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EX-32.3 - EXHIBIT 32.3 - APT Systems Incv351238_ex32-3.htm
EX-32.2 - EXHIBIT 32.2 - APT Systems Incv351238_ex32-2.htm
EX-32.1 - EXHIBIT 32.1 - APT Systems Incv351238_ex32-1.htm
EX-31.3 - EXHIBIT 31.3 - APT Systems Incv351238_ex31-3.htm
EX-31.2 - EXHIBIT 31.2 - APT Systems Incv351238_ex31-2.htm

 

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 April 30, 2013

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

______________________________________________________________________________________________

 

Commission File No. 333-181597

 

APT SYSTEMS, INC.

 (Exact Name of Small Business Issuer as specified in its charter)

 

Delaware 99-0370904
(State or other jurisdiction (IRS Employer File Number)

 

   

3400 Manulife Place

10180-101 Street

 
Edmonton, AB Canada T5J 3S4
(Address of principal executive offices) (zip code)

 

 (780)-270-6048

 (Registrant's telephone number, including area code)

 

Indicate by check mark whether the registrant: (1) 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 Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(Section 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 ¨  No x

 

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

 

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

 

As of July 26, 2013, registrant had outstanding 8,795,000 shares of the registrant's common stock.

 

 
 

 

FORM 10-Q

 

APT SYSTEMS, INC.

TABLE OF CONTENTS

 

 

PART I  FINANCIAL INFORMATION

 

PAGE

Item 1. Financial Statements for the Three Month Periods Ended April 30, 2013 and 2012 and the Period from Inception (October 29, 2010) through April 30, 2013 3
  Balance Sheets (Unaudited) 4
  Statements of Operations (Unaudited) 5
  Statements of Shareholders’ Equity (Deficit) (Unaudited) 6
  Statements of Cash Flows (Unaudited) 7
  Notes to Unaudited  Financial Statements 8
Item 2. Management’s Discussion and Analysis and Plan of Operation 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
Item 4. Controls and Procedures 16
Item 4T. Controls and Procedures 16
     
PART II  OTHER INFORMATION  
Item 1. Legal Proceedings  16
Item 1A. Risk Factors 17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Mine Safety Disclosures 17
Item 5. Other Information 17
Item 6. Exhibits 18
     
Signatures  

19

 

 

 

2
 

 

PART I FINANCIAL INFORMATION

 

References in this document to "us," "we," or "Company" refer to APT SYSTEMS, INC.

 

 

ITEM 1. FINANCIAL STATEMENTS

 

 

 

______________________________________________________________________________________________

 

APT SYSTEMS, INC.

 

UNAUDITED FINANCIAL STATEMENTS

 

 

For the Three Month Periods Ended April 30, 2013and 2012

 And

The Period from Inception (October 29, 2010) Through April 30, 2013

______________________________________________________________________________________________

 

 

 

 

 

 

APT Systems, Inc.

Financial Statements

(Unaudited)

 

TABLE OF CONTENTS

 

 

  PAGE
Balance Sheets 4
Statements of Operations 5
Statements of Stockholders’ Equity (Deficit)   6
Statements of Cash Flows 7
Notes to Financial Statements 8

 

3
 

 

APT SYSTEMS, INC.
(A Development-Stage Company)
Balance Sheets

 

  

(Unaudited)

April 30, 2013

  

(Audited)

January 31,2013

 
ASSETS        
Current Assets        
Cash and cash equivalents  $11,052   $2,428 
Total current assets   11,052    2,428 
           
Other Assets          
           
           
Software (net of $2,641 & $2,007 accumulated amortization respectively)   8,964    9,598 
Web site (net of $260 & $0 accumulated amortization respectively)   1,820    2,080 
 Total other assets   10,784    11,678 
           
Total Assets  $21,836   $14,106 
           
LIABILITIES & STOCKHOLDERS' DEFICIT          
Current Liabilities          
Accounts payable  $25,307   $23,961 
Loan from director   20    20 
Total Liabilities   25,327    23,981 
           
Stockholders' Deficit          
           
Preferred stock: $0.001 par value, 10,000,000 shares authorized; None issued as of April 30, 2013 and January 31,2013 respectively   -    - 
           
Common stock: $0.001 par value, 90,000,000 shares authorized; 8,795,000 and 8,694,000 shares issued and outstanding as of April 30, 2013 and January 31, 2013 respectively.   8,795    8,694 
Additional paid-in capital   80,705    60,606 
Deficit accumulated during the development stage   (92,991)   (79,175)
Total Stockholders' Deficit   (3,491)   (9,875)
           
Total Liabilities and Stockholders' Deficit  $21,836   $14,106 
           

 

See Accompanying Notes to Financial Statements

 

4
 

 

APT SYTEMS, INC.
(A Development-Stage Company)
Statements of Operations

 

   (Unaudited)
Three Months Ended
April 30, 2013
   (Unaudited)
Three Months Ended
April 30, 2012
   (Unaudited)
Inception
(October 29, 2010)
Through
April 30, 2013
 
             
Revenue  $22   $-   $33 
                
Operating Costs               
Accounting   5,000    2,500    20,085 
Amortization   894    -    2,901 
Consulting services   400    -    11,141 
General and administrative   3,947    5,554    20,458 
Legal   250    -    19,387 
Research & development   2,928    5,000    17,659 
Total Operating Costs   13,419    13,054    91,631 
                
Income (Loss) from Operations   (13,397)   (13,054)   (91,598)
                
Other Income (Expense)               
    Interest income (expense), net   (419)   3    (1,393)
                
Net  Income (Loss)  $(13,816)  $(13,051)  $(92,991)
                
Basic and diluted earnings (loss)  per share  $0.00*  $0.00*     
                
Weighted average number of common shares outstanding: basic and diluted   8,719,719    8,644,000      
                
 * denotes less than $(0.01) per share.               

 

See Accompanying Notes to Financial Statements

  

5
 

 

APT SYSTEMS, INC.
(A Development-Stage Company)
Statements of Stockholders' Equity (Deficit)
Period from Inception (October 29, 2010) through April 30, 2013

 

   Common
Shares
   Stock
Amount
   Additional
Paid-in
Capital
   Deficit
Accumulated
During
Development
Stage
   Total 
                     
Balance, October 29, 2010 (Inception) - audited   -   $-   $-   $-   $- 
                          
Net loss   -    -    -    (280)   (280)
                          
Balance January 31, 2011 - audited   -    -    -    (280)   (280)
                          
Common stock issued for cash   8,644,000    8,644    63,156    -    71,800 
                          
Net loss   -    -    -    (15,187)   (15,187)
                          
Balance  January 31, 2012 - audited   8,644,000    8,644    63,156    (15,467)   56,333 
                          
Common stock issued for cash   50,000    50    9,950    -    10,000 
                          
Offering costs   -    -    (12,500)   -    (12,500)
                          
Net loss   -    -    -    (63,708)   (63,708)
                          
Balance January 31, 2013  - audited   8,694,000    8,694    60,606    (79,175)   (9,875)
                          
Common stock issued for cash   101,000    101    20,099    -    20,200 
                          
Net loss   -    -    -    (13,816)   (13,816)
                          
Balance April 30, 2013 (unaudited)   8,795,000   $8,795   $80,705   $(92,991)  $(3,491)

 

See Accompanying Notes to Financial Statements

 

6
 

 

APT SYSTEMS, INC.
(A Development-Stage Company)
Statements of Cash Flows

 

   (Unaudited)
Three Months Ended
April 30, 2013
   (Unaudited)
Three Months Ended
April 30, 2012
   (Unaudited)
Inception
(October 29, 2010)
Through
April 30, 2013
 
             

 

CASH FLOWS FROM OPERATING ACTIVITIES

            
Net loss  $(13,816)  $(13,051)  $(92,991)
               
Adjustments to reconcile net loss to net cash
 provided by (used in) operating activities:
               
Amortization expense   894    -    2,901 
 
Changes in operating assets and liabilities:
               
Increase (decrease) in accounts payable   1,346    (104)   25,307 
                
Net cash provided by (used in) operating activities   (11,576)   (13,155)   (64,783)
                
CASH FLOWS FROM INVESTING ACTIVITIES               
Software purchased   -    -    (11,605)
Web site development costs   -    -    (2,080)
Net cash (used in) investing activities   -    -    (13,685)
                
CASH FLOWS FROM FINANCING ACTIVITIES               
Loan from shareholder   -    -    20 
Issuance of common stock for cash   20,200    -    89,500 
Net cash provided by financing activities   20,200    -    89,520 
                
Net change in cash and cash equivalents   8,624    (13,155)   11,052 
                
Cash and cash equivalents at beginning of period  $2,428   $39,068   $- 
                
Cash and cash equivalents at end of period  $11,052   $25,913   $11,052 
                
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION               
Cash paid  for :               
Interest  $-   $-   $- 
Income Taxes  $-   $-   $- 

 

During the fiscal year ended January 31, 2012, the Company pre-paid deferred offering costs in the amount of $12,500. Upon the Company’s S-1 Registration Statement becoming effective during the fiscal year ended January 31, 2013, this amount was offset against the offering proceeds in a non-cash transfer between prepaid expenses and additional paid in capital.  

 

 

 

See Accompanying Notes to Financial Statements

 

7
 

 

APT SYSTEMS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

April 30, 2013

  

 

 

1. NATURE OF OPERATIONS

 

APT Systems, Inc. (“APT Systems”, “the Company”, "We" or "Us") was incorporated in the State of Delaware on October 29, 2010 (“Inception”) to engage in the creation of innovative stock trading platforms, financial apps and visualization solutions for the financial markets. The Company is in the development stage with nominal revenues and a limited operating history.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Preparation of Financial Statements

 

The accompanying unaudited financial statements of APT Systems have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary in order to make the financial statements not misleading. Operating results for the three months ended April 30, 2013 are not necessarily indicative of the results that may be expected for the year ended January 31, 2014. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements for the year ended January 31, 2013 included in our Form 10-K filed with the SEC.

 

Development Stage Company

The Company is a development stage company in accordance with Financial Accounting Standards Codification (“ASC”) 915 "Development Stage Entities". Among the disclosures required as a development stage company are that our financial statements are identified as those of a development stage company, and that the statements of operations, stockholders' deficit and cash flows disclose activity since the date of our Inception (October 29, 2010) as a development stage company.

 

Use of Estimates and Assumptions

The preparation of financial statements in conformity with generally accepted accounting principles requires that management makes 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 period. Actual results could differ from those estimates. Due to uncertainties inherent in the estimation process, it is possible that these estimates could be materially revised within the next year.

 

Foreign Currency Translation

 

The financial statements are presented in United States dollars. In accordance with ASC 830, “Foreign Currency Matters”, foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Revenue and expenses are translated at average rates of exchange during the year. Gains or losses resulting from foreign currency transactions are included in results of operations.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with original maturity of three months or less to be cash equivalents.

 

Software

 

The Company has software that it uses for the development of certain mobile phone applications. The software and any upgrades are being amortized over useful lives ranging from 3 – 5 years.

 

Website

 

The Company accounts for website development costs in accordance with ACS 350-50 “Website Development Costs”. Costs incurred to register domain names, integrated databases and add additional functionality are being amortized over 1 – 3 years. Costs incurred in general maintenance of the website or hosting costs are expensed as incurred.

 

Research and Development Costs

 

Costs incurred in research and developments are expenses as incurred.

 

8
 

 

APT SYSTEMS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

April 30, 2013

 

Impairment of Long-Lived and Intangible Assets

 

In the event that facts and circumstances indicated that the cost of long-lived and intangible assets may be impaired, an evaluation of recoverability would be performed. If an evaluation was required, the estimated future undiscounted cash flows associated with the asset were compared to the asset’s carrying amount to determine if a write-down to market value or discounted cash flow value was required.

 

Financial Instruments

 

Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability.  ASC 820-10 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. ASC 820 establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:

 

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.

 

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

 

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.

 

The recorded amounts of financial instruments, including cash equivalents and accounts payable, approximate their market values as of April 30, 2013.

 

Income Taxes

 

The Company follows the accrual method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on the deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At April 30, 2013, a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded.

 

Basic and Diluted Net Income (Loss) per Share

The Company computes net income (loss) per share in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.

 

Basic and diluted EPS were identical for the three months ended April 30, 2013 and 2012 as we had no potentially dilutive debt or equity instruments outstanding.

 

Comprehensive Income (Loss)

 

Comprehensive income is defined as all changes in stockholders’ equity (deficit), exclusive of transactions with owners, such as capital investments. Comprehensive income includes net income or loss, changes in certain assets and liabilities that are reported directly in equity such as translation adjustments on investments in foreign subsidiaries and unrealized gains (losses) on available-for-sale securities. From our Inception there were no differences between our comprehensive loss and net loss.

 

Our comprehensive loss was identical to our net loss for the three months ended April 30 2013 and 2012.

 

Reclassifications

 

Certain reclassifications have been made to prior period financial statements to conform to the 2013 presentation.

 

9
 

 

APT SYSTEMS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

April 30, 2013

 

Business Segments

 

The Company believes that its activities during the three months ended April 30, 2013 and 2012 comprised a single segment.

 

Recently Issued Accounting Pronouncements

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial condition or the results of its operations.

 

3. GOING CONCERN AND LIQUIDITY

At April 30, 2013 the Company had cash of $11,052, no profitable business activities or other source of income, liabilities of $25,327, accumulated losses of $92,991 and a shareholders’ deficit of $3,491.

 

In the financial statements for the fiscal years ended January 31, 2013 and 2012, the Report of the Independent Registered Public Accounting Firms includes an explanatory paragraph that describes substantial doubt about our ability to continue as a going concern.

 

The unaudited financial statements for the three months ended April 30, 2013 and 2012 have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company anticipates future losses in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from directors and/or issuance of common shares. There is no assurance that this series of events will be satisfactorily completed.

 

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

 

4. RELATED PARTY TRANSACTIONS

The President of the Company provides management and office premises to the Company for no compensation.

 

As of April 30, 2013 and January 31, 2013, the Company owed the President $20.

 

The Company entered into a Consulting Agreement with Joseph J. Gagnon, the Secretary of the Board of Directors, on February 3, 2012. This agreement was amended jointly by the Board of Directors and Mr. Gagnon. As of June 15, 2012, it was agreed and accepted by all that Mr. Gagnon should discontinue his full-time services for a specified period of time. As of April 30, 2013, Mr. Gagnon is scheduled to resume his duties on September 30, 2013, unless otherwise agreed. Mr. Gagnon was paid $400 during the three months ending April 30, 2013 (2012 - $7,500); however, no balance was owed to Mr. Gagnon by the Company as at April 30, 2013 and 2012.

 

5. SHAREHOLDERS’ DEFICIT

 

COMMON SHARES

 

During the three months ended April 30, 2013, the Company issued 20,200 shares of $0.001 par value common stock as follows:

 

In February 2013, the Company issued 1,000 shares of $0.001 par value common stock for $200 cash or $0.20 per share.

 

In April 2013, the Company issued 100,000 shares of $0.001 par value common stock for $20,000 cash or $0.20 per share.

 

10
 

 

APT SYSTEMS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

April 30, 2013

 

STOCK OPTIONS

 

The Company adopted the 2012 Equity Incentive Plan (the “Plan”) on January 31, 2012, reserving 5,500,000 shares for future issuances, of which a maximum of 2,500,000 may be issued as incentive stock options. The Plan provides for the issuance of non-statutory stock options or restricted stock to officers and employees, with an exercise price that is at least equal to the fair market value of the Company’s common stock on the date of grant. Vesting terms and the lives of the options are to be determined by the Board of Directors upon grant.

 

No stock options have been issued to date.

 

6. INCOME TAXES

 

The Company accounts for income taxes in accordance with ASC 740. Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carry-forwards. No net provision for refundable Federal income tax has been made in the accompanying statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carry-forward has been recognized, as it is not deemed likely to be realized.

 

The provision for refundable federal income tax consists of the following for the periods ending:

 

   April 30,
2013
   January 31,
2013
 
Federal income tax benefit attributed to:        
Net operating loss   31,617    21,661 
Valuation   (31,617)   (5,164)
Net benefit   -    - 

 

The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows: 

 

   April 30,
2013
   January 31, 2013 
Deferred tax attributed:          
Net operating loss carryover   26,224    21,661 
Less: change in valuation allowance   (26,224)   (5,164)
Net deferred tax asset   -    - 

 

At April 30, 2013 the Company had an unused net operating loss carry-forward approximating $92,991 that is available to offset future taxable income; the loss carry-forward will start to expire in 2030.

 

7. SUBSEQUENT EVENTS

 

On May 16, 2013, the Board of Directors of APT filed a Form 8-K stating that it had concluded that the financial statements issued for the fiscal year ended January 31, 2012 should no longer be relied upon because of an error in such financial statements. The Board of Directors arrived at this conclusion because in each of the drafts of the form S1 filed between May 23, 2012 and November 16, 2012, it was disclosed that effective January 31, 2012, APT’s three directors had been granted a total of 2.25 million fully vested stock options with an exercise price of $0.10 and a term of 5 years. However, the compensation expense for these stock options had not been reflected in the financial statements for the year ended December 31, 2012. Accordingly the Board of Directors concluded that the January 31, 2012 financial statements had been misstated.

 

On July 1, 2013, The Board of Directors filed a Form 8-K announcing that it had performed a detailed review of the operation of the Company’s 2012 Equity Incentive Plan (the “Plan”) since its formation on January 31, 2012. While at times the Company’s management had indicated verbally and in emails that certain stock options had been granted, the Company has been unable to locate any signed stock option agreements. The Company contacted its former corporate advisors who had prepared the initial draft of the S1 disclosing the granting of the stock options and requested that they review their files for any documentation relating to disclosure made in the draft S1 relating to the Plan. At the date of this filing, the former corporate advisors have not provided the Company with any such documents or other information as to the circumstances leading to the disclosure of the grant of any stock options.

 

11
 

 

APT SYSTEMS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

April 30, 2013

 

Based on its detailed review, the Board of Directors concluded that no stock options have been granted since the formation of the Plan and all three directors have now confirmed in writing that they do not own, and have never owned, any APT stock options. Accordingly the information in the various S1 filings relating to the grant of APT stock options was incorrect and the Company would be filing an amended S1 to reflect the fact that, to the best of its knowledge and belief, no stock options have been granted by the Company. As no stock options have been granted, the Board of Directors now believed that the financial statements for the twelve months ended January 31, 2012 had been correctly stated and can be relied upon.

 

On July 2, 2013 the Company filed a Post–Effective Amendment to its registration statement to reflect the fact that, to the best of the Company’s knowledge and belief, no stock options have been granted by the Company to date and to correct the previously incorrect disclosure of the issuance of such options.

 

On July 17, 2013 the Company filed its Form 10-K for the year ended January 31, 2013.

 

In accordance with ASC 855, Subsequent Events, the Company has evaluated subsequent events through July 26, 2013, the date of available issuance of these unaudited financial statements. During this period, other than as disclosed above, the Company did not have any material recognizable subsequent events.

 

12
 

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

 

The following discussion of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by, the consolidated financial statements and notes thereto included in, Item 1 in this Quarterly Report on Form 10-Q. This item contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those indicated in such forward-looking statements.

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain forward-looking. Such forward-looking statements are based on current expectations, estimates, and projections about our industry, management beliefs, and certain assumptions made by our management. Words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", variations of such words, and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. However, readers should carefully review the risk factors set forth herein and in other reports and documents that we file from time to time with the Securities and Exchange Commission, particularly the Report on Form 10-K, Form 10-Q and any Current Reports on Form 8-K.

 

Overview and History

 

APT Systems, Inc. was incorporated in the State of Delaware on October 29, 2010. It is a development stage company and has not yet generated any significant revenues. Its limited start-up operations have consisted of the formation of the Company, development of its business plan, identification of its target market and active research and development of its product. We do not plan on raising any additional funds within the next six months but do not rule out the possibility. We have not been subject to any bankruptcy, receivership or similar proceeding.

 

The Company operations are currently being conducted out of the premises of its President, Glenda Dowie on a rent-free basis during its development stage. The office is at 3400 Manulife Place, 10180-101 Street, Edmonton, AB Canada T5J 3S4. The Company considers its current principal office space arrangement adequate and will reassess its needs based upon the future growth of the Company. Its fiscal year end is January 31st.

 

“APT” is an acronym for ‘Applied Proprietary Trading’. APT Systems, Inc. is a company that will be specializing in the creation of innovative equities trading platforms, stock research tools, financial apps and visualization solutions for the financial markets. APT, a technology solution provider, is focusing on the hand held market where we will develop and publish custom technical analysis indicators and trading systems both in-house and for third parties. In addition, the Company intends to develop a user friendly charting tool that displays price action and historic pricing for publicly traded companies. This charting tool and the charts that it produces can be configured to the user’s preferred view such as a line chart or candlestick chart, and the user shall be able to adjust the chart intervals as the user desires. Utilizing real time and delayed data networks along with graphic techniques pioneered in the gaming industry, APT’s charting solutions can speak to the mobile needs to be demanded by the next generation of traders.

 

In order to advance itself during its development stage, APT Systems can roll out traditional trading tools and publish charts for the hand held market to test plans and generate cash flow. However, these tools would be refreshed with leading edge graphics and networking technology to become desirable real-time and interactive trading assistance software.

 

APT services can extend to include:

 

-          Mobile Trading App Development

-          Robust Mobile Security Solutions

-          Financial Software and App Development

-          Analytical Software Development

-          Algorithmic Applied Technology

-          Trading Platform Refinement and Development

 

 

The steps remaining for the company to begin selling its above listed products are to finalize the programming of the software used in its products, specifically its dimensional charting tools, begin sales and marketing campaigns, contact prospective licensees, which the company expects to complete within 90 days, and deliver its products, which the company expects to complete in less than 180 days after its initial contact with prospective licensees. The new app with user friendly charts will be available to users on a subscription fee plan and will be available under license from other financial companies and brokerage firms who we will attempt to sell our product to. The goal is to have our product used by both handheld (tablet and Smartphone application users) and web based clients.

 

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Needs Assessment

 

Management believes the principal growth area in the personal computer market today is that of Smartphones and portable tablet devices; aside from being a large and quickly growing market, these mobile devices usually allow full time internet connectivity.  This makes them an ideal stage for a mobile equity-trading platform. Instead of merely porting existing software to allow on-the-go research and trading, APT Systems envisions for its future products an information-dense and interactive display of the financial markets. At this time, the Company believes that the future interactive display will include three dimensional imaging that the Company intends to use to provide financial information in new ways that can better assist novice users learning about publicly traded companies and those users who are trading equities in the public markets.

 

Distribution methods of the products or services
To facilitate marketing plans, our products and platforms will be available initially in the “App Store” managed by Apple Inc. Later, these same products will be available to audiences that prefer using other Smartphones such as Google’s Android or the BlackBerry. Especially in the case of Apple, these companies will provide marketing infrastructure to help developers reach their users and justify costs related to selling products from their app stores. These options will be fully explored and implemented as it makes sense to do so.

 

To further facilitate viral marketing plans, the Company products will be available for a very small downloading charge or in some cases free.  The Company is investigating a tiered subscription revenue model and revenue for providing licenses to others.

 

The Company will identify and address the target market for its services with apps, and demonstrate how it can help users optimize mobile devices for trading of equities in the North American markets.

 

 

Results of Operations

 

For the Period from Inception (October 29, 2010) Through April 30, 2013

 

The Company has generated $33 in revenue since Inception on October 29, 2010 through April 30, 2013.

 

Operating expenses from October 29, 2010 through April 30, 2013 were $91,598. The major components of the operating expenses include accounting fees, consulting fees and legal fees.

 

For the period from October 29, 2010 through April 30, 2013 the Company’s net loss was $92,991.

 

For the Three Months Ended April 30, 2013 Compared to the Three Months Ended April 30, 2012

 

The Company generated $22 in revenue in the three months ended April 30, 2013 (2012 - $0).

 

Operating expenses, which consisted solely of professional fees, general and administrative expenses, web development and research and development costs for the three month period ended April 30, 2013, were $13,419. This compares with operating expenses for the three month period ended April 30, 2012 of $13,054.  The major components of general and administrative expenses include accounting fees, software fees, consulting fees and research and development costs. 

 

As a result of the foregoing, we had a net loss of $13,816 for the three month period ended April 30, 2013. This compares with a net loss for the three month period ended April 30, 2012 of $13,051.

 

In its audited financial statements as of January 31, 2013, the Company was issued an opinion by its auditors that raised substantial doubt about the ability to continue as a going concern based on the company current financial position. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to successfully develop and market our products and our ability to generate revenues.

 

There is no historical financial information about the Company upon which to base an evaluation of its performance. It is in start-up/development stage operations and has not generated any revenues. The Company cannot guarantee it will be successful in its business operations.

 

Liquidity and Capital Resources

 

At April 30, 2013 the Company had cash of $11,052, no profitable business activities or other source of income, liabilities of $25,327, accumulated losses of $92,991 and a shareholders’ deficit of $3,491.

 

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In the financial statements for the fiscal years ended January 31, 2013 and 2012, the Report of the Independent Registered Public Accounting Firm includes an explanatory paragraph that describes substantial doubt about our ability to continue as a going concern.

 

Currently, the Company will require a minimum of $50,000 over the next 12 months, which will be funded either through operations or through the sale of its common stock.

 

The Company anticipates future losses in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from directors and/or issuance of common shares. There is no assurance that this series of events will be satisfactorily completed.

 

As of April 30, 2013, the Company had cash or cash equivalents of $11,052. As of January 31, 2013, the Company had cash or cash equivalents of $2,428.

 

Cash flow information for the three months ended April 30, 2013 compared to the three months ended April 30, 2012

 

Net cash used for operating activities was $11,576 for the three month period ended April 30, 2013. This compares to net cash used for operating activities of $13,155 for the three month period ended April 30, 2012. For the period from October 29, 2010 through April 30, 2013 net cash used for operating activities was $64,783.

 

Cash flows from investing activities were $0 for the three month period ended April 30, 2013 and April 30, 2012. Net cash flows used in investing activities were $13,685 from our Inception on October 29, 2010 through April 30, 2013.

 

Cash flows provided by financing activities were $20,200 for the three month period ended April 30, 2013 which compares to cash flows provided by financing activities of $0 for the three month period ended April 30, 2012. For the period from October 29, 2010 through April 30, 2013 cash flows provided by financing activities were $89,520.

 

As of April 30, 2013, our total assets were $21,836 and our total liabilities were $25,327. As of January 31, 2013, our total assets were $14,106 and our total liabilities were $23,981.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements with any party.

 

Plan of Operation

 

Our plan for the twelve months beginning April 30, 2013 is to operate at a profit or at break even. Our plan is to attract sufficient additional product sales and services within our present organizational structure and resources to become profitable in our operations.

 

Begin Marketing and Sales efforts:

 

The Company marketing efforts will primarily be related to assuring its product is easily found in app stores and create a smooth downloading experience. The Company has budgeted $1,500 for the initial three months of marketing efforts to be supplemented by the lists it is developing. It is believed that there will be sufficient funds remaining for additional methods of marketing if a suitable opportunity presents itself. The Company intends to engage in marketing and sales efforts during the next twelve months, however, the amount of funds that the Company can dedicate to such efforts will be determined based on the overall amount of funds available during the next twelve months.

 

Once the app is live and the Company has begun initial Search Engine Optimization (“SEO”) work and internet marketing, it is believed sales will be supported through the app stores and the Company website. The website will be set up to record all visitors automatically and billing will be handled by Apple’s extensive billing backend. This system will allow the Company minimize staff, maintain efficient delivery of products, and keep records for both accounting and marketing.

 

Successful implementation of the Company’s business strategy depends on factors specific to the internet, regulations regarding equities trading, app development licenses and the hand held device industry and numerous other factors that may be beyond its control. Adverse changes in the following factors could undermine its business strategy and have a material adverse effect on its business, its financial condition, and results of operations and cash flow:

 

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·the competitive environment in the app sector that may force the Company to reduce prices below the optimal desired pricing level or increase promotional spending;
·the ability to anticipate changes in consumer preferences and to meet customers’ needs for trading products in a timely cost effective manner; and
·the ability to establish, maintain and eventually grow market share in a competitive environment.

 

For delivery of Company information globally, geopolitical changes, changes in trading regulations, currency fluctuations, natural disasters, pandemics and other factors beyond its control may increase the cost of items it purchases, create communication issues or render product delivery difficult which could have a material adverse effect on its sales and profitability.

 

Concurrent Developments (0-12 months)

 

Future Trends use E-Books as a method for Training and Revenue:

 

Future product considerations revolve around enhanced or animated e-books. Consumers have confirmed they enjoy e-books for their convenience and accessibility but they are similar in format to the traditional book. As animation is added to traditional images such as charts, this same technology can be applied to e-books to animate the content to better engage the reader. It is hoped the learning experience will be enriched and the lessons learned more thoroughly. It is believed customers will soon demand interactive books that provide a much better, more informed educational experience and replace standard training techniques.

 

Recently Issued Accounting Pronouncements

 

We have reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial condition or the results of our operations.

 

Seasonality

 

We do not expect our revenues to be impacted by seasonal demands for our services.

 

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Not applicable.

 

ITEM 4T. CONTROLS AND PROCEDURES

 

As of the end of the period covered by this report, based on an evaluation of our disclosure controls and procedures (as defined in Rules 13a -15(e) and 15(d)-15(e) under the Exchange Act), our Chief Executive Officer has concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the applicable time periods specified by the SEC’s rules and forms.

 

There were no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

This report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Identified in connection with the evaluation required by paragraph (d) of Rule 240.13a-15 or Rule 240.15d-15 of this chapter that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

There are no legal proceedings, to which we are a party, which could have a material adverse effect on our business, financial condition or operating results.

 

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ITEM 1A. RISK FACTORS

 

There have been no changes to our Risk Factors included in our Registration Statement on Form S-1 that became effective with the Securities and Exchange Commission on November 30, 2012.  

 

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

 

Set forth below is information regarding the issuance and sales of securities without registration since inception. No such sales involved the use of an underwriter; no advertising or public solicitation was involved; the securities bear a restrictive legend; and no commissions were paid in connection with the sale of any securities.

 

On November 1, 2011, the Company issued a total of 5,000,000 shares of common stock to Glenda Dowie, our President and Chief Executive Officer for cash at $0.001 per share for a total of $5,000.

 

On November 1, 2011, the Company issued a total of 500,000 shares of common stock to Mark Anderson, an unaffiliated shareholder for cash at $0.001 per share for a total of $500.

 

On November 14, 2011, the Company issued a total of 200,000 shares of common stock to Carl Hussey, our Treasurer and Chief Financial Officer for cash at $0.005 per share for a total of $1,000.

 

On November 14, 2011, the Company issued a total of 200,000 shares of common stock to Joseph Gagnon, our Secretary and Chief Technology Officer for cash at $0.005 per share for a total of $1,000.

 

On December 7, 2011, the Company issued a total of 1,604,000 shares of common stock to 19 unaffiliated shareholders for cash at $0.005 per share for a total of $8,020.

 

On January 14, 2012, the Company issued a total of 962,000 shares of common stock to 15 unaffiliated shareholders for cash at $0.04 per share for a total of $38,480.

 

On January 31, 2012, the Company issued a total of 178,000 shares of common stock to 9 unaffiliated shareholders for cash at $0.10 per share for a total of $17,300.

 

In December 2012, the Company authorized the issuance of 35,000 common shares of the Company at $0.20 per share to various investors for net cash proceeds of $7,000.

 

In January 2013, the Company authorized the issuance of 15,000 common shares of the Company at $0.20 per share to various investors for net cash proceeds of $3,000.

 

In February 2013, the Company issued 1,000 shares of $0.001 par value common stock for $200 cash or $0.20 per share.

 

In April 2013, the Company issued 100,000 shares of $0.001 par value common stock for $20,000 cash or $0.20 per share.

 

These securities were issued in reliance upon an exemption provided by Regulation S promulgated under the Securities Act of 1933. The certificates for these securities were issued to a non-US resident and bear a restrictive legend.

 

At April 30, 2013 there are total of 8,795,000 common shares of the Company issued and outstanding.

 

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

 

None

  

ITEM 4.  MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5.  OTHER INFORMATION

 

None.

 

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ITEM 6. EXHIBITS

 

Exhibits

EXHIBITS. The following exhibits required by Item 601 to be filed herewith are incorporated by reference to previously filed documents:

 

 

Exhibit

Number

 

 

 

Description

     
3.1*   Articles of Incorporation
     
3.2*   Bylaws
     
31.1   Certification of Chief Executive Officer pursuant to Section 302
     
31.2   Certification of Chief Financial Officer pursuant to Section 302
     
31.3   Certification of Principal Accounting Officer pursuant to Section 302
     
32.1   Certification of Chief Executive Officer pursuant to Section 906
     
32.2   Certification of Chief Financial Officer pursuant to Section 906
     
32.3   Certification of Principal Accounting Officer pursuant to Section 906

   

 * Previously filed with Form S-1 Registration Statement, May 23, 2012

 

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SIGNATURES

 

In accordance with Section 12 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 on July 30, 2013.

 

 

     
  APT Systems, Inc.
     
  By: /s/ Glenda Dowie
  Glenda Dowie, President and Chief Executive Officer
     
  By: /s/ Joseph Gagnon
  Joseph Gagnon, Secretary and Chief Financial Officer
     
  By: /s/ Carl Hussey
  Carl Hussey, Treasurer and Principal Accounting Officer

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed   below by the following person on behalf of the Registrant and in the capacity and on the date indicated.

 

/s/ Glenda Dowie   President, Chief Executive Officer and Director July 30, 2013
Glenda Dowie   Title Date
       
/s/ Joseph Gagnon   Secretary, Chief Financial Officer and Director July 30, 2013
Joseph Gagnon   Title Date
       
/s/ Carl Hussey   Treasurer, Principal Accounting Officer and Director July 30, 2013
Carl Hussey   Title Date

 

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