SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-KSB



[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2006



[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934



Commission file number 000-50738



APD ANTIQUITIES, INC.

--------------------------------------------------------

(Name of Small Business Issuer Specified in Its Charter)



Nevada                                     91- 1959986

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(State or other jurisdiction of                      (I.R.S. Employer

incorporation or organization)                     Identification No.)



1314 S. Grand Boulevard, Suite 2 - 250, Spokane, WA         99202

----------------------------------------------------     ----------

(Address of principal executive offices)                 (Zip Code)



Issuer's telephone number (including area code): (509) 744-8590

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Securities registered under Section 12(b) of the Act: None



Securities registered under Section 12(g) of the Act:

Common Stock, par value $.001

(Title of Class)



Check whether the issuer (1) filed all reports to be filed by Section 13 or

15(d) of the Securities Exchange Act of 1934 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. [X] Yes

[ ] No



Check if there is no disclosure of delinquent filers in response to Item 405 of

Regulation S-B contained herein, and no disclosure will be contained, to the

best of registrant's knowledge, in definitive proxy or information statements

incorporated by reference in Part III of this Form 10-KSB or any amendment to

this Form 10-KSB. [ ]



Issuer's revenues for the most recent fiscal year: $7,500.



The aggregate market value of the Registrant's Common Stock held by non-

affiliates of the Registrant (458,000 shares) as of December 31,2006 was

approximately $52,000 based upon $.25 per share, the price at which the stock

was originally issued which represents the latest transaction price for the

shares since no public market exists for such shares.



The Registrant had 1,706,000 shares of Common Stock outstanding as of December

31,2006.



DOCUMENTS INCORPORATED BY REFERENCE

Not Applicable.



Transitional Small Business Disclosure Format (Check one):  Yes ___; No  X





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In accordance with the guidelines set forth by United States Securities and Exchange Commission in their recent review of the APD Antiquities, Inc. (hereinafter "We", the "Registrant" or the "Company") Form 10-KSB and subsequent financial statements and related disclosures contained within, for fiscal the year ended December 31, 2006, we have amended the Form 10-KSB as a result of inconsistencies in reference to rules in the Controls and Procedures, and the language in Section 302 Certification, as well as filing incorrect financial statements and omitting the auditors report which should have been included in the original filing.















































































PART I



ITEM 1. DESCRIPTION OF BUSINESS



BUSINESS DEVELOPMENT



APD Antiquities, Inc. (hereinafter "We", the "Registrant" or the "Company") was

incorporated in the State of Nevada on July 23, 1996.



APD Antiquities, Inc. is an e-Commerce based Company engaged in the business of

acquiring and marketing antiques. As of December 31, 2006 our inventory

consists of six antiques, with an inventory cost of $9,110.00. Retail sales of antiques and collectibles are primarily facilitated through our web site:

http://www.apd-international.com.



On December 27, 2004, APD Antiquities, Inc., a Nevada corporation and GCJ,

Inc., ("GCJ") a Nevada corporation entered into to an Acquisition Agreement and

Plan of Merger, whereby APD has acquired all the outstanding shares of common

stock of GCJ from its sole stockholder in an exchange for $3,600 cash in a

transaction where APD is the successor corporation.  Pursuant to Rule 12g-3(g)

of the General Rules and Regulations of the Securities and Exchange Commission,

the APD Antiquities, Inc. is the successor issuer to GCJ for reporting purposes

under the Securities Exchange Act of 1934, as amended (the "Act").  The purpose

of this transaction was for APD Antiquities, Inc. to succeed to the

registration status of JCG under the Exchange Act pursuant to Rule 12g-3.



INVENTORY OF ANTIQUES OWNED



We purchase and sell rare, high quality Asian antiques, Chinese art and other

collectibles having their origin in Hong Kong and the Peoples Republic of

China. In particular, we specialize in museum quality antique items such as

statues, pottery, porcelain, earthen sculptures, and gilt lacquer accessories.

These avenues of supply are likely to continue to be our main sources of

inventory. We hope to create a brand synonymous with a large selection

including a wide variety of antique types from the Far East. Other than this

general mission, we have no established criterion or procedures for selecting

merchandise.



In order to catalogue our inventory, we utilize a computerized inventory

control system. The computer system allows our sales staff to quickly identify

and obtain information about every antique in inventory. In addition, our sales

staff can obtain digital images of the antiques from our web site to exhibit to

customers.



CLIENTELE



Our marketing efforts principally target individuals who have appreciated or

collected antiques and collectibles, but who may not be aware of the

availability of antiques for purchase. In addition, antique collectors,

interior decorators, interior designers, private clients and corporations are

being targeted as these groups may have an appreciation for antiques or

collectibles.



We have two primary sales and marketing strategies. The first is a direct sales

approach via an Internet retail site. Originating from our corporate

headquarters, we have contracted with a local Web Designer/Internet Service

Provider (ISP) for the development and hosting of our retail web site. Upon

accessing the site, interested parties are able to read about our Company,

browse the majority of inventory items and place orders. Currently, two of our

pieces can be viewed in our gallery at http://www.apd-international. Utilizing

the Internet has allowed us to market antiques on a global basis. At the

current time, due to the expense associated with secure credit card

transactions, we do not accept credit card orders via the web site.



Our second marketing and sales strategy is a proposed direct mail approach. The

direct mail approach will focus on antique collectors, interior decorators,

home designers, private clients and corporations. This marketing effort is

aimed at attracting persons who have not necessarily had an awareness of the

existence of antiques available for private sale. At the present time,

management has agreed upon a plan concerning our direct sales approach. In this

regard, we will need to undertake an assessment of local and national business,

economic and social demographics. When we are in a position to conduct this

research we will seek the services of a marketing/public relations firm. We are

uncertain, at this time, which local or national firm we will secure to

undertake such a demographic study. Due to capital constraints, we cannot

implement our proposed direct sales approach at this time.



For the year ended December 31, 2006, the Company sold four items with an

average single item sales price of approximately $1,558.75.



CERTIFICATES OF AUTHENTICITY



Antiques in our inventory are frequently acquired with guarantees from the

sellers. In order to verify authenticity the Company may also: (a) utilize

information provided by the seller as to age, condition and origin of an

antique upon the transfer of ownership; (b) subject the antique or collectible

to our own expert examination; (c) employ outside experts available to it to

examine the antique items or (d) use other means.



We honor the Certificates of Authenticity provided by our wholesale vendors.

Therefore, we have an obligation to refund to the customer the purchase price

paid if any document is proven non-authentic. Should our determination of

authenticity of an antique be erroneous we would, as a consequence, likely

suffer a loss unless redress by the Company against the seller of the antiques

could be obtained. We do not carry any insurance and are currently not aware of

any entity that would offer or underwrite such insurance at commercially

reasonable rates to protect us against a loss arising from either the purchase

of antiques lacking authenticity or claims by customers for recovery against

the Certificates of Authenticity. Currently, there are no claims against us and

there have been no claims made against the Company pursuant to the Certificates

of Authenticity. Accordingly, we have not established a reserve against the

risk of forgery or against any exposure under the Certificates of Authenticity.





COMPETITION



We do not regard the business of marketing antiques as a definable industry.

There are a great number of dealers of antiquities, many of which are only

part-time operators, many are located in homes without any established

commercial location and many are located in commercial office buildings or have

retail space in metropolitan areas. We compete primarily with art galleries,

antique stores and sellers of other collectible items, as well as dealers in

Asian antiquities.



When acquiring an antique or collectible, APD Antiquities, Inc. competes with

persons who acquire similar antiques and collectibles for resale, as well as

private collectors. The principal sources for antiques are wholesale vendors in

Hong Kong and the People's Republic of China, as well as other Asian countries,

such as Thailand, Viet Nam and South Korea.   In the event prices for antiques

increase materially, our ability to acquire antiques and, in turn, our ability



to market such newly acquired antiques to the general public, may be adversely

affected. However, if prices for antiques significantly increase, the

resale/wholesale value of our inventory would be positively affected.



There is no assurance that we will be able to continue to realize significant

profits for existing inventory or items purchased for resale in the future.

Moreover, existing dealers may choose to compete with us in the same manner or

in a more favorable format than that of the Company.



Barriers to entry into the market of sales of Asian antiques and collectibles

are relatively low, and current and new competitors can launch new sites at

relatively low costs using commercially available software. We potentially

compete with a number of other companies marketing similar antiquities over the

Internet. Pressures created by our competitors could have a material adverse

effect on our business, results of operations and financial condition. We

believe that the principal competitive factors in our market are volume and

selection of goods, population of buyers and sellers, customer service,

reliability of delivery and payment by users, brand recognition, WEB site

convenience and accessibility, price, quality of search tools and system

reliability. Some of our potential competitors have longer operating histories,

larger customer bases, greater brand recognition and significantly greater

financial, marketing, technical and other resources. In addition, other online

trading services may be acquired by, receive investments from or enter into

other commercial relationships with larger, well-established and well-financed

companies. Therefore, some of our competitors with other revenue sources may be

able to devote greater resources to marketing and promotional campaigns, adopt

more aggressive pricing policies, and devote substantially more resources to

Web site and systems development, or may try to attract traffic by offering

incentives such as free products and/or services. Increased competition may

result in reduced operating margins, loss of market share and diminished value

in the Company brand.



As a strategic response to changes in the competitive environment, we may, from

time to time, make certain pricing, service or marketing decisions or

acquisitions. Such decisions or acquisitions could have a material adverse

effect on our business, results of operations and financial condition. New

technologies and the expansion of existing technologies may increase

competitive pressures on the Company by enabling our competitors to offer

products at a lower cost. Certain Web-based applications that direct Internet

traffic to certain Web sites may channel users to retail services that compete

with us. Although we plan to establish arrangements with online services and

have listed our site with search engine companies, there can be no assurance

that arrangements can be initially established, will be renewed on commercially

reasonable terms or that they will otherwise bring traffic to our web site. In

addition, companies that control access to transactions through network access

or Web browsers could promote our competitors or charge us substantial fees for

inclusion. Any and all of these events could have a material adverse effect on

our business, results of operations and financial condition.





SEASONAL BUSINESS



The nature of the business in which the Company engages is not seasonal.



EMPLOYEES



As of that date of this filing, the Company has 2 part time employees,

including it executive officers, Ms. Swank and Mr. Edward Wong Wah On.  No

other outside business employs Ms. Swank at this time. Mr. Wong Wah On is

currently employed by Anka Consultants Limited, a consultant service provider

headquartered in Sheung Wan, Hong Kong.  APD Antiquities, Inc. does not serve

as either individual's primary source of income.  Ms. Swank currently spends

about twenty percent (20%) of her free time on our operations.  Mr. Wong is

currently only able to dedicate a few hours per week working on our operations

and is the person primarily responsible for selecting and purchasing antique

and collectibles. Our bylaws do not establish a minimum time commitment

expected of each employee. We have no employment agreements with Ms. Swank or

Mr. Wong.



ITEM 2. PROPERTIES



The address of the principal office is: 1314 S. Grand Boulevard, Suite 2 - 250,

Spokane, WA 99202. An unaffiliated party is providing approximately 1,250

square feet of office space on a month-to-month basis at the rate of $300 per

month. The subleased space is currently fully utilized by our employees.



Management believes that this space is currently suitable for the Company's

needs for an additional twelve (12) months.



Our officers own the computer equipment the Company utilizes.





ITEM 3. LEGAL PROCEEDINGS



None.



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



On June 30, 2006 the Company held its annual meeting of shareholders for the

following purposes: to elect three directors to serve until

the next annual meeting of shareholders.



At the meeting the following Directors were elected by a majority of the votes

cast at the election.



Cindy Swank

Edward Wong Wah On

Timothy Kuh



PART II



ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS





THERE IS NO PUBLIC MARKET FOR THE COMPANY'S COMMON STOCK. THE COMPANY'S COMMON

STOCK, PAR VALUE $.001, HAS NEVER BEEN TRADED ON ANY NATIONAL EXCHANGE OR OTHER

FORMAL PUBLIC EXCHANGE QUOTATION MEDIUM. THERE IS NO TRADING MARKET FOR OUR

COMMON STOCK AT PRESENT AND THERE HAS BEEN NO TRADING MARKET TO DATE.



As of December 31, 2006 there were approximately 43 holders of record of the

Company's Common Stock before calculating individual participants in security

position listings pursuant to Rule 17Ad-8 under the Securities Exchange Act of

1934. The Company's transfer agent Nevada Agency and Trust Company, 50 West

Liberty Street, Suite 880, Reno, Nevada 89501, reported approximately 43

beneficial owners of 1,706,000 shares the Company's issued and outstanding

common stock, as of December 31, 2006.



Since its inception in July of 1996, the Company has never paid cash dividends

to the holders of the common stock.  We presently intend to retain future

earnings, if any, to finance the expansion of our business and we do not

anticipate that any cash dividends will be paid in the foreseeable future.  Our

future dividend policy will depend on our earnings, capital requirements,

expansion plans, financial condition and other relevant factors.





RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED

SECURITIES



In June 2005, we issued an aggregate of 250,000 shares of common stock in a

private placement at $.10 per share.  The issuance of the securities was exempt

from  the  registration  requirements  of the Securities Act  pursuant  to  the

exemption  set  forth  in  Section 4(2) and  Regulation  D,  Rule  505  of  the

Securities Act.  Gross proceeds  of  $25,000  were  paid to the Company in this

private placement.  No commission or finder's fee was  paid  in regards to this

transaction.





ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS



APD Antiquities., Inc. is an e-Commerce based company engaged in the business

of acquiring and marketing antiques. The Company expects to have smaller losses

in 2006, but can give no assurance as to when and if it will become profitable.

These losses and expenses may increase and fluctuate from quarter to quarter

when and if the Company expands their marketing activities. There can be no

assurance that the Company will achieve profitable operations.



The Company's existing cash position is insufficient to support its operations.

Accordingly, the Company is continuing to examine a range of possible funding

sources, including additional strategic alliances, additional equity or debt

private placements, the sale and of existing assets, the possibility of

entering into one or more business transactions that could involve the merger

or sale of the Company and/or the sale of some or all of its assets.  We do not

currently have any contractual restrictions on our ability to incur debt. Any

such indebtedness could contain covenants that would restrict our operations.

There can be no assurance that additional financing will be available on terms

favorable to the Company, or at all. If equity or convertible debt securities

are issued, the percentage ownership of our stockholders will be reduced,

stockholders may experience additional dilution and such securities may have

rights, preferences or privileges senior to those of the Company's common

stock. This effect is attributed to the fact that while additional shares of

common stock are issued from the company treasury, the Company's earnings at

that particular moment remain consistent and, therefore, the earnings per share

decreases. If the Company is unsuccessful in these efforts, the Company will be

required to curtail its ongoing operations. If the Company were to be unable to

sufficiently curtail its costs in such a situation, it might be forced to seek

protection of the courts through reorganization, bankruptcy or insolvency

proceeding or cease operations completely.





With respect to long term liquidity (periods in excess of one year), we are

unable to reasonably project or otherwise make assumptions concerning future

cash flows or amounts of funds that may be available to the Company.  Long-term

liquidity is directly dependent upon the future success of the Company's

business, including our marketing strategy, our efforts to increase sales and

the costs of goods sold relative to our market price. Management currently

anticipates that cash flow from operations will increase in the long-term as

the Company increases its sales and marketing activities. However, management

also anticipates that our operating expenses will increase in the long-term as

a result of the increase in sales and marketing activities as well as general

and administrative activities.



For more information concerning the Company's ability to continue as a going

concern, see Note 2 to the consolidated financial statements. The Company's

significant accounting policies are also detailed in Note 2 of the Company's

Consolidated Financial Statements.



We have had minimal operations and very limited revenues. From inception we

have accumulated an operating deficit of $95,801.  For the year ended December

31, 2006, we had a net loss of $24,009 on gross revenues of $7,500 from the

sale of a total of 4 antique items to 4 different customers with an average

single antique sales price of $1875. As of December 31, 2006, we had cash of

$51, resale inventories of $9,110 and accounts receivable of zero for total

current assets of $9,161. We have realized only minimal revenue from sales and

had a net loss for the year ended December 31, 2006. We believe that we could

experience negative operating cash flow for the foreseeable future as a result

of significant increased spending on advertising, augmentation of inventory,

etc.



The only development costs incurred since inception are with respect to finding

suitable products that offer the Company potential for revenues and profits, as

we market these products through our Web site.



Our ability to achieve profitable operations is subject to the validity of our

assumptions and risk factors within the industry and pertaining to the Company.



LIQUIDITY AND CAPITAL RESOURCES



APD Antiquities, Inc. has limited assets. As of December 31, 2006, our assets

consisted of cash of $51, resale inventories of $9,110 and accounts

receivable of zero for total assets of $9,161.



The current President of the Company owns a total of 202,004 shares of the

Company's authorized but unissued stock, which she paid $1,150 in cash.

Additionally, a private placement offering was made in reliance upon an

exemption from the registration provisions of Section 5 of the Securities Act

of 1933, as amended, pursuant to Regulation D, Rule 504, of the Act. Between

May 1, 1999 and May 24, 1999, we raised $51,000 through the sale of 51,000

thousand (51,000) shares of common stock in connection with the above-mentioned

private placement offering, at a price of $1.00 per share, to forty (40)

unaffiliated shareholders. On  December 21, 2004, the Company implemented a 4

for 1 split of the common stock.  In September of 2004, we raised $10,000

through the sale of forty thousand (40,000) shares of common stock at a price

of $.25 per share, to one unaffiliated shareholder.



Perpetual inventory records kept by the Company contain inventory descriptions

and the purchase costs of such inventory. Although each inventory item is

unique, the majority of the Company's inventory consists of similar categories

of antiques. With respect to the similar categories of antiques, current retail

sales information provides the Company with ratios of its sales to cost of

sales; the Company uses such information to assist it in substantiating that

its inventory value does not exceed market value. The records for inventory

categories are also periodically reviewed by management to determine if there

has been any known auction or interdealer sales of similar antiques at reduced

prices and to determine if a reduction in the inventory carrying value is

needed. The Company's review of its inventory of antiques has not shown any

significant decline in market value below cost on an individual level or by

major category. Retail sales by the Company have, to date, been in excess of

the purchase price for all items sold.



During the past two fiscal years, the Company has not experienced any adverse

impact arising from inflation. However, in the event prices for antiques

increase materially or the value of the dollar decrease against other

currencies, the Company's ability to acquire antiques, and, in turn, its

ability to market such newly acquired antiques  to its market, may be adversely

affected. Thus, although the retail and wholesale values of the Company's

existing inventory might be favorably affected by increasing prices, passing

along such increases to customers could have an inhibiting effect on the

Company's overall business. Management of the Company actually believes that

tangible collectibles move inversely with financial assets over the long term.

As a result, during times of greater inflationary expectations, tangible

collectibles may actually be the beneficiary of greater interest.



The Company anticipates no material commitments for capital expenditures at the

present time. Management is not aware of any trend in the Company's capital

resources, which may have an impact on its income, revenue or income from

continuing operations.



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



As of the date hereof, the Company has no debt with variable or fixed interest

rates, however, in the future we may incur debt or issue debt instruments. The

fair market value of any future debt will be sensitive to changes in prevailing

interest rates. The Company runs the risk that market rates will decline and

the required payments will exceed those based on the current market rate. We do

not use interest rate derivative instruments to manage our exposure to interest

rate changes.





RESULTS OF OPERATIONS



FISCAL 2006 COMPARED TO FISCAL 2005



Total revenues decreased from $44,200 to $7,500 or 17% comparing the

fiscal year ended December 31, 2006 to the fiscal year ended December 31, 2005.

This decrease in revenue is attributed to the lack of sales.

The Company has capital restraints that have not allowed inventory augmentation

and diversification, implementation of our marketing strategy, etc. Total cost

of goods sold decreased from $37,541 in 2005 to $6,235 in 2006, which resulted

in total decrease of $31,306 or 17% due to a decreased number of sales. The cost

of antique and collectibles amounted to 83.13% of revenues for the 2006 fiscal

year compared to 84.93% for fiscal 2005. There was no write-off of inventory or

other adjustments.



For the twelve months ending December 31, 2006, the Company reported a net loss

of $24,009 on gross revenues of $7,500 with gross profit on sales of $1,265

compared to sales of $44,200, a gross profit of $6,659 and net loss of $19,921 in the year ended December 31, 2005. The Company incurred Operating Expenses of

$25,274 in the year ended December 31, 2006 and $26,580 in the year ended

December 31, 2005.  This is an decrease of $1,306 from the year ending

December 31, 2005 as compared to the year ended December 31, 2006. The major

difference in the two periods being attributable to a decrease in commissions. The Company's year ended December 31, 2006 financial statements reflect adjustments and nonrecurring items of both revenue and costs and are not indicative of anticipated revenues which may be attained or expenditures which may be incurred by the Company in future periods.



The Company's independent public accountants have included explanatory

paragraphs in their reports on the Company's financial statements for the years

ended December 31, 2005, 2004, and 2003, which express substantial doubt

about the Company's ability to continue as a going concern. As discussed in

Footnote 2 to the Company's financial statements, included with this 10-KSB,

the Company has suffered recurring losses from operations and accumulated

deficit that raises substantial doubt about its ability to continue as a going

concern.



ITEM 7. FINANCIAL STATEMENTS



THE AUDITED FINANCIAL STATEMENTS FOR THIS FORM 10-KSB APPEAR ON PAGES F-

1 THROUGH F-16 FOLLOWING THE SIGNATURE PAGE BELOW



ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE



None other than that reported on Form 8-K filed on February 18, 2005.





ITEM 8A.  Controls and Procedures.





EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.



Our management, including our Executive Officer and our Chief Financial

Officer, has  evaluated  the  effectiveness  of  our "disclosure controls  and

procedures" (as such term is defined in Rules 13a-15  and  15d-15  of the

United States Securities Exchange Act of 1934, as amended (the "Exchange Act"))

as of  the  end  of  the  period covered by this Annual Report on Form 10-KSB.

Based on that evaluation, the CEO and CFO have concluded that as of end of our

last fiscal year, our disclosure  controls  and procedures were  effective  to ensure that information required to be disclosed by us in reports that we file  or submit under the Exchange Act is recorded, processed, summarized and reported  within the time periods specified in United States Securities and Exchange Commission rules and forms.  The CEO and CFO have also concluded that as of end of our last fiscal year, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we filed or submit under the Exchange Act are accumulated and communicated to our management, to allow timely decisions regarding required disclosure.



Our  management,  including  our  Chief  Executive   Officer  and  Chief

Financial Officer, does not expect that our disclosure controls  and procedures

or  internal control over financial reporting will prevent all errors  and  all

fraud.   We believe that our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.  The CEO and CFO have concluded that our disclosure controls and procedures are effective at that reasonable assurance level.  While we believe that our disclosure controls and procedures have been  effective, in light of the  foregoing,  we  intend  to continue to examine and refine  our  disclosure control and procedures to monitor ongoing developments in this area.







CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING.



There have been no changes  in  our  internal  control over financial  reporting  (as  defined  in  Rule 13a-15(f) under the Exchange  Act) identified in connection with the evaluation  of our internal control performed during our last fiscal quarter that was materially  affected,  or is reasonably likely to materially affect, our internal control over financial reporting.

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PART III



ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;

COMPLIANCE with Section 16(a) of the Exchange Act Directors, Executive Officers

and Significant Employees



Set forth below are the present directors, executive officers and any

significant employees of the Company. Note that there are no other persons who

have been nominated or chosen to become directors nor are there any other

persons who have been chosen to become executive officers. Directors are

elected until the next annual meeting of shareholders and until their

successors are duly elected and qualified. Officers are elected for terms of

one year, or until their successors are duly elected and qualified or until

terminated by the action of the Board of Directors.



Has Served as

Name                Age   Position with the Company   Director Continuously

Since

--------------      ---   -------------------------   ---------------------

Cindy K. Swank      49    President, Treasurer        August 1999

and Director



Timothy J. Kuh      30    Vice President              December 2004

and Director



Edward Wong Wah On  37   Secretary and Director       March 2003

---------------------------------------------------------------------------





There is no relationship by blood, marriage or adoption (not more remote than

first cousin) between any Director or executive officer of the Company.



Set forth below are brief accounts of the business experience during the past

five years of each director and executive officer of the Company.



Ms. Cindy K. Swank has been the President/Treasurer, or Secretary and Director

of APD Antiquities, Inc. since 1999 and has focused on developing sales and

marketing programs for the Company's products. From 1997 through the present,

Ms. Swank has been self-employed as a manager-promoter of her daughter, a

singer/stage performer, as well as other activities in the marketing and

reorganization of websites. She attended Eastern Washington University in

Cheney, WA and has awards for her accomplishments and creativity in the design

industry. Mrs. Swank founded, owned and managed Daisy's Bloomers, from 1990

until 1997, when she sold the business to L&L Limited Partnership. The

principle business of Daisy's Bloomers was retail sales of flowers and gifts.



Mr. Wong Wah On Edward, Secretary and director of APD Antiquities, Inc., was

elected to these offices in March 2003. Mr. Wong obtained his professional

diploma in Company Secretaryship and Administration from the Hong Kong

Polytechnic University in 1988 and is an associate of the Chartered Association

of Certified Accountants, the Hong Kong Society of Accountants, and the

Institute of Chartered Secretaries and Administrators. He is also a certified

public accountant in Hong Kong. He joined Ernst & Young Hong Kong following his

graduation and worked as audit supervisor until late 1992. Thereafter, he

commenced private practice in Hong Kong and is a partner in the firm of Tam &

Wong CPA. Mr. Wong is also currently a shareholder, director and Financial

Controller of China Resources Development, Inc. (CHRB), a company listed on

Nasdaq SmallCap market. Mr. Wong currently resides in Hong Kong and assists the

company in purchasing antiques as an agent for the company. He helps the

Company find qualified suppliers of antiques.



Mr. Timothy J. Kuh, Vice President and director of APD Antiquities, Inc. was

elected to these offices in December of 2004. Mr. Kuh obtained his Bachelor

Degree in International Affairs from Eastern Washington University in 2004. Mr.

Kuh was been employed by Horizon/Alaska Airlines from 1999 until November 2004.

He is currently employed by Triax Capital Management, Inc. as their operations

manager. Mr. Kuh resides in Spokane, Washington and will assist the company in

operations and administrative activities.





Section 16(a) Beneficial Ownership Reporting Compliance



Section 16(a) of the Securities Exchange Act of 1934 requires the Company's

directors and executive officers, and persons who own more than ten percent of

the Company's Common Stock, to file with the Securities and Exchange Commission

initial reports of ownership and reports of changes of ownership of Common

Stock of the Company. Officers, directors and greater than ten percent

stockholders are required by SEC regulation to furnish the Company with copies

of all Section 16(a) forms they file.



That Company has no knowledge that, as of the date of this filing, the

Company's directors, executive officers and persons who own more than ten

percent of the Company's Common Stock have filed an initial Form 3 or an annual

Form 5.



ITEM 10. EXECUTIVE COMPENSATION



The following summary compensation table sets forth information concerning the

annual and long-term compensation for services in all capacities to the Company

for the fiscal years ended December 31, 2005, 2004, and 2003, of those persons

who were (i) the chief executive officer and (ii) the other most highly

compensated executive officers of the Company, whose annual base salary and

bonus compensation was in excess of $100,000. No person received compensation

in excess of $100,000.



SUMMARY COMPENSATION TABLE



<TABLE>

<CAPTION>



NAME AND                              OTHER ANNUAL

PRINCIPAL POSITION    YEAR  SALARY  BONUS  COMPENSATION(1)

-----------------------  ----  ------  -----  ----------------

<S>                       <C>   <C>      <C>         <C>

Cindy Swank

2006  $  -0-   -0-         $  -0-



President, Treasurer      2005  $  -0-   -0-         $1,326

Chief Executive Officer   2004  $  -0-   -0-         $3,777

</TABLE>



*The officers/directors do not receive salaries but are to be compensated for

sales generated on behalf of the Company. Compensation is based solely on

bringing business to the Company. A nine percent (9%) commission is equally

divided amongst the officers/directors for each sale made. Commissions were

accrued, but not paid during the year ended December 31, 2004.



During the fiscal year ended December 31, 2004, no director received any

compensation for attending meetings of the Board of Directors and the Company

presently intends that the same will be the case for the fiscal year ended

December 31, 2006.  Directors are reimbursed, however, for reasonable expenses

incurred on behalf of the Company.



During the fiscal year ended December 31, 2006, no director received any

compensation for attending meetings of the Board of Directors and the Company

presently intends that the same will be the case for the fiscal year ended

December 31, 2007.  Directors are reimbursed, however, for reasonable expenses

incurred on behalf of the Company.





ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



The following table sets forth the number and percentage of Common Shares

beneficially owned, as of the date of this filing, by: (i) the beneficial

owners of more than five percent of the Common Stock of the Company; (ii) all

Directors of the Company; (iii) each of the named Executive Officers; and, (iv)

all Officers and Directors of the Company as a group:



<TABLE>

<CAPTION>



Name of                                      Amount of shares

Title of Class  Beneficial Owner of Shares    held by Owner    Percent of Class

--------------  --------------------------   ----------------- ----------------

<S>             <C>                                 <C>              <C>

common          Cindy Swank (1)                     202,004          13.81%

common          Timothy Kuh (2)                       2,000

common          Edward Wong (3)                         400           2.76%

common          Raymond Kuh (4)                     201,004          13.81%

common          All Executive Officers and          204,404          13.84%

Directors as a Group (3 persons)(5)

------------------------------------------------------------------------------

(1) c/o APD Antiquities, Inc., 1314 S. Grand Blvd, Suite 2-250, Spokane, WA 99202. Includes 200,004 Common Shares. See "Certain Relationships and Related

Transactions."



(2) c/o APD Antiquities, Inc., 1314 S. Grand Blvd, Suite 2-250, Spokane, WA 99202.



(3) c/o APD Antiquities, Inc., 1314 S. Grand Blvd, Suite 2-250, Spokane, WA 99202.



(4) c/o APD Antiquities, Inc., 1314 S. Grand Blvd, Suite 2-250, Spokane, WA 99202. Includes 200,004 Common Shares. See "Certain

Relationships and Related Transactions."



(5) Includes the shares of Common Stock beneficially owned by Ms. Swank, Mr. Kuh (2) and Mr. Wong Wah On.



Unless otherwise indicated, the owners have sole voting and investment power

with respect to their respective shares. In general, a person is deemed to be a

"beneficial owner" of a security if that person has or shares the power to vote

or direct the voting of such security, or the power to dispose or to direct the

disposition of such security. A person is also deemed to be a beneficial owner

of any securities of which the person has the right to acquire beneficial

ownership within 60 days. At December 31, 2006 we had outstanding 1,706,000 shares of common stock.



(a) Changes in Control



There are no arrangements known to the Company, the operation of which may at a

subsequent date result in a change of control of the Registrant.



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



APD Antiquities, Inc. was incorporated on July 23, 1996, in the state of

Nevada.  During the year ended December 31, 1999, 300,000 shares of common

stock were issued to officers and directors for cash in the amount of $300 (par

value), 51,000 common shares were sold for $1.00 per share and 10,000 common

shares were issued for converted debt.  In September 2004, the Company issued

10,000 shares of common stock for cash in the amount of $10,000.  On December

21, 2004 the company undertook a 1 for 4 split of the common stock, resulting

in a total of 1,448,000 shares being issued and outstanding



The Company's officers/directors do not receive salaries but are being

compensated for sales generated on behalf of the Company. Compensation is based

solely on bringing business to the Company. A nine percent (9%) commission is

equally divided amongst the officers/directors for each item sold.   From

inception through December 31, 2005 the current corporate officer/director, Ms.

Swank, was paid a total of $ 0.00 for sales arranged on behalf of the Company.

Additionally, as a result of minimal revenue and operations, commissions were

waived during the year ended December 31, 2001 and commissions payable  to Ms.

Swank were accrued on our books during that fiscal year.



On January 15, 2001, our board of directors adopted the 2001 stock Option Plan

(the "Plan") as a means of increasing employees', board of advisors,

consultants' and non-employee directors' proprietary interest and to align more

closely their interests with the interests of our stockholders. The Plan should

also increase our ability to attract and retain the services of experienced and

highly qualified employees and non-employee directors. Under the Plan, we have

reserved an aggregate of one million (1,000,000) shares of common stock for

issuance pursuant to options ("Plan Options"). Our board of directors or a

committee of our board of directors consisting of non-employee directors (the

"Committee") will administer the Plan, including, without limitation, the

selection of the persons who will be granted Plan Options under the Plan, the

type of Plan Options to be granted, the number of shares subject to each Plan

Option and the Plan Option price.



ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K



(a) 1 & 2.

Financial Statements See Item 7 in Part II of this report.



All other financial statement schedules are omitted because the information

required to be set forth therein is not applicable or because that information

is in the financial statements or notes thereto.



<TABLE>

<CAPTION>



(a) 3.

Exhibits



2.1

Acquisition Agreement and Plan of Merger between APD Antiquities, Inc. and GCJ, Inc. dated December 27, 2004 (Incorporated by reference to the corresponding exhibit to the Form 8-K previously filed by APD Antiquities, Inc.) on December 30, 2004 (File No. 000-50738) (the December 30, 2004 Form 8-K)



2.2

Articles of Merger (Nevada) dated December 29, 2004 (File No. 000-50738) (Incorporated by reference to exhibit 2.1 to the December 30, 2004 Form 8-K)



3.1

Articles of Incorporation*



3.2

By-Laws*



10.1



2001 stock Option Plan



31.1

Section 302 CEO Certification



31.1

Section 302 Secretary Certification



31.2

Section 906 CEO Certification



32

Section 1350 Certifications





* Incorporated by reference to the Registrant's Registration Statement on

Form 10SB, File No. 0-32345



(b) Reports on Form 8-K.



Form 8-K filed February 18, 2005.





<PAGE>

















































SIGNATURES



In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,

the Registrant has caused this report to be signed on its behalf by the

undersigned, thereunto duly authorized.



Dated: March 13, 2007



APD ANTIQUITIES, INC.



By:

/s/ Cindy Swank

------------------------------------

Cindy Swank

President and CEO



In accordance with the Securities Exchange Act of 1934, this report has been

signed below by the following persons on behalf of the Registrant and in the

capacities and on the dates indicated:







/s/ Cindy Swank

----------------------------------

Cindy Swank

Director

Dated: March 13, 2007







/s/ Edward Wong Wah On

----------------------------------

Edward Wong Wah On

Director

Dated: March 13, 2007





<PAGE>



#





---

Board of Directors

APD Antiquities, Inc.

Spokane, Washington





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





We have audited the accompanying balance sheets of APD Antiquities, Inc. (a Nevada corporation) as of December 31, 2006 and 2005, and the related statements of operations, stockholders equity and cash flows for the years then ended.  These financial statements are the responsibility of the Companys management.  Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of APD Antiquities, Inc. as of December 31, 2005 and 2004, and the results of its operations, stockholders equity and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.



The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in Note 2, the Company has a history of operating losses, has limited cash resources, and its viability is dependent upon its ability to meet its future financing requirements, and the success of future operations.  These factors raise substantial doubt about the Companys ability to continue as a going concern.  Managements plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.









Williams & Webster, P.S.

Certified Public Accountants

Spokane, Washington

March 13, 2007



APD ANTIQUITIES, INC.

BALANCE SHEETS



December 31,

2006             2005

--------        --------

ASSETS

CURRENT ASSETS

Cash                                        $      51       $  7,343

Inventory                                       9,110         12,464

--------        --------

Total Current Assets                      9,161         19,807

--------        --------

TOTAL ASSETS                                   $   9,161       $ 19,807

=========       ========







LIABILITIES AND STOCKHOLDERS' EQUITY



CURRENT LIABILITIES

Accounts payable                            $  9,367        $  3,680

Commissions payable - related party            4,895           4,219

Loan payable  related party

3,000

-

--------        --------

Total Current Liabilities               17,262           7,899

--------        --------



COMMITMENTS AND CONTINGENCIES                         -               -



STOCKHOLDERS' EQUITY

Preferred stock, 5,000,000 shares

authorized, $0.001 par value;

no shares issued and outstanding                -               -

Common stock, 20,000,000 shares

authorized, $0.001 par value;

1,698,000 and 1,448,000 shares

issued and outstanding,

respectively                                1,706           1,698

Additional paid-in capital                    85,994          82,002

Accumulated deficit                          (95,801)        (71,792)



--------        --------

Total Stockholder's Equity              (8,101)         11,908

--------        --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $  9,161        $ 19,807

========        ========





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

















|APD ANTIQUITIES, INC.   
|------------------------
|STATEMENTS OF OPERATIONS
|                        
|                        
|                        
|                        
|                        
|SALES                   
|                        
|COST OF GOODS SOLD      
|                        
|GROSS PROFIT            
|                        
|EXPENSES                
|                        
|                        
|                        
|                        
|                        
|                        
|                        
|                        
|LOSS FROM OPERATIONS    
|                        
|OTHER INCOME (EXPENSE)  
|                        
|                        
|                        
|LOSS BEFORE INCOME TAXES
|INCOME TAXES            
|NET LOSS                
|                        
|                        
|                        
|                        
|                        
|                        
|                        



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











APD ANTIQUITIES, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

-------------------------------------------------------------------------------



<TABLE>

<CAPTION>

Common Stock   Additional                 Total

------------------ Paid-in    Accumulated  Stockholders

Shares   Amount  Capital      Deficit       Equity

---------- ------- ---------- -----------  -------------

<S>                   <C>        <C>     <C>        <C>          <C>

Balance,

December 31, 2004       1,448,000   $ 1,448   $  57,252  $ (51,871) $  6,829



Common stock

250,000

250

24,750

-

25,000

Issued for cash



Net loss for year

ended December 31,

2005                          -         -           -    (19,921)    (19,921)

---------- ------- ---------- -----------  -------------

Balance,

December 31, 2005    1,698,000      1,698      82,002    (71,792)     11,908



Common stock

issued for cash          8,000          8       3,992          -       4,000





Net loss for year

ended December 31,

2006                        -          -            -    (24,009)    (24,009)

---------- ------- ---------- -----------  -------------

Balance,

December 31, 2006   1,706,000   $ 1,706    $ 85,994    $ (95,801)   $ (8,101)

=========    =======  ==========  ==========   ===========

</TABLE>





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











#





---



APD ANTIQUITIES, INC.

STATEMENTS OF CASH FLOWS



Years Ended

December 31,

2006          2005

-----------   ----------



CASH FLOWS FROM OPERATING ACTIVITIES

Net loss                               $  (24,009)    $ (19,921)

Adjustments to reconcile net loss

to net cash provided (used)

by operating activities:

Decrease (increase) in inventory            3,354      (10,867)

Increase (decrease) in accounts payable     5,687         1,420

Increase (decrease) in commissions payable    676

2,718

-----------   ----------

Net cash provided (used) by operating activities  (14,292)      (26,650)



CASH FLOWS FROM INVESTING ACTIVITIES                   -              -



CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from note payable                 3,000               -

Common stock issued for cash               4,000          15,000

-----------   -----------

Net cash provided by financing activities          7,000          25,000



Change in cash                                    (7,292)         (1,650)



CASH, BEGINNING OF PERIOD                          7,343           8,993

-----------   -----------

CASH, END OF PERIOD                            $      51     $     7,343

===========   ===========



SUPPLEMENTAL CASH FLOW DISCLOSURES:

Interest paid                           $      -      $        -

===========   ===========

Income taxes paid                       $      -      $        -

===========   ===========

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

#





---





APD ANTIQUITIES, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006





NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS



APD Antiquities, Inc. (hereinafter APD or the Company) was incorporated on July 23, 1996 under the laws of the State of Nevada for the purpose of the sale of rare antiques.  The Company maintains its corporate office in Spokane, Washington and offers its products online.  The Companys fiscal year end is December 31.



The Company changed its name from APD International Corporation in August of 1999.



On December 20, 2004, the Company acquired all of the outstanding common stock of GCJ, Inc., a fully reporting public company.  For accounting purposes the acquisition has been treated as a recapitalization of APD with APD as the acquirer in a reverse acquisition.  The historical financial statements prior to December 20, 2004 are those of APD, the operating company, while the Company maintains the legal structure of the acquired GCJ, Inc.  See Note 5.





NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



This summary of significant accounting policies of the Company is presented to assist in understanding the financial statements.  The financial statements and notes are representations of the Companys management, which is responsible for their integrity and objectivity.  These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.



Accounting Method

The Companys financial statements are prepared using the accrual method of accounting.



Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (hereinafter SFAS No. 157) which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. Where applicable, SFAS No. 157 simplifies and codifies related guidance within GAAP and does not require any new fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier adoption is encouraged. The Company does not expect the adoption of SFAS No. 157 to have a significant immediate effect on its financial position or results of operations.



In June 2006, the Financial Accounting Standards Board issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109 (hereinafter "FIN 48"), which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company does not expect the adoption of FIN 48 to have a significant immediate effect on its financial position or results of operations.

In March 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 156, Accounting for Servicing of Financial Assetsan Amendment of FASB Statement No. 140  (hereinafter SFAS No. 156).This statement requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in any of the following situations: a transfer of the servicers financial assets that meets the requirements for sale accounting; a transfer of the servicers financial assets to a qualifying special-purpose entity in a guaranteed mortgage securitization in which the transferor retains all of the resulting securities and classifies them as either available-for-sale securities or trading securities in accordance with FASB Statement No. 115; or an acquisition or assumption of an obligation to service a financial asset that does not relate to financial assets of the servicer or its consolidated affiliates.  The statement also requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable and permits an entity to choose either the amortization or fair value method for subsequent measurement of each class of servicing assets and liabilities.  This statement is effective for fiscal years beginning after September 15, 2006, with early adoption permitted as of the beginning of an entitys fiscal year. The company does not expect the adoption of FIN 48 to have a significant immediate effect on its financial position or results of operation.



In February 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 155, Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Standards No. 133 and 140 (hereinafter SFAS No. 155). This statement established the accounting for certain derivatives embedded in other instruments.  It simplifies accounting for certain hybrid financial instruments by permitting fair value remeasurement for any hybrid instrument that contains an embedded derivative that otherwise would require bifurcation under SFAS No. 133 as well as eliminating a restriction on the passive derivative instruments that a qualifying special-purpose entity (SPE) may hold under SFAS No. 140.  This statement allows a public entity to irrevocably elect to initially and subsequently measure a hybrid instrument that would be required to be separated into a host contract and derivative in its entirety at fair value (with changes in fair value recognized in earnings) so long as that instrument is not designated as a hedging instrument pursuant to the statement.  SFAS No. 140 previously prohibited a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.  This statement is effective for fiscal years beginning after September 15, 2006, with early adoption permitted as of the beginning of an entitys fiscal year. Management believes the adoption of this statement will have no material impact on the Companys financial condition or results of operations.



In May 2005, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 154, Accounting Changes  and Error  Corrections, (hereinafter SFAS No. 154) which replaces Accounting  Principles Board Opinion No. 20, Accounting  Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements  An Amendment of APB Opinion No. 28.  SFAS No. 154 provides guidance on accounting for and reporting changes in accounting principle and error corrections.  SFAS No. 154 requires that changes in accounting principle be applied retrospectively to prior period financial statements and is effective for fiscal years beginning after December 15, 2005.  Management does not expect SFAS No. 154 to have a material impact on the Companys financial position or results of operations.



Advertising Costs

Advertising costs, including costs for direct mailings, are expensed when incurred.  During the year ended December 31, 2006 and 2005 these costs were $439 and $519, respectively.



Basic and Diluted Earnings Per Share

Basic net income (loss) per share is computed using the weighted average number of common shares outstanding.  Diluted net income (loss) per share is the same as basic net income (loss) per share as there are no common stock equivalents outstanding.



Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a remaining maturity of three months or less to be cash equivalents.



Compensated Absences

The Company does not offer paid vacation or personal time to its employees.  Accordingly, there is no related accrual of expenses.



Derivative Instruments

The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (hereinafter SFAS No. 133), as amended by SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities  Deferral of the Effective Date of FASB No. 133, SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity, and SFAS No. 155, Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Standards No. 133 and 140.  These statements establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.



If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.



Historically, the Company has not entered into derivative contracts to hedge existing risks or for speculative purposes.



As of December 31, 2006 and 2005, the Company has not engaged in any transactions that would be considered derivative instruments or hedging activities.



Fair Value of Financial Instruments

The carrying amounts for cash, payables and accrued liabilities approximate their fair value.



Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. At December 31, 2006, the Company had a history of operating losses, an accumulated deficit of $95,801 and limited cash resources.  These conditions raise significant doubt about the Companys ability to continue as a going concern.  The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations.  Management's plans are to seek additional capital through sales of its common stock.  If necessary, the Company may sell common stock to provide additional cash to future operations and market development.  However, management has no plans to make a private offering of common stock at this time.



The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.



Inventories

Inventories are accounted for using the specific identification method, and stated at the lower of cost or market, with market representing the lower of replacement cost or estimated net realizable value.  The Company has no insurance coverage on its inventory.



The Company has no inventory on consignment at December 31, 2006 or 2005.  In the future, if the Company consigns inventory, it will retain title and will insure the inventory until the inventory is sold, returned, lost, stolen, damaged, or destroyed.



Provision for Taxes

Income taxes are provided based upon the liability method of accounting pursuant to Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (hereinafter SFAS No. 109).  Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end.  A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the more likely than not standard imposed by SFAS No. 109 to allow recognition of such an asset.



At December 31, 2006, the Company had deferred tax assets of approximately $32,600 principally arising from net operating loss carryforwards for income tax purposes calculated at an expected rate of 34%.  As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the deferred tax assets, a valuation allowance equal to the deferred tax assets was present at December 31, 2006 and 2005.





The significant components of the Companys deferred tax assets at December 31, 2006 and 2005 were as follows:



|                                       |   | December 31, 2006 |   | December 31, 2005
|-------------------------------------- | - | ----------------- | - | -----------------
|Net operating loss carryforward        | $ | 95,800            | $ | 70,800           
|                                       |   |                   |   |                  
|Deferred tax asset                     | $ | 32,600            | $ | 24,000           
|Deferred tax asset valuation allowance |   | (32,600)          |   | (24,000)         
|Net deferred tax asset                 | $ | -                 | $ | -                



At December 31, 2006, the Company has net operating loss carryforwards of approximately $95,800, which expire in the years 2020 through 2026.  The change in the allowance account from December 31, 2005 to December 31, 2006 was an increase of $8,600.



Revenue and Cost Recognition

Revenues from retail sales are recognized at the time the products are delivered.



Although the Company does not provide a written warranty on its items sold, the Company will refund the purchase price paid to any customer in those instances when an item sold is proven to be non-authentic.  In a majority of instances, the Company receives a certificate of authenticity for documents (items) purchased from its vendors and is reasonably assured as to the provenance of its products.  Since inception, the Company has made no refunds for the sale of any non-authentic items nor has the Company received any claims or notice of prospective claims relating to such items.  Accordingly, the Company has not established a reserve against forgery or non-authenticity.



If a product proves not to be authentic, the Company would give a full refund to the purchaser and record a charge for sales returns.



Use of Estimates

The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses.  Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements.  Accordingly, upon settlement, actual results may differ from estimated amounts.  At December 31, 2006 and 2005, the Company had not participated in consignment or conditional sales; therefore, there are no unsettled transactions related to sales or cost of sales.







NOTE 3  PREFERRED AND COMMON STOCK



The Company has 5,000,000 shares of preferred stock authorized and none issued.



The Company has 20,000,000 shares of common stock authorized.  All shares of stock are non-assessable and non-cumulative, with no preemptive rights.

In September 2004, the Company issued 40,000 shares of common stock for cash in the amount of $10,000.



On December 1, 2004, the Companys board of directors declared a 4 for 1 common stock split for all shareholders of record on December 1, 2004.  Per-share amounts in the accompanying financial statements and notes have been restated for the stock dividend.



During the year ended December 31, 2005, the Company sold 250,000 shares of common stock in a private placement for cash of $25,000 ($0.10 per share).



During the year ended December 31, 2006, the Company sold 8,000 shares of common stock in a private placement for cash of $4,000 ($0.50 per share).





<PAGE>























APD ANTIQUITIES, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006













NOTE 4  STOCK OPTION PLAN



The Companys board of directors approved the adoption of the 2001 Non-Qualified Stock Option and Stock Appreciation Rights Plan by unanimous consent on January 15, 2001.  This plan was initiated to encourage and enable officers, directors, consultants, advisors and other key employees of the Company to acquire and retain a proprietary interest in the Company by ownership of its common stock.  A total of 1,000,000 of the authorized shares of the Companys common stock may be subject to, or issued pursuant to, the terms of the plan.  No options have been issued under the plan as of December 31, 2006.





NOTE 5  COMMITMENTS AND CONTINGENCIES



Rental Agreement

The Company has a month-to-month rental agreement for office space in Spokane, Washington.  The monthly rent is $300.  Rent payments were $3,600 for each of the years ended December 31, 2006 and 2005.







NOTE 6  RELATED PARTY TRANSACTIONS



The occasional usage of used computer equipment, provided to the Company by the Companys officers at no charge, is considered immaterial for financial reporting purposes.



The Company pays a 3% commission on every sale to both of the Companys two officers.  Commissions unpaid, but accrued, are unsecured, payable upon demand and non-interest bearing.  Commissions paid during the years ended December 31, 2006 and 2005 were $675 and $1,259, respectively.







Exhibit 10.1  -  2001 STOCK OPTION PLAN



APD ANTIQUITIES, INC.

2001 STOCK OPTION PLAN

(Adopted by the Board of Directors on January 15, 2001)



1.

Purpose.



This 2001 Stock Option Plan is intended to encourage stock ownership in APD Antiquities Inc. by the officers, directors, employees, consultants, and advisors of the Company or its affiliates in order to promote their interest in the success of the Company and to encourage their continued affiliation.  All options granted under this 2001 Stock Option Plan are intended to be either (a) Incentive Stock Options or (b) Non-Statutory Stock Options.



2.

Definitions.



As used herein the following definitions shall apply:



"Act" shall mean the Securities Exchange Act of 1934, as amended from time to time.



Advisor shall mean an individual who provides bona fide services to the Company or Affiliate pursuant to a written contract.



"Affiliate" shall mean any corporation defined as a "parent corporation" or a "subsidiary corporation" by Code Section 424(e) and (f), respectively.



"Agreement" shall mean either a 2001 Incentive Stock Option Agreement or a 2001 Non-Statutory Stock Option Agreement, embodying the terms of the agreement between the Company and the Optionee with respect to Optionee's Option.



"Board" shall mean the Board of Directors of the Company.



"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.



"Company" shall mean APD Antiquities Inc., a Nevada corporation.



"Consultant" shall mean any person who is placed on the Company's Consultants List by theBoard and who agrees in writing to be included thereon.



"Disability" or "Disabled" shall mean the condition of being "disabled" within the meaning of Section 422(c)(6) of the Code or any successor provision.



Disinterested Person means a Non-Employee Director as defined in Rule 16b-3 of the Exchange Act of 1934, as amended.



"Employee" shall mean any salaried employee of the Company or its Affiliates, including those employees who are officers of the Company or its Affiliates.



"Fair Market Value" of Stock on a given date shall mean an amount per share as determined by the Board or its delegates by applying any reasonable valuation method determined without regard to any restriction other than a restriction which, by its terms, will never lapse.  Notwithstanding the preceding, if the Stock is traded upon an established stock exchange, then the "Fair Market Value" of Stock on a given date per share shall be deemed to be the average of the highest and lowest selling price per share of the Stock on the principal stock exchange on which the Stock is then trading or, if there was no trading of the Stock on that day, on the next preceding day on which there was such trading; if the Stock is not traded upon an established stock exchange but is quoted on a quotation system, the "Fair Market Value" of Stock on a given date shall be deemed to be the mean between the closing representative "bid" and "ask" prices per share of the Stock on such date as reported by such quotation system or, if there was no trading of the Stock on that day, on the next preceding day on which there was such trading.



"Incentive Stock Option" shall mean an option granted pursuant to the Plan which is designated by the Board or its delegates as an "Incentive Stock Option" and which qualifies as an incentive stock option under Section 422 of the Code or any successor provision.



"Non-Statutory Stock Option" shall mean a stock option granted pursuant to the Plan which is not an Incentive Stock Option.



"Option" shall refer to either or both an Incentive Stock Option or Non-Statutory Stock Option, as the context shall indicate.



"Optionee" shall mean the recipient of an Incentive Stock Option or a Non-Statutory Stock Option.



"Option Price" shall mean the price per share of Stock to be paid by the Optionee upon exercise of the Option.



"Option Stock" shall mean the total number of shares of Stock the Optionee shall beentitled to purchase pursuant to the Agreement.



"Plan" shall mean this APD Antiquities 2001 Stock Option Plan, as amended from time to time.



"Reporting Person" shall mean an Optionee who is required to file statements relating to his or her beneficial ownership of Stock with the SEC pursuant to Section 16(a) of the Act.



"Rule 16b-3" shall mean Rule 16b-3 (as amended from time to time), promulgated by the SEC under the Act, and any successor thereto.



"SEC" shall mean the Securities and Exchange Commission.



"Stock" shall mean the $0.001 par value Common Stock of the Company.



3.

Administration.



The Plan shall be administered by the Board; provided, however, that the Board may delegate all or any part of its authority to administer the Plan in its entirety or, with respect to any group or groups of persons eligible to receive Options hereunder, to such committee as the Board shall in its sole discretion determine.  Such committee shall be composed of not fewer than two members (the Committee), all of the members of which Committee shall be Disinterested Persons, if required.  Any Disinterested Person shall comply with the requirements of Rule 16b-3.  The Board or its Committee may adopt, amend and rescind such rules and regulations for carrying out the Plan and implementing agreements and take such actions as it deems proper.  The interpretation, construction and application by the Board or its Committee of any of the provisions of the Plan or any Option granted thereunder shall be final and binding on the Company, all Optionees, their legal representatives, and any person who may acquire an Option directly from an Optionee by permitted transfer, bequest or inheritance.  Reference to administrative acts by the Board in the Plan shall also refer to acts by its Committee, unless the context otherwise indicates.  Whether or not the Board has delegated administrative authority, the Board has the final power to determine all questions of policy or expediency that may arise in administration of the Plan.



4.

Eligibility.



Only Employees are eligible to receive Incentive Stock Options under the Plan.  Employees, Officers, Directors, Consultants and Advisors of the Company or its Affiliates are eligible to receive Non-Statutory Stock Options under the Plan.



No person shall be eligible to receive an Option for a larger number of shares than is recommended for him or her by the Board.  Any Optionee may hold more than one Option (whether Incentive Stock Options, Non-Statutory Stock Options, or both, but only on the terms and conditions and subject to the restrictions set forth herein.



Incentive Stock Options granted to an Employee who owns stock at the time the Incentive Stock Option is granted, representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company and its Affiliates, shall be granted atan Option Price at least one hundred ten percent (110%) of the Fair Market Value of the Stock at thetime the Incentive Stock Option is granted.  In determining ownership of Stock by an Employee, the attribution standards set forth in Code Section 424(d) shall be applicable.



5.

Stock Subject to the Plan.



Options granted under the Plan shall be for shares of the Company's authorized but unissued or re-acquired Stock.  The aggregate number of shares of Stock which may be subject toOptions pursuant to the Plan shall not exceed one million (1,000,000) shares, unless adjusted by the Board pursuant to Paragraph 6(l).  Stock issued under other stock option plans of the Company shall not be counted against the maximum number of shares that can be issued under the Plan.



In the event that any outstanding Option expires or is terminated for any reason, the shares of Stock allocable to the unexercised portion of such Option may again be subject to an Option under the Plan.



If an Optionee pays all or part of any Option Price with shares of Stock, the number of shares deemed to be issued to the Optionee (and counted against the maximum number of shares that can be issued under the Plan) shall be the number of shares transferred to the Optionee by the Company, less the number of shares transferred by the Optionee to the Company as payment.  Stock issued on the exercise of an Option which is forfeited in accordance with the conditions contained in the grant by the Optionee after issuance shall be deemed to have never been issued under the Plan and, accordingly, shall not be counted against the maximum number of shares that can be issued under the Plan.  Notwithstanding the terms of the previous two sentences, the maximum number of shares for which Incentive Stock Options may be issued under the Plan shall be one million (1,000,000) shares, subject to adjustment by the Board as provided under Paragraph 6(l), regardless of the fact that under the terms of the preceding sentences, a lesser number of shares isdeemed to be issued pursuant to the exercise of Incentive Stock Options.



6.

Terms and Conditions of Options.



The Board or its delegates shall authorize the granting of all Options under the Plan with such Options to be evidenced by Incentive Stock Option Agreements or Non-Statutory Stock Option Agreements, as the case may be.  Each Agreement shall be in such form as the Board may approve from time to time.  Each Agreement shall comply with and be subject to the following terms and conditions:



(a)

Type of Option; Number of Shares.  Each particular Option Agreement shall state the type of Options to be granted (whether Incentive Stock Options or Non-Statutory Stock Options) and the number of shares to which the Option pertains.  Under no circumstances shall the aggregate Fair Market Value of the Stock (determined as of the time the Option is granted) with respect to which Incentive Stock Options are exercisable for the first time by any Employee during any calendar year (under all incentive stock option plans of the Company and its Affiliates) exceed $100,000.



(b)

Option Price.  Each particular Option Agreement shall state the Option Price.  The Option Price for an Incentive Stock Option shall not be less than one hundred percent (100%) of the Fair Market Value per share of Stock on the date the Incentive Stock Option is granted.  The Option Price for a Non-Statutory Stock Option shall be the price per share of Stock set by the Board or its delegates.



(c)

Certificate Legends.  Certificates for shares of Stock issued and delivered to Reporting Persons may be legended, as the Board deems appropriate, if required by the provisions of any applicable rule or regulation.



(d)

Medium and Time of Payment.  The aggregate Option Price shall be payable upon the exercise of the Option and shall be paid in any combination of:



(i)

United States cash currency;



(ii)

a cashier's or certified check to the order of the Company;



(iii)

a personal check acceptable to the Company;



(iv)

to the extent permitted by the Board, shares of Stock of the Company (including previously owned Stock or Stock issuable in connection with the Option exercise), properly endorsed to the Company, whose Fair Market Value on the date of exercise equals the aggregate Option Price of the Option being exercised; or



(v)

to the extent permitted by the Board, the Optionee's entering into an agreement with the Company, whereby a portion of the Optionee's Options are terminated and where the "built-in gain" on any Options which are terminated as part of such agreement equals the aggregate Option Price of the Option being exercised.  The Company may establish, from time to time, procedures for a cashless exercise of options. "Built-in gain" means the excess of the aggregate Fair Market Value of any Stock otherwise issuable on exercise of a terminated Option, over the aggregate Option Price otherwise due the Company on such exercise.



The Board may permit deemed or constructive transfer of shares in lieu of actual transfer and physical delivery of certificates.  Except to the extent prohibited by applicable law, the Board may take any necessary or appropriate steps in order to facilitate the payment of any such Option Price.  Without limiting the foregoing, the Board may cause the Company to loan the Option Price to the Optionee or to guarantee that any Stock to be issued will be delivered to a broker or lender in order to allow the Optionee to borrow the Option Price.  The Board, in its sole and exclusive discretion, may require satisfaction of any rules or conditions in connection with payment of the Option Price at any particular time, in any particular form, or with the Company's assistance.  If Stock used to pay any Option Price is subject to any prior restrictions imposed in connection with any plan of the Company (including this Plan), an equal number of the shares of Stock acquired on exercise shall be made subject to such prior restrictions in addition to any further restrictions imposed on such Stock by the terms of the Optionee's Agreement or by the Plan.



(e)

Vesting.  The total number of shares of Stock subject to an Option may, but need not, be allotted in periodic installments (which may, but need not, be equal).  The Option Agreement may provide that from time to time during each of such installment periods, the Option may become exercisable ("vest") with respect to some or all of the shares allotted to that period, and may be exercised with respect to some or all of the shares allotted to such period and/or any prior period as to which the Option became vested but was not fully exercised.  During the remainder of the term of the Option (if its term extends beyond the end of the installment periods), any unexercised Option Stock may be exercised from time to time.



(f)

Duration of Options.  Each particular Option Agreement shall state the term of the Option; provided, however, that all Incentive Stock Options granted under this Plan shall expire and not be exercisable after the expiration of ten (10) years from the date granted; provided, further, that any Incentive Stock Option granted to an Employee who owns stock at the time the Incentive Stock Option is granted representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company and its Affiliates shall expire and not be exercisable after the expiration of five(5) years from the date granted.  Non-Statutory Stock Options shall expire and not be exercisable after the date set by the Board or its delegates in the particular Option Agreement, or on any later date subsequently approved by the Board or its delegates.



(g)

Exercise of Options.



(i)

Each particular Option Agreement shall state when the Optionee's right topurchase Stock pursuant to the terms of an Option are exercisable in whole or in part, provided, however, that Incentive Stock Options shall not be exercisable by an Employee more than 90 days after the date that the employment of such Employee is voluntarily or involuntarily terminated, except in the case of death or disability of the Employee as provided below.Subject to the earlier termination of the right to exercise the Options as provided under this Plan, Options shall be exercisable in whole or in part as the Board, in its sole and exclusive discretion, may provide in the particular Option Agreement, as amended.  The Board may at any time increase the percentage of an Option that is otherwise exercisable under the terms of a particular Option Agreement.  The Board, in its sole and exclusive discretion, may permit the issuance of Stock underlying an Option prior to the date the Option is otherwise exercisable, provided such Stock is subject to repurchase rights which expire pro rata as the Option would otherwise have become exercisable.



(ii)

If the Optionee does not exercise in any one (1) year period the full number of shares to which he or she is then entitled to exercise, the Optionee may exercise those shares in any subsequent year during the term of the Option.



(h)

Transfer of Options.An Option shall not be transferable except by will or by the laws of decent and distribution, and shall be exercisable during the lifetime of the person to whom the Option is granted only by such person, except as specifically provided for by the Board.  An attempted non-permitted transfer of an Option shall be void.



(i)

Disability of Optionee.  In the event an Optionee's Continuous Status as an Employee, Director or Consultant terminates as a result of the Optionee's Disability, the Optionee may exercise his or her Option, but only within twelve (12) months from the date of such termination (or such shorter period specified in the Option Agreement), and only to the extent that the Optionee was entitled to exercise it at the date of such termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement).  If, at the date of termination, the Optionee is not entitled to exercise his of her entire Option, the shares covered by the unexercisable portion of the Option shall revert to the Plan.  If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to the Plan.



(j)

Death of Optionee.  In the event of the death of an Optionee, the Option may be exercised, at any time within sixteen (16) months following the date of death (or such other period specified in the Option Agreement but in no event later than the expiration of the term of such Option as set forth in the Option Agreement), by the Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent the Optionee was entitled to exercise the Option at the date of death.  If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to the Plan.  If, after death, the Optionee's estate or a person who acquired the right to exercise the Option by bequest or inheritance does not exercise the Option within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to the Plan.



(k)

Termination of Employment or Relationship as an Officer, Director, Consultant or Advisor.  In the event that an Optionee who is an Employee, Officer, Director, Consultant or Advisor of the Company or its Affiliates shall cease to be employed by or perform services for the Company or its Affiliates prior to the Option's expiration date (other than upon the Optionee's death or Disability), the exercise of Options held by such Optionee shall be subject to such limitations on the periods of time during which such Options, except for Incentive Stock Options limitations under section 6(g)(i) herein, may be exercised as may be specified in the particular Option Agreement, as amended, between the Optionee and the Company.  Whether authorized leave of absence or absence for military or governmental service shall constitute termination of employment for purposes of the Plan shall be determined by the Board in their sole and exclusive discretion.  No provision of the Plan shall be construed so as to grant any individual the right to remain in the employ or service of the Company for any period of specific duration.



(l)

Recapitalization.



(i)

The number of shares issuable under the Plan and the number and amount of the Option Stock and the Option Price of outstanding Options may be proportionately adjusted by the Board, in its sole and exclusive discretion, for any increase or decrease in the number of issued shares of Stock resulting from a subdivision or consolidation of shares, or for the payment of a stock dividend, or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company in order to preclude the dilution or enlargement of benefits under the Plan.



(ii)

The Board, in its sole and exclusive discretion, may make such equitable adjustments to the Plan and outstanding Options as it deems appropriate in order to preclude the dilution or enlargement of benefits under the Plan, upon exchange of all of the outstanding stock of the Company for a different class or series of capital stock or the separation of assets of the Company, including a spin-off or other distribution of stock or property by the Company.



(iii)

If the Company shall be the surviving corporation in any merger or consolidation, each outstanding Option shall pertain to and apply to the securities to which a holder of the number of shares of Option Stock would have been entitled.  A dissolution or liquidation of the Company, a merger (other than a merger the principal purpose of which is to change the state of the Company's incorporation) or consolidation in which the Company is not the surviving corporation, a reverse merger in which the Company is the surviving corporation but the Company's Common Stock outstanding immediately preceding the merger is converted by virtue of the merger into other property, or other capital reorganization in which more than fifty percent (50%) of the Company's Common Stock is exchanged (unless the dissolution or liquidation plan, merger or consolidation agreement or capital reorganization corporate documents expressly provide to the contrary) shall cause each outstanding Option to terminate, provided, that each Optionee shall, immediately prior to such event, have the right to exercise his or her Option in whole or in part, unless the Option in connection with such event is either to be assumed by the successor corporation or parent thereof, or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation or parent thereof, or the Option is to be replaced by a comparable cash incentive program of the successor corporation based on the value of the Option on the date of such event.  Notwithstanding the preceding, if, within one (1) year from the date of such event, an Employee's employment is involuntarily terminated, then the Employee's outstanding Options, if any, shall become immediately exercisable.



(iv)

All adjustments required by the preceding paragraphs shall be made by the Board, whose determination in that respect shall be final, binding and conclusive, provided, that adjustments shall not be made in a manner that causes an Incentive Stock Option to fail to continue to qualify as an "incentive stock option" within the meaning of Code Section 422.



(v)

Except as expressly provided in this Paragraph 6(l), an Optionee shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, or the payment of any stock dividend, or any other increase in the number of shares of stock of any class by reason of any dissolution, liquidation, merger, consolidation, reorganization, or separation of assets, and any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or amount of the Option Stock or the Option Price of outstanding Options.



(vi)

The grant or existence of an Option shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes in its capital or business structure, or to merge, consolidate, dissolve, liquidate or sell, or transfer all or any part of its business or assets.



(m)

Rights as a Shareholder.  An Optionee shall not have rights as a shareholder with respect to any shares until the date of the issuance of a stock certificate to him or her for such shares.  No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date of issuance of such stock certificate, except as provided in Paragraph 6(l) above.



(n)

Modification, Extension and Renewal of Options.  Subject to the terms and conditions of the Plan, the Board may modify (including lowering the Option Price or changing Incentive Stock Options into Non-Statutory Stock Options), extend or renew outstanding Options granted under the Plan, or accept the surrender of outstanding Options under this Plan and/or other stock option plans of the Company (to the extent not previously exercised) and authorize the granting of new Options in substitution therefor.  Notwithstanding the foregoing, no modification of an Option shall, without the consent of the Optionee, alter or impair any rights or obligations under any Option previously granted under the Plan.



(o)

Securities Compliance.  The Company may require any Optionee, or any person to whom an Option is transferred under subsection 6(d), as a condition of exercising any such Option, (1) to give written assurances satisfactory to the Company as to the Optionee's knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters, and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Option; and (2) to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the Option for such person's own account and not with any present intention of selling or otherwise distributing the stock.  These requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise of the Option has been registered under a then currently effective registration statement under the Securities Act of 1933, as amended (the "Securities Act"), or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws.  Unless an Optionee could otherwise exercise a Stock Option or dispose of Stock delivered upon exercise of a Stock Option granted under the Plan without incurring liability under Section 16(b) of the Exchange Act, at least six months shall elapse from the date of acquisition of the Stock Option to the date of disposition of its underlying Stock.



(p)

Transfer and Exercise of Options.  To the extent required by Code Section 422, each Incentive Stock Option shall state that it is not transferable or assignable by Optionee otherwise than by will or the laws of descent and distribution, and that during an Optionee's lifetime, such Incentive Stock Option shall be exercisable only by the Optionee.



(q)

Other Provisions.  Each Option Agreement maycontain such other provisions, including without limitation, restrictions upon the exercise ortransferability of the Option, as the Board may deem advisable.  Any Incentive StockOption Agreement shall contain such limitations and restrictions upon the exercise of theIncentive Stock Option as shall be necessary in order that such Incentive Stock Option shallbe an "incentive stock option" as defined in Code Section 422, or to conform toany changein the law.



(r)

Withholding Taxes.  When the Company becomes required to collect federal and state income and employment taxes in connection with the exercise of an Option ("withholding taxes"), the Optionee shall promptly pay to the Company the amount of such taxes in cash, unless the Board permits or requires payment in another form.  Subject to such conditions as it may require, the Board, in its sole discretion, may allow an Optionee to reimburse the Company for payment of withholding taxes with shares of Stock.  If an Optionee is a Reporting Person at the time of exercise and is given an election to pay any withholding taxes with Stock, the Board shall have sole discretion to approve or disapprove such election.



7.

Term of Plan.



The Board may suspend or terminate the Plan at any time.  Unless sooner terminated, the Plan shall not extend beyond a date ten (10) years from the date of adoption hereof by the Board.  No Incentive Stock Options or Non-statutory Stock Options may be granted under the Plan while the Plan is suspended or after it is terminated.  Rights and obligations under any Option granted while the Plan is in effect shall not be altered or impaired by suspension or termination of the Plan, except with the consent of the person to whom the Option was granted.



8.

Amendment of Plan.



With respect to any shares at the time not subject to Options, the Board may from time to time, insofar as permitted by law, suspend or discontinue the Plan or revise or amend the Plan in any respect whatsoever, except that, without approval of the stockholders, no such revision or amendment shall change the number of shares for which Options may be granted under the Plan, except as provided in Section 6(l), change the designation of the class of persons eligible to receive Options under the Plan, materially increase the benefits accruing to Optionees under the Plan, or decrease the price at which Incentive Stock Options may be granted.  Furthermore, without the approval of the stockholders, the Plan may not be amended in any manner that will cause Incentive Stock Options issued under it to fail to meet the requirements of "incentive stock options" as defined in Code Section 422.  The Board may amend the Plan from time to time to the extent necessary to comply with any applicable law, rule or other regulatory requirement.



9.

Application of Funds.



The proceeds received by the Company from the sale of Stock pursuant to the exercise of an Option will be used for general corporate purposes.



10.

No Obligation to Exercise Option.



The granting of an Option shall impose no obligation upon the Optionee to exercise such Option.



11.

Indemnification.



In addition to such other rights of indemnification as they may have as Directors, Employees or agents of the Company, the Directors, or any individuals who are delegated authority by the Board to administer the Plan, shall be indemnified by the Company against: (i) their reasonable expenses, including attorneys' fees actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Option granted thereunder; and (ii) against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company), or paid by them in satisfaction of a judgment in any such action,. suit or proceeding, except in actions to matters as to which it shall be adjudged in such action, suit or proceeding that such Director or individual is liable for negligence or misconduct in the performance of his duties; this indemnification is expressly conditioned upon the indemnified party, within ninety (90) days after institution of any such action, suit or proceeding, offering the Company in writing the opportunity, at its own expense, to handle and defend the same.



12.

Approval of Stockholders.



The portions of the Plan dealing with Incentive Stock Options shall not take effect unless approved by the stockholders of the Company's preferred (if any) and Common Stock, which approval must occur within a period commencing sixty (60) months before and ending twelve (12) months after the date the Plan is adopted by the Board.  Nothing in the Plan shall be construed to limit the authority of the Company to exercise its corporate rights and powers, including the right of the Company to grant Non-Statutory Options for proper corporate purposes.



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