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EX-32.2 - EXHIBIT 32.2 SECTION 906 CERTIFICATION - APT Systems Incf10k013115_ex32z2.htm
EX-31.2 - EXHIBIT 31.2 SECTION 302 CERTIFICATION - APT Systems Incf10k013115_ex31z2.htm
EX-31.1 - EXHIBIT 31.1 SECTION 302 CERTIFICATION - APT Systems Incf10k013115_ex31z1.htm
EX-32.1 - EXHIBIT 32.1 SECTION 906 CERTIFICATION - APT Systems Incf10k013115_ex32z1.htm


SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K

 

  X . ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

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

SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended January 31, 2015

 

Commission File No. 000-54865

 

APT SYSTEMS, INC.

 (Exact name of issuer as specified in its charter)

 

Delaware

99-0370904

(State or other jurisdiction

(IRS Employer File Number)

of incorporation)

 

 

505 Montgomery Street,

 

11th Floor

 

San Francisco, CA

94111

(Address of principal executive offices)

(Zip Code)

 

(780) 270-6048

(Registrant's telephone number, including area code)

 

Securities to be Registered Pursuant to Section 12(b) of the Act: None

 

Securities to be Registered Pursuant to Section 12(g) of the Act:

 

Common Stock, $0.001 per share par value

 

Indicate by check mark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes       .   No   X .

 

Indicate by check mark if registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes       . No   X .

 

Indicate by check mark whether the registrant (1) has filed all Reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes:  X .     No:       .

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate 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   X .  No       .

 

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K is contained in this form and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K.       .

 

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 .




 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. The aggregate market value of the voting stock held by non-affiliates computed by reference to the price at which the stock was sold was $1,612,000 based on prices of other such stock as the Registrant’s securities are not currently quoted.  

 

As of June 5, 2015, registrant had outstanding 8,915,000 shares of common stock.

 

Documents incorporated by reference: None. 



2




FORM 10-K

 

APT SYSTEMS, INC.

 

INDEX

 

PART I

 

 

 

Item 1. Business.

4

 

 

Item 1A. Risk Factors.

7

 

 

Item 2. Properties.

7

 

 

Item 3. Legal Proceedings.

7

 

 

Item 4. Mine Safety Disclosures.

7

 

 

PART II

 

 

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

8

 

 

Item 6. Selected Financial Data.

10

 

 

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

10

 

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

15

 

 

Item 8. Financial Statements and Supplementary Data.

15

 

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.

 

 

 

Item 9A. Controls and Procedures.

16

 

 

Item 9B. Other Information.

17

 

 

PART III

 

 

 

Item 10. Directors, Executive Officers and Corporate Governance.

18

 

 

Item 11. Executive Compensation.

21

 

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

22

 

 

Item 13. Certain Relationships and Related Transactions, and Director Independence.

23

 

 

Item 14. Principal Accountant Fees and Services.

24

 

 

PART IV

 

 

 

Item 15. Exhibits, Financial Statement Schedules.

25

 

 

Financial Statements pages

F-1 – F-15

 

 

Signatures

26




3




 Certain Terms Used in this Report


For purposes of this report, unless otherwise indicated or the context otherwise requires, all references herein to “APT Systems,” “APT,” “the Company,” “we,” “us,” and “our,” refer to APT Systems, Inc., a Delaware corporation.

 

Forward-Looking Statements

 

The following discussion contains 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.

 

PART I

 

Item 1. Business.

 

Business Strategy Overview and Products 

 

APT Systems, Inc. was incorporated in the State of Delaware on October 29, 2010. The Company has not as yet generated significant sales 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 limited research towards the development of its software products. During the twelve months ended January 31, 2015, the Company commenced providing technical writing and computer assisted design services to other startups using a contractor, a related person (family member to the Chief Executive Officer, to generate certain additional revenues. We would anticipate that this revenue will eventually diminish entirely if we are able to raise the necessary funding to allow the contractor to work exclusively on in-house projects. Upon obtaining approval for electronic trading of our symbol, we plan on raising additional funds by issuing shares but do not rule out the possibility of additional loans. However, there is no guarantee we will be successful in raising sufficient funding to progress with the implementation of our business plan. We have not been subject to any bankruptcy, receivership or similar proceeding.

 

Our mailing address is in an executive suite facility at 505 Montgomery Street, 11th Floor, San Francisco, CA 94111 which also provides office services, computer access and meeting space on demand. We consider this current executive office space arrangement adequate for our current operations and will reassess our needs annually based upon the future growth of the Company. Our fiscal year end is January 31st.

 

We are a company that specializes in the creation of innovative equities trading platforms. We are focusing on the mobile device market where we intend to develop and publish custom technical analysis indicators and trading systems both in-house and for third parties. In addition, we intend 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. We plan to utilize real time and delayed data networks along with graphic techniques which will provide solutions that can speak to the mobile needs to be demanded by the next generation of equity and commodity traders.

 

In order to advance itself, 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 invigorated 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.




4



 

APT services can extend to include:


·

Financial Software and Analytical Software Development


·

Algorithmic Applied Technology


·

Trading Platform Refinement and Linking to Brokerage Accounts


·

Analytical Charting Software Development


The steps remaining for us to begin selling our products listed above are to finalize the programming of the software used in our products, specifically our dimensional charting tools, begin sales and marketing campaigns, contact prospective licensees, and deliver our products, which we expect to complete in less than 180 days after our initial contact with prospective licensees. Our app would be available to users on a subscription fee plan and we plan to grant licenses in our app to financial companies and brokerage firms for use by their employees and clients. The goal is to have our product used by both handheld (tablet and Smartphone application 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 and is examining other acquisition opportunities as a means to enhance overall operations.


On February 19, 2014, the Company had received notice from FINRA that the trading symbol APTY has been allocated to the APT Systems, Inc.  We are currently preparing to submit an application for DTCC eligibility to allow the markets access to trade our shares electronically.  We expect an approval would assist us in our financial goals and help to attract investors.


Needs Assessment

 

Management believes the principal growth area in the personal computer market today is that of Smartphones and portable tablet devices.  These mobile devices usually allow full time internet connectivity which 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, we envision for our future products an information-dense and interactive display of the financial markets. At this time, we believe that the future interactive display will include three dimensional imaging that we intend 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. All 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 mainly North American markets.


Organization

 

We are comprised of one corporation and do not have any subsidiaries but do not rule out the future possibility of acquiring or creating subsidiaries. At this time, all of our operations are conducted through this corporation.



5




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. 

 

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 directors currently provide their time and undertake duties as directors without compensation for these services. 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.


Effective November 1, 2013, the Company began to accrue a monthly salary of $5,000 per month for Ms. Dowie on an ongoing basis.  As of January 31, 2015, accrued officer compensation was $75,000.  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.  Ms. Dowie can elect at any time to convert some, or all, of her accrued compensation into shares of the Company’s common stock as determined by the Board of Directors. 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


During the twelve months ended January 31, 2015, the Company commenced providing technical writing and computer assisted design services to other startups provided by a contractor, a related person, a family member to the Chief Executive Officer, to generate certain additional revenues. The Company paid $11,450 to the related party consultant in respect of the provision of these services during the twelve months ended January 31, 2015 (2014 – $0).


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 in the fiscal years ended January 31, 2015 and 2014, respectively, on research and development of our website and mobile applications that was included as part of consulting services incurred to date. We plan to spend further funds on research and development activities in the future as the development of our software applications continue if we are able to raise the necessary funding.  

 



6




Environmental Compliance

 

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


Item 1A.  Risk Factors.

 

As a smaller reporting company, we are not required to provide the information required by this section.

 

Item 2. Properties.

 

Our mailing address is in an executive suite facility at 505 Montgomery Street, 11th Floor, San Francisco, CA 94111. We consider this current executive office space and services arrangement adequate for our current operations and will reassess our needs based upon the future growth of the Company


Item 3. Legal Proceedings.

 

We were not party to any legal proceedings during the twelve months ended January 31, 2015 or 2014, and, to the best of our knowledge and belief, no legal proceedings are threatened or pending. 


Item 4. Mine Safety Disclosures.

 

Not applicable to our Company.

 



7



PART II

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

Holders


As of June 5, 2015, there were 48 record holders of our common stock, and there were 8,915,000 shares of our common stock outstanding.  

 

 Market Information

 

The Company’s common stock has been approved for non-priced quotation on the OTC Bulletin Board under the symbol “APTY” but is not listed on any national stock exchange. We are currently preparing to submit an application for DTCC eligibility to allow the markets access to trade our shares electronically.  

 

The Securities Enforcement and Penny Stock Reform Act of 1990

 

The Securities and Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).

 

A purchaser is purchasing penny stock which limits the ability to sell the stock. The shares offered by this prospectus constitute penny stock under the Securities and Exchange Act. The shares will remain penny stocks for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his/her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.


 The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the Commission, which:

 

·

contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;


·

contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of the Securities Act of 1934, as amended;


·

contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and the significance of the spread between the bid and ask price;


·

contains a toll-free telephone number for inquiries on disciplinary actions;


·

defines significant terms in the disclosure document or in the conduct of trading penny stocks; and


·

contains such other information and is in such form (including language, type, size and format) as the Securities and Exchange Commission shall require by rule or regulation;

 

 The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer:

 

·

the bid and offer quotations for the penny stock;


·

the compensation of the broker-dealer and its salesperson in the transaction;


·

the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and


·

monthly account statements showing the market value of each penny stock held in the customer's account.

  



8




In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling their securities.

 

Equity Compensation Plan Information


2012 Equity Incentive Plan

 

As of January 31, 2012, the Company adopted the 2012 Equity Incentive Plan (the “Plan”) of APT Systems, Inc. as approved by the Company’s board of directors and stockholders. The purpose of the Plan is to enable the Company to offer its employees, officers, directors, consultants and others whose past, present and/or potential contributions to the Company have been, are or will be important to the success of the Company, an opportunity to acquire a proprietary interest in the Company. Stock options granted under the Plan may be of two types: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options. A total of 5,500,000 shares of common stock are eligible for issuance under the Plan, which may consist of authorized and unissued shares or treasury shares. The maximum amount of shares of stock that may be granted as Incentive Stock Options shall be 2,500,000.  Since our inception (October 29, 2010), no equity compensation has been granted under the Plan.

 

 Dividend Policy

 

We have not previously declared or paid any dividends on our common stock and do not anticipate declaring any dividends in the foreseeable future. The payment of dividends on our common stock is within the discretion of our board of directors. We intend to retain any earnings for use in our operations and the expansion of our business. Payment of dividends in the future will depend on our future earnings, future capital needs and our operating and financial condition, among other factors that our board of directors may deem relevant. We are not under any contractual restriction as to our present or future ability to pay dividends.


Unregistered Sales of Equity Securities


Common Stock


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 2014, the Company issued 10,000 shares of common stock, par value $0.001 per share, to one non-U.S. investor for $2,000 cash or $0.20 per share. These shares were issued pursuant to the exemption from registration provided by Regulation S of the Securities Act in that they were issued to a non U.S. person.


On June 4, 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.


Convertible Note


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 was 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 May 31, 2015.


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”).



9




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.


Accrued interest payable as of January 31, 2015 and January 31, 2014 was $10,126 and $625, respectively. Interest expense accrued on this convertible note payable for the years ended January 31, 2015 and 2014 was $9,501 and $625, respectively.


Purchases of Equity Securities by the Issuer and Affiliated Purchasers


During the years ended January 31, 2015 and 2014, there were no purchases of equity securities by the Company and affiliated purchasers.


Item 6. Selected Financial Data.

 

A smaller reporting company is not required to provide the information in this Item.

 


Item 7. Management's Discussion and Analysis of Financial Condition and Results Of Operations.


This Management’s Discussion and Analysis or Plan of Operation contains forward-looking statements that involve future events, our future performance and our expected future operations and actions. In some cases, you can identify forward-looking statements by the use of words such as “may”, “will”, “should”, “anticipate”, “believe”, “expect”, “plan”, “future”, “intend”, “could”, “estimate”, “predict”, “hope”, “potential”, “continue”, or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including, but not limited to, the matters discussed in this report under the caption “Risk Factors”. We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus. We undertake no obligation to publicly update any forward looking-statements, whether as a result of new information, future events or otherwise.

 

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included in this report.


The following table provides selected financial data about us for the fiscal years ended January 31, 2015 and 2014. For detailed financial information, see the audited Financial Statements included in this report.

 

 

 

Fiscal year ended January 31,

 

 

2015

 

 

2014

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

776

 

$

 

18,830

Total assets

 

$

5,632

 

$

 

39,932

Total liabilities

 

$

189,360

 

$

 

100,006

Stockholders' deficit

 

$

(183,728)

 

$

 

(60,074)

 

 

 

 

 

 

 

 

Operating Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

13,574

 

$

 

39

Cost of revenue

 

$

11,450

 

$

 

-

Operating expenses

 

$

174,791

 

$

 

75,708

Other income (expense)

 

$

32,013

 

$

 

(1,731)

Net loss

 

$

(140,654)

 

$

 

(77,399)




10




Results of Operations


We have little operating history upon which to evaluate our intended business. In addition, we have a history of losses. Our activities have been directed at developing our business plans as to eventually generate significant revenues. We have operated at a loss in all relevant periods.


For our fiscal years ended January 31, 2015 and 2014, our accountants have expressed substantial doubt about our ability to continue as a going concern as a result of our history of losses. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to raise the necessary funding to implement our business plan and to successfully develop and market our software, generate revenues and operate a profitable business.


Revenue


We generated revenues of $13,574 for the fiscal year ended January 31, 2015, as compared to $39 for the fiscal year ended January 31, 2014, an increase of $13,535.  This increase was attributable to $13,540 generated in consulting services consisting mostly of technical writing provided by the Company.


Cost of Revenue


During the twelve months ended January 31, 2015 we incurred contract labor – related party costs of $11,450 (2014 - $0) directly related to the consulting services revenue we generated in the period.


Operating (Income) Expense

 

Operating expenses, which consisted of accounting, legal, research and development and general and administrative expenses for the fiscal year ended January 31, 2015, were $174,791, which is an increase of $99,083, or 130.9% as compared to the operating expenses for the fiscal year ended January 31, 2014 of $75,708. The increase in our operating expenses was primarily attributable to a $45,000 increase in the accrual for compensation to one our officers, a $50,500 increase in legal fees and a $11,500 write off of deferred financing costs offset by a reduction of $2,928 in research and development costs and $4,959 in general and administrative, consulting and accounting expenses.

   

Other income (Expense)


During the twelve months ended January 31, 2015 we recognized gains on the settlement of accounts payable through the issuance of stock and debt of $43,492 (2014 - $0),


Interest expense for the fiscal year ended January 31, 2015 was $11,479 compared with $1,731 in the fiscal year ended January 31, 2014, an increase of $9,748 or 563.1%.  The increase was due primarily to interest on the $50,000 convertible note payable as described above which accrues at 19% per annum.  


Net Loss


As a result of the foregoing, we incurred a net loss of $140,654 for the fiscal year ended January 31, 2015, which was an increase of $63,255, or 81.7%, as compared to the net loss for the fiscal year ended January 31, 2014 of $77,399.

 

We expect to incur operating losses in future foreseeable periods because we will be incurring expenses and not generating sufficient revenues to fund these expenses. We expect at a minimum $85,000 in operating costs over the next twelve months based on current operations. We cannot guarantee that we will be successful in generating sufficient revenues or finding other funds in the future to cover these operating costs. Failure to generate sufficient revenues or secure additional financing when needed could cause us to go out of business.

 

Liquidity and Capital Resources

 

As of January 31, 2015, we had cash and cash equivalents of $776. As of January 31, 2014, we had cash and cash equivalents of $18,830.



11



 

Net cash used for operating activities was $31,433 for the fiscal year ended January 31, 2015 This compares to net cash used for operating activities of $44,301 for the fiscal year ended January 31, 2014.  During the fiscal year ended January 31, 2015, we incurred a loss of $140,654 which was partially reduced by $15,076 of non-cash expenses and increased by a non-cash gain of $43,492 on the settlement of accounts payable for debt and shares of our common stock. There was a $330 increase in unbilled revenue, a $60,000 increase in accrued officer compensation and a $77,967 increase in accounts payable and accrued expenses to arrive at cash used in operations of $31,433. By comparison, during the fiscal year ended January 31, 2014 we incurred a loss of $77,399 which was partially reduced by $8,576 of non-cash expenses. There was a $15,000 increase in accrued officer compensation and a $9,522 increase in accounts payable and accrued expenses to arrive at cash used in operations of $44,301.

 

Cash flows used in or generated by investing activities were $0 for the fiscal years ended January 31, 2015 and 2014 as we lacked the funding to be able to pursue investing opportunities.

 

Cash flows provided by financing activities were $13,379 for the fiscal year ended January 31, 2015 which compares to cash flows provided by financing activities of $60,703 for fiscal year ended January 31, 2014. During the fiscal year ended January 31, 2015, we received $6,879 of additional loans from one of our directors, secured short-term borrowings of $5,000 and received $1,500 in reimbursement of certain previously paid deferred financing costs.  By comparison, during the fiscal year ended January 31, 2014, we received $1,503 of additional loans from one of our directors, issued convertible notes payable of $50,000 and received $22,200 through the sale of 111,000 shares of our common stock.   

 

Over the next twelve months we do not expect any material capital costs to develop operations. Our estimated operating costs of $85,000 will be used for operations and reporting, but none will be used to pay salaries unless deemed reasonable by management.


To date, we have realized only nominal revenue.  As a result, we expect that we may need to engage in the private placement of our debt and equity securities in order to continue to fund operations. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to raise an estimated $1.5 million to fully implement our business plan and to successfully develop and market our software, generate revenues and operate a profitable business.

 

In any case, we try to operate with minimal overhead while we undertake to attract participants to help build our products. Our primary activity will be to seek to develop clients for our services and, consequently, our sales. If we succeed in developing clients for our services and generating sufficient sales, we will have the potential to become profitable. We cannot guarantee that this will ever occur. Our plan is to build our company in any manner which will be successful and provide value for our shareholders.

 

Off-Balance Sheet Arrangements

 

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

 

Plan of Operation

 

Marketing and Sales efforts:

 

Our marketing efforts will primarily be related to assuring our product is easily found in app stores and create a smooth downloading experience. We anticipate allocating seven percent of funds raised for marketing as well as generating product awareness through paid investor relations programs. We believe that there will be sufficient funds available if a suitable advertising opportunity presents itself.

 

Once the app is live and we have has begun initial Search Engine Optimization (“SEO”) work and internet marketing, we believe sales will be initially supported through the Apple store and our 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 us to minimize staff, maintain efficient delivery of products, and keep records for both accounting and marketing.

 

Successful implementation of our 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 our control. Adverse changes in the following factors could undermine our business strategy and have a material adverse effect on our business, financial condition, and results of operations and cash flow:

 

·

the competitive environment in the app sector that may force us 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



12




·

the ability to establish, maintain and eventually grow market share in a competitive environment.

 

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

 

Concurrent Developments

 

Future Trends use E-Books as a method for Training: Future product considerations revolve around enhanced or animated e-books. We believe consumers enjoy e-books because of 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 believed customers will soon demand interactive books that provide a much better, more informed educational experience and replace standard training techniques. New E-books with a view to training support will be made available after the sale of apps has commenced.


Consulting Services


During the twelve months ended January 31, 2015, the Company commenced providing technical writing and computer assisted design services to other startups using a contractor, a related person, a family member to the Chief Executive Officer, to generate certain additional revenues. We would anticipate that this revenue will eventually diminish if we are able to raise the necessary funding to allow the contractor to work exclusively on in-house projects.


Critical Accounting Policies


Use of Estimates and Assumptions


The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.


Foreign Currency Transactions


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


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.



13




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 FASB ASC 350-50, “Website Development Costs”.  Cost incurred to register domain names, integrate databases and add additional functionality or features to the website are capitalized and amortized over 1-3 years.  Costs incurred in general maintenance of the website or hosting costs, are expensed as incurred.


Financial Instrument


The Company measures its financial assets and liabilities in accordance with the requirements of FASB ASC 825 “Financial Instruments”. The carrying values of cash, accounts receivable, accounts payable, and accrued expenses, note payable, accrued interest payable and loan form director approximate fair value due to the short-term maturities of these instruments.


Revenue Recognition

 

The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer; (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.


Research and Development Costs


Costs incurred in research and development activities are listed separately and expensed as incurred.


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 January 31, 2015 and 2014, 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


During the years ended January 31, 2015 and 2014, the Company did have potentially dilutive debt instruments that have been excluded from the earnings per share calculation as their effect would have been anti-dilutive.



14




Recently Issued Accounting Pronouncements.

 

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 will be effective for the Company beginning in its first quarter of 2017. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the impact of adopting the new revenue standard on its financial statements.


In August 2014, the FASB issued guidance that requires management to evaluate whether there are conditions or events that raise substantial doubt about an entity's ability to continue as a going concern. If such conditions or events exist, disclosures are required that enable users of the financial statements to understand the nature of the conditions or evens, management's evaluation of the circumstances and management's plans to mitigate the conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. The Company will be required to perform an annual assessment of its ability to continue as a going concern when this standard becomes effective on January 1, 2017; however, the adoption of this guidance is not expected to impact our financial position, results of operations or cash flows.


Seasonality.

 

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

 

Item 7A. Quantitative and Qualitative Disclosure About Market Risk.

 

A smaller reporting company is not required to provide the information in this Item.

 

Item 8. Financial Statements and Supplementary Data.



 



15




APT Systems, Inc.

FINANCIAL STATEMENTS

 

With Report of Independent Registered Public Accounting Firm

 

For the years ended January 31, 2015 and 2014

 

 

 

 

TABLE OF CONTENTS

 

 

 

Page

 

 

Report of Independent Registered Public Accounting Firm

F-2

 

 

Balance Sheets

F-3

 

 

Statements of Operations

F-4

 

 

Statements of Changes in Shareholders’ Deficit

F-5

 

 

Statements of Cash Flows

F-6

 

 

Notes to Financial Statements

F-7

 

 



F-1







[f10k013115_10k001.jpg]


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 


Board of Directors

APT Systems, Inc.

San Francisco, CA 94111

 

We have audited the accompanying balance sheet of APT Systems, Inc. as of January 31, 2015 and 2014 and the related statements of operations, changes stockholders' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.


We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of APT Systems, Inc. as of January 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

 

Wheat Ridge, formerly Arvada, Colorado

/s/ Cutler & Co, LLC

June 5, 2015

Cutler & Co., LLC


 

 


      9605 West 49th Ave. Suite 200 Wheat Ridge, Colorado 80033  ~ Phone 303-968-3281  ~  Fax 303-456-7488  ~  www.cutlercpas.com




F-2



 


APT SYSTEMS, INC.

Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 31, 2015

 

January 31,2014

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

$

776

$

18,830

 

 

Unbilled revenue

 

330

 

-

 

 

Total current assets

 

1,106

 

18,830

 

 

 

 

 

 

 

 

 

Other Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Software (net of $7,079 and $4,543 accumulated amortization respectively)

 

4,526

 

7,062

 

 

Web site (net of $2,080 and $1,040 accumulated amortization respectively)

 

-

 

1,040

 

 

Deferred financing costs

 

-

 

13,000

 

 

 Total other assets

 

4,526

 

21,102

 

 

 

 

 

 

 

 

 

Total Assets

$

5,632

$

39,932

 

 

 

 

 

 

 

 

LIABILITIES & STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Accounts payable and accrued expenses

$

38,516

$

32,858

 

 

Accrued officer compensation - convertible

 

75,000

 

15,000

 

 

Convertible note payable

 

50,000

 

50,000

 

 

Notes payable

 

7,189

 

-

 

 

Accrued interest payable

 

10,253

 

625

 

 

Loan from director

 

8,402

 

1,523

 

 

 Total current liabilities

 

189,360

 

100,006

 

 

 

 

 

 

 

 

 

Total Liabilities

 

189,360

 

100,006

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

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

  None issued as of January 31, 2015 and 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

  and January 31, 2015 and 2014, respectively.

 

8,915

 

8,830

 

 

Additional paid-in capital

 

104,585

 

87,670

 

 

Accumulated deficit

 

(297,228)

 

(156,574)

 

 

TOTAL STOCKHOLDERS' DEFICIT

 

(183,728)

 

(60,074)

 

 

     

 

 

 

 

 

 

     TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$

5,632

$

39,932

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 








F-3




APT SYSTEMS, INC

Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

Year Ended

 

 

 

January 31, 2015

 

January 31, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

Consulting revenue

$

13,540

$

-

 

E-book sales

 

34

 

39

 

Total Revenue

 

13,574

 

39

 

 

 

 

 

 

 

Cost of Revenue

 

 

 

 

 

Contract labor - related party

 

11,450

 

-

 

Total Cost of Goods Sold

 

11,450

 

-

 

 

 

 

 

 

 

Gross Profit

 

2,124

 

39

 

 

 

 

 

 

 

Operating (Income) Expenses

 

 

 

 

 

Accounting

 

12,975

 

13,300

 

Write off of deferred finance costs

 

11,500

 

-

 

Amortization

 

3,576

 

3,576

 

Compensation to officer

 

60,000

 

15,000

 

Consulting services

 

-

 

350

 

Consulting services - related party

 

-

 

1,000

 

General and administrative

 

23,990

 

27,304

 

Legal

 

62,750

 

12,250

 

Research & development

 

-

 

2,928

 

Total Operating (Income) Expenses

 

174,791

 

75,708

 

 

 

 

 

 

 

Net Operating Income (Loss)

 

(172,667)

 

(75,708)

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

    Gain on settlement of accounts payable by loan issuance

 

5,242

 

-

 

    Gain on settlement of accounts payable for stock

 

38,250

 

-

 

    Interest expense

 

(11,479)

 

(1,731)

 

    Interest income

 

-

 

1

 

Total Other Income (Expense)

 

32,013

 

(1,730)

 

 

 

 

 

 

 

Net  Income (Loss)

$

(140,654)

$

(77,399)

 

 

 

 

 

 

 

Earnings (Loss) per share:

 

 

 

 

 

basic and diluted

$

(0.02)

$

(0.01)

 

 

 

 

 

 

 

Weighted average number of

 

 

 

 

 

   common shares outstanding:

 

 

 

 

 

       basic and diluted

 

8,886,589

 

8,785,512

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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





F-4




APT SYSTEMS,  INC

Statements of  Changes in Stockholders' Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

Common

 

Stock

 

Paid-in

 

Deficit

 

 

 

 

 

Shares

 

Amount

 

Capital

 

Accumulated

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance January 31, 2013

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

8,830,000

 

8,830

 

87,670

 

(156,574)

 

(60,074)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued in settlement of accounts payable  at $0.20 per share

85,000

 

85

 

16,915

 

-

 

17,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the year ended January 31, 2015

-

 

-

 

-

 

(140,654)

 

(140,654)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance January 31, 2015

8,915,000

$

8,915

$

104,585

$

(297,228)

$

(183,728)

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 





F-5




APT SYSTEMS,  INC

Statements of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Year Ended

 

 Year Ended

 

 

January 31, 2015

 

January 31, 2014

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

    Net loss

$

(140,654)

$

(77,399)

    Adjustments to reconcile net loss to net cash

 

 

 

 

       provided by (used in) operating activities:

 

 

 

 

Amortization expense

 

3,576

 

3,576

Write off of deferred financing costs

 

11,500

 

-

Stock issued for services

 

-

 

5,000

Gain on settlement of accounts payable by loan issuance

 

(5,242)

 

-

Gain on settlement of accounts payable for stock

 

(38,250)

 

-

    Changes in operating assets and liabilities:

 

 

 

 

(Increase) in unbilled revenue

 

(330)

 

-

Increase in accounts payable and accrued expenses

 

77,967

 

9,522

Increase in accrued officer compensation

 

60,000

 

15,000

 

 

 

 

 

     Net cash provided by (used in) operating activities

 

(31,433)

 

(44,301)

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

-

 

-

       Net cash (used in) investing activities

 

-

 

-

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

     Loan from shareholder

 

6,879

 

1,503

     Issuance of short-term notes payable

 

5,000

 

50,000

     Issuance of common stock for cash

 

-

 

22,200

     Decrease (increase) in deferred financing costs

 

1,500

 

(13,000)

   Net cash provided by financing activities

 

13,379

 

60,703

 

 

 

 

 

   Net change in cash and cash equivalents

 

(18,054)

 

16,402

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

18,830

 

2,428

 

 

 

 

 

Cash and cash equivalents at end of period

$

776

$

18,830

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

 

 

 

 

Cash paid  for :

 

 

 

 

 

 

 

 

 

   Interest

$

1,812

$

-

   Income Taxes

$

-

$

-

 

 

 

 

 

Equity Securities issued for services:

 

 

 

 

 

 

 

 

 

   Loan issued settlement of accounts payable

$

2,189

$

-

 

 

 

 

 

   Stock issued settlement of accounts payable

$

17,000

$

-

 

 

 

 

 

   Stock issued for services

$

-

$

5,000

 

 

 

 

 

 

 

 

 

 

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



F-6




APT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

For the fiscal years ended January 31, 2015 and 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 has launched a publication using its Apple developer account and has been concentrating on researching and improving its intellectual property for trading systems; in order to facilitate rolling out new 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. We constantly strive to pioneer original trading tools along with new approaches for managing risk. Our proprietary custom charting tools and trading platforms will later be available to licensees.


While management works to deliver stock trading software it also is strategically acquiring other compatible financial businesses which demonstrate strong growth potential stemming from a solid business plan.


During the twelve months ended January 31, 2015, the Company commenced providing technical writing and computer assisted design services to other startups using a contractor, a related person (family member to the Chief Executive Officer, to generate certain additional revenues. We would anticipate that this revenue will diminish if we are able to raise the necessary funding to allow the contractor to work exclusively on in-house projects.


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Basis of Presentation


The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. The Company’s year-end is January 31.


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.


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


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.



F-7




APT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

For the fiscal years ended January 31, 2015 and 2014


Foreign Currency Transactions


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 FASB ASC 350-50, “Website Development Costs”.  Costs incurred to register domain names, integrate databases and add additional functionality or features to the website are capitalized and amortized over 1-3 years.  Costs incurred in general maintenance of the website or hosting costs, are expensed as incurred.


Revenue Recognition


The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer; (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.


Research and Development Costs


Any costs incurred in research and developments are listed separately and expensed 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.


As of fiscal years ended January 31, 2015 and 2014, the Company had refundable deposits outstanding of $11,500 and $13,000, 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.


To date, one consulting firm has refunded to the Company $1,500 of the $4,000 that they were paid as part of their obligation to refund amounts on deposit for non-performance under the agreements.  As of January 31, 2015, no successful equity or debt funding is expected to arise from these payments and as repayment of the remaining amounts owed to the Company on these agreements is uncertain $11,500, or 100% of the outstanding balance of the deferred financing costs, have been written off effective January 31, 2015.  



F-8




APT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

For the fiscal years ended January 31, 2015 and 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.


Advertising costs


Advertising costs are expensed as incurred. The Company recorded no advertising costs during for the years ended January 31, 2015 and 2014.


Financial Instrument


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, unbilled revenue, accounts payable, accrued expenses, note payable and loan from director approximate their market values as of January 31, 2015 and 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 January 31, 2015 and 2014, 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.




F-9



APT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

For the fiscal years ended January 31, 2015 and 2014


Basic and Diluted Net Income (Loss) per Share - continued


During the years ended January 31, 2015 and 2014, the Company did have potentially dilutive debt instruments that have been excluded from the earnings per share calculation as their effect would have been anti-dilutive.


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 fiscal years ended January 31, 2015 and 2014, 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.


Business Segments


The Company believes that its activities during the twelve months ended January 31, 2015 and 2014 comprised a single segment.


Reclassifications


Certain reclassifications have been made to the prior period financial statements to conform to the 2015 presentation.


Recently Adopted Accounting Pronouncements


In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, and early adoption is prohibited. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is currently assessing the impact the adoption of ASU 2014-09 will have on our consolidated financial statements and disclosures.


In August 2014, the FASB issued guidance that requires management to evaluate whether there are conditions or events that raise substantial doubt about an entity's ability to continue as a going concern. If such conditions or events exist, disclosures are required that enable users of the financial statements to understand the nature of the conditions or evens, management's evaluation of the circumstances and management's plans to mitigate the conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. The Company will be required to perform an annual assessment of its ability to continue as a going concern when this standard becomes effective on January 1, 2017; however, the adoption of this guidance is not expected to impact our financial position, results of operations or cash flows.




F-10




APT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

For the fiscal years ended January 31, 2015 and 2014


3.  GOING CONCERN AND LIQUIDITY


At January 31, 2015 the Company had cash of $776, insufficient revenue to meet its ongoing operating expenses, liabilities of $189,360, accumulated losses of $297,228 and a shareholders’ deficit of $183,728.


In the audited financial statements for the fiscal years ended January 31, 2015 and 2014, the Report of the Independent Registered Public Accounting Firm includes an explanatory paragraph that describes substantial doubt about our ability to continue as a going concern.


These audited 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 anticipates future losses in the development of its software 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, loans from directors and, or, the sale shares of common stock. There is no assurance that this series of events will be satisfactorily completed.


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


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 nine months ended October 31, 2014 and year ended January 31, 2014, was $60,000 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. The President has deferred her decision until January 15, 2015 and will be provided to the Board of Directors before our financial year end.


As of January 31, 2015 and January 31, 2014, the Company owed the President $8,402 and $1,523 respectively by way of loans. The loans are unsecured, due on demand and interest free.


During the twelve months ended January 31, 2015, the Company commenced providing technical writing and computer assisted design services to other startups provided by a contractor, a related person (family member to the Chief Executive Officer, to generate certain additional revenues. The Company paid $11,450 to the related party consultant in respect of the provision of these services during the twelve months ended January 31, 2015 (2014 – $0).


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 non specified period of time. As of January 31, 2015, Mr. Gagnon is not scheduled to resume his duties unless otherwise agreed to in writing.  Mr. Gagnon was paid a $0 and $1,000 during the years ended January 31, 2015 and 2014, respectively.  No balance was owed to Mr. Gagnon by us as of January 31, 2015.


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 Company secured an initial extension of the convertible note to January 29, 2015 and subsequently a further extension to May 31, 2015.




F-11



APT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

For the fiscal years ended January 31, 2015 and 2014


5.  CONVERTIBLE NOTE PAYABLE (Continued)


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.


At January 31, 2015 and 2014 accrued interest was $10,126 and $625 respectively.  Interest expense at January 31, 2015 and 2014 was $9,501 and $625, respectively.


6. NOTES PAYABLE


In November 21, 2014, the Company received $5,000 by way of unsecured short-term loan from a non-related party for a term of six months at 10% interest due upon repayment  Accrued interest of $118 and $0 is included in the financial statements as of January 31, 2015 and 2014, respectively.


The Company entered into a new stock transfer agreement dated November 19, 2014 with Pacific Stock Transfer.  As part of the agreement, amounts owed to the Company’s previous stock transfer agent of $7,430 were paid by Pacific Stock Transfer, of which $2,189 is to be repaid by the Company in installments of $250 per month beginning on January 3, 2015.  Accordingly we recognized a $5,242 gain of the settlement of this $7,430 balance of accounts payable by assuming a loan of $2,189. Interest at 5% per annum accrues on the unpaid balance of the loan for each month.  For fiscal year ended January 31, 2015 and 2014, accrued interest on this short-term loan was $9 and $0, respectively.


7.  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


8.  SHAREHOLDERS’ DEFICIT


Preferred Shares


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


No shares of preferred stock were issued or outstanding during the fiscal years ended January 31, 2014 and 2013.




F-12



APT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

For the fiscal years ended January 31, 2015 and 2014


8.  SHAREHOLDERS’ DEFICIT (Continued)


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 one non-U.S. investor for $2,000 cash or $0.20 per share. These shares were issued pursuant to the exemption from registration provided by Regulation S of the Securities Act in that they were issued to a non U.S. personfor total cash proceeds of $2,000.


On June 4, 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 January 31, 2015, 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 January 31, 2015 and 2014, no options have been issued under this Plan.


9.   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 federal income tax consists of the following for the periods ending:


 

 

January 31,

2015

 

January 31,

2014

Federal income tax benefit attributed to:


 



Net operating loss

$

(47,822)

$

(26,316)

Valuation

 

47,822

 

26,316

Net benefit

$

-

$

-



F-13



 APT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

For the fiscal years ended January 31, 2015 and 2014


9.   INCOME TAXES (Continued)


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


 

 

January 31, 2015

 

January 31, 2014

Deferred tax attributed:

 

 

 

 

Net operating loss carryover

$

101,057

$

53,235

Less: change in valuation allowance

 

(101,057)

 

(53,235)

Net deferred tax asset

$

-

$

-


At January 31, 2015 and 2014, the Company had an unused net operating loss carry-forwards approximating $297,228 and $156,574, respectively that are available to offset future taxable income. The loss carry-forwards will start to expire in 2031.


In assessing the reliability of the deferred tax assets at January 31, 2015 and 2014 of $101,057 and $53,235, respectively, management considered whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, the projected future taxable income and tax planning strategies in making this assessment. Based on management’s analysis, the Company concluded not to retain a deferred tax asset since it is uncertain whether the Company can utilize this asset in future periods. Therefore, the Company has established a full reserve against this asset. The valuation allowance was $101,057 and $53,235 as of January 31, 2015 and 2014, respectively.


The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. As of January 31, 2015 and 2014, the Company has no accrued interest and penalties related to uncertain tax positions.


The Company is subject to taxation in the U.S. The tax years for 2010 and forward are subject to examination by tax authorities. The Company is not currently under examination by any tax authority.


Management has evaluated tax positions in accordance with FASB ASC 740, and has not identified any tax positions, other than those discussed above, that require disclosure.


10. SUBSEQUENT EVENTS


On April 17, 2015, APT Systems, Inc. received $5,000 in additional short-term borrowing from the holder of the Convertible Note Payable, Donald Meador.  This is a 60 day demand note.  There is no interest rate currently stated in the agreement.  Interest will be waived entirely if repayment is made on time.


The Company executed a short-term lending arrangement with Raymond C. Dove on April 30, 2015.  The effective date of the loan is May 1, 2015.  The loan amount is $25,000 with interest at 5% per annum.  Repayment or both principal and interest is due and payable on or before December 4, 2015.


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








F-14




Item 9A. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

An evaluation was performed under the supervision of our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial and accounting 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 January 31, 2015, 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 Annual Report on Internal Control Over Financial Reporting.

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

 

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

  

Despite these controls, because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies, like us, face additional limitations. Smaller reporting companies employ fewer individuals and can find it difficult to employ resources for complicated transactions and effective risk management. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

 

Our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of January 31, 2015 based on the criteria established in “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that as of January 31, 2015, 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.

 

This annual report does not include an attestation report of our registered public accounting firm regarding our internal controls over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to Section 404(c) of the Sarbanes-Oxley Act that permit us to provide only management’s report in this annual report.



16



 

Inherent Limitations Over Internal Controls.

 

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. 


Changes in Internal Control Over Financial Reporting.

 

We have made no change in our internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


Attestation Report of the Registered Public Accounting Firm.

 

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report on Form 10-K.

 

Item 9B. Other Information.

 

The information required by this Item 9B with respect to unregistered sales of equity securities is incorporated by reference to Item 5 of this Form 10-K. 



17



PART III

 

Item 10. Directors, Executive Officers, and Corporate Governance

 

The following table sets forth our directors and executive officers, their ages and the positions they hold:

 

Name

 

Age

 

Positions and Offices Held

 

 

 

 

 

 

 

Glenda Dowie

 

58

 

Director, President, Chief Executive Officer

 

 

 

 

 

 

 

Joseph Gagnon

 

57

 

Director, Secretary, Chief Technology Officer

 

 

 

 

 

 

 

Carl Hussey

 

63

 

Director, Treasurer, Chief Financial Officer

 

 

 

Glenda Dowie has been President, Chief Executive Officer and a Director of the Company since inception. She is a full-time equities trader. She is the President and Founder of the stock trading site TraderZone.com and its affiliated newsletter-inspired BuyZoneReview.com. For the past nine years, she has focused her energy and talents on stock trading indicators, refining her methodology for active trading and developing formulas that capture market momentum. During the past five years, Ms. Dowie has worked for two companies that she owns: The TraderZone Corporation and MTM Research, Inc. Ms. Dowie is the manager and director of TraderZone. Ms. Dowie has shared her experience through Published Articles on Investopedia (division of Forbes) as well as published a book entitled “6 Steps to Buying a Winning Stock” available through the Apple Store.

 

Joseph Gagnon has been Secretary, Chief Technology Officer and a Director of the Company since inception. From 1997 to 2011 Mr. Gagnon was the Owner of JJG Consulting providing computer software consulting services. From February 2006 to 2011 Mr. Gagnon was a Java programmer with Branagh Information Group, a privately held computer networking company. Mr. Gagnon co-founded Abacus Concepts in 1984. With two MacUser Eddies, six MacWorld World Class awards and a 60% market share world-wide, Abacus was a leader of Macintosh Statistical Analysis and a significant player in the Win32 world. Mr. Gagnon served as Chief Technology Officer and served on the Board of Directors. His technical responsibilities were the user interface design, software architecture and implementation of the StatView product line. Mr. Gagnon left Abacus in 1997 when the business was sold to SAS Institute. Mr. Gagnon obtained a BS in Computer Science in 1981 from the University of Wisconsin-Madison.

 

Carl Hussey has been Treasurer, Chief Financial Officer and a Director of the Company since inception. From January 2006 to the present Mr. Hussey has been the Owner of CH Strategic Management Group, providing management consulting to a broad range of companies. From June 2004 to August 2005 Mr. Hussey was the Chief Logistics Officer UNDOF at the United Nations. He was responsible for logistics for United Nations in UNDOF situated on Israel, Lebanon and Syria borders maintaining the disputed area of separation between the countries. From July 1999 to June 2004 he was a Comptroller for the Canadian Air Division of the Canadian Forces. Prior to this position he headed the Review and Audit Services within the Corporate Services Directorate of 1 Canadian Air Division. Mr. Hussey attended the University of New Brunswick.

 

Family Relationships

 

There are no family relationships among our directors and executive officers. No director or executive officer has been a director or executive officer of any business which has filed a bankruptcy petition or had a bankruptcy petition filed against it. No director or executive officer has been convicted of a criminal offense within the past five years or is the subject of a pending criminal proceeding. No director or executive officer has been the subject of any order, judgment or decree of any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities. No director or officer has been found by a court to have violated a federal or state securities or commodities law.



18




Involvement in Certain Legal Proceedings 


To the best of our knowledge, none of our directors or executive officers has, during the past ten years:

 

·

been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);


·

had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;


·

been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;


·

been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;


·

been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or


·

been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the Commission.

 

Term of Office

 

Our directors are elected for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.

 

Committees of the Board of Directors

 

There is a new committee consisting of the Board of Directors formed January 31, 2015.  Going forward into the new fiscal year, the Audit Committee can review, add policies and procedures; further, it will seek to add new members.


Audit Committee Financial Expert

 

The Board of Directors does not have does not have an “audit committee financial expert,” as such term is defined in Item 401(h)(2) of Regulation S-K.



19




 Section 16(a) Beneficial Ownership Reporting Compliance

 

The members of our Board of Directors, our executive officers and persons who hold more than 10% of our outstanding Common Stock are subject to the reporting requirements of Section 16(a) of the Exchange Act, which requires them to file reports with respect to their ownership of our Common Stock and their transactions in such Common Stock.

 

Based solely upon a review of copies of such forms filed on Forms 3, 4, and 5, and amendments thereto furnished to us, we believe that as of the date of this Report, our executive officers, directors and greater than 10 percent beneficial owners have complied on a timely basis with all Section 16(a) filing requirements, with the exception of our officers, directors and greater than 10 percent beneficial owners listed in the table below:

  

Name

 

Form

 

Description

Glenda Dowie

 

 3

 

Was not filed timely on the effective date of the registration statement on Form 8-A (SEC File No. 000-54865)

Joseph Gagnon

 

 3

 

Was not filed timely on the effective date of the registration statement on Form 8-A (SEC File No. 000-54865).

Carl Hussey

 

 3

 

Was not filed timely on the effective date of the registration statement on Form 8-A (SEC File No. 000-54865).

 

Code of Ethics

 

Our board of directors has adopted a general code of ethics guideline. All directors, officers and employees of the Company must comply with the law and regulations and must act honestly and in good faith with a view to the best interests of the Company in exercising their powers and discharging their duties. Any director or officer of the Company shall disclose in writing or request to have it entered into the minutes of Board of Directors’ meeting or any of the committees of the directors the nature and extent of any interest in a material contract or a material transaction, whether made or proposed, as soon as the director or officer becomes aware of such a contract or transaction. In the event of such a case, the director shall abstain from voting on any resolution to approve such a contract or transaction.

 

Options/SAR Grants and Fiscal Year End Option Exercises and Values

 

We have not had a stock option plan or other similar incentive compensation plan for officers, directors and employees, and no stock options, other than as is discussed in this Annual Report.



20



 

Item 11. Executive Compensation

 

Summary Compensation Table


The following table shows for the fiscal years ended January 31, 2015 and 2015, compensation awarded to or paid to, or earned by, our Chief Executive Officer, our Chief Technology Officer, and our Chief Financial Officer (the “Named Executive Officers”).

 

Name and

Principal Position

 

Year

 

 

Salary
($) (1)

 

 

Bonus
($)

 

 

Option
Awards (1)
($)

 

 

All Other
Compensation

 

 

Total
($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Glenda Dowie

 

 

2015

 

 

 

$60,000

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

$60,000

 

 Chief Executive Officer

 

 

2014

 

 

 

$15,000

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

$15,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Joseph Gagnon

 

 

2015

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 Chief Technology Officer

 

 

2014

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carl Hussey

 

 

2015

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 Chief Financial Officer

 

 

2014

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Effective November 1, 2013, the Company began to accrue a monthly salary of $5,000 per month for Ms. Dowie on an ongoing basis.  As of January 31, 2015, accrued officer compensation was $75,000.  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.  Ms. Dowie can elect at any time to convert some, or all, of her accrued compensation into shares of the Company as determined by the Board of Directors in consultation with its legal advisors.  Market price will be 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.


Outstanding Equity Awards at the End of the Fiscal Year

 

No equity compensation has been paid under the Plan.


Compensation of Directors


Directors are permitted to receive fixed fees and other compensation for their services as directors.  The Board of Directors has the authority to fix compensation of directors.  No amounts have been paid to, or accrued to, directors in such capacity.


Employment Agreements


No other officers of the Company have current employment agreements effective November 1, 2013, the Company began to accrue a monthly salary of $5,000 per month for Ms. Glenda Dowie on an ongoing basis.  As of January 31, 2015 and January 31, 2014 accrued officer compensation was $75,000 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 as determined by the Board of Directors in consultation with its legal advisors.  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 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.  Mr. Gagnon provides contract services for a fee connected to maintenance on the servers and software on a consultant basis. Mr. Hussey does not receive compensation for his services at this time.  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.



21



 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

The following table sets forth certain information, as of June 5, 2014, with respect to the holdings of (1) each person who is the beneficial owner of more than 5% of our common stock, (2) each of our directors, (3) each executive officer, and (4) all of our current directors and executive officers as a group.

 

Beneficial ownership of the common stock is determined in accordance with the rules of the Securities and Exchange Commission and includes any shares of common stock over which a person exercises sole or shared voting or investment power, or of which a person has a right to acquire ownership at any time within 60 days of June 5, 2014. Except as otherwise indicated, we believe that the persons named in this table have sole voting and investment power with respect to all shares of common stock held by them. Applicable percentage ownership in the following table is based on 8,915,000 shares of common stock outstanding as of June 5 2014 plus, for each individual, any securities that individual has the right to acquire within 60 days of June 5, 2014.

  

Name and Address

 

Amount and Nature of

 

 

Percent of

 

of Beneficial Owner

 

Beneficial Ownership (1)(2)

 

 

Class

 

 

 

 

 

 

 

 

Glenda Dowie (3)

 

 

5,000,000

 

 

 

56.6

%

505 Montgomery Street,

 

 

 

 

 

 

 

 

11th Floor

 

 

 

 

 

 

 

 

San Francisco, CA 94111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Joseph Gagnon (3)

 

 

200,000

 

 

 

2.3

%

505 Montgomery Street,

 

 

 

 

 

 

 

 

11th Floor

 

 

 

 

 

 

 

 

San Francisco, CA 94111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carl Hussey (3)

 

 

200,000

 

 

 

2.3

%

505 Montgomery Street,

 

 

 

 

 

 

 

 

11th Floor

 

 

 

 

 

 

 

 

San Francisco, CA 94111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Officers and Directors as a Group (two persons)

 

 

5,400,000

 

 

 

61.2

%

 

 

 

 

 

 

 

 

 

Mark Anderson

 

 

500,000

 

 

 

5.7

%

 

 

 

 

 

 

 

 

 

Donald Meador

 

 

450,000

 

 

 

5.1

%

 

(1) All ownership is beneficial and of record, unless indicated otherwise.

 

(2) The Beneficial owner has sole voting and investment power with respect to the shares shown.

 

(3) An officer and director of the Company.



22




Item 13. Certain Relationships and Related Transactions, and Director Independence.

 

Transactions with Related Persons


Except as set forth below, since February 1, 2013, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which the Company was or will be a party in which the amount involved exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets at year end for the last two completed fiscal years; and in which any director, executive officer, other stockholders of more than 5% of the Company’s Common Stock or any member of their immediate family had or will have a direct or indirect material interest:


Effective November 1, 2013, the Company began to accrue a monthly salary of $5,000 per month for the President on an ongoing basis.  As of January 31, 2015 accrued officer compensation was $75,000.  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 January 31, 2015 and 2014, the Company owed the President $8,402 and $1,523, respectively, by way of loan. The loan is unsecured, due on demand and interest free.


During the twelve months ended January 31, 2015, the Company commenced providing technical writing and computer assisted design services to other startups provided by a contractor, a related person, a family member to the Chief Executive Officer, to generate certain additional revenues. The Company paid $11,450 to the related party consultant in respect of the provision of these services during the twelve months ended January 31, 2015 (2014 – $0).


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 January 31, 2014, Mr. Gagnon is not scheduled to resume his duties unless otherwise agreed to in writing.  Mr. Gagnon was paid a $0 and $1,000 during the years ended January 31, 2015 and 2014, respectively.  No balance was owed to Mr. Gagnon by the Company as of January 31, 2015.  


Director Independence

 

We do not have any independent directors. Because our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination.  NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship which, in the opinion of the Company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.  The NASDAQ listing rules provide that a director cannot be considered independent if:

 

·

the director is, or at any time during the past three years was, an employee of the company;


·

the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service);


·

a family member of the director is, or at any time during the past three years was, an executive officer of the company;


·

the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions);


·

the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or


·

the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.



23



 

Ms. Dowie and Messrs. Gagnon and Hussey are not considered independent because they are executive officers of the Company.

 

We do not currently have a separately designated nominating or compensation committee but have created an audit committee.


Item 14: Principal Accountant Fees and Services.

 

Audit Fees

 

For the Company’s fiscal year ended January 31, 2015 and 2014, we were billed approximately $9,500 and $9,500, respectively for professional services rendered for the audit and reviews of our financial statements.

 

Audit Related Fees

 

For the Company’s fiscal year ended January 31, 2015 and 2014, we were not billed for professional services related to our audits, other than the fees discussed in Audit Fees above.

  

Tax Fees

 

For the Company’s fiscal years ended January 31, 2015 and 2014, we were not billed for professional services rendered for tax compliance, tax advice, and tax planning by our auditors.

 

All Other Fees

 

The Company did not incur any other fees related to services rendered by our principal accountant for the fiscal years ended January 31, 2015 and 2014.

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:

 

·

approved by our audit committee; or


·

entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee’s responsibilities to management.


Currently our entire board of directors pre-approves all services provided by our independent auditors. The pre-approval process has just been implemented in response to the new rules. Therefore, our board of directors does not have records of what percentage of the above fees were pre-approved. However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered. An Audit Committee was created on January 31, 2015 to better manage the audit process.




24



PART IV


Item 15. Exhibits, Financial Statement Schedules.


The following financial information is filed as part of this report:

 

(a)

(1) FINANCIAL STATEMENTS

 

(2) SCHEDULES

 

(3) 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

 

 

 

4.1*

 

APT Systems, Inc. 2012 Equity Incentive Plan

 

 

 

4.2**

 

19% Convertible Note dated January 8, 2014

 

 

 

31.1

 

Certification of Principal Executive Officer pursuant to Section 302

 

 

 

31.2

 

Certification of Principal Financial Officer pursuant to Section 302

 

 

 

32.1

 

Certification of Principal Executive Officer pursuant to Section 906

 

 

 

32.2

 

Certification of Principal Financial Officer pursuant to Section 906

 

101.INS    XBRL Instance Document

101.SCH   XBRL Taxonomy Schema

101.CAL  XBRL Taxonomy Calculation Linkbase

101.DEF   XBRL Taxonomy Definition Linkbase

101.LAB  XBRL Taxonomy Label Linkbase

101.PRE   XBRL Taxonomy Presentation Linkbase

 

 In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.


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

** Previously filed with the Annual Report on Form 10-K for the year ended January 31, 2014, on May 29, 2014


 

 



25




SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

APT Systems, Inc.

 

 

 

 

By:

/s/ Glenda Dowie

 

Glenda Dowie, President and Chief Executive Officer

(Principal Executive Officer)

 

 

 

 

By:

/s/ Carl Hussey

 

Carl Hussey, Chief Financial Officer and Director

(Principal Financial and Accounting Officer)

 

 

 

 

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

 

/s/ Glenda Dowie

 

President, Chief Executive Officer and Director

 

June 5, 2015

Glenda Dowie

 

Title

 

Date

 

 

 

 

 

/s/ Joseph Gagnon

 

Secretary, Chief Technology Officer and Director

 

June 5, 2015

Joseph Gagnon

 

Title

 

Date

 

 

 

 

 

/s/ Carl Hussey

 

Treasurer, Chief Financial Officer and Director

 

June 5, 2015

,Carl Hussey

 

Title

 

Date

 





26