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EX-31.3 - EXHIBIT 31.3 SECTION 302 CERTIFICATIONS - APT Systems Incf10q073114_ex31z3.htm
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EX-31.1 - EXHIBIT 31.1 SECTION 302 CERTIFICATIONS - APT Systems Incf10q073114_ex31z1.htm
EX-31.2 - EXHIBIT 31.2 SECTION 302 CERTIFICATIONS - APT Systems Incf10q073114_ex31z2.htm
EX-32.3 - EXHIBIT 32.3 SECTION 906 CERTIFICATIONS - APT Systems Incf10q073114_ex32z3.htm
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EXCEL - IDEA: XBRL DOCUMENT - APT Systems IncFinancial_Report.xls

  


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 July 31, 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 September 12, 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 six month periods ended July 31, 2014 and 2013

 

Condensed Balance Sheets

1

Condensed Statements of Operations

2

Condensed Statements of Changes in Stockholders’ Equity (Deficit)

3

Condensed Statements of Cash Flows

4

Notes to Unaudited  Condensed Financial Statements

5

Item 2.

Management’s Discussion and Analysis and Plan of Operation

13

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

18

Item 4.

Controls and Procedures

18

 

 

  

  

PART II  OTHER INFORMATION

19

Item 1.

Legal Proceedings 

19

Item 1A.

Risk Factors

19

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

19

Item 3.

Defaults Upon Senior Securities

19

Item 4.

Mine Safety Disclosures

19

Item 5.

Other Information

20

Item 6.

Exhibits

20

  

  

Signatures

21





  



  


 

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 Six Month Periods Ended July 31, 2014 and 2013

  

 

 

 APT Systems, Inc.

Condensed Financial Statements

(Unaudited)

 

TABLE OF CONTENTS


 

  

PAGE

Condensed Balance Sheets

1

Condensed Statements of Operations

2

Condensed Statements of Changes in Stockholders’ Deficit

  3

Condensed Statements of Cash Flows

4

Notes to Condensed Financial Statements

5





  



  




APT SYSTEMS, INC.


Unaudited Condensed Balance Sheets


 

 

 

(Unaudited)

 

(Audited)

 

 

 

July 31,  2014

 

January 31, 2014

ASSETS

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$

1,407

$

18,830

 

Total current assets

 

1,407

 

18,830

 

 

 

 

 

 

 

Other Assets

 

 

 

 

 

 

 

 

 

 

 

Software (net of $5,811 & $4,543 accumulated amortization respectively)

 

5,794

 

7,062

 

Web site (net of $1,560 & $1,040 accumulated amortization respectively)

 

520

 

1,040

 

Deferred financings costs

 

11,500

 

13,000

 

 

 

 

 

 

 

 Total other assets

 

17,814

 

21,102

 

 

 

 

 

 

 

Total Assets

$

19,221

$

39,932

 

 

 

 

 

 

LIABILITIES & STOCKHOLDERS' DEFICIT

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts payable and accrued expenses

$

35,848

$

32,858

 

Accrued officer compensation

 

45,000

 

15,000

 

Note payable

 

50,000

 

50,000

 

Accrued interest payable

 

5,336

 

625

 

Loan from director

 

6,575

 

1,523

 

Total current liabilities

 

142,759

 

100,006

 

 

 

 

 

 

 

Total Liabilities

 

142,759

 

100,006

 

 

 

 

 

 

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

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

None issued as of July 31, 2014 and January 31,2014 respectively

 

 

 

 

 

-

 

-

 

 

 

 

 

 

 

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

8,915,000 and 8,830,000 shares issued and outstanding as of July 31, 2014

and January 31, 2014 respectively.

 

 

 

 

 

 

 

 

 

 

 

8,915

 

8,830

 

Additional paid-in capital

 

104,585

 

87,670

 

Accumulated deficit

 

(237,038)

 

(156,574)

 

Total Stockholders’ Deficit

 

(123,538)

 

(60,074)

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Deficit

$

19,221

$

39,932

 

 

 

 

 

 



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


1



  



APT SYSTEMS, INC

 

 

 

 

 

 

 

 

 

Condensed Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

 

(Unaudited)

 

(Unaudited)

 

 

 

Three Months Ended

 

Three Months  Ended

 

 

Six

Months Ended

 

Six

Months  Ended

 

 

 

July 31, 2014

 

July 31, 2013

 

 

July 31, 2014

 

July 31, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

-

$

-

 

$

17

$

22

 

 

 

 

 

 

 

 

 

 

 

 

Operating (Income) Expenses

 

 

 

 

 

 

 

 

 

 

Accounting

 

2,225

 

4,100

 

 

8,225

 

9,100

 

Amortization

 

894

 

894

 

 

1,788

 

1,788

 

Compensation to officer

 

15,000

 

-

 

 

30,000

 

-

 

General and administrative

 

5,922

 

6,761

 

 

10,357

 

11,108

 

Legal

 

-

 

-

 

 

62,750

 

250

 

Research & development

 

-

 

-

 

 

-

 

2,928

 

Gain on settlement of accounts payable

 

(38,250)

 

-

 

 

(38,250)

 

-

 

Total Operating (Income) Expenses

 

(14,209)

 

11,755

 

 

74,870

 

25,174

 

 

 

 

 

 

 

 

 

 

 

 

Net Operating Income (Loss)

 

14,209

 

(11,755)

 

 

(74,853)

 

(25,152)

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

    Interest expense

 

(2,887)

 

(419)

 

 

(5,611)

 

(838)

 

 

 

 

 

 

 

 

 

 

 

 

Net  Income (Loss)

$

11,322

$

(12,174)

 

$

(80,464)

$

(25,990)

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (Loss) per share:

 

 

 

 

 

 

 

 

 

 

basic and diluted

$

0.00*

$

0.00*

 

$

(0.01)

$

0.00*

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of

 

 

 

 

 

 

 

 

 

 

   common shares outstanding:

 

 

 

 

 

 

 

 

 

 

       basic and diluted

 

8,886,356

 

8,757,983

 

 

8,886,356

 

8,757,983

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

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

 




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


2



  



APT SYSTEMS, INC.

Condensed Statements of  Changes in Stockholders’ Equity (Deficit)


 

 

Common

Shares 

 

Stock

Amount

 

Additional

Paid-in

Capital

 

Deficit

Accumulated

During

Development

Stage

 

Total 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

Common Stock Issued for services at $.20 / share

 

85,000

 

85

 

16,915

 

-

 

17,000

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period ended July 31, 2014

 

-

 

-

 

-

 

(80,464)

 

(80,464)

 

 

 

 

 

 

 

 

 

 

 

Balance July 31, 2014 (unaudited)

 

8,915,000

$

8,915

$

104,858

$

(237,038)

$

(123,538)

 

 

 

 

 

 

 

 

 

 

 



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


3



  





APT SYSTEMS, INC.

Condensed Statements of  Cash Flows


 

 

(Unaudited)

Six Months

July 31, 2014

 

(Unaudited)

Six Months

July 31, 2013

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

    Net loss

$

(80,464)

$

(25,990)

    Adjustments to reconcile net loss to net cash

 

 

 

 

       provided by (used in) operating activities:

 

 

 

 

        Amortization expense

 

1,788

 

1,788

        Gain on settlement of accounts payable in shares of common stock

 

(38,250)

 

-

    Changes in operating assets and liabilities:

 

 

 

 

      Increase (decrease) in accounts payable and accrued expenses

 

92,951

 

3,602

     Net cash provided by (used in) operating activities

 

(23,975)

 

(20,600)

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

-

 

-

       Net cash (used in) investing activities

 

-

 

-

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

     Loan from shareholder

 

5,052

 

-

     Issuance of common stock for cash

 

-

 

20,200

     (Increase) decrease in deferred financing costs

 

1,500

 

-

   Net cash provided by financing activities

 

6,552

 

20,200

 

 

 

 

 

   Net change in cash and cash equivalents

 

(17,423)

 

(400)

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

18,830

 

2,428

 

 

 

 

 

Cash and cash equivalents at end of period

$

1,407

$

2,028

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

 

Cash paid  for :

 

 

 

 

 

 

 

 

 

   Interest

$

-

$

-

   Income Taxes

$

-

$

-

 

 

 

 

 

Equity securities issued for services:

 

 

 

 

 

 

 

 

 

   Common stock issued for settlement of accounts payable

$

17,000

$

-

 

 

 

 

 






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


4





APT SYSTEMS, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED JULY 31, 2014 AND 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 charting the financial markets. The Company is in the development stage, with its Apple developer’s account, 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 six months ended July 31, 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 as defined under the then current Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, “Development-Stage Entities”. Additional disclosures required as a development stage company are that our financial statements be identified as those of a development stage company, and that the statements of operations, changes in members’ deficit and cash flows disclosed activity since the date of our Inception (October 29, 2010). 


In June 2014 the FASB issued ASU 2014-10 regarding development stage entities. The ASU removes the definition of development stage entity, as was previously defined under generally accepted accounting principles in the United States (U.S. GAAP), from the accounting standards codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP.


In addition, the ASU eliminates the requirements for development stage entities to (i) present inception-to-date information in the statement of income, cash flow and stockholders' equity, (ii) label the financial statements as those of a development stage entity, (iii) disclose a description of the development stage activities in which the entity is engaged, and (iv) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.


The Company has chosen to adopt the ASU early for the Company’s financial statements as of July 31, 2014. The adoption of this pronouncement impacted the Company by eliminating the requirement to report inception to date financial information previously required.



  

5





APT SYSTEMS, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED JULY 31, 2014 AND 2013


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


 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.


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 July 31, 2014 and 2013, the Company had paid refundable deposits of $11,500 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 and a $1,500 cash refund had been received during the three months ended July 31, 2014.


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.



  

6






APT SYSTEMS, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED JULY 31, 2014 AND 2013


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


Advertising costs


Advertising costs are expensed as incurred. The Company recorded no advertising costs during the three months ending July 31, 2014 and 2013.


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 equivalents, accounts payable, accrued expenses, note payable and loan from director approximate their market values as of July 31, 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 July 31, 2014 and 2013, the Company has no unrecognized tax benefits.




  

7






APT SYSTEMS, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED JULY 31, 2014 AND 2013



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



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 six month ended July 31, 2014, the Company did have potentially dilutive debt instruments that have been excluded from the earnings per share calculation; as no event has occurred that would permit the debt instrument to become convertible. No potentially dilutive debt or equity instruments were issued and outstanding during the six months ended July 31, 2013.


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 six month periods ended July 31, 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 six months ended July 31, 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 six month periods ended July 31, 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 as than in respect of the change in accounting for development stage companies as discussed above.




  

8






APT SYSTEMS, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED JULY 31, 2014 AND 2013


3. GOING CONCERN AND LIQUIDITY


At July 31, 2014 the Company had cash of $1,407, no profitable business activities or other source of income, liabilities of $142,759, accumulated losses of $237,038 and a stockholders’ deficit of $123,538.


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 six months ended July 31, 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.


4. RELATED PARTY TRANSACTIONS


The President of the Company no longer provides management and office premises to the Company for no compensation. Suitable office facilities are now rented monthly and reflected in our expenses.


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 six months ended July 31, 2014 and year ended January 31, 2014, was $45,000 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 July 31, 2014 and January 31, 2014, the Company owed the President $6,575 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 July 31, 2014, Mr. Gagnon is not scheduled to resume his duties unless otherwise agreed to in writing. Mr. Gagnon was paid $0 and $1,000 for the period and year ended July 31, 2014 and January 31, 2014, respectively. No balance was owed to Mr. Gagnon by the Company as of July 31, 2014 or January 31, 2014.



  

9






APT SYSTEMS, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED JULY 31, 2014 AND 2013



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 November 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 July 31, 2014 and January 31, 2014 was $5,336 and $625, respectively. Interest expense for the six months ended July 31, 2014 and 2013 were $5,611 and $0 respectively.


6. COMMITMENTS AND CONTINGENCIES


On July 8, 2014 the Company entered into an agreement to issue 100,000 shares of its common stock as a deposit for an option to acquire 100% of the issued share capital of AZUR Universal Inc., subject to certain terms and conditions. As at the date of this report, certain due diligence remains to be completed, no shares have been issued as yet and no liability for this potential future issuance has been recognized in these financial statements.



  

10






APT SYSTEMS, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED JULY 31, 2014 AND 2013



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 July 31 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 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.


On June 3, 2014, the Company issued 85,000 shares of its common stock to settle a liability of $55,250 for legal services provided to it by an attorney. The Company estimated the fair value of these shares to be $17,000, or $0.20 per share, based on its most recent cash sale of shares of its common stock. Accordingly the Company recognized a gain of $38,250 on the sale of settlement of the accounts payable to the Attorney.


As of July 31, 2014, there are a total of 8,915,000 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 July 31, 2014 and January 31, 2014, no options have been issued under this Plan.




  

11






APT SYSTEMS, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED JULY 31, 2014 AND 2013



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 three and six month periods ending:


 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

July 31,

2014

 

Three months

ended

July 31,

2013

 

Six months  ended

July 31, 2014

 

Six months  ended

July 31, 2013

Federal income tax benefit attributed to:

 

 

 

 

 

 

 

 

 

 

Net operating income (loss)

 

$

3,849

 

$

(4,139)

$

(27,358)

$

(8,837)

(Brought forward losses) / valuation

 

 

(3,849)

 

 

4,139

 

27,358

 

8,837

Net benefit

 

$

-

 

$

-

$

-

$

 


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


 

 

 

 

 

 

 

 

 

July 31,

2014

 

January 31,

2014

Deferred tax attributed:

 

 

 

 

 

 

Net operating loss carryover

 

$

80,593

 

$

53,235

Less: change in valuation allowance

 

 

(80,593)

 

 

(53,235)

Net deferred tax asset

 

$

-

 

$

-


At July 31, 2014 the Company had an unused net operating loss carry-forward approximating $237,038 that is available to offset future taxable income; the loss carry-forward will start to expire in 2030.


9. SUBSEQUENT EVENTS


On August 1, 2014 the note payable was further extended to November 9, 2014.


The Company has jointly filed its financial reports with SEDAR on August 23rd, 2014 at the request of the Alberta Securities Commission (ASC) and will continue to do so to support its Canadian shareholder base.  The demand notice came as a result of having one the Company’s Directors residing in the province of Alberta.  Under new policies, subsequent to the initial filings made by the Company, it is now a disclosure requirement of ASC to the benefit of Canadian investors.


Management has entered into discussions with companies and individuals prepared to provide development and documentation of software under contract. These contracts may be paid in cash upon presentation of invoices or may be settled with the issuance of shares. Initial budgets are currently estimated to be $15,000. At this time the Company does not have the funding to undertake the rebuild and further development of it financial charting tools.


In accordance with ASC 855, Subsequent Events, the Company has evaluated events that occurred subsequent to events to the balance sheet date through September 17, 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.





  

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 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



  

13






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. 



  

14






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 contract employees are likely to be added in the near future to assist in the research, documenting and development of software.

 

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, visual charts, and. 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 Six months ended July 31, 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 July 31, 2014 Compared to the Three Months Ended July 31, 2013


Revenue


The Company generated $0 in revenue in the three months ended July 31, 2014 and 2013.We have generated only nominal revenue to date.


Operating (Incomes) Expenses


Net operating income was ($14,209) for the three month period ended July 31, 2014 compared to operating expenses of $11,755 for the three month period ended July 31, 2013, a variance of $25,964. The variance was primarily due to a $15,000 accrual for officer compensation offset by a gain on the settlement of accounts payable of $38,250.


Operating Income/Loss


We realized operating income of $14,209 in the three months ended July 31, 2014 compared to an operating loss of $11,755 for the three months ended July 31, 2013, and decrease of $25,964 due to the factors described above.


Interest Expense


We incurred a interest expense of $2,887 in the three month period ended July 31, 2014 compared to interest expense $419 for the three month period ended July 31, 2013, an increase of $2,468. 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.  In addition we continued to fund some of our expenditures on credit cards.



  

15






Net Income/Loss


In the three months ended July 31, 2014 we realized net income of $11,322 compared to a net loss of $12,174 for the three months ended July 31 2013 due to the factors discussed above.


For the Six Months Ended July 31, 2014 Compared to the Six Months Ended July 31, 2013


Revenue


The Company generated $17 in revenue in the six months ended July 31, 2014 compared to $22 of revenue in the six months ended July 31, 2013. As a development stage company, we have generated only nominal revenue to date.


Operating Expenses


Operating expenses were $74,870 for the six month period ended July 31, 2014 compared to $25,174 for the six month period ended July 31, 2013, an increase of $49,696. The increase was primarily due to a $62,500 increase in legal fees and a $30,000 accrual for officer compensation offset by a gain on the settlement of accounts payable of $38,250 and a $2,928 reduction in research and development expense.


Operating Loss


We incurred an operating loss of $74,853 in the six months ended July 31, 2014 compared to an operating loss of $25,152 for the six months ended July 31, 2013, and increase of $49,701 due to the factors described above.


Interest Expense


We incurred an interest expense of $5,611 in the six month period ended July 31, 2014 compared to interest expense $838 for the six month period ended July 31, 2013, an increase of $4,773. 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.  In addition we continued to fund some of our expenditures on credit cards.


Net Loss


In the six months ended July 31, 2014 we incurred a net loss of $80,464 compared to a net loss of $25,990 for the six months ended July 31 2013 due to the factors discussed above.


Liquidity and Capital Resources


At July 31, 2014, the Company had cash of $1,407, no profitable business activities or other source of income, liabilities of $142,759, accumulated losses of $237,038 and a shareholders’ deficit of $123,538.


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.



  

16






Cash flow information for the Six Months ended July 31, 2014 is compared to the Six Months ended July 31, 2013


Net cash used for operating activities was $23,975 for the six month period ended July 31, 2014. This compares to net cash used for operating activities of $20,600 for the six month period ended July 31, 2013.  During the six months ended July 31, 2014 we incurred a loss of $80,464 which was partially reduced by $1,788 of non cash expenses, and increased by a non cash gain of $38,250 on the settlement of accounts payable.  There was a $92,951 increase in operating liabilities to arrive at cash used in operations of $23,975. By comparison, during the six months ended July 31, 2013 we incurred a loss of $25,990 which was partially reduced by $1,788 of non cash expenses and $3,602 increase in operating liabilities to arrive at cash used in operations of $20,600.


Cash flows generated by (used in) investing activities were at $0 for the six month periods ended July 31, 2014 and 2013.


Cash flows provided by financing activities were $6,552 for the six month period ended July 31, 2014 which compares to cash flows provided by financing activities of $20,200 for the six month period ended July 31, 2013. During the six months ended July 31, 2014 we received $5,052 of additional loans from one of our shareholders and received $1,500 in reimbursements of previously paid deferred financing costs.  By comparison, during the six months ended July 31, 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 six months ended July 31, 2014.


Off-Balance Sheet Arrangements


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


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 six 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.



  

17






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


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 July 31, 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 July 31, 2014. Based on this assessment, management believes that as of July 31, 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.



  

18






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.

 

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.


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.


On June 3, 2014, the Company authorized the issuance of 85,000 shares of its common stock at $.20 per share to settle a liability of $55,250 for legal services provided to it by an attorney.


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 July 31, 2014, there are a total of 8,915,000 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 July 31, 2014 or 2013.


ITEM 4.  MINE SAFETY DISCLOSURES


Not applicable.



  

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ITEM 5.  OTHER INFORMATION


None.


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 September 17, 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

September 17, 2014

Glenda Dowie

Title

Date

 

 

 

/s/ Joseph Gagnon

Secretary, Chief Technical Officer and Director

September 17, 2014

Joseph Gagnon

Title

Date

 

 

 

/s/ Carl Hussey

Treasurer, Chief Financial Officer and Director

September 17, 2014

Carl Hussey

Title

Date