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<!--egx--><p style='line-height:normal;margin:0cm 0cm 0pt'><b><u><font lang="EN-CA">1. NATURE OF OPERATIONS</font></u></b></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><b><font lang="EN-US">APT Systems, Inc</font></b><font lang="EN-US">. (“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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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. </font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><b><font lang="EN-US">Going Concern Consideration</font></b></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">These condensed 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,</font><font lang="EN-CA" style='layout-grid-mode:line'> </font><font lang="EN-CA">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</font><font lang="EN-CA" style='layout-grid-mode:line'>, or, </font><font lang="EN-CA">the sale of shares of common stock. </font><font lang="EN-US">There is no assurance that these events will be satisfactorily completed</font><font lang="EN-US">.</font></p> <p style='line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.</font></p> <p style='line-height:normal;margin:0cm 0cm 0pt'> </p>
<!--egx--><p style='line-height:normal;margin:0cm 0cm 0pt'><b><u><font lang="EN-CA">2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</font></u></b></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-US">Basis of Preparation of Financial Statements</font></u></p><pre style='text-align:justify'>The accompanying unaudited condensed 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 financial statements not misleading. Operating results for the six months ended July 31, 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.</pre> <p style='line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA" style='letter-spacing:-0.1pt'>Use of Estimates and Assumptions</font></u></p><pre style='text-align:justify'>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.</pre> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Foreign Currency Translation</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">The financial statements are presented in United States dollars. In accordance with ASC 830, “<i>Foreign Currency Matters</i>”, 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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">Foreign currency transaction gains and losses are recorded in the statements of operations as a component of other income (expense).</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Cash and Cash Equivalents</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">The Company considers all highly liquid investments with original maturity of three months or less to be cash equivalents.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Financial Instruments</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">Fair value measurements</font><font lang="EN-CA"> 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:</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">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.</font></p> <p style='text-align:justify;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;margin:0cm 0cm 0pt'><font lang="EN-CA">The recorded amounts of financial instruments, including cash equivalents, accounts payable, accrued expenses, note payable and loan from director approximate their market values as of July 31, 2015 and January 31, 2015 due to the intended short term maturities of these financial instruments.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Software</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Website</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">The Company accounts for website development costs in accordance with ACS 350-50 “<i>Website Development Costs</i>”. Costs incurred to register domain names, integrate 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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-US">Deferred Financing Costs</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">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. </font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">For the six month periods ended July 31, 2015 and 2014, the Company had paid refundable deposits of $11,000 and $13,000, respectively. The deposits were made to two consulting companies that were to assist the Company in obtaining a $125,000 bridge loan to be utilized by the Company for its public registration purposes, and to assist the Company with an $8,000,000 private equity placement. The deposits are refundable for non-performance. As of the date of this report, neither the bridge loan nor the private placement had been secured. </font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">During the quarter ended July 31, 2015, one consulting firm refunded to the Company $2,000 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 July 31, 2015, collection of the remaining amounts owed to the Company on these agreements was uncertain, therefore, </font><font lang="EN-US">$11,500, or 100% of the outstanding balance of the deferred financing costs, was written off effective January 31, 2015.</font><font lang="EN-US"> </font><font lang="EN-CA"> Subsequently, additional funds were recovered in May in the amount of $500.00 </font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-US">Impairment of Long-Lived and Intangible Assets</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Income Taxes</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">The Company accounts for income taxes in accordance with FASB ASC 740 “</font><i><font lang="EN-US">Income Taxes</font></i><font lang="EN-US">”. Under FASB ASC 740, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial statement reported amounts at each period end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. FASB ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under FASB ASC 740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. At July 31, 2015 and 2014, the Company has no unrecognized tax benefits. </font></p> <p style='line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-US">Revenue Recognition</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-US">Advertising costs</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">Advertising costs are expensed as incurred. The Company recorded no advertising costs during the six months ending July 31, 2015 and 2014.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Research and Development Costs</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">Costs incurred in research and developments are expenses as incurred.</font></p> <p style='line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-US">Stock Based Compensation</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">The Company accounts for employee and non-employee stock awards under ASC 718 and 505, 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 <i>Note 8 – Stockholders’ Deficit</i> below. During the six month periods ended July 31, 2015 and 2014, no stock options had been issued or outstanding.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='margin:0cm 0cm 0pt'><u><font lang="EN-CA" style='font-style:normal'>Basic and Diluted Net Income (Loss) per Share</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">The Company computes net income (loss) per share in accordance with ASC 260, "<i>Earnings per Share</i>" 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 and six months ended July 31, 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. </font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Recently Issued Accounting Pronouncements</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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.</font></p>
<!--egx--><p style='line-height:normal;margin:0cm 0cm 0pt'><b><u><font lang="EN-CA">4. RELATED PARTY TRANSACTIONS</font></u></b></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><b><font lang="EN-CA"> </font></b></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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 July 31, 2015 and January 31, 2015, was $105,000 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</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">As of July 31, 2015 and January 31, 2015, the Company owed the President $4,790 and $8,402, respectively by way of loans. The loans are unsecured, due on demand and interest free.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">During the six months ended July 31, 2015, the Company commenced providing consulting, technical writing and computer assisted design services to other startups provided by a </font><font lang="EN-US">contractor, a related person (family member to the Chief Executive Officer, </font><font lang="EN-US">to generate certain additional revenues. The Company paid $6,364 and $13,365 and $0 to the related party contractor in respect of the provision of these services during the three and six months ended July 31, 2015 and 2014, respectively.</font></p>
<!--egx--><p style='line-height:normal;margin:0cm 0cm 0pt'><b><u><font lang="EN-CA">5. CONVERTIBLE NOTE PAYABLE </font></u></b></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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 December 31, 2015.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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”). </font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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.</font></p> <p style='line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">Accrued interest payable as of July 31, 2015 and January 31, 2015 was $15,701 and $10,253, respectively. Interest expense was $4,135 and $7,798 for the three and six months ended July 31, 2015, and $2,887 and 5,611 for the three and six months ended July 31, 2014,respectively.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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. 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 December 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</font><font lang="EN-US">.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p>
<!--egx--><p style='line-height:normal;margin:0cm 0cm 0pt'><b><u><font lang="EN-CA">6. NOTES PAYABLE</font></u></b></p> <p style='line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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 $366 and $118 is included in the financial statements as of July 31, 2015 and January 31, 2015, respectively. </font><font lang="EN-US"> <i></i> The</font><font lang="EN-US"> 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 </font><font lang="EN-US">and accordingly we went into default under the terms of this note payable on May 21, 2015 </font><font lang="EN-US">and the liability remains outstanding in full as of the date of the issuance of this report. We have had discussions with the holder of the note payable to extend the term of the note payable until December 31, 2015 upon making an interim renewal payment of $400.00 but as yet have not signed any agreement to formally extend the note payable. There</font><font lang="EN-US"> can be no assurance that we will be able to raise the funding necessary to repay the balance due under the note payable. </font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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 July 31, 2015 and January 31, 2015, accrued interest on this loan was $74 and $9, respectively. As on July 31, 2015, and as of the date of the date of the issuance of this report, we have not had the funds to make any payments under the term of this agreement and consequently were in default under the terms of this agreement as of July 31, 2015 and continue to be in default under the terms of this agreement as of the date of the issuance of this report. There</font><font lang="EN-US"> 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. T</font><font lang="EN-US">he initiation of any collection action by this creditor could affect our ability to execute on our business plan and operations.</font><font lang="EN-US"> </font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US"> </font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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 <i>Note 10 Subsequent Events</i> 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.</font><font lang="EN-US">of June 16, 2015. </font><font lang="EN-US">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 and subsequently extended the note until September 30, 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. </font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p>
<!--egx--><p style='line-height:normal;margin:0cm 0cm 0pt'><b><u><font lang="EN-CA">7. COMMITMENTS AND CONTINGENCIES</font></u></b></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">The Company had executed three short-term lending arrangements with a non-related party, Mr. Raymond C. Dove, by July 31, 2015. The effective dates of the loans are May 1, 2015 and June 22, 2015 and June 27, 2015. The loan amounts are $25,000 and $3,000 and $2,700.00, respectively, with interest accruing at 5% per annum. Accrued interest of $18 and $12, respectively is included in the financial statements as of July 31, 2015. Repayment is in one lump sum due and payable on or before December 4, 2015 and December 31, 2015, respectively.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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. The Company is filing for exemptions and it is not possible to determine the outcomes.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p>
<!--egx--><p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><b><u><font lang="EN-CA">9. SUBSEQUENT EVENTS</font></u></b></p> <p style='line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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 July 31, 2015 and January 31, 2015, accrued interest on this loan was $74 and $9, respectively. As on July 31, 2015, and as of the date of the date of the issuance of this report, we have not had the funds to make any payments under the term of this agreement and consequently were in default under the terms of this agreement as of July 31, 2015 and continue to be in default under the terms of this agreement as of the date of the issuance of this report. The Company has entered into discussions with Pacific Stock Transfer and has agreed on terms it hopes to acheive this in the near future. There</font><font lang="EN-US"> can be no assurance that we will be able to raise the funding necessary to repay the balance due under this agreement. T</font><font lang="EN-US">he initiation of any collection action by this creditor could affect our ability to execute on our business plan and operations.</font><font lang="EN-US"> </font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">In accordance with <i>ASC 855, Subsequent Events</i>, the Company has evaluated events that occurred subsequent to the balance sheet date through the date of available issuance of these financial statements. </font><font lang="EN-US">The Company determined that other than as disclosed above, there were no material reportable subsequent events to be disclosed</font><font lang="EN-US">.</font></p>
<!--egx--><p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><b><u><font lang="EN-CA">8. SHAREHOLDERS’ DEFICIT</font></u></b></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><b><font lang="EN-CA">PREFERRED SHARES</font></b></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.001.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">No shares of preferred stock were issued and outstanding as of July 31, 2015 and January 31, 2015.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><b><font lang="EN-CA">COMMON SHARES</font></b></p> <p style='line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">The Company is authorized to issue 90,000,000 shares of common stock, par value $0.001 per share.</font></p> <p style='line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">No shares of common stock were issued during the six months ended July 31, 2015 or 2014.</font></p> <p style='line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">As of July 31, 2015, there are a total of </font><font lang="EN-CA">8,915,000 </font><font lang="EN-US">of the Company’s common shares issued and outstanding</font></p> <p style='line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='line-height:normal;margin:0cm 0cm 0pt'><b><font lang="EN-US">STOCK OPTIONS</font></b></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">The Company adopted the 2013 Equity Incentive Plan (the “Plan”) on January 31, 2012, reserving 5,500,000 shares for future issuances, of which a maximum of 2,500,000 may be issued as incentive stock options. The Plan provides for the issuance of non-statutory stock options or restricted stock to officers and employees, with an exercise price that is at least equal to the fair market value of the Company’s common stock on the date of grant. Vesting terms and the lives of the options are to be determined by the Board of Directors upon grant. As of July 31, 2015 and January 31, 2015, no options have been issued or are outstanding under this Plan.</font></p>
<!--egx--><p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-US">Basis of Preparation of Financial Statements</font></u></p><pre style='text-align:justify'>The accompanying unaudited condensed 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 financial statements not misleading. Operating results for the six months ended July 31, 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.</pre> <p style='line-height:normal;margin:0cm 0cm 0pt'> </p>
<!--egx--><p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA" style='letter-spacing:-0.1pt'>Use of Estimates and Assumptions</font></u></p><pre style='text-align:justify'>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.</pre>
<!--egx--><p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Foreign Currency Translation</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">The financial statements are presented in United States dollars. In accordance with ASC 830, “<i>Foreign Currency Matters</i>”, 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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">Foreign currency transaction gains and losses are recorded in the statements of operations as a component of other income (expense).</font></p>
<!--egx--><p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Cash and Cash Equivalents</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">The Company considers all highly liquid investments with original maturity of three months or less to be cash equivalents.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p>
<!--egx--><p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Financial Instruments</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">Fair value measurements</font><font lang="EN-CA"> 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:</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">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.</font></p> <p style='text-align:justify;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;margin:0cm 0cm 0pt'><font lang="EN-CA">The recorded amounts of financial instruments, including cash equivalents, accounts payable, accrued expenses, note payable and loan from director approximate their market values as of July 31, 2015 and January 31, 2015 due to the intended short term maturities of these financial instruments.</font></p>
<!--egx--><p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Website</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">The Company accounts for website development costs in accordance with ACS 350-50 “<i>Website Development Costs</i>”. Costs incurred to register domain names, integrate 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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p>
<!--egx--><p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-US">Deferred Financing Costs</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">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. </font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">For the six month periods ended July 31, 2015 and 2014, the Company had paid refundable deposits of $11,000 and $13,000, respectively. The deposits were made to two consulting companies that were to assist the Company in obtaining a $125,000 bridge loan to be utilized by the Company for its public registration purposes, and to assist the Company with an $8,000,000 private equity placement. The deposits are refundable for non-performance. As of the date of this report, neither the bridge loan nor the private placement had been secured. </font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">During the quarter ended July 31, 2015, one consulting firm refunded to the Company $2,000 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 July 31, 2015, collection of the remaining amounts owed to the Company on these agreements was uncertain, therefore, </font><font lang="EN-US">$11,500, or 100% of the outstanding balance of the deferred financing costs, was written off effective January 31, 2015.</font><font lang="EN-US"> </font><font lang="EN-CA"> Subsequently, additional funds were recovered in May in the amount of $500.00 </font></p>
<!--egx--><p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-US">Impairment of Long-Lived and Intangible Assets</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">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.</font></p>
<!--egx--><p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Income Taxes</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">The Company accounts for income taxes in accordance with FASB ASC 740 “</font><i><font lang="EN-US">Income Taxes</font></i><font lang="EN-US">”. Under FASB ASC 740, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial statement reported amounts at each period end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. FASB ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under FASB ASC 740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. At July 31, 2015 and 2014, the Company has no unrecognized tax benefits. </font></p> <p style='line-height:normal;margin:0cm 0cm 0pt'> </p>
<!--egx--><p style='line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-US">Revenue Recognition</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p>
<!--egx--><p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-US">Advertising costs</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">Advertising costs are expensed as incurred. The Company recorded no advertising costs during the six months ending July 31, 2015 and 2014.</font></p>
<!--egx--><p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Research and Development Costs</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">Costs incurred in research and developments are expenses as incurred.</font></p> <p style='line-height:normal;margin:0cm 0cm 0pt'> </p>
<!--egx--><p style='line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-US">Stock Based Compensation</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">The Company accounts for employee and non-employee stock awards under ASC 718 and 505, 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 <i>Note 8 – Stockholders’ Deficit</i> below. During the six month periods ended July 31, 2015 and 2014, no stock options had been issued or outstanding.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p>
<!--egx--><p style='margin:0cm 0cm 0pt'><u><font lang="EN-CA" style='font-style:normal'>Basic and Diluted Net Income (Loss) per Share</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">The Company computes net income (loss) per share in accordance with ASC 260, "<i>Earnings per Share</i>" 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 and six months ended July 31, 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. </font></p>
<!--egx--><p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Recently Issued Accounting Pronouncements</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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.</font></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-US">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.</font></p>
<!--egx--><p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><u><font lang="EN-CA">Software</font></u></p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'> </p> <p style='text-align:justify;line-height:normal;margin:0cm 0cm 0pt'><font lang="EN-CA">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.</font></p>
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<!--egx--><p style='margin:0in 0in 0pt;line-height:normal'><b><u><font lang="EN-CA">3. GOING CONCERN AND LIQUIDITY</font></u></b></p> <p style='text-align:justify;margin:0in 0in 0pt;line-height:normal'> </p> <p style='text-align:justify;margin:0in 0in 0pt;line-height:normal'><font lang="EN-CA">As of July 31, 2015, the Company had cash of $279, </font>insufficient revenue to meet its ongoing operating expenses<font lang="EN-CA">, liabilities of $252,818, accumulated losses of $360,570 and a shareholders’ deficit of $247,070.</font></p> <p style='text-align:justify;margin:0in 0in 0pt;line-height:normal'> </p> <p style='text-align:justify;margin:0in 0in 0pt;line-height:normal'><font lang="EN-CA">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.</font></p> <p style='text-align:justify;margin:0in 0in 0pt'> </p> <p style='text-align:justify;margin:0in 0in 0pt'><font lang="EN-CA">The unaudited condensed financial statements for the six months ended July 31, 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.</font></p> <p style='margin:0in 0in 0pt;line-height:normal'> </p> <p style='margin:0in 0in 0pt;line-height:normal'><font lang="EN-CA">Financial statements do not include adjustments that may be necessary if the Company is unable to continue as a going concern.</font></p>
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APT Systems Inc
0001543739
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