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EX-31.1 - EXHIBIT 31.1 SECTION 302 CERTIFICATION - APT Systems Incf10q043014_ex31z1.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, 2014


      .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 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 June 16, 2014, registrant had outstanding 8,915,000 shares of the registrant's common stock.





FORM 10-Q


APT SYSTEMS, INC.

TABLE OF CONTENTS


PART I  FINANCIAL INFORMATION

PAGE

Item 1.

Unaudited Condensed Financial Statements for the three month periods ended April 30, 2014 and 2013 and the period from Inception (October 29, 2010) to April 30, 2014

3

 

Condensed Balance Sheets

4

 

Condensed Statements of Operations

5

 

Condensed Statements of Changes in Stockholders’ Equity (Deficit)

6

 

Condensed Statements of Cash Flows

7

 

Notes to Unaudited Condensed Financial Statements

8

Item 2.

Management’s Discussion and Analysis and Plan of Operation

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

21

Item 4.

Controls and Procedures

21

 

 

 

PART II  OTHER INFORMATION

 

Item 1.

Legal Proceedings

22

Item 1A.

Risk Factors

22

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

22

Item 3.

Defaults Upon Senior Securities

23

Item 4.

Mine Safety Disclosures

23

Item 5.

Other Information

23

Item 6.

Exhibits

24

 

 

 

Signatures

 

25




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 CONDENSED FINANCIAL STATEMENTS


For the Three Month Periods Ended April 30, 2014 and 2013

And

The Period from Inception (October 29, 2010) Through April 30, 2014


APT Systems, Inc.

Condensed Financial Statements

(Unaudited)


TABLE OF CONTENTS


 

PAGE

Condensed Balance Sheets

4

Condensed Statements of Operations

5

Condensed Statements of Changes in Stockholders’ Equity (Deficit)

6

Condensed Statements of Cash Flows

7

Notes to Condensed Financial Statements

8




3



APT SYSTEMS, INC.

(A Development-Stage Company)

Condensed Balance Sheets


 

 

(Unaudited)

(Audited)

 

 

April 30, 2014

January 31, 2014

 

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

 

$

2,757

$

18,830

Total current assets

 

 

2,757

 

18,830

 

 

 

 

 

 

Other Assets

 

 

 

 

 

 

 

 

 

 

 

Software (net of $5,177 & $4,543 accumulated amortization respectively)

 

 

6,428

 

7,062

Web site (net of $1,300 & $1,040 accumulated amortization respectively)

 

 

780

 

1,040

Deferred financings costs

 

 

13,000

 

13,000

 Total other assets

 

 

20,208

 

21,102

 

 

 

 

 

 

Total Assets

 

$

22,965

$

39,932

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts payable and accrued expenses

 

$

87,112

$

32,858

Accrued officer compensation

 

 

30,000

 

15,000

Note payable

 

 

50

 

50,000

Accrued interest payable

 

 

2,941

 

625

Loan from director

 

 

4,773

 

1,523

Total current liabilities

 

 

174,826

 

100,006

 

 

 

 

 

 

Total Liabilities

 

 

174,826

 

100,006

 

 

 

 

 

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

Preferred stock $0.001 par value, 10,000,000 shares authorized;

   None issued as of April 30, 2014 and January 31,2014 respectively

 

 

-

 

-

Common stock $0.001 par value, 90,000,000 shares authorized;

   8,830,000 shares issued and outstanding as of April 30, 2014

   and January 31, 2014 respectively.

 

 

8,830

 

8,830

Additional paid-in capital

 

 

87,670

 

87,670

Deficit accumulated during the development stage

 

 

(248,361)

 

(156,574)

Total Stockholders’ Deficit

 

 

(151,861)

 

(60,074)

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Deficit

 

$

22,965

$

39,932


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




4



APT SYSTEMS, INC.

(A Development-Stage Company)

Condensed Statements of Operations


 

 

(Unaudited)

Three Months Ending

 

(Unaudited)

Inception

(October 29, 2010)

Through

 

 

April 30, 2014

April 30, 2013

 

April 30, 2014

 

 

 

 

 

 

 

 

 

Revenue

 

$

17

$

22

 

$

67

 

 

 

 

 

 

 

 

 

Operating Costs

 

 

 

 

 

 

 

 

Accounting

 

 

6,000

 

5,000

 

 

31,885

Amortization

 

 

894

 

894

 

 

6,477

Compensation to officer

 

 

15,000

 

-

 

 

30,000

Consulting services

 

 

-

 

400

 

 

1,091

Consulting services – related party

 

 

-

 

-

 

 

11,000

General and administrative

 

 

4,436

 

3,947

 

 

55,751

Legal

 

 

62,750

 

250

 

 

94,137

Research & development

 

 

-

 

2,928

 

 

12,659

Total Operating Costs

 

 

89,080

 

13,419

 

 

243,000

 

 

 

 

 

 

 

 

 

Net Operating Loss

 

 

(89,063)

 

(13,397)

 

 

(242,933)

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

    Interest expense

 

 

(2,724)

 

(420)

 

 

(5,439)

    Interest income

 

 

-

 

1

 

 

11

Total Other Income (Expense)

 

 

(2,724)

 

(419)

 

 

(5,428)

 

 

 

 

 

 

 

 

 

Net  Income (Loss)

 

$

(91,787)

$

(13,816)

 

$

(248,361)

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share: Basic and Diluted

 

$

(0.01)

$

(0.00)*

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding: Basic and Diluted

 

 

8,830,000

 

8,719,719

 

 

 

 

 

 

 

 

 

 

 

 

 * denotes a loss of less than $(0.01) per share.

 

 

 

 

 

 

 

 


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




5



APT SYSTEMS, INC.

(A Development-Stage Company)

Condensed Statements of Changes in Stockholders’ Equity (Deficit)


 

 

 

 

Deficit

Total

 

 

 

Accumulated

 

 

Additional

During

Common

Stock

Paid-in

Development

Shares 

Amount

Capital

Stage

Balance, October 29, 2010 (inception)

-

$            -

$              -

$               -

$              -

 

 

 

 

 

 

Net loss for the period ended January 31, 2011

-

-

-

(280)

(280)

 

 

 

 

 

 

Balance January 31, 2011(audited)

-

-

-

(280)

(280)

 

 

 

 

 

 

Common stock issued for cash, net of $12,500 expenses

8,644,000

8,644

50,656

-

59,300

 

 

 

 

 

 

Net loss for the period ended January 31, 2012

-

-

-

(15,187)

(15,187)

 

 

 

 

 

 

Balance  January 31, 2012 (audited)

8,644,000

8,644

50,656

(15,467)

43,833

 

 

 

 

 

 

Common stock issued for cash

50,000

50

9,950

-

10,000

 

 

 

 

 

 

Net loss for the year ended January 31, 2013

-

-

-

(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

111,000

111

22,089

-

22,200

 

 

 

 

 

 

Common stock issued for services at $0.20 per share

25,000

25

4,975

-

5,000

 

 

 

 

 

 

Net loss for the year ended January 31, 2014

-

-

-

(77,399)

(77,399)

 

 

 

 

 

 

Balance January 31, 2014 (audited)

8,830,000

8,830

87,670

(156,574)

(60,074)

 

 

 

 

 

 

Net loss for the period ended April 30, 2014

-

-

-

(91,787)

(91,787)

 

 

 

 

 

 

Balance April 30, 2014 (unaudited)

8,830,000

$       8,830

$     87,670

$  (248,361)

$ (151,861)


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




6



APT SYSTEMS, INC.

(A Development-Stage Company)

Condensed Statements of Cash Flows


 

 

 

 

(Unaudited)

 

 

 

Inception

 

(Unaudited)

(Unaudited)

(October 29, 2010)

 

Three Months

Three Months

Through

 

April 30, 2014

April 30, 2013 

April  30, 2014 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

    Net loss

 

$

(91,787)

$

(13,816)

$

(248,361)

    Adjustments to reconcile net loss to net cash

 

 

 

 

 

 

 

       provided by (used in) operating activities:

 

 

 

 

 

 

 

        Amortization expense

 

 

894

 

894

 

6,477

        Expenses paid by issuance of common stock

 

 

-

 

-

 

10,240

    Changes in operating assets and liabilities:

 

 

 

 

 

 

 

        Increase (decrease) in accounts payable and accrued expenses

 

 

56,570

 

1,346

 

90,053

        Increase (decrease) in accrued officer compensation

 

 

15,000

 

-

 

30,000

     Net cash provided by (used in) operating activities

 

 

(19,323)

 

(11,576)

 

(111,591)

 

 

 

 

 

 

 

 

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

 

 

3,250

 

-

 

4,773

     Issuance of short-term note payable

 

 

-

 

-

 

50,000

     Issuance of common stock for cash

 

 

-

 

20,200

 

86,260

     (Increase) decrease in deferred financing costs

 

 

-

 

-

 

(13,000)

   Net cash provided by financing activities

 

 

3,250

 

20,200

 

128,033

 

 

 

 

 

 

 

 

   Net change in cash and cash equivalents

 

 

(16,073)

 

8,624

 

2,757

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

18,830

 

2,428

 

-

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

2,757

$

11,052

$

2,757

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid  for :

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Interest

 

$

408

$

 -

$

2,498

   Income Taxes

 

$

 -

$

 -

$

-

 

 

 

 

 

 

 

 

Equity securities issued for services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Common stock issued for services

 

$

 -

$

 -

$

10,240


During the fiscal year ended January 31, 2012, the Company pre-paid deferred offering costs in the amount of $12,500. Upon the effective of the S-1 Registration Statement 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.


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




7



APT SYSTEMS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM INCEPTION (OCTOBER 29, 2010) TO APRIL 30, 2014


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 charting the financial markets. The Company is in the development stage and has been concentrating on researching and improving its intellectual property for trading and to facilitate rolling out new trading software. Management will continually test its trading software products and any profits generated from funds used in live trading tests will be to the benefit of the Company.


Going Concern Consideration


These financial statements 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 has incurred losses since inception and 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, obtaining 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, the sale of shares of common stock. There is no assurance that these 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.


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, 2014 are not necessarily indicative of the final results that may be expected for the year ended January 31, 2015. 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, 2014 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.


Cash and Cash Equivalents


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


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.



8



APT SYSTEMS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM INCEPTION (OCTOBER 29, 2010) TO APRIL 30, 2014



2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


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.


Foreign currency transaction gains and losses are recorded in the statements of operations as a component of other income (expense).


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.


Deferred Financing Costs


Costs with respect to issue of common stock, warrants, stock options or debt instruments by the Company are initially deferred and ultimately offset against the proceeds from such equity transactions or amortized as debt discount over the term of any debt funding if successful or expensed if the proposed equity or debt transaction is unsuccessful.


For the three month periods ended April 30, 2014 and 2013, the Company had paid refundable deposits of $13,000 and $0, respectively. The deposits were made to two consulting companies that were to assist the Company in obtaining a $125,000 bridge loan to be utilized by the Company for its public registration purposes, and to assist the Company with an $8,000,000 private equity placement. The deposits are refundable for non-performance. As of the date of this report, neither the bridge loan nor the private placement had been secured.


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 will be performed. If an evaluation is 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 is required.


Advertising costs


Advertising costs are expensed as incurred. The Company recorded no advertising costs during the three months ending April 30, 2014 and 2013.



9



APT SYSTEMS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM INCEPTION (OCTOBER 29, 2010) TO APRIL 30, 2014



2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


Financial Instruments


Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. Accounting Standards Codification (“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 which reflect a reporting entity’s own assumptions about the assumptions that market participants would use for 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, accounts payable, accrued expenses, note payable and loan from director approximate their market values as of April 30, 2014 due to the short term maturities of these financial instruments.


Income Taxes


The Company accounts for income taxes in accordance with FASB ASC 740 “Income Taxes”. Under FASB ASC 740, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial statement reported amounts at each period end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. FASB ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under FASB ASC 740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. At April 30, 2014 and 2013, the Company has no unrecognized tax benefits.


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. For the three month ended April 30, 2014, the Company did have potentially a dilutive debt instrument that has been excluded from the earnings per share calculation as such an inclusion would have been anti-dilutive due to losses incurred in the period. No potentially dilutive debt or equity instruments were issued and outstanding during the three months ended April 30, 2013.



10



APT SYSTEMS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM INCEPTION (OCTOBER 29, 2010) TO APRIL 30, 2014



2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


Stock Based Compensation


The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. The Company has adopted a stock option plan, as disclosed in Note 7 – Stockholders’ Deficit below. As of the three month periods ended April 30, 2014 and 2013, no stock options had been issued or were 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.


The comprehensive loss was identical to the net loss for the three months ended April 30, 2014 and 2013.


Reclassifications


Certain reclassifications have been made to prior period financial statements to conform to the 2014 presentation.


Business Segments


The Company believes that its activities during the three month periods ended April 30, 2014 and 2013 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, 2014 the Company had cash of $2,757, no profitable business activities or other source of income, liabilities of $174,826, accumulated losses of $248,361 and a stockholders’ deficit of $151,861.


In the audited financial statements for the fiscal years ended January 31, 2014 and 2013, the Reports of our Independent Registered Public Accounting Firms include 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, 2014 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, obtaining 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, the sale of common stock. There is no assurance that this series of events will be satisfactorily completed.


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



11



APT SYSTEMS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM INCEPTION (OCTOBER 29, 2010) TO APRIL 30, 2014



4.

RELATED PARTY TRANSACTIONS


Effective November 1, 2013, the Company began to accrue a monthly salary of $5,000 per month for the President on an ongoing basis. Accrued officer compensation for the three months ended April 30, 2014 and year ended January 31, 2014, was $30,000 and $15,000 respectively. The accrued compensation will only be paid as and when the directors decide the Company has sufficient liquidity to pay some, or all, of the amounts accrued. The President of the Company can elect at any time to convert some, or all, of her accrued compensation into shares of the Company’s common stock at the market price at the date of conversion. Market price will be either the publicly quoted share price, when such a publicly quoted price becomes available, or the last cash price the Company received for the sale of its common shares.


As of April 30, 2014 and January 31, 2014, the Company owed the President $4,773 and $1,523 respectively by way of loans. The loans are unsecured, due on demand and interest free.


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, 2014, Mr. Gagnon is not scheduled to resume his duties unless otherwise agreed to in writing. Mr. Gagnon was paid $0 for the three months  ended April 30, 2014. No balance was owed to Mr. Gagnon by the Company as of April 30, 2014 or January 31, 2014.


5.

CONVERTIBLE NOTE PAYABLE


On January 8, 2014 the Company issued an unsecured convertible note to one accredited investor (as that term is defined under the Securities Act of 1933, as amended) in the aggregate amount of $50,000 This convertible note accrues interest at the rate of 19% per annum and is convertible only when a “qualifying financing” event takes place. The note will be due and payable on May 7, 2014. The Company secured an initial extension of the convertible note to June 8, 2014 and subsequently a further extension to August 9, 2014.


The Note, but none of the accrued unpaid interest thereon, may convert into equity securities at the option of the holder if the Company issues equity securities and any other indebtedness in aggregate with gross proceeds of $1,200,000, including conversion of the Note (a “Qualified Financing”).


The conversion price is equal to 80% of the per share price paid by the purchasers of such equity securities in the Qualified Financing. Accrued and unpaid interest will be paid by the Company at time of conversion.


If a Qualified Financing has not occurred and the Company elects to consummate a sale of the company prior to the maturity date of the Note, the Company will give the holder a minimum ten days prior written notice of an anticipated closing date of such sale of the Company in order that the holder may consider a conversion of their Note into equity in advance of a sale transaction.


No value has been assigned to the conversion feature attached to this note payable as the possibility of the Company completing such a Qualifying Financing or completing a sale of the Company before May 7, 2014 was considered to be extremely remote.


Accrued interest payable as of April 30, 2014 and January 31, 2014 was $2,941 and $625, respectively. Interest expense for the three months ended April 30, 2014 and 2013 were $2,724 and $0 respectively.



12



APT SYSTEMS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM INCEPTION (OCTOBER 29, 2010) TO APRIL 30, 2014



6.

COMMITMENTS AND CONTINGENCIES


On January 13, 2014, the Company entered into an Attorney-Client Fee Agreement for legal services. Effective with the execution and delivery of the agreement, the Company was to issue 85,000 shares of its common stock as compensation for legal services to be provided to the Company by the attorney.


As of April 30, 2014, no shares had been issued under the terms of the Attorney-Client Fee Agreement and accordingly this transaction has not been recognized in these financial statements.


On June 3, 2014, the Company issued 85,000 shares of its common stock in settlement of a liability for legal services provided to it by the Attorney


7.

SHAREHOLDERS’ DEFICIT


PREFERRED SHARES


The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.001.


No shares of preferred stock were issued and outstanding during the three months ended April 30, 2014 and 2013.


COMMON SHARES


The Company is authorized to issue 90,000,000 shares of common stock, par value $0.001 per share.


In October 2011, the Company authorized the issuance of 5,000,000 shares of common stock to Glenda Dowie, the President and Chief Executive Officer of the Company, at a value of $0.001 per share for total cash proceeds of $5,000.


In October 2011, the Company authorized the issuance of 500,000 shares of common stock at a value of $0.001 per share for total cash proceeds of $500.


In November 2011, the Company authorized the issuance of 200,000 shares of common stock at $0.005 per share to Carl Hussey, the Treasurer and Chief Financial Officer of the Company, for cash proceeds of $1,000.


In November 2011, the Company authorized the issuance of 200,000 shares of the Company’s common stock at $0.005 per share to Joseph Gagnon, the Secretary and Chief Technology Officer of the Company, for total cash proceeds of $1,000.


In November 2011, the Company authorized the issuance of 1,604,000 shares of the Company’s common stock at $0.005 per share to various investors for total cash proceeds of $8,020.


In December 2011, the Company authorized the issuance of 962,000 shares of the Company’s common stock at $.04 per share to various investors for total cash proceeds of $38,480.


In January of 2012, the Company authorized the issuance of 178,000 shares of the Company’s common stock at $0.10 per share to various investors for total cash proceeds of $17,800.


Legal expenses of $12,500 were incurred in respect of the sales of shares completed in the fiscal year ended January 31, 2012 which were charged to additional paid in capital.


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



13



APT SYSTEMS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM INCEPTION (OCTOBER 29, 2010) TO APRIL 30, 2014



7.

SHAREHOLDERS’ DEFICIT (Continued)


In January of 2013, the Company authorized the issuance of 15,000 shares of the Company’s common stock at $0.20 per share to various investors for total 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.


In October 2013, the Company issued 25,000 shares of $0.001 par value common stock for services valued at $5,000 cash or $0.20 per share.


In January of 2014, the Company authorized the issuance of 10,000 shares of the Company’s common stock at $0.20 per share to various investors for total cash proceeds of $2,000.


As of April 30, 2014, there are a total of 8,830,000 of the Company’s common shares issued and outstanding


STOCK OPTIONS


The Company adopted the 2013 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. As of April 30, 2014 and January 31, 2014, no options have been issued under this Plan.


8.

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,

2014

 

January 31,

2014

Federal income tax benefit attributed to:

 

 

 

 

 

 

Net operating loss

 

$

31,208

 

$

26,316

Valuation

 

 

(31,208)

 

 

(26,316)

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,

2014

 

January 31,

2014

Deferred tax attributed:

 

 

 

 

 

 

Net operating loss carryover

 

$

84,443

 

$

53,235

Less: change in valuation allowance

 

 

(84,443)

 

 

(53,235)

Net deferred tax asset

 

$

-

 

$

-




14



APT SYSTEMS, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM INCEPTION (OCTOBER 29, 2010) TO APRIL 30, 2014



8.

INCOME TAXES (Continued)


At April 30, 2014 the Company had an unused net operating loss carry-forward approximating $248,361 that is available to offset future taxable income; the loss carry-forward will start to expire in 2030.


9.

SUBSEQUENT EVENTS


Effective June 3, 2014, the Company filed an S-8 registration statement in respect 85,000 shares of its common stock which it issued to its Attorney in settlement of a liability for legal services provided to it by the Attorney.


Effective June 8, 2014, the term of the note payable was extended from June 8, 2014 to August 9, 2014.


In accordance with ASC 855, Subsequent Events, the Company has evaluated events that occurred subsequent events to the balance sheet date through June 16, 2014, the date of available issuance of these audited financial statements. The Company determined that other than as disclosed above, there were no material reportable subsequent events to be disclosed.




15






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 statements regarding us, our business, prospects and results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that may affect such forward-looking statements include, without limitation: our ability to successfully develop new products and services for new markets; the impact of competition on our revenues, changes in law or regulatory requirements that adversely affect or preclude clients from using us for certain applications; delays our introduction of new products or services; and our failure to keep pace with our competitors.


When used in this discussion, words such as "believes", "anticipates", "expects", "intends" and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made by us in this report and other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business, 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 significant revenues as its key products are still under development. 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 towards the development of its software products. Upon obtaining our trading symbol, we plan on raising additional funds within the next six months by issuing shares but do not rule out the possibility of shareholder loans. We have not been subject to any bankruptcy, receivership or similar proceeding.


“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, market indicators, 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 equities 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. In addition, the company was recently in contact with potential educators for its products and for general education of its clients in trading techniques.


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 Linking to Brokerage accounts



16






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) users and web based clients.


With its currently limited financial resources, the Company has only been able to make very limited progress in developing its business activities since inception.


On February 19, 2014, the Company received notice from FINRA that the trading symbol APTY has been allocated to the Company.


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.


Organization


We are comprised of one corporation and do not have any subsidiaries. All of our operations are conducted through this corporation.


Competition

 

The market for financial services software and services is competitive, rapidly evolving and highly sensitive to new product introductions and marketing efforts by industry participants, although high conversion costs can create barriers to adoption of new products or technologies. The market is fragmented and served by both large-scale firms with broad offerings as well as firms that target only local markets or specific types of clients. We also face competition from information systems developed and serviced internally by the IT departments of large financial services firms. We believe that we can compete effectively by providing software contained in a mobile application, which provides buy/sell suggestions, and trading ability, although some of our existing competitors and potential competitors have substantially greater financial, technical, distribution and marketing resources than we have and may offer products with different functions or features that are more attractive to potential customers than our offerings.


Moreover, it is not our intent to compete with larger financial services firms, but rather to facilitate more trades by better informing our clients and providing them with better trading tools. The trading tools such as dimensional charts may be licensed to these same banks and brokers or subscribed to by users, directly. We believe that we can work with the banks and brokerage firms who offer online and Smartphone trading access by providing them with a more effective analysis tool for their current and future clients. 



17






Contracted Consultants


We currently have one consultant under contract. Mr. Gagnon is the only consultant with a consulting agreement. Per the terms of the agreement Mr. Gagnon, in his position as the Chief Technology Officer, is paid a minimum of $2,500 per month for services writing technical documents while the Company awaits full funding. As of June 15, 2012, Mr. Gagnon took a leave of absence from his role under the consulting agreement; however, he will continue to serve as an officer and director of the Company during his leave of absence. Our other officers and directors currently provide their services on a consultant basis without compensation. Based upon the amount of the proceeds from additional sales of our common stock, other future employees and directors may receive salaries. Once we generate revenue, future salaries will be evaluated at that time. Additional employees may be added in the future to assist in the monitoring and fulfillment of orders.


Intellectual Property Information


Our success and ability to compete will be dependent to a significant degree on our intellectual property, which may include our trade name, trading models, and visual charts. We intend to develop our technology internally and we will rely primarily on trade secret, trademark, copyright, domain name, patent and contract law to protect our intellectual property. It is our intention to enter into confidentiality, intellectual property invention assignment and/or non-competition and non-solicitation agreements or restrictions with our employees, independent contractors and business partners, and to control access to and distribution of our intellectual property. Currently, we do not have any registered copyrights or patents; however, we may obtain such registrations in the future.


Government Regulation


We do not expect to be subject to material governmental regulation. However, it is our policy to fully comply with all governmental regulation and regulatory authorities.


Research and Development


We have spent $0 and $2,928 respectively in the three months ended April 30, 2014 and 2013, on research and development of our website and mobile applications. We plan to spend further funds on research and development activities in the future as the development of our software applications continue and we raise the necessary funding required.


Environmental Compliance


We believe that we are not subject to any material costs for compliance with any environmental laws.


Results of Operations


For the Three Months Ended April 30, 2014 Compared to the Three Months Ended April 30, 2013


Revenue


The Company generated $17 in revenue in the three months ended April 30, 2014 compared to $22 of revenue in the three months ended April 30, 2013. As a development stage company, we have generated only nominal revenue to date.


Operating Expenses


Operating expenses were $89,080 for the three month period ended April 30, 2014 compared to $13,419 for the three month period ended April 30, 2013, an increase of $75,661. The increase was primarily due to a $62,500 increase in legal fees and a $15,000 accrual for officer compensation offset by a $2,928 reduction in research and development expense.


Operating Loss


We incurred an operating loss of $89,063 in the three months ended April 30, 2014 compared to an operating loss of $13,397 for the three months ended April 30, 2013, and increase of $75,666 due to the factors described above.



18






Interest Expense


We incurred an interest expense of $2,724 in the three month period ended April 30, 2014 compared to interest expense $420 for the three month period ended April 30, 2013, an increase of $2,304. On January 8, 2014, we executed an unsecured short-term convertible note payable in the amount of $50,000. Interest accrues at 19% per annum on this note. In addition we continued to fund some of our expenditures on credit cards.


Net Loss


In the three months ended April 30, 2014 we incurred a net loss of $91,787 compared to a net loss of $13,816 for the three months ended April 30 2013 due to the factors discussed above.


Liquidity and Capital Resources


At April 30, 2014, the Company had cash of $2,757, no profitable business activities or other source of income, liabilities of $174,826, accumulated losses of $248,361 and a shareholders’ deficit of $151,861.


In the audited financial statements for the fiscal years ended January 31, 2014 and 2013, the Reports of the Independent Registered Public Accounting Firms include an explanatory paragraph that describes substantial doubt about our ability to continue as a going concern.


Currently, the Company expects to require a minimum of $100,000 over the next 12 months, which will be funded either through operations, loans 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 the issuance of common shares. There is no assurance that this series of events will be satisfactorily completed.


Cash flow information for the three months ended April 30, 2014 is compared to the three months ended April 30, 2013


Net cash used for operating activities was $19,323 for the three month period ended April 30, 2014. This compares to net cash used for operating activities of $11,576 for the three month period ended April 30, 2013. During the three months ended April 30, 2014 we incurred a loss of $91,787 which was partially reduced by $894 of non cash expenses and a $71,570 increase in operating liabilities to arrive at cash used in operations of $19,323. By comparison, during the three months ended April 30, 2013 we incurred a loss of $13,816 which was partially reduced by $894 of non cash expenses and $1,346 increase in operating liabilities to arrive at cash used in operations of $11,576.


Cash flows generated by (used in) investing activities were at $0 for the three month periods ended April 30, 2014 and 2013.


Cash flows provided by financing activities were $3,250 for the three month period ended April 30, 2014 which compares to cash flows provided by financing activities of $20,200 for the three month period ended April 30, 2013. During the three months ended April 30, 2014 we received $3,250 of additional loans from one of our shareholders. By comparison, during the three months ended April 30, 2013, we received $20,200 through the sale of 101,000 shares of our common stock.  No shares of our common stock were sold during the three months ended April 30, 2014.


Off-Balance Sheet Arrangements


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



19






Plan of Operation


Our plan is to operate at a break even or a profit. Our business plan is to attract sufficient additional product sales and provide 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:


·

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.



20






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


Evaluation of Disclosure Controls and Procedures


An evaluation was performed under the supervision of our management, including our Chief Executive Officer and Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that, as of April 30, 2014, our disclosure controls and procedures were not effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms due to material weaknesses in our internal controls described below.


Management’s Report on Internal Control over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f). Our internal control system is intended to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements and that we have controls and procedures designed to ensure that the information required to be disclosed by us in our reports that we will be required to file under the Exchange Act is accumulated and communicated to our management as appropriate to allow timely and informed decisions regarding financial disclosure.


Our management assessed the effectiveness of our internal control over financial reporting as of April 30, 2014. Based on this assessment, management believes that as of April 30, 2014, our internal control over financial reporting was not effective based on those criteria.


Management’s assessment identified several material weaknesses in our internal control over financial reporting. These material weaknesses include the following:


Lack of appropriate segregation of duties;


Limited capability to interpret and apply accounting principles generally accepted in the United States;


Lack of formal accounting policies and procedures that include multiple levels of review.


Limitations on Effectiveness of Controls and Procedures


Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Our control systems are designed to provide such reasonable assurance of achieving their objectives. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



21






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.


ITEM 1A.

RISK FACTORS


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 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 of 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 of 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.



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ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS (Continued)


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.


In October 2013 the Company issued 25,000 shares for services valued at $5,000 or $0.20 per share.


In January of 2014, the Company authorized the issuance of 10,000 shares of the Company’s common stock at $0.20 per share to various investors for total cash proceeds of $2,000.


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 US resident and bear a restrictive legend.


As of April 30, 2014, there are a total of 8,830,000 of the Company’s common shares issued and outstanding


ITEM 3.

DEFAULTS UPON SENIOR SECURITIES


The Company was not in default on any of its borrowings at April 30, 2014 or 2013.


ITEM 4.

MINE SAFETY DISCLOSURES


Not applicable.


ITEM 5.

OTHER INFORMATION


None.



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ITEM 6.

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

 

 

 

Exhibit 101.INS

 

XBRL Instance Document (1)

 

 

 

Exhibit 101.SCH

 

XBRL Taxonomy Extension Schema Document (1)

 

 

 

Exhibit 101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document (1)

 

 

 

Exhibit 101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document (1)

 

 

 

Exhibit 101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document (1)

 

 

 

Exhibit 101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document (1)


(1)

Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.


*

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 June 16, 2014.


APT Systems, Inc.


By:

/s/ Glenda Dowie

Glenda Dowie, President and Chief Executive Officer




By:

/s/ Carl Hussey

Carl Hussey, Treasurer and Chief Financial 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

June 16, 2014

Glenda Dowie

Title

Date

 

 

 

/s/ Joseph Gagnon

Secretary, Chief Technical Officer and Director

June 16, 2014

Joseph Gagnon

Title

Date

 

 

 

/s/ Carl Hussey

Treasurer, Chief Financial Officer and Director

June 16, 2014

Carl Hussey

Title

Date




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