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EX-32.1 - EXHIBIT 32.1 SECTION 906 CERTIFICATION - APT Systems Incf10q043015_ex32z1.htm
EX-32.3 - EXHIBIT 32.3 SECTION 906 CERTIFICATION - APT Systems Incf10q043015_ex32z3.htm
EX-31.2 - EXHIBIT 31.2 SECTION 302 CERTIFICATION - APT Systems Incf10q043015_ex31z2.htm
EX-31.3 - EXHIBIT 31.3 SECTION 302 CERTIFICATION - APT Systems Incf10q043015_ex31z3.htm
EX-32.2 - EXHIBIT 32.2 SECTION 906 CERTIFICATION - APT Systems Incf10q043015_ex32z2.htm
EX-31.1 - EXHIBIT 31.1 SECTION 302 CERTIFICATION - APT Systems Incf10q043015_ex31z1.htm


SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 ______________________________________________________________________________


FORM 10-Q


 

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

SECURITIES EXCHANGE ACT OF 1934


For the Quarterly period ended April 30, 2015


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

SECURITIES EXCHANGE ACT OF 1934

 

_______________________________________________________________________________

 

Commission File No. 333-181597



APT SYSTEMS, INC.

 (Exact name of issuer as specified in its charter)

 

Delaware

99-0370904

(State or other jurisdiction

(IRS Employer File Number)


  

  

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)


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


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files.

Yes       .  No   X .


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


Large accelerated filer       .

Accelerated filer       .

Non-accelerated filer         . (Do not check if a smaller reporting company)

 Smaller reporting company    X .


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes       . No   X  .


As of July 20, 2015, registrant had outstanding 8,915,000 shares of the registrant's common stock.  


 




  



FORM 10-Q

 

APT SYSTEMS, INC.

TABLE OF CONTENTS




PART I  FINANCIAL INFORMATION


PAGE

Item 1.

Unaudited Condensed Financial Statements for the three month periods ended April 30, 2015 and 2014

1

Condensed Balance Sheets

2

Condensed Statements of Operations

3

Condensed Statements of Changes in Stockholders’ Deficit

4

Condensed Statements of Cash Flows

5

Notes to Unaudited  Condensed Financial Statements

6

Item 2.

Management’s Discussion and Analysis and Plan of Operation

14

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

19

Item 4.

Controls and Procedures

19

 

 

PART II  OTHER INFORMATION

 

Item 1.

Legal Proceedings 

20

Item 1A.

Risk Factors

20

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

20

Item 3.

Defaults Upon Senior Securities

20

Item 4.

Mine Safety Disclosures

21

Item 5.

Other Information

21

Item 6.

Exhibits

21

  

 

Signatures

22





ii



  


 

PART I  FINANCIAL INFORMATION


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.


 

ITEM 1. FINANCIAL STATEMENTS

 

 _______________________________________________________________________



APT SYSTEMS, INC.


UNAUDITED FINANCIAL STATEMENTS



For the Three Month Periods Ended April 30, 2015 and 2014


_________________________________________________________________________

 

 

 APT Systems, Inc.

Condensed Financial Statements

(Unaudited)

 

TABLE OF CONTENTS


 

  

PAGE

Condensed Balance Sheets

2

Condensed Statements of Operations

3

Condensed Statements of Changes in Stockholders’ Deficit

  4

Condensed Statements of Cash Flows

5

Notes to Condensed Financial Statements

6





1



  




APT SYSTEMS, INC.

Condensed Balance Sheets

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

(Audited)

 

 

 

 

April 30, 2014

 

January 31,2015

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

$

2,163

$

776

 

 

Unbilled revenue

 

2,250

 

330

 

 

Total current assets

 

4,413

 

1,106

 

 

 

 

 

 

 

 

 

Fixed Assets

 

 

 

 

 

 

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

 

-

 

-

 

 

Software (net of $7,713 (unaudited) & $7,543 accumulated amortization respectively)

 

3,892

 

4,526

 

 

Net book value

 

3,892

 

4,526

 

 

 

 

 

 

 

 

 

Total Assets

$

8,305

$

5,632

 

 

 

 

 

 

 

 

LIABILITIES & STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Accounts payable and accrued expenses

$

43,459

$

38,516

 

 

Convertible accrued officer compensation

 

90,000

 

75,000

 

 

Convertible notes payable

 

50,000

 

50,000

 

 

Notes payable

 

12,189

 

7,189

 

 

Accrued interest payable

 

12,816

 

10,253

 

 

Loan from director

 

8,231

 

8,402

 

 

 Total current liabilities

 

216,695

 

189,360

 

 

 

 

 

 

 

 

 

Total Liabilities

 

216,695

 

189,360

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

None issued as of April 30, 2015 (unaudited) and January 31,2015 respectively

 

-

 

-

 

 

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

 

 

 

 

 

 

8,915,000 shares issued and outstanding as of April 30, 2015 (unaudited) and January 31, 2015 respectively.

 

8,915

 

8,915

 

 

Additional paid-in capital

 

104,585

 

104,585

 

 

Accumulated deficit

 

(321,890)

 

(297,228)

 

 

TOTAL STOCKHOLDERS' DEFICIT

 

(208,390)

 

(183,728)

 

 

     

 

 

 

 

 

 

     TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$

8,305

$

5,632

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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


2



  



APT SYSTEMS, INC

Condensed Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

Three Months Ended

 

Three Months  Ended

 

 

 

 

April 30, 2015

 

April 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

Consulting revenue

$

9,513

$

-

 

 

E-book sales

 

-

 

17

 

 

Total Revenues

 

9,513

 

17

 

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

 

 

 

 

 

Contract labor – related party

 

7,002

 

-

 

 

Total Cost of Goods Sold

 

7,002

 

-

 

 

 

 

 

 

 

 

 

Gross Profit

 

2,511

 

17

 

 

 

 

 

 

 

 

 

Operating Costs

 

 

 

 

 

 

Accounting

 

6,250

 

6,000

 

 

Amortization

 

634

 

894

 

 

Compensation to officer

 

15,000

 

15,000

 

 

General and administrative

 

1,626

 

4,436

 

 

Legal

 

-

 

62,750

 

 

Total Operating Costs

 

23,510

 

89,080

 

 

 

 

 

 

 

 

 

Net Operating Loss

 

(20,999)

 

(89,063)

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

    Interest expense

 

(3,663)

 

(2,724)

 

 

Total Other Income (Expense)

 

(3,663)

 

(2,724)

 

 

 

 

 

 

 

 

 

Net  Income(Loss)

$

(24,662)

$

(91,787)

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

basic and diluted

$

(0.00)*

$

(0.01)

 

 

 

 

 

 

 

 

 

Weighted average number of

 

 

 

 

 

 

   common shares outstanding:

 

 

 

 

 

 

       basic and diluted

 

8,915,000

 

8,830,000

 

 

 

 

 

 

 

 

 

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

 

 

 




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


3



  




APT SYSTEMS,  INC

Condensed Statements of  Changes in Stockholders' Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

Common

 

Stock

 

Paid-in

 

Deficit

 

 

 

 

 

Shares

 

Amount

 

Capital

 

Accumulated

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance January 31, 2014 (Audited)

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 (Audited)

8,915,000

$

8,915

$

104,585

$

(297,228)

$

(183,728)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period ended April 30, 2015 (Unaudited)

-

 

-

 

-

 

(24,662)

 

(24,662)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance April 30, 2015 (Unaudited)

8,915,000

$

8,915

$

104,585

$

(321,890)

$

(208,390)

 



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


4



  





APT SYSTEMS,  INC

Condensed Statements of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 Three Months Ended

 

 Three Months Ended

 

 

 

 

April 30, 2014

 

April 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

    Net loss

$

(24,662)

$

(91,787)

 

 

    Adjustments to reconcile net loss to net cash

 

 

 

 

 

 

       provided by (used in) operating activities:

 

 

 

 

 

 

        Amortization expense

 

634

 

894

 

 

    Changes in operating assets and liabilities:

 

 

 

 

 

 

       Increase in unbilled revenue

 

(1,920)

 

-

 

 

       Increase in accounts payable and

 

 

 

 

 

 

         accrued expenses

 

7,506

 

56,570

 

 

       Increase in accrued officer compensation

 

15,000

 

15,000

 

 

 

 

 

 

 

 

 

     Net cash provided by (used in) operating activities

 

(3,442)

 

(19,323)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

-

 

-

 

 

       Net cash (used in) investing activities

 

-

 

-

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

     Repayment of loan from director

 

(2,470)

 

(5,750)

 

 

     Loan from director

 

2,299

 

9,000

 

 

     Issuance of short-term note payable

 

5,000

 

-

 

 

   Net cash provided by financing activities

 

4,829

 

3,250

 

 

 

 

 

 

 

 

 

   Net change in cash and cash equivalents

 

1,387

 

(16,073)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

776

 

18,830

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

$

2,163

$

2,757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

 

 

 

Cash paid  for :

 

 

 

 

 

 

 

 

 

 

 

 

 

   Interest

$

1,100

$

408

 

 

   Income Taxes

$

-

$

-

 



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


5





APT SYSTEMS, INC.

NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 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 is also seeking to strategically acquire other compatible financial businesses which demonstrate strong growth potential stemming from a solid business plan.


In the fiscal year ending 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.


The Company is required to file its annual and quarterly financial reports with SEDAR in Canada and will continue to do so for the foreseeable future. The requirement to file is a result of the Issuer being deemed a reporting issuer under MI 51-105 as advised by the Alberta Securities Commission.


Going Concern Consideration


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


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


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Basis of Preparation of Financial Statements


The accompanying unaudited financial statements of APT Systems have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In our opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary in order to make the financial statements not misleading.  Operating results for the three months ended April 30, 2015 are not necessarily indicative of the final results that may be expected for the year ended January 31, 2016.  For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements for the year ended January 31, 2015 included in our Form 10-K filed with the SEC.


Development Stage Company


The Company is a development stage company as defined under the then current Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, “Development-Stage Entities”. Additional disclosures required as a development stage company are that our financial statements be identified as those of a development stage company, and that the statements of operations, changes in members’ deficit and cash flows disclosed activity since the date of our Inception (October 29, 2010).



6






2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


Development Stage Company Cont.


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. Consequently this additional disclosure has not been presented in these financial statements


Use of Estimates and Assumptions


The preparation of financial statements in conformity with generally accepted accounting principles requires that management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Due to uncertainties inherent in the estimation process, it is possible that these estimates could be materially revised within the next year.


Foreign Currency Translation


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


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


Cash and Cash Equivalents


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


Financial Instruments


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


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


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


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


The recorded amounts of financial instruments, including cash equivalents, accounts payable, accrued expenses, not payable and loan from director approximate their market values as of April 30, 2015 and January 31, 2015 due to the intended short term maturities of these financial instruments.


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.



7






2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


Website


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


Deferred Financing Costs


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


For the three month periods ended April 30, 2015 and 2014, the Company had paid refundable deposits of $13,000 and $0, respectively.  The deposits were made to two consulting companies that were to assist the Company in obtaining a $125,000 bridge loan to be utilized by the Company for its public registration purposes, and to assist the Company with an $8,000,000 private equity placement.  The deposits are refundable for non-performance.  As of the date of this report, neither the bridge loan nor the private placement had been secured.


During the year ended January 31, 2015, one consulting firm 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, collection of the remaining amounts owed to the Company on these agreements was uncertain, therefore, $11,500, or 100% of the outstanding balance of the deferred financing costs, was written off effective January 31, 2015.


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.


Income Taxes


The Company accounts for income taxes in accordance with FASB ASC 740 “Income Taxes”. Under FASB ASC 740, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial statement reported amounts at each period end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. FASB ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under FASB ASC 740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. At April 30, 2015 and 2014, the Company has no unrecognized tax benefits.


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.


Advertising costs


Advertising costs are expensed as incurred. The Company recorded no advertising costs during the three months ending April 30, 2015 and 2014.


Research and Development Costs


Costs incurred in research and developments are expenses as incurred.



8






2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


Stock Based Compensation


The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. The Company has adopted a stock option plan, as disclosed in Note 7 – Stockholders’ Deficit below.  During the three month periods ended April 30, 2015 and 2014, no stock options had been issued or outstanding.


Comprehensive Income (Loss)


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


The comprehensive loss was identical to the net loss for the three months ended April 30, 2015 and 2014.


Basic and Diluted Net Income (Loss) per Share


The Company computes net income (loss) per share in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. For the three month ended April 30, 2015 and 2014, the Company did have potentially dilutive debt instruments that have been excluded from the earnings per share calculation; as such an inclusion would have been anti-dilutive due to the losses incurred in both periods.


Reclassifications


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


Business Segments


The Company believes that its activities during the three month periods ended April 30, 2015 and 2014 comprised a single segment.


Recently Issued 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.



9






3.  GOING CONCERN AND LIQUIDITY


As of April 30, 2015, the Company had cash of $2,163, insufficient revenue to meet its ongoing operating expenses, liabilities of $216,695, accumulated losses of $321,890 and a shareholders’ deficit of $208,390.


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


The unaudited financial statements for the three months ended April 30, 2015 have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company anticipates future losses in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans, loans from directors and, or, the sale of common stock. There is no assurance that this series of events will be satisfactorily completed.


Financial statements do not include adjustments that may be necessary if the 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 as of April 30, 2015 and January 31, 2015, was $90,000 and $75,000 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 as determined by the Board of Directors in consultation with its legal advisors. Market price will be considered the publicly quoted share price, either when such a publicly quoted price becomes available, or the last cash price the Company received for the sale of its common shares.


As of April 30, 2015 and January 31, 2015, the Company owed the President $8,231 and $8,402 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 consulting, 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 $7,002 and $0 to the related party contractor in respect of the provision of these services during the three months ended April 30, 2015 and 2014, respectively.


The Company entered into a Consulting Agreement with Joseph J. Gagnon, the Secretary of the Board of Directors, on February 3, 2012. This agreement was amended jointly by the Board of Directors and Mr. Gagnon. As of June 15, 2012, it was agreed and accepted by all that Mr. Gagnon should discontinue his full-time services for a specified period of time. As of April 30, 2014, Mr. Gagnon is not scheduled to resume his duties unless otherwise agreed to in writing No balance was owed to Mr. Gagnon by the Company as of April 30, 2015 or 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 note was initially due and payable on May 7, 2014. The Company secured an initial extension of term of the convertible note to January 29, 2015 and subsequently a further extension to May 31, 2015.


The Note, but none of the accrued unpaid interest thereon, may convert into equity securities of the Company 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.



10






5.  CONVERTIBLE NOTE PAYABLE (continued)


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


Accrued interest payable as of April 30, 2015 and January 31, 2015 was $12,251 and $10,126, respectively.  Interest expense for the three months ended April 30, 2015 and 2014 were $2,395 and $2,316 respectively.


As disclosed in Note 10 Subsequent Events below, the convertible note payable and accrued interest was scheduled for repayment on May 31, 2015. However, we did not have the funds to make any repayment on the scheduled repayment date and accordingly we went into default under the terms of this convertible note payable on May 31, 2015. We had entered into discussions with the convertible noteholder prior to May 31, 2015 to extend the term of the convertible note payable and effective June 29, 2015 we received confirmation  that we had reached agreement with the convertible noteholder to further extend the term of the convertible note payable to July 31, 2015. There can be no assurance that we will be able to reach a further agreement to extend or amend the terms of the convertible note payable with the convertible noteholder or that we will be able to raise the funding necessary to repay the balance due under the convertible note payable.


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 $240 and $118 is included in the financial statements as of April 30, 2015 and January 31, 2015, respectively. As disclosed in Note 10 Subsequent Events below, the note payable and accrued interest was scheduled to be repaid on May 21, 2015. However, we did not have the funds to make any repayment on the scheduled repayment date and accordingly we went into default under the terms of this note payable on May 21, 2015 and the liability remains outstanding in full as of the date of the issuance of this report. Accordingly we continue to be in default under the terms of this note payable as of the date of this issuance of this report. We have had discussions with the holder of the note payable to extend the term of the note payable but as yet have not signed any agreement to extend or amend the terms of the note payable. There can be no assurance that we will be able to reach an agreement to extend or amend the terms of the note payable with the noteholder or that we will be able to raise the funding necessary to repay the balance due under the note payable. The initiation of any collection action by this noteholder could affect our ability to execute on our business plan and operations.  


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 to Pacific Stock Transfer by the Company in installments of $250 per month beginning on January 3, 2015. Accordingly we also 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. As of April 30, 2015 and January 31, 2015, accrued interest on this loan was $46 and $9, respectively. As on April 30, 2015, and as of the date of the date of the issuance of this report, we have not had the funds to made any payments under the term of this agreement and consequently were in default under the terms of this agreement as of April 30, 2015 and continue to be in default under the terms of this agreement as of the date of the issuance of this report. There can be no assurance that we will be able to reach a further agreement to extend or amend the terms of the agreement or that we will be able to raise the funding necessary to repay the balance due under this agreement. The initiation of any collection action by this creditor could affect our ability to execute on our business plan and operations.  

 

On April 17, 2015, APT Systems, Inc. received $5,000 in additional short-term borrowing from the holder of the Convertible Note Payable, Mr. Donald Meador. This was a 60 day demand note. As disclosed in Note 10 Subsequent Events below, the note payable was scheduled to be repaid on June 16, 2015. However, we did not have the funds to make any repayment on the scheduled repayment date and accordingly we went into default under the terms of this note payable on June 16, 2015. We had entered into discussions prior to the due date to extend the term of the note payable and effective June 29, 2015 we received confirmation that we had reached agreement with the noteholder to further extend the term of the note payable to July 31, 2015. There can be no assurance that we will be able to reach a further agreement to extend or amend the terms of the note payable with the noteholder or that we will be able to raise the funding necessary to repay the balance due under the note payable.


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. It is anticipated these shares will be issued within the terms and timelines of the agreement.



11






7.  COMMITMENTS AND CONTINGENCIES (Continued)


The Company executed two short-term lending arrangements with non-related party, Mr. Raymond C. Dove, on April 30, 2015.  The effective dates of the loans are May 1, 2015 and June 22, 2015.  The loan amounts are $25,000 and $3,000, respectively, with interest accruing at 5% per annum.  Repayment is in one lump sum due and payable on or before December 4, 2015.


The Company is required to file its annual and quarterly financial reports with SEDAR in Canada. Due to delays in filing its financial statements, the Company believes it may be subject to certain potentially significant penalties to be levied by the Alberta Securities Commission. It is not possible to determine the amount of these potential liabilities at this time.


8.  SHAREHOLDERS’ DEFICIT


PREFERRED SHARES


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


No shares of preferred stock were issued and outstanding during the three months ended April 30, 2015 and 2014.


COMMON SHARES


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


No shares of common stock were issued during the three months ended April 30, 2015 or 2014.


As of April 30, 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 April 30, 2015 and January 31, 2015, no options have been issued or are outstanding 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 refundable federal income tax consists of the following for the periods ending:

 

 

 

April 30,

2015

 

April 30,
2014

Federal income tax benefit attributed to:


 



Net operating loss

 $

 (8,385)

 $

 (31,208)

Valuation

 

 8,385

 

 31,208

Net benefit

 $

 -

 $

 -

 

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


 

 

April 30,

2015

 

January 31, 2015

Deferred tax attributed:

 

 



Net operating loss carryover

 $

 109,442

 $

 101,057

Less: change in valuation allowance

 

 (109,442)

 

 (101,057)

Net deferred tax asset

$

-

 $

 -

 

At April 30, 2015, the Company had an unused net operating loss carry-forward approximating $321,890 that is available to offset future taxable income; the loss carry-forward will start to expire in 2030.



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10.  SUBSEQUENT EVENTS


The Company received two short-term unsecured loans from a non-related party. The effective dates of the loans are May 1, 2015 and June 22, 2015. The loan amounts are $25,000 and $3,000, respectively, with interest accruing at 5% per annum. Repayment is in one lump sum due and payable on or before December 4, 2015.


As disclosed in Note 6 Notes Payable above, on November 21, 2014, the Company received $5,000 by way of unsecured short-term note payable from a non-related party for a term of six months at 10% interest due upon repayment. The note payable and accrued interest was scheduled to be repaid on May 21, 2015. However, we did not have the funds to make any repayment on the scheduled repayment date and accordingly we went into default under the terms of this note payable on May 21, 2015 and the liability under this note payable remains outstanding in full as of the date of the issuance this report. Accordingly we continue to be in default under the terms of this note payable as of the date of the issuance of this report. We have had discussions with the holder of the note payable but as yet have not signed any agreement to extend or amend the terms of the note payable. There can be no assurance that we will be able to reach an agreement to extend or amend the terms of the note payable with the noteholder or that we will be able to raise the funding necessary to repay the balance due under the note payable. The initiation of any collection action by this noteholder may affect our ability to execute on our business plan and operations.  


As disclosed in Note 5 Convertible Note Payable above, 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 initially due and payable on May 7, 2014. The Company secured an initial extension of the convertible note to January 29, 2015 and subsequently a further extension to May 31, 2015. However, we did not have the funds to make any repayment on the scheduled repayment date and accordingly we went into default under the terms of this convertible note payable on May 31, 2015. We had entered into discussions with the convertible noteholder prior to the due date to extend the term of the convertible note payable and effective June 29, 2015, we received confirmation that we had reached agreement with the noteholder to further extend the term of the convertible note payable to July 31, 2015. There can be no assurance that we will be able to reach a further agreement to extend or amend the terms of the convertible note payable with the noteholder or that we will be able to raise the funding necessary to repay the balance due under the convertible note payable.  


As disclosed in Note 6 Notes Payable above, on April 17, 2015, APT Systems, Inc. received $5,000 as a short-term loan from the holder of the Convertible Note Payable, Mr. Donald Meador. This was a 60 day demand note. There is no interest rate currently stated in the agreement.   The loan was scheduled to be repaid on July 16, 2015. However, we did not have the funds to make any repayment on the scheduled date and accordingly we went into default under the terms of this note payable on June 16, 2015. We had entered into discussions prior to the due date to extend the term of the note payable and effective June 29, 2015, we received confirmation that we had reached agreement with the noteholder to further extend the term of the note payable to July 31, 2015. There can be no assurance that we will be able to reach a further agreement to extend or amend the terms of the note payable with the noteholder or that we will be able to raise the funding necessary to repay the balance due under the note payable.


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 financial statements. The Company determined that other than as disclosed above, there were no material reportable subsequent events to be disclosed.






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


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


Forward-Looking Statements


This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain forward-looking statements regarding us, our business, prospects and results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that may affect such forward-looking statements include, without limitation: our ability to successfully develop new products and services for new markets; the impact of competition on our revenues, changes in law or regulatory requirements that adversely affect or preclude clients from using us for certain applications; delays our introduction of new products or services; and our failure to keep pace with our competitors.

 

When used in this discussion, words such as "believes", "anticipates", "expects", "intends" and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made by us in this report and other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business, particularly the Report on Form 10-K, Form 10-Q and any Current Reports on Form 8-K.


Overview and History


APT Systems, Inc. was incorporated in the State of Delaware on October 29, 2010. 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 consulting 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.


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 during its development stage, APT Systems can roll out traditional trading tools and publish charts for the hand held market to test plans and generate cash flow. However, these tools would be 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.


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




14






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.


Distribution methods of the products or services


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


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


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


Organization


We are comprised of one corporation and do not have any subsidiaries 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.

 

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. 



15






Contracted Consultants

 

We currently have one consultant under contract. Mr. Gagnon is the only officer with a formal consulting agreement. Per the terms of the agreement Mr. Gagnon, in his position as the Chief Technology Officer, is paid a minimum of $2,500 per month for services writing technical documents while the Company awaits full funding. As of June 15, 2012, Mr. Gagnon took a leave of absence from his role under the consulting agreement; however, he will continue to serve as an officer and director of the Company during his leave of absence. Our other officers and directors currently provide some services on a consultant basis without compensation. Based upon the amount of the proceeds from additional sales of our common stock, other future employees and directors may receive salaries. Once we generate sufficient 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 $90,000.  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 give notice to convert some, or all, of her accrued compensation into shares of the Company’s common stock as determined by the Board of Directors and its legal advisors.


During the three months ended April 30, 2015, the Company continued 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 $7,002 and $0 to the related party contractor in respect of the provision of these services during the three months ended April 30, 2015 and 2014.


Intellectual Property Information

 

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


Government Regulation

 

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

 

Research and Development


We have spent $0 and $0 respectively in the three months ended April 30, 2015 and 2014, on research and development of our website and mobile applications. We plan to spend further funds on research and development activities in the future as the development of our software applications continue and we raise the necessary funding required.  

 

Environmental Compliance

 

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


Results of Operations


For the Three Months Ended April 30, 2015 Compared to the Three Months Ended April 30, 2014


Revenue


The Company generated $9,513 in consulting revenue in the three months ended April 30, 2015 compared to $0 of revenue in the three months ended April 30, 2014, and $0 book revenues compared to $17 in three months ending April 30, 2014. As a startup company, we have generated only nominal revenue that does exceed our expenses.


Cost of Revenue


During the three months ended April 30, 2015 the Company paid $7,002 in contract labor – related party, associated with the consulting revenue generated for the same time period, as compared with $0 for the three months ended April 30, 2014, an increase of $7,002 or 100%.We had not begun providing consulting services during the three months ended April 30, 2014.



16






Operating Expenses


Operating expenses were $23,510 for the three month period ended April 30, 2015 compared to $89,080 for the three month period ended April 30, 2014, a decrease of $65,570. The decrease was primarily due a reduction in legal fees from $62,750 to $0 for the period. The legal fees incurred in the three months ended April 30, 2014 primarily related to the preparation of the Company’s form 10K for the year ended January 31, 2014. We did not use external attorneys in the preparation of the Company’s form 10K for the year ended January 31, 2015 and consequently we did not incur any comparable legal fees during the three months ended April 30, 2015. .


Operating Loss


We incurred an operating loss of $20,999 in the three months ended April 30, 2015 compared to an operating loss of $89,063 for the three months ended April 30, 2014, and decrease of $68,064 or 76%, due to the factors described above.


Interest Expense


We incurred an interest expense of $3,663 in the three month period ended April 30, 2015 compared to interest expense $2,724 for the three month period ended April 30, 2014, an increase of $939. On January 8, 2014, we executed an unsecured short-term convertible note payable in the amount of $50,000.  Interest accrues at 19% per annum.  In addition we continued to fund some of our expenditures on credit cards, and have executed certain new short-term notes at varying interest rates as described in Note 6 Notes Payable in the condensed unaudited financial statements presented above..


Net Loss


In the three months ended April 30, 2015 we incurred a net loss of $24,662 compared to a net loss of $91,787 for the three months ended April 30, 2014, a decrease of $67,125 or 73%, due to the factors discussed above.


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


As of April 30, 2015, the Company had cash of $2,163, insufficient revenue to meet its ongoing operating expenses, liabilities of $216,695, accumulated losses of $321,890 and a shareholders’ deficit of $208,390.


The unaudited financial statements for the three months ended April 30, 2015 have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company anticipates future losses in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans, loans from directors and, or, the sale of common stock. There is no assurance that this series of events will be satisfactorily completed.


Net cash used for operating activities was $3,442 for the three month period ended April 30, 2015. This compares to net cash used for operating activities of $19,323 for the three month period ended April 30, 2014.  During the three months ended April 30, 2014 we incurred a loss of $24,662 which was partially reduced by $634 of non-cash amortization expense and a $22,506 increase in operating liabilities, and an increase of $1,920 in unbilled revenue, to arrive at cash used in operations of $3,442. By comparison, during the three months ended April 30, 2014 we incurred a loss of $91,787 which was partially reduced by $894 of non-cash amortization expense and a $71,570 increase in operating liabilities to arrive at cash used in operations of $19,323.


Cash flows generated by (used in) investing activities were at $0 for the three month periods ended April 30, 2015 and 2014.


Cash flows provided by financing activities were $4,829 for the three month period ended April 30, 2015 which compares to cash flows provided by financing activities of $3,250 for the three month period ended April 30, 2014. During the three months ended April 30, 2015 we received $2,470 of additional loans from one of our directors, made repayments to the same director in the amount of $2,299 and received $5,000 by way of short-term note payable..  By comparison, during the three months ended April 30, 2014, we received $9,000 in loans from one of our directors and made repayments to the same director in the amount of $5,750. No shares of our common stock were sold during the three months ended April 30, 2015 and 2014, respectively.


Off-Balance Sheet Arrangements


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



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Liquidity and Capital Resources


As of April 30, 2015, we had cash and cash equivalents of $2,163. As of January 31, 2015, we had cash and cash equivalents of $776.


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.


Plan of Operation


Our business plan is to attract additional capital and sufficient product sales, and provide services within our present organizational structure and resources, to become profitable in our operations.

 

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


·

the competitive environment in the app sector that may force the Company to reduce prices below the optimal desired pricing level or increase promotional spending;

·

the ability to anticipate changes in consumer preferences and to meet customers’ needs for trading products in a timely cost effective manner; and

·

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


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


Concurrent Developments


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.



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Consulting Services


During the three months ended April 30, 2015, the Company continued 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.


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 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


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


ITEM 4. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures

 

An evaluation was performed under the supervision of our management, including our Chief Executive Officer and Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that, as of April 30, 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 Report on Internal Control over Financial Reporting

 

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


Our management assessed the effectiveness of our internal control over financial reporting as of April 30, 2014. Based on this assessment, management believes that as of April 30, 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:



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·

Lack of appropriate segregation of duties;


·

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


·

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


Limitations on Effectiveness of Controls and Procedures

 

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

 

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


PART II  OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


During the three months ended April 30, 2015 and 2014, there were no legal proceedings, to which we are a party, which could have a material adverse effect on our business, financial condition or operating results and none are threatened or pending to the best of our knowledge.


ITEM 1A. RISK FACTORS


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


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


No equity securities were sold during the three month periods ended April 30, 2015 or 2014.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES


As of April 30, 2015, we were in default under the terms of an agreement to repay $2,189, together with accrued interest at 5% per annum, to Pacific Stock Transfer in installments of $250 per month beginning on January 3, 2015.


Subsequent to April 30, 2015 we went into default under the terms of our $50,000 convertible note payable and two notes payable with principal balances of $10,000, together with the accrued interest due on all of these notes. On June 29, 2015, , we received confirmation that we had reached agreement with the convertible noteholder and one of the noteholders to further extend the term of the $50,000 convertible note payable and a $5,000 note payable to July 31, 2015. We continue to be in default under the terms of our agreement and note payable with principal balances of $7,189, together with the accrued interest.  While we have continued to hold discussions with the creditors to arrange extended payment terms, as yet we have not signed any agreement to extend or amend the terms of the agreement or the note payable. There can be no assurance that we will be able to reach an agreement to extend or amend the terms of the agreement or the notes payable with the creditors or that we will be able to raise the funding necessary to repay the balances due under the agreement or the note payable.  The initiation of any collection action by these creditors may affect our ability to execute on our business plan and operations.  



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ITEM 4.  MINE SAFETY DISCLOSURES


Not applicable to our Company.


ITEM 5.  OTHER INFORMATION


None.


ITEM 6. EXHIBITS


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


Exhibit Number

Description

 

 

3.1*

Articles of Incorporation

 

  

3.2*

Bylaws

 

  

31.1

Certification of Chief Executive Officer pursuant to Section 302

 

  

31.2

Certification of Chief Financial Officer pursuant to Section 302

 

 

31.3

Certification of Principal Accounting Officer pursuant to Section 302

 

 

32.1

Certification of Chief Executive Officer pursuant to Section 906

 

 

32.2

Certification of Chief Financial Officer pursuant to Section 906

 

 

32.3

Certification of Principal Accounting Officer pursuant to Section 906

 

 


Exhibit 101.INS

XBRL Instance Document (1)

 

 

Exhibit 101.SCH

XBRL Taxonomy Extension Schema Document (1)

 

 

Exhibit 101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document (1)

 

 

Exhibit 101.DEF

XBRL Taxonomy Extension Definition Linkbase Document (1)

 

 

Exhibit 101.LAB

XBRL Taxonomy Extension Label Linkbase Document (1)

 

 

Exhibit 101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document (1)


 

(1)

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


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





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SIGNATURES


In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on July 20, 2015.


APT Systems, Inc.


 

By:

/s/ Glenda Dowie

 

Glenda Dowie, President and Chief Executive Officer




 

By:

/s/ Carl Hussey

 

Carl Hussey, Treasurer and Chief Financial Officer



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


/s/ Glenda Dowie

President, Chief Executive Officer and Director

July 20, 2015

Glenda Dowie

Title

Date

 

 

 

/s/ Joseph Gagnon

Secretary, Chief Technical Officer and Director

July 20, 2015

Joseph Gagnon

Title

Date

 

 

 

/s/ Carl Hussey

Treasurer, Chief Financial Officer and Director

July 20, 2015

Carl Hussey

Title

Date
















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