American Power (APGI) 10-Q 2012 Q1 Quarterly report

U.S. 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 December 31, 2011

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the Transition Period From ____to _____

Commission File Number 000-53683

Nevada (State or other jurisdiction of incorporation or organization)	27-4429450  (I.R.S. employer identification number)
16 Market Square Center 1400 16th Street Suite 400 Denver, CO 80202 Tel: 720.932.8389 Fax: 720.932.8189 (Address of principal executive offices and zip code)  Copies to: Davis Graham & Stubbs LLP 1550 Seventeenth Street, Suite 500 Denver, CO 80202 Phone:  (303) 892-7344 Fax:  (303) 893-1379

Indicate by check mark whether the registrant (1) has 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 [  ]

1

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (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, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨
Non-accelerated filer	¨(Do not check if a smaller reporting company)
Accelerated filer	¨
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]

Number of shares of common stock outstanding as of February 14, 2012: 96,429,358

2

PART I	Page No.
Item 1.  Financial Statements	4
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.  Quantitative and Qualitative Disclosures About Market Risk	15
Item 4.  Controls and Procedures	15
PART II
Item 1.  Legal Proceedings	15
Item 1A. Risk Factors	15
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3.  Defaults Upon Senior Securities	16
Item 4.  Submission of Matters to a Vote of Security Holders	16
Item 5.  Other Information	16
Item 6.  Exhibits	16

3

ITEM 1. FINANCIAL STATEMENTS

INDEX TO AMERICAN POWER CORP. FINANCIAL STATEMENTS

AMERICAN POWER CORPORATION	PAGE
Balance Sheets		6
Statements of Operations		7
Statement of Stockholders’ Equity (Deficit)		8
Statements of Cash Flows		9
Notes to Financial Statements		10

4

AMERICAN POWER CORP.

(An Exploration Stage Company)

FINANCIAL STATEMENTS

5

AMERICAN POWER CORP.
(An Exploration Stage Company)
BALANCE SHEETS
	December 31, 2011 (Unaudited)			September 30, 2011 (Audited)
ASSETS
CURRENT ASSETS
Cash	$	261,067		$	629,857
Prepaids and deposit		10,212			17,753
TOTAL CURRENT ASSETS		271,279			647,610
LONG TERM ASSETS
Mineral property		2,670,500			2,670,500
Reclamation bond		125,108			92,876
Equipment - net		2,908			3,218
Website - net		23,863			26,297
TOTAL LONG TERM		2,822,379			2,792,891
TOTAL ASSETS	$	3,093,658		$	3,440,501
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT  LIABILITIES
Accounts payable and accrued liabilities	$	235,312		$	241,637
Promissory notes, current portion		462,500			431,250
TOTAL CURRENT LIABILITIES		697,812			672,887
LONG TERM LIABILITIES
Promissory notes, net of current portion, net of debt discount of $698,629 ($777,442 – September 30, 2011)		1,738,871			1,691,308
TOTAL LONG TERM LIABILITIES		1,738,871			1,691,308
TOTAL LIABILITIES		2,436,683			2,364,195
STOCKHOLDERS’  EQUITY
Capital stock
Authorized
500,000,000 shares of common stock, $0.001 par value,
Issued and outstanding
96,429,358 shares of common stock (92,952,085 September 30, 2011)		96,428			92,951
Additional paid in capital		3,843,560			2,957,037
Stock payable		20,000			867,500
Accumulated deficit during the exploration stage		(3,303,013	)		(2,841,182	)
TOTAL STOCKHOLDERS’ EQUITY		656,975			1,076,306
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,093,658		$	3,440,501
The accompanying notes are an integral part of these financial statements.

6

AMERICAN POWER CORP.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
							Cumulative results
							from inception
	Three Months Ended			Three Months Ended			(August 7, 2007) to
	December 31, 2011			December 31, 2010			December 31, 2011
REVENUES
Revenues		-		$	-		$	-
Total revenues		-			-			-
EXPENSES
Office and general		40,255			41,940			398,639
Management fees		80,000			292,500			1,081,164
Professional fees		47,778			22,276			257,920
Gain on debt forgiveness		-			-			(8,000	)
Exploration costs		214,985			15,107			655,879
Total expenses		(383,018	)		(371,823	)		(2,385,602	)
OTHER INCOME (EXPENSE)
Interest expense		(78,813	)		(88,492	)		(604,534	)
Loss on debt settlement		-			-			(237,807	)
Total other expenses		(78,813	)		(88,492	)		(842,341	)
NET LOSS		(461,831	)	$	(460,315	)	$	(3,227,943	)
BASIC LOSS PER COMMON SHARE		(0.01	)	$	(0.01	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING- BASIC		93,670,217			91,042,888

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

7

AMERICAN POWER CORP.
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
From inception (August 7, 2007) to December 31, 2011
(Unaudited)
	Common Stock												Accumulated
	Number of shares		Amount		Additional Paid-in Capital		Share Subscription Receivable			Stock Payable			deficit during the exploration stage			Total
Balance, August 7, 2007 (Inception)		-	$	-	$	-	$	-		$	-		$	-		$	-
Common stock issued for cash at $0.001per share on August 13, 2007		44,200,000		44,200		-		(8,500	)		-			(35,700	)		-
Net loss		-		-		-		-			-			(2,525	)		(2,525	)
Balance, September 30, 2007		44,200,000		44,200		-		(8,500	)		-			(38,225	)		(2,525	)
Subscription Receivable		-		-		-		8,500			-			-			8,500
Common stock issued for cash at $0.03per share July and August 2008		43,180,000		43,180		-		-			-			(39,370	)		3,810
Net loss														(12,964	)		(12,964	)
Balance, September 30, 2008		87,380,000		87,380		-		-			-			(90,559	)		(3,179	)
Net loss		-		-		-		-			-			(21,338	)		(21,338	)
Balance, September 30, 2009		87,380,000		87,380		-		-			-			(111,897	)		(24,517	)
Forgiveness of debt by former director		-		-		16,198		-			-			-			16,198
Common Stock, issued for mineral property at $0.05 per share April 9, 2010		2,300,000		2,300		112,700		-			-			-			115,000
Common stock issued for cash at $0.50per share June 25, 2010		800,000		800		399,200		-			-			-			400,000
Common stock  to be issued on debt totaling $208,603 (including interest of $8,603) conversion at $0.50 per share September 10, 2010		-		-		-		-			446,410			-			446,410
Common stock to be issued for services at $0.96 per share at September 30, 2010		-		-		-		-			160,000			-			160,000
Private placement received in advance		-		-		-		-			500,000			-			500,000
Net loss		-		-		-		-			-			(777,221	)		(777,221	)
Balance,  September 30, 2010		90,480,000		90,480		528,098		-			1,106,410			(889,118	)		835,870
Common stock issued for 595,238 units at $0.84 per unit on October 5, 2010		595,238		595		499,405		-			(500,000	)		-			-
Common stock issued for 449,438 units at $0.89 per unit on January 25, 2011		449,438		449		399,551		-			-			-			400,000
Common stock issued for 510,204 units at $0.98 per unit on February 23, 2011		510,204		510		499,490		-			-			-			500,000
Common stock issued for stock payable on April 5, 2011		417,205		417		445,993		-			(446,410	)		-			-
Common stock issued for services on April 5, 2011 , 250,000 shares vested on October 31, 2010 and 250,000 shares vested on January 31, 2011		500,000		500		584,500		-			(160,000	)		-			425,000
Common stock to be issued for 2,727,273 units at $0.22 per unit on August 9, 2011		-		-		-		-			600,000			-			600,000
Common stock to be issued for services at September 30, 2011		-		-		-		-			267,500			-			267,500
Net loss		-		-		-		-			-			(1,952,064	)		(1,952,064	)
Balance,  September 30, 2011		92,952,085	$	92,951	$	2,957,037	$	-		$	867,500		$	(2,841,182	)	$	1,076,306
Common stock issued for stock payable on December 12, 2011		2,727,273		2,727		597,273		-			(600,000	)		-			-
Common stock issued for services on December 12, 2011 , 250,000 shares vested on April 30, 2011,  250,000 shares vested on July 31, 2011 and 250,000 shares vested on October 31, 2011		750,000		750		289,250		-			(267,500	)		-			22,500
Common stock to be issued for services at December 31, 2011		-		-		-		-			20,000			-			20,000
Net loss		-		-		-		-			-			(461,831	)		(461,831	)
Balance,  December 31,  2011		96,429,358	$	96,428	$	3,843,560	$	-		$	20,000		$	(3,303,013	)	$	656,975
The accompanying notes are an integral part of these financial statements.

8

AMERICAN POWER CORP.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
	Three Months Ended December 31, 2011			Three Months Ended December 31, 2010			Cumulative results from inception (August 7, 2007) to December 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(461,831	)	$	(460,315	)	$	(3,277,943	)
Adjustment to reconcile net loss to net cash
used in operating activities
Depreciation and amortization		2,744			2,784			17,131
Stock-based compensation		42,500			265,000			895,000
Accretion of debt discount		78,813			88,493			604,474
Gain on debt settlement		-			-			(8,000	)
Loss on extinguishment of debt		-			-			237,807
(Increase) decrease in prepaid expenses		7,541			(51,226	)		(10,212	)
Decrease in advances to related party		-			12,689			0
(Decrease) increase in accounts payable and accrued liabilities		(6,325	)		(5,050	)		243,312
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(336,558	)		(147,625	)		(1,248,431	)
CASH FLOWS FROM INVESTING ACTIVITIES
Website		-			(5,890	)		(38,945	)
Equipment		-			-			(4,957	)
Mineral Property								(350,000	)
Reclamation Bond		(32,232	)		-			(125,108	)
NET CASH USED IN INVESTING ACTIVITIES		(32,232	)		(5,890	)		(519,010	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock		-			-			2,412,310
Loans from related party		-			-			16,198
Proceeds from notes payable		-			-			200,000
Payment on promissory note		-			(200,000	)		(600,00	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		-			(200,000	)		2,028,508
NET INCREASE ( DECREASE) IN CASH		(368,790	)		(353,515	)		261,067
CASH, BEGINNING OF PERIOD		629,857			520,852			-
CASH, END OF PERIOD	$	261,067		$	167,337		$	261,067
Supplemental cash flow information and noncash financing activities:
Common stock payable for property acquisition	$	-		$	-		$	115,000
Promissory notes issued for property	$	-		$	-		$	2,405,500
Forgiveness of debt by former director	$	-		$	-		$	16,198
Common stock issued to satisfy common stock payable	$	867,500		$	500,000		$	1,973,910
Conversion of debt totalling $208,603, (including interest of $8,603) for common stock	$	-		$	-		$	464,410
The accompanying notes are an integral part of these financial statements.

9

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2011

(Unaudited)

NOTE 1 –FINANCIAL STATEMENTS

Pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q, the financial statements, footnote disclosures and other information normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. The financial statements contained in this report are unaudited but, in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments necessary for a fair presentation of the financial statements.  The results of operations for any interim period are not necessarily indicative of results for the full year. The balance sheet at September 30, 2011 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

NOTE 2 – GOING CONCERN

The Company’s financial statements as of December 31, 2011 have been prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. For the three months ended December 31, 2011, and from inception (August 7, 2007) to December 31, 2011, the Company had a net loss of $461,831 and $3,227,943, respectively.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Stock based compensation

The Company recognizes stock-based compensation in accordance with ASC Topic 718 “Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values.

For non-employee stock-based compensation, the Company has adopted ASC Topic 505 “Equity-Based Payments to Non-Employees”, which requires stock-based compensation related to non-employees to be accounted for based on the fair value of the related stock or options or the fair value of the services on the grant date, whichever is more readily determinable in accordance with ASC Topic 505.

Cash and cash equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

Use of Estimates and Assumptions

Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.

10

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2011

(Unaudited)

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued)

Net Loss per Share

Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period.  Dilutive loss per share reflects the potential dilution of securities that could share in the losses of the Company.  The Company does not have any potentially dilutive securities, therefore the accompanying presentation is only of basic loss per share.

Fair Value of Financial Instruments

The carrying amounts of the financial instruments, including cash and cash equivalents, accounts payable, and accrued liabilities, approximate fair value due to the short maturities of these financial instruments. The notes payable are also considered financial instruments whose carrying amounts approximate fair values.

Fixed Assets

Fixed assets are stated at cost.  Major renewals and improvements are charged to the asset accounts while replacements, maintenance, and repairs, which do not improve or extend the lives of the respective assets, are expensed.  At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts.  Gains or losses from retirements or sales are credited or charged to income.

The Company’s fixed assets consist of computer equipment, which is valued at cost and depreciated using the straight-line method over a period of four years.

NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS AFFECTING THE COMPANY

There have been no recent accounting pronouncements or changes in accounting pronouncements that impacted the first quarter of fiscal 2012, or which are expected to impact future periods, which were not already adopted and disclosed in prior periods.

NOTE 5 - CAPITAL STOCK

On December 12, 2011, the Company issued a total of 2,727,273 shares to Black Sands Holding Inc. These shares were previously recorded as stock payable on September 30, 2011.

On December 12, 2011, the Company issued a total of 750,000 shares to Mr. Alvaro Valencia, CEO and Director of the Company, under the Independent Consulting Agreement between the Company and CEO. These shares were previously recorded as stock payable on September 30, 2011.

During the quarter ended December 31, 2011, the Company recorded $42,500 for stock-based compensation payable related to 250,000 shares of common stock earned by Mr. Alvaro Valencia, CEO and Director of the Company.  On October 31, 2011, under the Independent Consultant Agreement between the Company and the CEO, 250,000 shares of common stock vested and were valued based on the closing price of our shares of common stock on October 31, 2011.  At September 30, 2011 and December 31, 2011, 166,667 shares of common stock were recorded in stock payable on the balance sheet at an estimated value based on the closing price of our shares of common stock at September 30, 2011 and December 31, 2011, respectively.

11

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q and other reports filed by the Company from time to time with the Securities and Exchange Commission (collectively the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan”, or the negative of these terms and similar expressions as they relate to Company or Company’s management identify forward-looking statements. Such statements reflect the current view of Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors (including the risks contained in the section of operations and results of operations, and any businesses that Company may acquire.) Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations, and prospects.

Overview

American Power Corp (which we refer to herein as the “Company”, “us”, or “we”) was incorporated in the State of Nevada as a for-profit company on August 7, 2007. We are an exploration stage company whose intended business purpose is coal, oil, and natural gas exploration, development, and production. At the time of our incorporation, we were incorporated under the name “Teen Glow Makeup, Inc.” and our original business plan was to create a line of affordable teen makeup for girls. On November 20, 2009, Johannes Petersen acquired the majority of the shares of our issued and outstanding common stock in accordance with two stock purchase agreements by and between Mr. Petersen and Ms. Pamela Hutchinson, and Ms. Andrea Mizushima, respectively. On March 31, 2010, we changed our intended business purpose to that of coal, oil, and natural gas exploration, development, and production.

Our current primary business focus is to acquire, explore, and develop coal, oil, and gas exploration properties in the United States of North America, with a particular focus on the Rocky Mountain region. On March 30, 2010, our Board of Directors approved the proposal to change the Company’s name and to effect a 340 for 1 forward stock split. The Certificate of Change for the forward stock split was filed with and approved by the Nevada Secretary of State on April 28, 2010. Also on April 28, 2010, Articles of Amendment were filed and approved with the Nevada Secretary of State to change the name of the Corporation to American Power Corp. The Articles of Amendment also changed the authorized amount of capital stock to Five Hundred Million (500,000,000) shares of Common Stock, par value $0.001.

Business Description and Plan of Operation

Our plan of operation is to acquire and explore mineral properties and prospects in order to ascertain whether they possess economic quantities of coal and/or hydrocarbons in accordance with available funds. There can be no assurance that an economic coal and/or hydrocarbon reserve exists on any of the exploration prospects we acquire until appropriate exploration work is completed.

Coal, oil, and gas exploration is typically conducted in phases. Each subsequent phase of exploration work is recommended by a geologist based on the results from the most recent phase of exploration. We have yet to acquire exploration properties, upon which we will commence the initial phase of exploration.  We have acquired an assignment of certain contractual rights in coal and minerals located in Judith Basin County, Montana, collectively described as the “Pace Coal Project”, however these rights are speculative in nature and additional exploration work is required to determine their value. In that regard, an exploration drilling program consisting of three phases has been planned for the Pace Coal Project this year. Once we have completed each phase of the exploration drilling program, we will make a decision as to whether or not we proceed with the development of the Pace Coal Project based upon the analysis of the results of that program. Even if we complete our proposed exploration program on the Pace Coal Project or on other properties that we acquire in the future, and we are successful in identifying the presence of coal and/or hydrocarbons, we will have to spend substantial funds on further drilling, engineering studies, environmental, and mine feasibility studies before we will know if we have a commercially viable coal, oil, and gas deposit or reserve.

12

Market Overview for Plan of Operation

Coal production in the United States in 2010 reached a level of 1,085.3 million short tons (1,074.9 million short tons in 2009) according to data from the Energy Information Administration (EIA), an increase of 0.9% from the 2009 level. In spite of this increase, coal production in 2010 is still 7.4% lower than the level reached in 2008 (1,171.8 million short tons).

Coal consumption in the United States in 2010 reached a level of 1,048.3 million short tons (997.5 million short tons in 2009), an increase of 5.1% from the 2009 level, with all of the coal-consuming sectors experiencing higher consumption for the year, with the only exception of the commercial and institutional sector. Although all sectors had increases, the electric power sector (electric utilities and independent power producers), which consumed about 93% of all coal in the US in 2010, has been and continues to be the overriding force for determining total domestic coal consumption. In 2010, coal consumption for the electric power sector reached 975.6 million short tons, an increase of 4.5% from the 2009 level (933.6 million short tons). Coal consumption in the non-electric power sector (comprised of other industrial, coking coal, and the commercial and institutional sectors) increased 13.1% in 2010, after experiencing declines for five consecutive years.  Coal consumption at coke plants increased by 37.6% to end 2010 at 21.1 million short tons (15.3 million short tons in 2009).

Total coal stockpiles have begun to return to pre-recession levels, decreasing in 2010 by 8.4% to end the year at 224.3 million short tons, after posting a record level of 244.8 million short tons in 2009.

Domestic coal prices continued to increase, rising for the seventh consecutive year. According to data for 2010, the average price of coal delivered to the electric power sector increased by 4.2% to $2.22 per million Btu over the 2009 level. The average delivered price of coal to the other industrial sector decreased by 1.0% to an average price of $64.24 per short ton in 2010 while  the delivered price of coal to US coke plants increased by 7.4% to reach an average price of $153.59 per short ton. The average delivered price of coal to the commercial and institutional sector decreased in 2010 by 9.1% to $88.42 per short ton.

Western Region (includes Montana)

The Western Region is the largest coal-producing region in the US, concentrating 54.6% of total US coal production in 2010. Coal production in this region increased by 1.1% in 2010 to a total of 591.6 million short tons.

In 2010, Montana, the second largest coal-producing State in the Western Region, produced a total of 44.7 million short tons, an increase of 13.3% over the 2009 level.

Results of Operations for the Three Months ended December 31, 2011 and 2010

Revenues

The Company has yet to generate any revenues.

13

Expenses

Three months ended December 31, 2011 compared to the three months ended December 31, 2010

We had a net loss of $461,831 for the three months ended December 31, 2011, which was $1,516 greater than the net loss of $460,315 for the three months ended December 31, 2010. There has not been a significant change in net loss between the three month periods.  The decrease in management fees has been approximately offset by an increase in mineral property exploration costs.

 Interest expense of $78,813 for the three months ended December 31, 2011, as compared to interest expense of $88,492 for the three months ended December 31, 2010, comprises of accretion expense related to debt discount recorded on the promissory notes.

Liquidity and Capital Resources

Our balance sheet as of December 31, 2011, reflects current assets of $271,279 which includes cash of $261,067. Our deficit in working capital at December 31, 2011 is $426,533.

	As at December 31, 2011			As at September 30, 2011
Current assets	$	271,279		$	647,610
Current liabilities		697,812			672,887
Working capital (deficit)	$	(426,533	)	$	(25,277	)

Operating Activities

Net cash flows used in operating activities were $336,558 and $147,625 for the three months ended December 31, 2011 and 2010, respectively. Negative cash flows from operating activities are primarily attributable to a net loss of $461,831 and $460,315 for the three months ended December 31, 2011 and 2010, respectively.

Investing Activities

Net cash flows used in investing activities were $32,232 and $5,890 for the three months ended December 31, 2011 and 2010, respectively. Negative cash flows for the three months ended December 31, 2011 was due to the purchase of a reclamation bond in the amount of $32,232.

Financing Activities

Net cash flows used in financing activities were $0 and $200,000 for the three months ended December 31, 2011 and 2010, respectively.

	Three months ended December 31,
	2011			2010
Net Cash Used in Operating Activities	$	(336,558	)	$	(147,625	)
Net Cash Used in Investing Activities		(32,232	)		(5,890	)
Net Cash Used in Financing Activities		-			(200,000	)
Net Decrease in Cash	$	(368,790	)	$	(353,515	)

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Off-Balance Sheet Arrangements

As of December 31, 2011, we had no existing off-balance sheet arrangements, as defined under SEC rules.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required by smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized, and reported within the specified time periods. Our Chief Executive Officer and its Chief Financial Officer (collectively, the “Certifying Officers”) are responsible for maintaining our disclosure controls and procedures. The controls and procedures established by us are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms.

As of December 31, 2011, the Certifying Officers evaluated the effectiveness of our disclosure controls and procedures. Based on the evaluation, the Certifying Officers concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure.

The Certifying Officers have also concluded, based on their evaluation of our controls and procedures that as of December 31, 2011, our internal controls over financial reporting are effective and provide reasonable assurance of achieving their objective.

The Certifying Officers have also concluded that there was no change in our internal controls over financial reporting identified in connection with the evaluation that occurred during our fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.  OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.

No director, officer, or affiliate of the issuer and no owner of record or beneficiary of more than 5% of the securities of the issuer, or any security holder is a party adverse to the small business issuer or has a material interest adverse to the small business issuer.

ITEM 1A.   RISK FACTORS

The information to be reported under this item has not changed since the previously filed 10K, for the year ended September 30, 2011.

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

On December 12, 2011, the Company issued a total of 2,727,273 shares to Black Sands Holding Inc. These shares were previously recorded as stock payable on September 30, 2011.

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On December 12, 2011, the Company issued a total of 750,000 shares to Mr. Alvaro Valencia, CEO and Director of the Company, under the Independent Consulting Agreement between the Company and CEO. These shares were previously recorded as stock payable on September 30, 2011.

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES

We have not had any default upon senior securities.

ITEM 4.      (Removed and Reserved)

None

ITEM 5.      OTHER INFORMATION

We do not have any other information to report.

ITEM 6.      EXHIBITS

31.1 CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2 CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1 CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2 CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

* Filed herewith

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SIGNATURES

Pursuant to the requirements 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.

	AMERICAN POWER CORPORATION  (Registrant)
Date: February 14, 2012	By:	/s/ Alvaro Valencia
		Alvaro Valencia Chief Executive Officer, President and Director
Date: February 14, 2012	By:	/s/ Johannes Petersen
		Johannes Petersen Chief Financial Officer, Secretary, and Director

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