FREE EMAIL WATCHDOG

Get free email notifications about news in APT Systems Inc.

The service is free and you can unsubscribe at any time.

General | People (5) | Filings (103) | Investment rounds (2) | Annual reports (6) | Stock | News

APT Systems Inc SEC Filing Form 10-Q Quartely report 2/2017, submited: 2017-06-14

<< back to list of filings

Form 10-Q

The SEC form 10-Q is a comprehensive report of a company's performance that must be submitted quarterly by all public companies to the Securities and Exchange Commission. In the 10-Q, firms are required to disclose relevant information regarding their financial position. The form must be submitted on time, and the information should be available to all interested parties.

The 10-Q is due 35 days (it used to be 45 days) after each of the first three fiscal quarters. There is no filing after the fourth quarter because that is when the 10-K is filed.

10-Q 1 f10q043017_10q.htm FORM 10-Q QUARTERLY REPORT Form 10-Q Quarterly Report


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, 2017


     . TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

_______________________________________________________________________________

 

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)


505 Montgomery Street

11th Floor

 

San Francisco, CA

94111

(Address of principal executive offices)

(zip code)

 

(415)-200-1105

(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  X .. No      ...


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


Large accelerated filer

      .

Accelerated filer

      .

Non-accelerated filer

      . (Do not check if a smaller reporting company)

Smaller reporting company

  X .


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


As of June 14, 2017, registrant had 271,943,387 outstanding shares of common stock.




1




FORM 10-Q

 

APT SYSTEMS, INC.

TABLE OF CONTENTS


PART I FINANCIAL INFORMATION

PAGE

 

 

Item 1.

Unaudited Financial Statements As of April 30, 2017 and for the Three Month Periods Ended April 30, 2017 and 2016

4

Balance Sheets

5

Statements of Operations

6

Statements of Cash Flows

7

Notes to Unaudited Financial Statements

8

Item 2.

Management’s Discussion and Analysis and Plan of Operation

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

20

Item 4.

Controls and Procedures

20

 

 

PART II OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings 

22

Item 1A.

Risk Factors

22

Item 2.

Properties

Item 3.

Unregistered Sales of Equity Securities and Use of Proceeds

22

Item 4.

Defaults Upon Senior Securities

23

Item 5.

Mine Safety Disclosures

23

Item 6.

Other Information

23

Item 7.

Exhibits

24

 

 

Signatures

25




2



 

FINANCIAL INFORMATION


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 notes 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. APTY may also opt to disseminate information about itself, including the results of its operations and financial information, via social media platforms such as Facebook, LinkedIn and Twitter. 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.




3




ITEM 1. FINANCIAL STATEMENTS


APT SYSTEMS, INC.

UNAUDITED FINANCIAL STATEMENTS

For the Three Month Periods Ended April 30, 2017 and 2016


TABLE OF CONTENTS

 

 

PAGE

 

 

Balance Sheets

5

Statements of Operations

6

Statements of Cash Flows

7

Notes to Unaudited Financial Statements

8





4




APT SYSTEMS, INC.

Balance Sheet

 

 

 

 

 

 

 

 

 

 

April 30, 2017

 

January 31,2017

 

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

$

46,638

$

7,713

 

 

Trading investments

 

14,755

 

14,681

 

 

Prepaid expenses

 

-

 

17,141

 

 

Other current assets

 

268

 

268

 

 

Total current assets

 

61,661

 

39,803

 

 

 

 

 

 

 

 

 

Other Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Software (net of $27,353 and $22,291 accumulated amortization respectively)

 

78,332

 

82,494

 

 

Total other assets

 

78,332

 

82,494

 

 

 

 

 

 

 

 

 

Total Assets

$

139,993

$

122,297

 

 

 

 

 

 

 

 

LIABILITIES & STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Accounts payable and accrued expenses

$

137,948

$

113,170

 

 

Accrued officer compensation

 

185,300

 

170,300

 

 

Convertible notes payable, net of discounts of $2,576 and $4,233, respectively

 

140,924

 

139,267

 

 

Notes payable

 

75,959

 

76,619

 

 

Loan from director

 

2,103

 

4,465

 

 

Total current liabilities

 

542,234

 

503,821

 

 

 

 

 

 

 

 

 

Convertible notes payable - related party

 

26,276

 

26,276

 

 

Total Liabilities

 

568,510

 

530,097

 

 

 

 

 

 

 

 

 

Series B 6% Convertible Cumulative Preferred Stock; $0.001 par value, 1,000,000 shares designated; 35,000 and 0 shares issued and outstanding as of April 30, 2017 and January 31, 2017 respectively

 

35,000

 

-

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, 100,000,000 authorized

 

 

 

 

 

 

Preferred A stock $0.001 par value, 1,000,000 shares designated;

 

 

 

 

 

 

    none issued as of April 30, 2017 and January 31, 2017, respectively

 

-

 

-

 

 

Common stock $0.0001 par value, 750,000,000 shares authorized;

 

 

 

 

 

 

    261,640,269 and 229,252,036 shares issued and outstanding as  of

 

 

 

 

 

 

    April 30, 2017 and January 31, 2017, respectively

 

26,164

 

22,926

 

 

Additional paid-in capital

 

888,453

 

855,511

 

 

Common stock payable

 

-

 

1,180

 

 

Accumulated deficit

 

(1,378,134)

 

(1,287,417)

 

 

TOTAL STOCKHOLDERS' DEFICIT

 

(463,517)

 

(407,800)

 

 

 

 

 

 

 

 

 

     TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$

139,993

$

122,297

 

 

 

 

 

 

 

 

 

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

 




5




APT SYTEMS, INC

Statements of Operations

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

April 30, 2017

 

 

April 30, 2016

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

E-book sales

$

11

 

$

-

 

Total Revenue

 

11

 

 

-

 

 

 

 

 

 

 

 

Cost of Revenue

 

-

 

 

-

 

 

 

 

 

 

 

 

Gross Profit

 

11

 

 

-

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

Amortization

 

5,062

 

 

3,750

 

Compensation to officer

 

15,000

 

 

15,000

 

General and administrative

 

63,986

 

 

196,065

 

Total Operating Expenses

 

84,048

 

 

214,815

 

 

 

 

 

 

 

Net Operating Loss

 

(84,037)

 

 

(214,815)

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

    Other income

 

103

 

 

4,698

 

    Interest expense and amortization of debt discount

 

(6,783)

 

 

(7,378)

 

Total Other Income (Expense)

 

(6,680)

 

 

(2,680)

 

 

 

 

 

 

 

Net Loss

 

(90,717)

 

 

(217,495)

 

 

 

 

 

 

 

Dividends Applicable to Preferred Stock

 

(246)

 

 

-

 

 

 

 

 

 

 

Net Loss Applicable to Common Stockholders

$

(90,963)

 

$

(217,495)

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

       Basic and diluted

$

(0.0004)

 

$

(0.0019)

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

       Basic and diluted

 

238,566,153

 

 

115,989,448

 

 

 

 

 

 

 

 

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




6




APT SYSTEMS,  INC

Statements of Cash Flows

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

 

April 30,2017

 

April 30,2016

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

    Net loss

$

(90,717)

$

(217,495)

    Adjustments to reconcile net loss to net cash

 

 

 

 

       provided by (used in) operating activities:

 

 

 

 

        Amortization expense

 

5,062

 

500

        Gain on investments

 

(74)

 

(4,434)

        Amortization of debt discount

 

1,657

 

-

        Stock issued for consulting services

 

-

 

114,000

 

 

 

 

 

    Changes in operating assets and liabilities:

 

 

 

 

       Accounts receivable

 

-

 

4,517

       Prepaid expenses and other current assets

 

17,141

 

-

       Accounts payable and accrued expenses

 

27,416

 

31,076

       Accrued officer compensation

 

15,000

 

15,000

       Net cash (used in) operating activities

 

(24,515)

 

(56,836)

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

     Purchase of investments

 

-

 

(20,000)

     Investment in software development

 

(900)

 

-

       Net cash (used in) investing activities

 

(900)

 

(20,000)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

     Proceeds from director loan

 

-

 

526

     Payment of loan from director

 

(5,000)

 

(2,860)

     Issuance of convertible notes and short-term notes payable

 

-

 

74,207

     Issuance of long-term notes payable

 

-

 

5,655

     Payments on Notes Payable

 

(660)

 

-

     Proceeds from issuance of common and preferred shares

 

70,000

 

-

       Net cash provided by financing activities

 

64,340

 

77,528

 

 

 

 

 

       Net change in cash and cash equivalents

 

38,925

 

692

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

7,713

 

833

 

 

 

 

 

Cash and cash equivalents at end of period

$

46,638

$

1,525

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

 

Cash paid for :

 

 

 

 

   Interest

$

1,387

$

1,744

   Income Taxes

$

-

$

-

 

 

 

 

 

Non-Cash Transactions

 

 

 

 

 

 

 

 

 

   Stock and stock payable issued for software acquisition

$

-

$

65,000

   Common stock issued for stock payable

$

1,180

$

-

   Expenses paid by director

$

2,638

$

-

 

 

 

 

 

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




7




APT SYSTEMS, INC.

NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2017 AND 2016


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 operate as a Fintech Company to engage in the creation of innovative and intuitive stock trading platforms, financial apps and visualization solutions for charting the financial markets. While management works to deliver a mobile trading platform it also is strategically acquiring other compatible software or financial businesses which demonstrate strong growth potential stemming from a solid business plan. After we identify prospective opportunities then we continue with due diligence efforts that will and do include testing software performance within funded external trading accounts. The Company successfully acquired Global Trader predictive indicators and added these to its intellectual property. Over the previous year, the Company had continued to claim income earned from its testing of strategies and trading software as other income. The testing continues to generate positive returns. In this first quarter, the Company began its development of separate native charting apps branded as KenCharts for potential future licensing opportunities. Some revenue continues to come from the Apple store from a previously launched publication promoting a trading strategy that is successfully testing Apple revenue payment delivery. After beta testing is completed, our proprietary custom charting tools and trading platform apps will later be available to subscribers for a fee.


Management will continue to expand upon trading its platform named Intuitrader and related software products, being those recently acquired predictive indicators called Global Trader as well as those developed in-house such as KenCharts. Any profits generated from funds used in live trading tests can be used to offset future development costs, for which there is a plan to operate from within a wholly-owned subsidiary. We constantly strive to pioneer original trading tools and indicators along with new approaches for managing trading risk. After beta testing is completed, our proprietary custom charting tools and trading platform apps will later be available to subscribers for a fee.


2. GOING CONCERN AND LIQUIDITY


As of April 30, 2017, the Company had cash of $46,638, insufficient revenue to meet its ongoing operating expenses, and liabilities of $568,510, accumulated losses of $1,378,134 and a shareholders’ deficit of $463,517. The Company has not as yet generated significant product sales revenues as its key products are still under development.


The unaudited financial statements for the three months ended April 30, 2017 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 any adjustments relating to the recoverability and classification of assets and liabilities that may be necessary if the Company is unable to continue as a going concern.


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Basis of Presentation 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 8 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 condensed financial statements not misleading. Operating results for the three months ended April 30, 2017 are not necessarily indicative of the final results that may be expected for the year ended January 31, 2018. 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, 2017 included in our Form 10-K filed with the SEC. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.


Reclassifications

 

Certain reclassifications have been made to the prior periods to conform to the current period presentation.



8




APT SYSTEMS, INC.

NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2017 AND 2016


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, 2017 and January 31, 2017 was $185,300 and $170,300 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. As resolved, the accrued compensation will only be paid after January 1, 2018 as and when the directors decide the Company has sufficient liquidity to pay some, or all, of the amounts accrued in cash or by issuing shares. The President of the Company can also consider submitting a request to the Board of Directors for permission to convert some, or all, of her accrued compensation into shares of the Company’s common stock, but only after January 1, 2018. The share price considerations will be either the publicly quoted share price, when such a publicly quoted price is available; or equal to or above the last cash price the Company recorded for the sale of its common shares to third parties.


As of April 30, 2017 and January 31, 2017, the Company owed the President $2,103 and $4,465 respectively by way of loans. The loans are unsecured, due on demand and interest free.


5. SOFTWARE


The Company has software that it uses for the development of certain mobile applications. The software and any upgrades are being amortized over useful lives ranging from 3 – 5 years. The Company recorded amortization expense of $5,062 and $3,750 for the three months ended April 30, 2017 and 2016, respectively.


 

 

April 30, 2017

 

January 31, 2017

 

 

 

 

 

Charting software

$

102,705

$

102,705

Ken Chart Native Apps

 

900

 

-

Website

 

2,080

 

2,080

 

 

105,685

 

104,785

Accumulated amortization

 

(27,353)

 

(22,291)

Net book value

$

78,332

$

82,494


6. CONVERTIBLE NOTES PAYABLE


Noteholder 1


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 at $0.0001. The Company secured an initial extension of the convertible note to January 29, 2015 and subsequently obtained a further extension to December 31, 2016. The note has been reduced to $43,500 through the sales of part of the debt to unrelated third parties in prior periods. The Company is currently in discussions with the lender to further extend the maturity date and has been verbally extended to be later written. Until such time as that is completed the note is considered past due.


On April 17, 2015, the Company received $5,000 by way of an unsecured short-term loan from a non-related party for a term of 60 days that was later extended until April 23, 2017. Principal and interest at 8% per annum accrued thereon are due and payable on April 23, 2017 and is further renewable. Also, the lender has the right to convert the principal and accrued interest into shares of the Company’s common stock at $0.01 cents. The Company is currently in discussions with the lender to further extend the maturity date and has been verbally extended to be later written. Until such time as that is completed the note is considered past due.


Noteholder 2


On October 2, 2015, the Company received $12,500 by way of an unsecured short-term loan from a non-related party for a term of one year. Principal and interest at 8% per annum accrued thereon are due and payable on October 1, 2016. Also, the lender has the right to convert the principal and accrued interest into shares of the Company’s common stock. The conversion rate was equal to the fair market value of the Company’s common stock on the date of issuance. This loan has been extended until October 1, 2017.



9




APT SYSTEMS, INC.

NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2017 AND 2016


Noteholder 3


The Company took on a loan of $52,500, in the form of a convertible note, in November 2016. The note is due and payable twelve months from the issuance date and bear interest at 5% per annum with an original issuance discount of 5%. If the Note is paid off prior to 181 days, the Company is required to pay the face amount plus a penalty of 30% otherwise the investor may convert loan to common shares. Once convertible the conversion rate is equal to 60% of the lowest traded market price during the previous 15 trading days. The holder is limited to converting no more than 20% percent of the previous week’s dollar volume during any given trading week. Subsequent to quarter end the note was amended. See Note 10 for further details.


Noteholder 4


The Company took on a further loan of $30,000, in the form of a convertible note on January 31, 2017 with unrelated parties. The note is due and payable twelve months from the issuance date and bears interest at 8% per annum with an original issuance discount of $3,000. If the Note is paid off prior to the due date, the Company is required to pay the face amount plus a scaled penalty ranging from 10% to 35% depending on the repayment date. Also noted, after 181 days from the issuance date, the Note is convertible into the shares of the Company’s common stock. The conversion rate is equal to 55% of the market price during the previous 10 trading days. The loan is convertible at the end of July 2017.


Noteholder 5


The Company had executed three lending arrangements with a related party, affiliated to the CEO of the company. The effective dates of the loans are November 24, 2015, December 8, 2015 and January 14, 2016. The loan amounts are $3,000, $16,121 and $1,500, respectively, with interest accruing at 5% per annum. Repayment is in one lump sum due and payable on or before December 31, 2018, December 31, 2018 and January 31, 2019, respectively.


The Company has executed two additional notes with the same related party. The effective dates of the additional loans are March 10, 2016 and March 15, 2016. The loan amounts are $2,770 and $2,885, respectively, with interest accruing at 5% per annum. Repayment is in one lump sum due and payable on or before January 31, 2019. All notes are convertible, at the holder’s request, into shares of the Company’s common stock at the rate of $9.50 per share.


The following table summarizes all convertible notes outstanding as of April 30, 2017:


Holder

Issue Date

Due Date

 

Principal

 

Unamortized Debt Discount

 

Carrying Value

 

 

 

 

 

 

 

 

 

Third Parties

 

 

 

 

 

 

 

 

Noteholder 1a

1/8/2014

Past Due

$

43,500

$

-

$

43,500

Noteholder 1b

4/23/15

Past Due

 

5,000

 

-

 

5,000

Noteholder 2

10/2/2015

10/1/2017

 

12,500

 

-

 

12,500

Noteholder 3

11/1/2016

5/4/2017

 

52,500

 

308

 

52,192

Noteholder 4

1/30/2017

1/30/2018

 

30,000

 

2,268

 

27,732

 

 

 

 

 

 

 

 

 

Related Parties

 

 

 

 

 

 

 

 

Noteholder 5a

11/23/2015

12/31/2018

 

3,000

 

-

 

3,000

Noteholder 5b

12/8/2015

12/31/2018

 

16,121

 

-

 

16,121

Noteholder 5c

1/12/2016

1/31/2019

 

1,500

 

-

 

1,500

Noteholder 5d

3/10/2016

1/31/2019

 

2,770

 

-

 

2,770

Noteholder 5e

3/15/2016

1/31/2019

 

2,885

 

-

 

2,885

 

 

 

 

 

 

 

 

 

Total Convertible Notes Payable

 

$

169,776

$

2,576

 

167,200

Less: Current Portion

 

 

 

 

 

 

 

(140,924)

Long Term Portion

 

 

 

 

 

 

$

26,276




10




APT SYSTEMS, INC.

NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2017 AND 2016


7. NOTES PAYABLE


Noteholder 1


On August 12, 2016, we borrowed $26,000 from an Accredited Investor, being a non-convertible note at 5% interest, as a short term loan to facilitate cash flow. The loan will come due December 31, 2017.


On September 21, 2016, we borrowed $25,909 from an Accredited Investor, being a non-convertible note at 5% interest, as a short term loan to facilitate cash flow. The loan will come due December 31, 2017.


Noteholder 2


On November 20, 2014, the Company received $5,000 by way of an unsecured short-term loan from a non-related party for a term of nine months at 10% interest due upon repayment. The note payable and accrued interest was scheduled to be repaid on May 21, 2015. The Company was successful in obtaining an extension until December 31, 2015 upon making an interim renewal payment of $400. As of April 30, 2017, we are default under the loan agreement.


Noteholder 3


The Company had executed short-term lending arrangements with a non-related party. The effective dates of the loans are June 22, 2015, June 27, 2015 and September 22, 2015. The loan amounts are $3,000, $2,700 and $1,950, respectively, with interest accruing at 5% per annum. Repayment is in one lump sum due and payable on or before December 4, 2015 through January 31, 2016. The outstanding notes were extended to September and December 2016. The Company is currently in discussions with the lender to further extend the maturity date. Until such time as that is completed the note is considered past due.


Noteholder 4


One of the trader agreements included monthly compensation and to this end, part of the fees were paid in cash and then part of the fees were offset with a non-convertible note for $7,000 that is payable on or before June of 2017.


Noteholder 5


The Company entered into a stock transfer agency 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. Interest at 5% per annum accrues on the unpaid balance of the loan for each month. As of April 30, 2017, we are not in default under this loan agreement as in August 2016 we renegotiated the terms for this loan and interest payment commenced in November 2016.


The following table summarizes all notes outstanding as of April 30, 2017:


Holder

Issue Date

Due Date

 

Principal

 

Unamortized Debt Discount

 

Carrying Value

 

 

 

 

 

 

 

 

 

Third Parties

 

 

 

 

 

 

 

 

Noteholder 1a

8/12/2016

12/31/2017

$

26,000

$

-

$

26,000

Noteholder 1b

9/21/2016

12/31/2017

 

25,909

 

-

 

25,909

Noteholder 2

11/7/2014

Past Due

 

5,000

 

-

 

5,000

Noteholder 3a

6/15/2015

Past Due

 

3,000

 

-

 

3,000

Noteholder 3b

6/28/2015

Past Due

 

2,700

 

-

 

2,700

Noteholder 3c

9/22/2015

Past Due

 

1,950

 

-

 

1,950

Noteholder 4

6/15/2016

6/15/2017

 

7,000

 

-

 

7,000

Noteholder 5

8/11/2016

8/11/2018

 

4,400

 

-

 

4,400

 

 

 

 

 

 

 

 

 

Total Convertible Notes Payable

 

$

75,959

$

-

 

75,959

Less: Current Portion

 

 

 

 

 

 

 

(75,959)

Long Term Portion

 

 

 

 

 

 

$

-




11




APT SYSTEMS, INC.

NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2017 AND 2016


8. COMMITMENTS AND CONTINGENCIES


The Company is required to file its annual and quarterly financial reports with SEDAR in Canada. Due to delays in filing its financial statements and other possible forms, the Company believes it may be subject to certain potentially significant penalties to be levied by the Alberta Securities Commission (ASC). These fines have now been stated to be CDN$10,120 or approximately US$7,500 as advised and invoiced by the ASC, and have been accrued into the financial statements as of April 30, 2017. The Company is considering engaging its legal counsel to assist in reducing or eliminating these penalties and requests to file. Further correspondence has been delivered to the ASC after filing the 10-K for January 31, 2016. Subsequently, the 10Q ending April 30, 2016 and 10Q ending July 31, 2016 were filed with SEDAR and this is ongoing.


The Company had retained TESO Communications as its Investor Relations and Public Relations manager and under the agreement the Company may pay the invoice with cash or by issuing shares against the invoices submitted. The Directors opted to issue shares before the end of the initial agreement period of January 16, 2015 but the same were not yet issued. The agreement represented a cash payment of $25,000 or the issuance of 50,000 restricted common shares at the completion of the agreement which has been extended to May 15, 2016. No invoice has been presented to the Company and no shares have been issued to date.


9. STOCKHOLDERS’ DEFICIT


Preferred Shares


The Company is authorized to issue 100,000,000 shares of preferred stock, par value $0.001 per share.


During the quarter ending April 30, 2017, the directors signed a resolution to restructure the preferred shares. The preferred shares were changed to Preferred Series A shares with a par value of $.001 and the Series B preferred shares with a par value of $.001 that are redeemable after one year $1.00 at the holder’s option with interest of 6% payable annually on April 28, 2017. The Series B preferred shares become mandatorily redeemable at $1.00 five years after issuance. The Series B preferred shares become convertible at time following the first anniversary of the issuance of the shares into Common Stock at the 90% of the average Closing Sales Price of the company's common stock for the 2 trading days prior to the conversion date.


During the quarter ending April 30, 2017 the Company received proceeds of $35,000 for the issuance of 35,000 shares of Series B Preferred shares.


For the period ended April 30, 2017, total dividends applicable to Series B Preferred Stock was $246. The Company did not declare or pay any dividends in 2017. Although no dividends have been declared, the cumulative total of preferred stock dividends due to these stockholders upon declaration was $246 as of April 30, 2017.


Common Shares


During the quarter ending April 30, 2017, the Company restructured its common shares by increasing authorized shares from 300,000,000 to 750,000,000 common shares with a par value of $.0001.


During the quarter ending April 30, 2017, 11,800,000 shares of common stock were issued in settlement of the $1,180 stock payable.


During the quarter ending April 30, 2017 the Company received proceeds of $35,000 for the issuance of 20,588,233 shares of common stock.


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, 2017, no options have been issued under this Plan.



12




APT SYSTEMS, INC.

NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2017 AND 2016


10. SUBSEQUENT EVENTS


The Company settle a consultant’s invoice of $15,000 by issuing 8,832,530 common shares on May 8, 2017.


The Company received $5,000 from an investor for 2,500 Series B Preferred shares and 1,470,588 common shares.


The Company reached an agreement on May 4, 2017 with Convertible Noteholder 3 related to a note for $52,500 where by half of the note has been repaid in cash and the balance of the loan has been extended for an additional six months up to November 4, 2017 during which time the note is not convertible.  The total cash payment of $34,438 is being applied $26,250 to the principle and the remaining to interest and prepayment penalties.


The Company signed agreements with an investor for a loan of $53,000 on May 8, 2017 and net funds were received upon filing the 10K for year ending January 31, 2017. The agreement called for the Company to be current in its filings to avoid any default. This note matures on February 20, 2018 and bears an interest rate of 8% and allows for prepayment between 112% and 137% depending on the date; and would be convertible on or about November 15, 2017 when funded. Once the conversion terms are effective the note is convertible into shares at the greater of $0.00008 or 61% of the market value as calculated per the agreement.





13




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 condensed 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 but our first charting app is likely to be released in the second quarter. Limited start-up operations to date have consisted of the formation of the Company, development of its business plan, identification of its target market, naming its software Intuitrader, and limited research towards the development of its software. However, the company was able to engage in testing trading strategies and products in a limited fashion in 2016.


We have not been subject to any bankruptcy, receivership or similar proceeding.


APT is a Fintech 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 separate app 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, currency, futures and commodity traders.


In order to advance itself, APT Systems can also roll out technical trading tools and publish KenCharts for the hand held market to test its business plans and generate cash flow. We are focusing our early attention on the charting software we own and rewriting the code to provide a native chart only app for both Android and iOS platforms. 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 delayed time initially and later real time 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. However, these tools would be invigorated with leading edge graphics and networking technology to become desirable real-time and interactive trading assistance software.



14




As a Fintech company, APT services and products can later extend to include:


-

Financial Software and Analytical Software Development

-

Algorithmic Applied Technology

-

Trading Platform Refinement and Linking to Brokerage Accounts

-

Analytical Charting Software Development

-

Explore plans for upcoming proposed National Banking Charters for Fintech companies


The steps remaining for us to begin selling our products listed above are to finalize the programming and rewriting 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.


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.


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 and charting tool. Instead of merely importing 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 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 and other platforms. Especially in the case of Apple, these companies will provide marketing infrastructure to help developers reach their users and justify costs charged related to selling products from their app stores. All new marketing options within North America will be fully explored and implemented as it makes sense to do so. We plan to launch beta testing campaigns as well to attract prospective subscribers and garner suggestions for improvements.


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 but we are actively researching the requirements and impact of opening a subsidiary office in Nevada.


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 by the different offers and served by both large-scale firms as well as firms that target only local markets or specific types of clients such as the millennial crowd. 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 proprietary buy/sell suggestions, and a platform to enhance trading ability of users, although some of our existing competitors and potential competitors have substantially greater financial, technical, distribution and marketing resources than we have currently 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 joint 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 in apps. We are broker agnostic and believe that we can work with the banks and brokerage firms who offer online and Smartphone trading access by providing them with the opportunity to generate additional commissions from their existing client base.



15




Contracted Consultants

 

Our directors currently provide their time and undertake duties as directors without compensation for these services. At the time the Company derives sufficient cash flow from operations or financing, the Company will evaluate the ability to compensate our directors.


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, 2017 and January 31, 2017 was $185,300 and $170,300 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. As resolved, the accrued compensation will only be paid after January 1, 2018 as and when the directors decide the Company has sufficient liquidity to pay some, or all, of the amounts accrued in cash or by issuing shares. The President of the Company can also consider submitting a request to the Board of Directors for permission to convert some, or all, of her accrued compensation into shares of the Company’s common stock, but only after January 1, 2018. The share price considerations will be either the publicly quoted share price, when such a publicly quoted price is available; or equal to or above the last cash price the Company recorded for the sale of its common shares to third parties.


Intellectual Property Information

 

Our success and ability to compete will be dependent to a significant degree on our intellectual property and any further acquisitions, which may include our operating and trade names such as Intuitrader, proprietary trading platforms and indicators, and visual charting software. We intend to mostly develop our technology internally and we will rely primarily on domain registration, 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 secure 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 in the three month periods ended April 30, 2017 and 2016, 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


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




16




For the Three Ended April 30, 2017 Compared to the Three Months Ended April 30, 2016


Revenue


The Company generated $0 in consulting revenue in during the three months ended April 30, 2017 and 2016. Revenue from e-books sales were $11 and $0, respectively, for the three month periods ended April 30, 2017 and 2016, respectively. As a startup company, we have generated only nominal revenue.


Operating Expenses


Operating expenses were $84,048 for the three month period ended April 30, 2017 compared to $214,815 for the three month period ended April 30, 2016, which is a decrease of $130,767. The decrease in operating expenses for the three months ended April 30, 2017 as compared to the three months ended April 30, 2016 was due primarily to a decrease and stock based compensation of approximately $114,000.


Operating Loss


We incurred an operating loss of $84,037 and $214,815 for the three months ended April 30, 2017 and 2016, respectively. The decrease of $130,778 or 61% is due to the factors described above.


Other Income (Expense)


The most significant component of Other Income (Expense) is related to interest expense related to notes payables.


Net Loss


The Company incurred a net loss of $90,717 for the three months ended April 30, 2017 compared to a net loss of $217,495 for the three months ended April 30, 2016, a decrease of $126,778 or 58% due to the factors discussed above.


Cash flow information for the three months ended April 30, 2017 is compared to the three months ended April 30, 2016


As of April 30, 2017, the Company had cash of $46,638, insufficient revenue to meet its ongoing operating expenses, and liabilities of $568,510 accumulated losses of $1,378,134 and a shareholders’ deficit of $463,517.


The unaudited financial statements for the three months ended April 30, 2017 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 $24,515 for the three month period ended April 30, 2017. This compares to net cash used for operating activities of $56,836 for the three month period ended April 30, 2016. In both periods our negative cash flow from operations is the result of insufficient revenue and profits to offset ongoing operating expenses.


Cash flows used in investing activities were at $900 and $20,000 for the three month periods ended April 30, 2017 and 2016 arising from software development in the current year and investing in foreign currency trading accounts in the prior year.


Cash flows provided by financing activities were $64,340 for the three month period ended April 30, 2017 which compares to cash flows provided by financing activities of $77,528 for the three month period ended April 30, 2016. During the three months ended April 30, 2017 we received $70,000 of cash proceeds from the sale of common and Series B Preferred shares. During the same period we made payments of $5,660 to pay down Notes Payable. By comparison, during the three months ended April 30, 2016, we received $526 in loans from one of our directors and made repayments to the same director in the amount of $2,860, received $5,655 in long term notes payable and received $74,207 by way of a convertible notes payable and short-term note payable.


Off-Balance Sheet Arrangements


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




17




Liquidity and Capital Resources


As of April 30, 2017, we had cash and cash equivalents of $46,638. As of January 31, 2017, we had cash and cash equivalents of $7,713.


Over the next twelve months we do expect some material capital costs to develop operations. Our estimated operating costs of $355,000 will be used for operations and reporting, but will be used to pay salaries as deemed reasonable by management.


To date, we have realized only nominal sales revenue. As a result, we expect that we may need to further 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 apps, 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 or promotional opportunity presents itself.


Once the app is live and we have had to begin 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.


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 or promotional opportunity presents itself.


Once the app is live and we have had to begin 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


-

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



18




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.


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. We have successfully tested posting an e-book and the receiving of revenues electronically to our bank account from Apple Inc.


Consulting Services


During the three months ended April 30, 2017, the Company did not provide technical writing and computer assisted design services to other startups. This revenue source diminished as anticipated and is $0 for the quarter ending April 30, 2017.


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, 2017, 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, 2017. Based on this assessment, management believes that as of April 30, 2017, our internal control over financial reporting was not effective based on those criteria.



19




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


-

Lack of appropriate segregation of duties;


-

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


-

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


Limitations on Effectiveness of Controls and Procedures

 

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


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.



20




PART II OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


During the three month periods ended April 30, 2017 and 2016, 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 3. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.


Common Stock


On October 16, 2015, 102,000,000 shares of the Company's common stock were issued at $.0001 per share to management as follows: Jeffrey Jolliffe – 1,000,000; Carl Hussey, Treasurer – 2,000,000; Joseph Gagnon, Secretary - 2,000,000; Glenda Dowie, President & CEO – 97,000,000 valued at $ 10,200.


On December 23, 2015, the Company issued 26,670 shares of its common stock at a fair value of $ 20,000, respectively, for service rendered by unrelated third parties.


On March 18, 2016, the directors approved 100,000 shares of the Company's common stock be issued to Azur Universal Inc and were issued at $.65 per share for a total value of $65,000 as per the agreement signed July 8, 2014 The amount was recorded as deposit on software acquisition under other current assets. As of January 31, 2017, the amount has been recognized as acquisition of software.


The Company has retained three unrelated parties as Consultants to help develop investor awareness in the Company through varied campaigns that revolve around contacting known sophisticated investors through media outlets, newsletters, emails and direct telephone calls. The consultants are compensated in combination of cash and restricted common shares. In May and June, 2016 the Company issued 4,283,333 shares of its common stock for services rendered by unrelated third parties. This represents payments to invoices totaling $229,182.


On July 20, 2016, the directors approved 900,000 of the Company’s shares (book value of $26,100) be issued to Azur Universal Inc and were issued at $.029 cents per share to acquire the license rights and source code for the Global Trader software.


The directors proceeded with purchasing the asset and declined to purchase the company at this time. An 8-K form was filed and a press release was sent out. The shares were issued in August and the license and rights have been acquired.


The Company was able to partially pay its debt obligations and the balances of the outstanding notes were repaid from conversion of shares. The Company issued 93,027,033 with a total value of $240,704 throughout the year.


On December 14, 2016, the Company issued 15,000,000 shares of it restricted common stock at the fair value of $57,000 to the CEO, Glenda Dowie, against accrued compensation.


In January 27 2017, a consultant returned a certificate for 1,500,000 common shares used to secure an agreement with the Company when the parties mutually agreed the services sought were not provided to the full extent both anticipated. The total number of outstanding shares was adjusted accordingly


The Company raised $70,000 in a private placement with accredited investors where a combination of restricted common shares (20,588,233) and Preferred Series B shares (35,000) were issued (see subsequent events).


The Company opted to pay consultant’s invoice by issuing 8,832,500 common shares (see subsequent events).


Purchases of Equity Securities by the Issuer and Affiliated Purchasers


During the quarter ended April 30, 2017, there were no purchases of equity securities by the Company and affiliated purchasers.



21




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, 2017 and 2016, no options have been issued under this Plan.


ITEM 4. DEFAULTS UPON SENIOR SECURITIES


In November 2014, the Company received $5,000 by way of an unsecured short-term loan from a non-related party for a term of nine months at 10% interest due upon repayment. The note payable and accrued interest was scheduled to be repaid on May 21, 2015. The Company was successful in obtaining an extension until December 31, 2015 upon making an interim renewal payment of $400. As of October 31, 2016, we are in default under the loan agreement. There can be no assurance that we will be able to reach any further agreement to extend or amend the terms of the agreement with this creditor or that we will be able to raise the funding necessary to repay the balances due under this agreement. The initiation of any collection action by any creditor may affect our ability to execute on our business plan.


On June 17, 2015 and June 28, 2015, the Company received $3,000 and $2,700, respectively, by way of an unsecured short-term loans from a non-related party for a term of six months at 5% interest due upon repayment. The loans and accrued interest were scheduled to be repaid on December 31, 2015. The Company was successful in obtaining an extension until September 1, 2016. Currently, these short-term loans are past due, however there are no default penalties associated with these loan agreements. There can be no assurance that we will be able to reach any further agreement to extend or amend the terms of the agreement with this creditor or that we will be able to raise the funding necessary to repay the balances due under this agreement. The initiation of any collection action by any creditor may affect our ability to execute on our business plan. Additional short term loans were provided in September, 2015 in the amount of $1,950, with a maturity date of January 31, 2016. This short-term lending arrangement is also past due, but does not carry any default penalty.


ITEM 5. MINE SAFETY DISCLOSURES


Not applicable to our Company.


ITEM 6. OTHER INFORMATION


None.



22




ITEM 7. 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




23



SIGNATURES


In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on June 14, 2017.


APT Systems, Inc.


 

By: /s/ Glenda Dowie

 

Glenda Dowie,

President and Chief Executive Officer



 

By: /s/ Carl Hussey

 

Carl Hussey,

Treasurer and Chief Financial Officer



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



/s/ Glenda Dowie

 

President, Chief Executive Officer and Director

 

June 14, 2017

Glenda Dowie

 

Title

 

Date

 

 

 

 

 

/s/ Joseph Gagnon

 

Secretary, Chief Technical Officer and Director

 

June 14, 2017

Joseph Gagnon

 

Title

 

Date

 

 

 

 

 

/s/ Carl Hussey

 

Treasurer, Chief Financial Officer and Director

 

June 14, 2017

Carl Hussey

 

Title

 

Date




24


APT Systems Inc Latest filings

Filing dateCompanyFormQuarterYear
2017-09-19APT Systems Inc10-Q/A32017view
2017-09-14APT Systems Inc10-Q32017view
2017-08-16APT Systems IncSC 13G32017view
2017-07-13APT Systems IncD32017view
2017-06-20APT Systems Inc10-Q/A22017view
2017-06-14APT Systems Inc10-Q22017view
2017-06-02APT Systems Inc8-K22017view
2017-05-17APT Systems Inc10-K/A22017view
2017-05-16APT Systems Inc10-K22017view
2017-05-15APT Systems IncRW22017view