| [×] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the fiscal year ended December 31, 2007 or | ||
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from to |
| NV | 98-0211652 | |||
| (State or other jurisdiction | (IRS Employer | |||
| of incorporation) | Identification Number) |
| 930 West First Street, Ste 116, North Vancouver, BC | V7P 3N4 | |
| (Address of principal executive offices) | (Zip Code) |
| Title of each class | Name of each exchange on which registered | |
| None | ||
| Title of each class | Name of each exchange on which registered | |
| Common Stock, $.001 par value | Over The Counter Bulletin Board | |
| Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. | [ ] Yes [×] No |
| Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. | [ ] Yes [×] No |
| Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | [×] Yes [ ] No |
| Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). | [×] Yes [ ] No |
| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not 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-K or any amendment to this Form 10-K. | [ ] |
| [ ] | Large accelerated filer | [ ] | Accelerated filer | |||
| [ ] | Non-accelerated filer | [×] | Smaller reporting company | |||
| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). | [ ] Yes [×] No |
The Issuer's revenue for its fiscal year ended December 31, 2007 is $5,093,255.
As of March 18, 2008, the aggregate market value of the registrant's common
stock held by non-affiliates of the registrant was approximately $4,939,775
based on approximately 32,931,833 shares held by non affiliates at a price of
$0.15.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
2
EXPLANATORY NOTE:
This Amendment No. 1 on Form 10-K/A hereby amends the registrant's
annual report on Form 10-KSB, which the registrant filed with the Securities and
Exchange Commission on April 2, 2008. This amendment is being filed in order to
restate the registrant's financial statements in order to correct certain errors
in its revenue recognition in relation to certain advertising contracts.
TABLE OF CONTENTS
PAGE
PART I
ITEM 1. Description of Business. 4
ITEM 1A. Risk Factors 9
ITEM 1B. Unresolved Staff Comments 18
ITEM 2. Properties. 18
ITEM 3. Legal Proceedings. 18
ITEM 4. Submission of Matters to a Vote of Security Holders. 19
PART II
ITEM 5. Market for Common Equity Related Stockholder Matters And Issuer
Purchases of Equity Securities. 19
ITEM6. Selected Financial Data 22
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations. 22
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk. 26
ITEM 8. Financials Statements And Supplementary Data. 26
ITEM 9. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure. 26
ITEM 9A. Controls and Procedures. 27
ITEM 9B. Other Information. 27
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance. 28
ITEM 11. Executive Compensation. 30
ITEM 12. Security Ownership of Certain Beneficial Owners and 33
Management Related Stockholder Matters.
ITEM 13. Certain Relationships and Related Transactions,
and Director Independence. 34
ITEM 14. Principal Accountant Fees and Services 36
ITEM 15. Exhibits. 38
Signatures 40
3
ITEM 1. DESCRIPTION OF BUSINESS
Information Regarding Forward Looking Statements
AlphaTrade.com (the "Company" or "we" or "us" or "our") has made forward-looking
statements (within the meaning of the Private Securities Litigation Reform Act
of 1995) in this Annual Report on Form 10-KSB (the "Annual Report") that are not
historical facts are "forward-looking statements" which can be identified by the
use of terminology such as "estimates," "projects," "plans," "believes,"
"expects," "anticipates," "intends," or the negative or other variations, or by
discussions of strategy that involve risks and uncertainties. We urge you to be
cautious of the forward-looking statements, that such statements, which are
contained in this Annual Report, reflect our current beliefs with respect to
future events and involve known and unknown risks, uncertainties and other
factors affecting our operations, market growth, services, products and
licenses. No assurances can be given regarding the achievement of future
results, as actual results may differ materially as a result of the risks we
face, and actual events may differ from the assumptions underlying the
statements that have been made regarding anticipated events. Factors that may
cause actual results, our performance or achievements, or industry results, to
differ materially from those contemplated by such forward-looking statements
include without limitation:
1. Our ability to attract and retain management, and to integrate and
maintain technical information and management information systems;
2. Our ability to generate customer demand for our products;
3. The intensity of competition; and
4. General economic conditions.
Organizational History
AlphaTrade.com was originally incorporated in the State of Nevada on June 6,
1995 as Sierra Gold Development Corp. Our name was changed to Honor One
Corporation on October 29, 1998. On January 6, 2001 the name was changed to
AlphaTrade.com. In 2001 our common stock commenced trading on OTC Bulletin Board
(the "OTCBB") under the symbol "EBNK". On January 14, 2002, our symbol changed
to APTD after we effected a reverse split on a 1 for 50 basis. Unless otherwise
indicated, share amounts set forth herein have been adjusted to reflect past
stock splits.
Our headquarters are located at Suite 116 - 930 West 1st Street, North
Vancouver, B.C. V7P3N4, Canada.
Overview
AlphaTrade began as a technology company focused on developing a web based stock
quote service that was high quality, comprehensive and affordable. Almost
perfectly timed, our product release coincided with a major turn down in tech
stocks and interest in the financial industry from a retail point of view waned
severely. We noticed the impact almost immediately as the demand for our stock
quote service and all of our financial products slowed to almost zero annual
growth. This prompted immediate corrective action from management. Upon
analyzing our business model we realized the major importance of the business we
built was our database. From this we formulated a plan for our future business
development - targeted on-line digital advertising for small, mid, mini and
4
micro cap publicly traded companies. From that we have grown into a
multi-faceted, digital media marketing agency through our creative use of sports
franchises to get more exposure for our own brand and by maximizing our
financial data services to increase our database.
Since January 1999 when we commenced operations, AlphaTrade has prided itself on
its ability to evolve. Our mandate is to aggressively build our business in
markets that are under served and over charged. Our entire digital advertising
business evolved from a lack we noticed in the advertising industry - no one was
specifically serving the needs of developing companies on the smaller exchanges.
We launched our advertising program to serve that need and in the process our
operation costs have been lowered, our database is growing at a fast pace, our
web traffic is soaring and our brand is becoming well known. This initiative
allowed us to augment our management team, expand our revenue opportunities and
further diversify our business. Our affiliations with sports franchises gave us
the opportunity to fast track the growth of our advertising business. By
embedding our business and our brand with as many operating businesses of the
caliber of the New York Mets, the Dallas Mavericks and other such sports teams,
strongly positions AlphaTrade in the minds of potential clients.
Business Strategy
Our marketing strategy is building products and creating services that can
survive and prosper in challenging economic times. Our advertising programs are
driving out much of the hard costs associated with our financial products. We
are aggressively marketing our products and services to qualified prospects. Our
strongest revenue growth for 2007 came from our advertising programs.
AlphaTrade's unique positioning in the marketplace is protected by a number of
factors: reasonable price, targeted ad placement, high volume web traffic,
valuable associations, strong networking ability, and worldwide audience.
Our database is expanding as a direct result of our successful advertising
promotions and our sports affiliations. This is resulting in a strong conduit of
new business for a variety of our advertising programs and our other business
segments such as text promotions. Our own corporate brand awareness made
tremendous strides in 2007 which is also improving our business prospects.
Our overall strategy reflects the attention we are paying to our revenue growth
for 2007 and beyond. As with any business, there are some dominant players
currently capturing a lot of the digital advertising business. The Internet
public is fickle and expects unique content, interesting presentations, and fast
paced messages. The Internet audience readily embraces the proactive marketing
approach used by companies like AlphaTrade that can make changes and alter their
presentations quickly. We have created a mindset at AlphaTrade that focuses on
listening and paying attention to our "fans" - who are the people who frequent
our websites.
Our foray into mainstream and grassroots sports portrayed our theme of "we go
where our customers are". We continually embrace our motto of "make the move" -
meaning don't wait - do it now. For us, it is all about looking at what connects
people to our advertisers' messages - what makes our advertisements appealing to
the consumer. 2007 was a pivotal year for AlphaTrade. Our revenue from
advertising for the first time exceeded the revenue from our core financial
products. We see this as validation for our current marketing strategy.
5
The caliber of our site demographics is one of our main marketing focuses. In
addition to the continually increasing number of site visitors, we attract one
of the most favored demographic due to the combination of our financial products
and our sports presence. Our selling feature to advertisers is that our service
completely aligns the intentions of both site visitors and advertisers. This
creates a dynamic partnership that reflects management's commitment to strategic
marketing that benefits both parties.
Our mobile messaging business has become an adjunct service that compliments our
advertising programs. Throughout 2007 we conducted text promotions at Shea
Stadium, the home of the New York Mets, for NFL Super Bowl tickets, at the NHRA
drag races, at a NASCAR race in Phoenix and many others - in fact, in 2007 we
promoted and developed over 50 text promotions. Our database from our text
promotions is growing continually and is becoming an additional feature for our
marketing programs.
In keeping with our theme of building partnerships with our advertisers, we have
expanded our web development services, which include web site development,
enhancements, logo development, mailing programs, corporate identity and brand
building.
Our business development in 2007 is representative of an underlying trend for
the company with respect to our potential revenue growth. Although we were
experiencing continued growth prior to adding additional revenue streams, it was
not as solid as it is now. When you combine financial products with technology
and spice it up with website development and blend all of that with an
innovative advertising and marketing strategy, our potential revenue is
unlimited and restricted only by our own creativity. As our database grows and
the success of our advertising programs becomes more widely known, we believe
our advertising revenues will become our main revenue source. We have a great
sense that our corporate direction and marketing focus is valid. We anticipate a
stellar year in 2008 judging by the success and the acceptance of our new
products. We are also anticipating some growth for our financial products as our
Internet footprint expands. We are strategically building a database of highly
favored website visitors, of publicly traded companies and a network of people
around the world interested in the services we provide. Our plans for 2008
include greater web traffic, revenue and site popularity. We aim to become a
fully functioning marketing arm for all of our advertisers offering services
from website enhancements and improvements, to mailing, to customer management,
to creative, and to join our networking force.
Sports Sponsorships
Agreement with Sterling Mets, L.P.
On January 12, 2007, we entered into a Letter Agreement (the "Mets Agreement")
with Sterling Mets, L.P. ("Sterling"), owner and operator of the New York Mets
National League Baseball team (the "Mets"). Under the terms of the Mets
Agreement, Sterling and the Mets granted to us certain Mets' advertising and
sponsorship rights for each of the 2007 and 2008 Major League Baseball seasons
in consideration of us providing to Sterling certain monetary consideration,
with the term of the Mets Agreement commencing on the date of the Mets Agreement
and terminating upon the conclusion of the 2008 Major League Baseball season
(the "Term"). Specifically, pursuant to the terms of the Mets Agreement,
6
Sterling granted to us the right to advertise our online investment management
services (the "Services") during Mets home games in the specifically designated
Shea Stadium locations and our associated sponsorship of the Mets.
Agreement with Dallas Mavericks Basketball Club.
On October 1, 2007, we entered into an Agreement (the "Mavericks Agreement")
with the Dallas Mavericks, a professional basketball team ("Mavericks"). Under
the terms of the Mavericks Agreement, the Mavericks have granted to us certain
Mavericks advertising and
sponsorship rights for 2007 with an option to extend for two additional one year
periods through to September, 2010 in consideration of us providing to Mavericks
certain monetary consideration, with the term of the Mavericks Agreement
commencing on the date of the Agreement and terminating September, 2008 (the
"Term"). Specifically, pursuant to the terms of the Mavericks Agreement,
Mavericks granted to us the right to advertise on the Video Board at American
Airlines Center and at home games in specifically designated American Airlines
Center locations and our associated sponsorship of the Mavericks.
Agreement with American Drag Racing League
On March 1, 2007, we entered into a three-year agreement (the ADRL Agreement")
with American Drag Racing League ("ADRL"). The multi-faceted ADRL Agreement will
give AlphaTrade the title-rights sponsorship for a number of prominent ADRL
programs. Pursuant to the terms of the ADRL Agreement, AlphaTrade agreed to
become the title sponsor for the season-long points program and the year-end
championship eliminators - now called the AlphaTrade Battle for the Belts, the
traditional season-ending event in Texas - now called the AlphaTrade ADRL World
Finals and the newly established AlphaTrade All-Stars program. This new program
has been designed exclusively for this partnership and will involve engaging the
fans through a variety of text message promotions. The fans will text to
determine the first AlphaTrade ADRL All-Star teams in each of the organization's
professional categories.
Associate Sponsorship Agreement with Kenny Bernstein Racing, Inc.
On November 29, 2006, we entered into an Associate Sponsorship Agreement (the
"KBR Agreement") with Kenny Bernstein Racing, Inc., a Texas corporation ("KBR").
In December, 2007 it was agreed between the Company and KBR that the sponsorship
would be mutually cancelled. The sum of $125,000 remained due and owing as at
December 31, 2007, which sum is being settled in monthly installments. Kenny
Bernstein had a serious crash in his funny car racing against John Force and
elected to no longer personally race after the 2007 year.
Sponsorship Agreement with Professional Bull Riders, Inc.
On December 27, 2006, we entered into a Sponsorship Agreement (the "PBR
Agreement")with Professional Bull Riders, Inc., a Colorado corporation ("PBR").
The agreement was amended on March 21, 2007 and further amended on November 1,
2007 to discontinue the sponsorship. The sum of $750,000 remained owing for as
of December 31, 2007 which is being retired in monthly installments.
7
Agreement with Tampa Bay Devil Rays.
On March 7, 2007, we entered into a Letter Agreement (the "DR Agreement") with
the Tampa Bay Devil Rays, a professional baseball team ("Devil Rays"). Under the
terms of the DR Agreement, AlphaTrade provided notice to the Devil Rays on
September 25, 2007 that it was not exercising it's option to continue the
sponsorship beyond 2007.
Our Core Competencies
We have focused on building a company with a diverse base of revenue
opportunities. In addition to our financial data services, we also provide a
broad array of advertising and marketing products. In the digital era, all sizes
of companies are competing for brand opportunities. With our multi-dimensional
advertising, the consumer may see the advertisement when he logs into our
financial product, when he attends a sporting event or when he participates in a
text message promotion. Our intent with the cross over into our sports
properties is that we want to put the enjoyment back into the financial market
thereby potentially increasing the number of customers we would attract.
We attribute our business growth to the following core competencies:
- Entrepreneurial focus. We pride ourselves on our alacrity when presented
with strategic business opportunities. By bringing an entrepreneurial
focus to the traditional financial industry, we believe we are able to
structure new and unique opportunities for our growth. We further believe
that our range of experience within these different industries -
sporting, financial and advertising - allows us to execute specialized
programs typically not offered by any other organization. By offering our
customers flexibility and responsiveness and by offering them a full
range of brand opportunities, we believe we are well positioned to serve
our markets and grow our business.
- Our unique culture. We have instilled a culture of partnerships, and we
create a shared sense of commitment throughout our organization.
- Employee and Customer Diversity. Since our inception, we have focused on
building a diverse group of employees, which we believe enables us to
establish and maintain excellent customer relations. Approximately 40% of
our associates and employees are minorities with ethnic backgrounds that
include Asian, Persian, Hispanic, and Pakistani. Our CEO is a woman and
the board of directors is 75% female. Our culture of diversity is the
essence of our character; we experience it in our customers and it is
embraced by our board of directors, executive officers and employees. -
Stringent Credit Policies. We consider credit administration to be of
primary importance. We emphasize advance payment for all of our services.
Our disciplined approach to credit administration is evidenced by what we
believe to be our extremely low to non-existent bad debt.
Our Markets
We believe that we currently operate in industries that provide attractive
market opportunities and diverse economic growth possibilities. While general
subscriber growth for our stock quote product is predictable, management
predicts this growth to be slower than for our advertising products. The diverse
8
needs of our advertising customers provide us with the greatest opportunities
for revenue growth. Our business model focuses on utilizing our sports
partnerships as a catalyst for expansion in all areas of the company but
especially advertising.
Advertising Growth
------------------
Our advertising program is designed to be a unique and innovative approach for
promoting our client's brand. Our sports partnerships drive new traffic to our
website which creates a more successful advertising campaign. Our advertising is
designed in an "a la carte" fashion, wherein the client can custom tailor an
advertising campaign based on their objectives and their budget. We anticipate
that the revenue from our advertising program, which encompasses our text
events, will continue to be the fastest revenue sector of our company.
Sports Partnerships and Lead Generation
Our management believes that our alliances with our sports partnerships have put
our company in the forefront of the sports industry. We believe that these
sports teams are some of the most prominent sports properties in the world and
their combined fan base offers us an unbelievable opportunity to prospect for
new business. Additionally, we will benefit from our association with them due
to their reputable management, their vast media exposure, and their dedicated
and professional staff members. The support and dedication of our sports
properties are the driving force for us to gain traction in our quest to gain
market share, to increase our web traffic and in producing what we hope to be
phenomenal results for our advertising clients. We hope that over time, these
results will continue to build significant benefits to our advertising clients
by gaining the exposure they need at a fraction of the cost of more mainstream
advertising venues.
Text Events and Promotions.
--------------------------
Text messaging appears to be the perfect venue to engage fans and sports
enthusiasts. Our sports partnerships provide what we believe to be a superb
venue to derive additional revenue streams via text promotions both in stadium
and via web promotions. With the growing base of sports partnerships and greater
recognition of our corporate brand, our text programs are rapidly expanding into
one of our fastest growing revenue opportunities.
Employees
We currently retain, through contracts with corporations, the services of three
executive officers on a full time basis. In addition, through a Canadian
management company, we employ twenty-one employees/contractors. Our employees
are not members of any union, nor have we entered into any collective bargaining
agreements. We believe that our relationship with our employees is excellent. We
are anticipating hiring additional employees/contractors in the next year to
handle anticipated growth.
ITEM 1A. RISK FACTORS.
You should carefully consider the risks described below as well as other
9
information provided to you in this document, including information in the
section of this document entitled "Information Regarding Forward Looking
Statements." The risks and uncertainties described below are not the only ones
facing the Company. Additional risks and uncertainties not presently known to
our company or that we currently believe are immaterial may also impair our
business operations. If any of the following risks actually occur, our business,
financial condition or results of operations could be materially adversely
affected, the value of our common stock could decline, and you may lose all or
part of your investment.
Risks related to our financial results
--------------------------------------
We have a limited operating history and our limited operating history makes it
difficult to evaluate our business and prospects.
We have a limited operating history and our limited operating history makes it
difficult to evaluate our business and prospects. We commenced operations in
January 2001 and have conducted limited business operations since that time. As
a result of our short operating history, we have only limited financial data and
business information with which to evaluate our business strategies, past
performance and an investment in our common stock. As a company with a limited
operating history, there are substantial risks, uncertainties, expenses and
difficulties that we are subject to. You should consider an investment in our
company in light of these risks, uncertainties, expenses and difficulties. To
address these risks and uncertainties, we must do the following:
o Successfully execute our business strategy;
o Continue to develop our products and services;
o Respond to competitive developments; and
o Attract, integrate, retain and motivate qualified personnel.
We may be unable to accomplish one or more of these objectives, which could
cause our business to suffer. In addition, accomplishing one or more of these
objectives might be very expensive, which could harm our financial results.
We have incurred significant losses since inception and anticipate that we will
continue to incur losses for the foreseeable future.
As of December 31, 2007, we have incurred an accumulated net loss of
approximately $35 million. We also have plans to significantly increase our
corporate expenses and marketing costs due to our sports partnerships. Our
management believes that while our business and products will be appealing to
our current and future customers, and our revenues have continued to increase in
the past three fiscal years, there is no assurance, we will be able to
successfully continue to increase our revenues or that our products will be
accepted by the market. Furthermore, in light of our significant losses, we will
need to generate significant revenues to achieve and sustain profitability. If
we do achieve profitability, we may be unable to sustain or increase
profitability on a quarterly or annual basis. Any of these factors could cause
our stock price to decline.
10
Management believes that long-term profitability and growth will depend on its
ability to:
o Develop the reputation of AlphaTrade as a successful marketing and
advertising company;
o Successfully identify and exploit appropriate opportunities, markets
and products;
o Develop viable strategic alliances; and
o Maintain sufficient volume of inflow of advertising clients.
We will need to raise substantial additional capital to fund our operations, and
our failure to obtain funding when needed may force us to delay, reduce or
eliminate our products and services.
Our operations have consumed a substantial amount of cash since inception. We
expect to continue to spend substantial amounts to:
o develop the reputation of AlphaTrade as a successful marketing and
advertising company;
o maintain and increase the company's human resource including full
time and consultant resources;
o evaluate appropriate opportunities, markets and products; and
o evaluate future products and areas for long term development.
To date, our sources of cash have been primarily limited to the sale of our
securities and loans from related parties and outside sources. We cannot be
certain that additional funding will be available on acceptable terms, if at
all. To the extent that we raise additional funds by issuing equity securities
or debt convertible debt securities, our stockholders may experience significant
dilution. Any debt financing, if available, may involve restrictive covenants
that impact our ability to conduct its business. If we are unable to raise
additional capital, when required, or on acceptable terms, we may have to
significantly delay, scale back or discontinue our products and services.
Risks Related to Our Business
-----------------------------
There are many competitors in the data feed industry. We expect competition to
continue and intensify in the future. We also face competition from discount and
full service brokerage firms that provide similar proprietary services to their
own customer bases.
The market may not continue to accept our products and our E-Gate product. We
generate a large portion of our revenue from subscribers who pay monthly for the
E-Gate service. We do expect that E-Gate will continue to account for a
substantial portion of our revenue for fiscal 2008. Our future financial
performance will depend on increasing acceptance of our current products and on
the successful development, introduction and customer acceptance of new products
and services.
11
As our subscriber base increases, the amount of revenue from advertising is
expected to increase and the amount we can charge for advertising increases
because the specific demographics of our subscribers is highly attractive for
many companies. If we are unable to continue to generate sufficient revenues
from our new products, our business may be adversely affected and the price of
our stock may decline.
Outside factors may influence our growth and business development.
Outside factors may influence our growth and business development. We expect to
experience significant fluctuations in our future results of operations due to a
variety of factors, many of which are outside of our control, including, but not
limited to the following:
* demand for and market acceptance of our products and services;
* our efforts to expand into different industries;
* introduction of new products and services by us or
our competitors;
* competitive factors that affect our pricing;
* the mix of products and services we sell;
* the timing and magnitude of our capital expenditures, including
costs relating to the expansion of our operations;
* hiring and retention of key personnel;
* changes in generally accepted accounting policies, especially
those related to the recognition of subscription revenue; and
* new government legislation or regulation.
Any of the above factors could have a negative effect on our business and on the
price of our stock, and we may have to significantly delay, scale back or
discontinue our products and services.
Loss of key executives and key personnel and failure to attract qualified
managers and employees could limit our growth and negatively impact our business
operations.
If we lose our key executives and key personnel or fail to attract qualified
managers and employees, we may be unable to successfully operate our business.
We depend on the continued contributions of our executive officers and other
technical and marketing personnel to work effectively as a team, to execute our
business strategy and to manage our business. The loss of key personnel or their
failure to work effectively could have a material adverse effect on our
business, financial condition and results of operations. We are not aware of any
named executive officer or director who has plans to leave us or retire.
If we are unable to attract and retain additional qualified personnel, our
future business may suffer.
12
Our business strategy requires us to attract and retain additional qualified
technical and marketing personnel. We may experience difficulty in recruiting
qualified personnel, which is an intensely competitive and time consuming
process. We may not be able to attract and retain the necessary personnel to
accomplish our business objectives as our business develops and grows.
Accordingly, we may experience constraints that will adversely affect our
ability to satisfy future customer demand in a timely fashion or to support our
customers and operations. This could cause an adverse effect on our business,
financial condition and results of operations.
We will need to increase the size of our organization, and may experience
difficulties in managing growth. We are a small company with a small number of
employees as of December 31, 2007. We expect to experience a period of
significant expansion in headcount, facilities, infrastructure and overhead and
anticipate that further expansion will be required to address potential growth
and market opportunities. Future growth will impose significant added
responsibilities on members of management, including the need to identify,
recruit, maintain and integrate additional independent contractors and managers.
Our future financial performance and its ability to compete effectively will
depend, in part, on our ability to manage any future growth effectively.
If we are unable to protect our intellectual property effectively, we may be
unable to prevent third parties from using our technologies and methods, which
would impair our competitive advantage.
We do not believe that our operations or products infringe on the intellectual
property rights of others. However, there can be no assurance that others will
not assert infringement or trade secret claims against our company with respect
to our current or future technologies or that any such assertion will not
require us to enter into a license agreement or royalty arrangement with the
party asserting the claim. Responding to and defending any such claims may
distract the attention of our management and have an adverse effect on our
business, financial condition and results of operations.
Others may claim in the future that we have infringed their past, current or
future technologies. We expect that participants in our markets increasingly
will be subject to infringement claims as the number of competitors grows. Any
claim like this, whether meritorious or not, could be time-consuming, and result
in costly litigation and possibly result in agreements covering intellectual
property secrets and technologies. These agreements might not be available on
acceptable terms or at all. As a result, any claim like this could harm our
business.
We regard the protection of our copyrights, service marks, trademarks, and trade
secrets as critical to our success. We rely on a combination of patent,
copyright, trademark, service mark and trade secret laws and contractual
restrictions to protect its proprietary rights in products and services. When
applicable, we will enter into confidentiality and invention assignment
agreements with employees and contractors, and nondisclosure agreements with
parties we conduct business with in order to limit access to and disclosure of
our proprietary information. These contractual arrangements and the other steps
taken to protect our intellectual property may not prevent misappropriation of
our technology or deter independent third-party development of similar
technologies. We intend to pursue the registration of trademarks and service
marks in the U.S. and internationally. Effective trademark, service mark,
13
copyright and trade secret protection may not be available in every country in
which its services are made available. In addition, the laws of many foreign
countries do not protect our intellectual property to the same extent as the
laws of the United States. Also, it may be possible for unauthorized third
parties to copy or reverse engineer aspects of our products, develop similar
technology independently or otherwise obtain and use information that we regard
as proprietary. Furthermore, policing the unauthorized use of our products is
difficult.
We principally rely upon contractual restrictions to protect our technology.
We principally rely upon contractual restrictions to protect our technology. Our
contracts may not provide significant commercial protection or advantage to us,
and the measures we take to maintain the confidentiality of our trade secrets
may be ineffective. If we are unable to effectively protect our technology, our
competitors may be able to copy important aspects of our products or product
message, which could undermine the relative appeal of our products to customers
and thus could reduce our future sales.
Litigation may be necessary in the future to enforce our intellectual property
rights, to protect our trade secrets or patents that we may obtain, or to
determine the validity and scope of the proprietary rights of others. Such
litigation could result in substantial costs and diversion of resources and
could have a material adverse effect on our future operating results.
We substantially rely on third party providers.
Our future success for our financial products depend upon our ability to
aggregate and deliver compelling financial content over the Internet. We rely
heavily on third party content providers, namely Reuters Information Ltd.,
Acquire Media Corporation and Hemscott, Inc. Currently we have a one year
contract with Reuters which calls for monthly payments of $43,500, a one year
contract with Acquire Media Corporation which calls for monthly payments of
$4,500, and an annual contract with Hemscott, Inc., which calls for monthly
payments of $5,000. All of the aforementioned contracts provide for automatic
renewal unless both parties negotiate otherwise or unless the provider is unable
to deliver the feed. Although there are many competitors to these feed suppliers
and if necessary a new contract could be negotiated, a temporary disruption in
these feed suppliers could have a negative effect on our business. We also have
contracts with various stock exchanges and market quotation services including
the Pink Sheets, the New York and Toronto exchanges and the London Stock
Exchange. We supply this exchange data to our customers on a reimbursed basis.
The loss of our data feeds from these exchanges and market quotation services
would seriously damage our customer relations and likely result in a loss of our
customers.
We are subject to compliance with securities law, which exposes us to potential
liabilities, including potential rescission rights as further described below.
We have periodically offered and sold our common stock to investors pursuant to
certain exemptions from the registration requirements of the Securities Act of
1933, as well as those of various state securities laws. The basis for relying
on such exemptions is factual; that is, the applicability of such exemptions
depends upon our conduct and that of those persons contacting prospective
14
investors and making the offering. In most of these sales, we have not received
a legal opinion to the effect that these offerings were exempt from registration
under any federal or state law. Instead, we have relied upon the operative facts
as the basis for such exemptions, including information provided by investors
themselves.
If any prior offering did not qualify for such exemption, an investor would have
the right to rescind its purchase of the securities if it so desired. It is
possible that if an investor should seek rescission, such investor would
succeed. A similar situation prevails under state law in those states where the
securities may be offered without registration in reliance on the partial
preemption from the registration or qualification provisions of such state
statutes under the National Securities Markets Improvement Act of 1996. If
investors were successful in seeking rescission, we would face severe financial
demands that could adversely affect our business and operations. Additionally,
if we did not in fact qualify for the exemptions upon which it has relied, we
may become subject to significant fines and penalties imposed by the SEC and
state securities agencies.
Our independent auditors have expressed a going concern qualification in their
report dated February 1, 2007.
Our independent auditors have expressed a going concern regarding our company.
Our ability to continue as a going concern is dependant upon our ability to
achieve a profitable level of operations. We will need, among other things,
additional capital resources. Management's plans include concentrating its
efforts on increasing our subscriber base and increasing our advertising
revenues. We are also exploring the possibility of acquiring companies that are
synergistic with our existing business. However, management cannot provide any
assurances that we will be successful in accomplishing any of its plans.
The availability of a large number of authorized but unissued shares of our
common stock may, upon their issuance, lead to dilution of existing
stockholders.
We are authorized to issue 100,000,000 shares of our common stock and 10,000,000
shares of preferred stock, of which as of December 31, 2007, 48,589,773 shares
of common stock and 4,000,000 shares of preferred stock were issued and
outstanding. In addition, we also have also issued warrants and stock options of
which 51,720,347 are outstanding as of December 31, 2007, and 36,075,350 are
exercisable at a weighted average exercise price of $0.40 to purchase an
equivalent amount of shares of common stock. Assuming exercise of these warrants
and stock options, we will be left with more than 15,000,000 authorized shares
that remain unissued. These shares may be issued by our Board of Directors
without further stockholder approval. The issuance of large numbers of shares,
possibly at below market prices, is likely to result in substantial dilution to
the interests of other stockholders. In addition, issuances of large numbers of
shares may adversely affect the market price of our common stock.
Risks related to our common stock and its market value:
-------------------------------------------------------
There is a limited market for our common stock which may make it more difficult
for you to dispose of your stock. Our common stock has been quoted on the OTC
Bulletin Board under the symbol "APTD" since January 15, 2002. There is a
15
limited trading volume for our common stock. For example, approximately more
than one-half of the trading days during January of 2007 saw trading in our
stock of less than 50,000 shares per day. During that same period, the smallest
number of shares trade in one day was 0 and the largest number of shares traded
in one day was 1,132,156. Accordingly, there can be no assurance as to the
liquidity of any markets that may develop for our common stock, the ability of
holders of our common stock to sell our common stock, or the prices at which
holders may be able to sell our common stock.
The price of our common stock is extremely volatile and investors may not be
able to sell their shares at or above their purchase price, or at all.
Our stock is presently traded on the OTC Bulletin Board, although there is no
assurance that a viable market will continue. The price of our common stock in
the public market is highly volatile and may fluctuate substantially because of:
* actual or anticipated fluctuations in our operating results;
* changes in or failure to meet market expectations;
* conditions and trends in the financial data and content provider
industry; and
* fluctuations in stock market price and volume, which are
particularly common among securities of technology companies,
particularly new start-up companies.
In addition, the securities markets have from time to time experienced
significant price and volume fluctuations that are unrelated to the operating
performance of particular companies. These market fluctuations may also
materially and adversely affect the market price of the Company's common stock.
Our common stock is subject to the "penny stock" rules of the SEC and the
trading market in our securities is limited, which makes transactions in our
stock cumbersome and may reduce the value of an investment in our stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes
the definition of a "penny stock," for the purposes relevant to us, as any
equity security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules require:
o that a broker or dealer approve a person's account for transactions
in penny stocks; and
o the broker or dealer receive from the investor a written agreement to
the transaction, setting forth the identity and quantity of the penny
stock to be purchased.
In order to approve a person's account for transactions in penny stocks, the
broker or dealer must:
o obtain financial information and investment experience objectives of
the person; and
16
o make a reasonable determination that the transactions in penny stocks
are suitable for that person and the person has sufficient knowledge
and experience in financial matters to be capable of evaluating the
risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to the penny
stock market, which, in highlight form:
o sets forth the basis on which the broker or dealer made the
suitability determination; and
o that the broker or dealer received a signed, written agreement from
the investor prior to the transaction.
Generally, brokers may be less willing to execute transactions in securities
subject to the "penny stock" rules. This may make it more difficult for
investors to dispose of our common stock and cause a decline in the market value
of our stock.
Disclosure also has to be made about the risks of investing in penny stocks in
both public offerings and in secondary trading and about the commissions payable
to both the broker-dealer and the registered representative, current quotations
for the securities and the rights and remedies available to an investor in cases
of fraud in penny stock transactions. Finally, monthly statements have to be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks.
We do not expect to pay dividends in the future. Any return on investment may be
limited to the value of our stock. We do not anticipate paying cash dividends on
our stock in the foreseeable future. The payment of dividends on our stock will
depend on our earnings, financial condition and other business and economic
factors affecting our company at such time as the board of directors may
consider relevant. If we do not pay dividends, our stock may be less valuable
because a return on your investment will only occur if our stock price
appreciates.
A sale of a substantial number of shares of our common stock may cause the price
of its common stock to decline. If our stockholders sell substantial amounts of
our common stock in the public market, including shares issued upon the exercise
of outstanding options or warrants, the market price of our common stock could
fall. These sales also may make it more difficult for the Company to sell equity
or equity-related securities in the future at a time and price that the Company
deems reasonable or appropriate. Stockholders who have been issued shares in the
Acquisition will be able to sell their shares pursuant to Rule 144 under the
Securities Act of 1933, beginning one year after the stockholders acquired their
shares.
The exercise of our outstanding warrants and options may depress our stock price
We currently have 51,720,347 warrants and options to purchase shares of our
common stock outstanding as of December 31, 2007, of which 36,075,350 are
exercisable at a weighted average exercise price of $0.40 as of equal date. The
exercise of warrants and/or options by a substantial number of holders within a
17
relatively short period of time could have the effect of depressing the market
price of our common stock and could impair our ability to raise capital through
the sale of additional equity securities.
We may need additional capital that could dilute the ownership interest of
investors.
We require substantial working capital to fund our business. If we raise
additional funds through the issuance of equity, equity-related or convertible
debt securities, these securities may have rights, preferences or privileges
senior to those of the rights of holders of our common stock and they may
experience additional dilution. We cannot predict whether additional financing
will be available to us on favorable terms when required, or at all. Since our
inception, we have experienced negative cash flow from operations and expect to
experience significant negative cash flow from operations in the future. The
issuance of additional common stock by our management, may have the effect of
further diluting the proportionate equity interest and voting power of holders
of our common stock, including investors in this offering.
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2. PROPERTIES
Our executive offices are located at Suite 116 - 930 West 1st Street, North
Vancouver, B.C., Canada, in a 8,207 square foot facility. We have a
month-to-month sub-lease at a current monthly rent of $11,000. The lease expires
in December 30, 2011. We house our equipment in a high-speed infrastructure
co-location in British Columbia to ensure our support coverage is manned
24/7/365. We do not own any real estate.
ITEM 3. LEGAL PROCEEDINGS
We are a defendant in a litigation case pending in the Supreme Court of British
Columbia, Canada. This action was filed on December 23, 2003 and is between
Zacks Investment Services Inc. as Plaintiff and AlphaTrade.com as Defendant. The
case number is S036907. The Plaintiff alleges it is owed the sum of $279,664
pursuant to a licensing Agreement executed by the Plaintiff and the Defendant in
1999. We are vehemently defending our self against this claim. At the request of
the Plaintiff, we have submitted a settlement proposal, for the Plaintiff to
accept the $14,758.58 currently held by the Court as payment in full, which is
currently outstanding.
During the year ending December 31, 2002, a company filed an action against us
in the Supreme Court of British Columbia, Canada claiming unspecified damages.
We filed a Statement of Defense in August, 2002. There has been no further
developments in this action. We plan to vigorously defend ourselves.
From time to time we may be a defendant and plaintiff in various legal
proceedings arising in the normal course of our business. We are currently not a
party to any material pending legal proceedings or government actions, including
any bankruptcy, receivership, or similar proceedings . In addition, management
is not aware of any known litigation or liabilities involving the operators of
our properties that could affect our operations. Should any liabilities incurred
in the future, they will be accrued based on management's best estimate of the
potential loss. As such, there is no adverse effect on our consolidated
18
financial position, results of operations or cash flow at this time.
Furthermore, our management does not believe that there are any proceedings to
which any of our directors, officers, or affiliates, any owner of record of the
beneficially or more than five percent of our common stock, or any associate of
any such director, officer, affiliate, or security holder is a party adverse to
our company or has a material interest adverse to us.
Arena Media Networks LLC v. AlphaTrade.com
Supreme Court of the State of New York, County of New York, Index No. 603406/06
-------------------------------------------------------------------------------
Plaintiff Arena Media Networks LLC ("Arena") commenced this action on or about
October 15, 2007 by the filing of a Summons and Complaint. In the Complaint,
Arena asserts causes of action for breach of contract, account stated and unjust
enrichment against the Company arising from the Company's alleged failure to pay
sums purportedly due Arena pursuant to an agreement in which Arena agreed to
place advertising for the Company.
The Company answered the Complaint on February 1, 2008. In its Answer, the
Company denies the material allegations of the Complaint and asserts numerous
affirmative defenses. This action is presently in the discovery stage. The
Company intends to vigorously defend this action.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the fiscal
year ended December 31, 2007.
PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDERS MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
Market Information
Currently, our common stock is traded on the OTCBB and quoted under the symbol
"APTD". The high and low bid prices for the Common Stock as reported by our
content provider, Reuters Information Ltd. are listed below. The prices in the
table reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.
2007 Fiscal Year - Quarterly Information
High Low
First 0.20 0.12
Second 0.32 0.15
Third 0.33 0.19
Fourth 0.33 0.19
19
2006 Fiscal Year - Quarterly Information
High Low
First 0.40 0.27
Second 0.30 0.19
Third 0.22 0.16
Fourth 0.28 0.15
The shares of common stock quoted are subject to the provisions of Section 15(g)
and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the Exchange
Act"), commonly referred to as the "penny stock" rule. Section 15(g) sets forth
certain requirements for transactions in penny stocks and Rule 15(g)9(d)(1)
incorporates the definition of penny stock as that used in Rule 3a51-1 of the
Exchange Act.
The Commission generally defines penny stock to be any equity security that has
a market price less than $5.00 per share, subject to certain exceptions. Rule
3a51-1 provides that any equity security is considered to be a penny stock
unless that security is: registered and traded on a national securities exchange
meeting specified criteria set by the Commission; authorized for quotation on
The NASDAQ Stock Market; issued by a registered investment company; excluded
from the definition on the basis of price (at least $5.00 per share) or the
registrant's net tangible assets; or exempted from the definition by the
Commission. Trading in the shares is subject to additional sales practice
requirements on broker-dealers who sell penny stocks to persons other than
established customers and accredited investors, generally persons with assets in
excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together
with their spouse.
For transactions covered by these rules, broker-dealers must make a special
suitability determination for the purchase of such securities and must have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the first transaction, of a
risk disclosure document relating to the penny stock market. A broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative, and current quotations for the securities. Finally,
the monthly statements must be sent disclosing recent price information for the
penny stocks held in the account and information on the limited market in penny
stocks. Consequently, these rules may restrict the ability of broker dealers to
trade and/or maintain a market in the company's common stock and may affect the
ability of stockholders to sell their shares.
Holders
As of December 31, 2007 there were 309 stockholders of record of our common
stock. This does not include an indeterminate number of shareholders who may
hold their shares in "street name".
Dividends
We have never declared any cash dividends and do not anticipate paying such
dividends in the near future. We anticipate future earnings, if any, to be
retained for use in our business. Any future determination to pay cash dividends
20
will be at the discretion of the Board of Directors and will be dependent upon
our results of operations, financial conditions, contractual restrictions, and
other factors deemed relevant by the Board of Directors. We are under no
contractual restrictions in declaring or paying dividends to our common or
preferred shareholders.
We completed a 10% stock dividend to our shareholders of record on July 27,
2007.
Sales of Unregistered Securities
The future sale of presently outstanding "unregistered" and "restricted" common
stock by present members of our management and persons who own more than 5% of
our outstanding voting securities may have an adverse effect on the trading
market for our shares.
The following unregistered securities have been issued since January 1, 2007 and
have not been previously disclosed in our Form 10-QSB's unless otherwise noted:
Fiscal year ended December 31, 2007
Valued
Date No. of Shares Title At Reason
Jan. 18/2007 266,580 Common $0.16 Services
Feb. 20/2007 1,035,420 Common $0.135 Services
Feb. 27/2007 175,000 Common $0.125 Services
Mar. 15/2007 100,000 Common $0.12 Services
Mar. 23/2007 115,000 Common $0.122 Services
Mar. 29/2007 15,000 Common $0.135 Services
Apr. 05/2007 22,500 Common $0.17 Services
Apr. 12/2007 375,500 Common $0.17 Services
May 15/2007 50,000 Common $0.17 Services
July 2/2007 200,000 Common $0.21 Services
July 5/2007 902,550 Common $0.21 Services
July 17/2007 16,500 Common $0.28 Services
July 18/2007 10,000 Common $0.25 Services
July 24/2007 29,000 Common $0.23 Services
July 31/2007 3,000 Common $0.26 Services
Aug. 14/2007 300,000 Common $0.23 Services
Aug. 27/2007 54,500 Common $0.24 Services
Sep. 7/2007 270,000 Common $0.21 Services
Oct. 3/2007 350,000 Common $0.22 Services
Oct. 4/2007 270,000 Common $0.22 Services
Oct. 15/2007 63,650 Common $0.20 Services
Oct. 25/2007 324,500 Common $0.20 Services
Nov. 9/2007 1,025 Common $0.20 Services
Nov. 19/2007 150,000 Common $0.25 Services
Nov. 26/2007 115,000 Common $0.21 Services
Dec. 4/2007 100,000 Common $0.22 Services
Dec. 5/2007 76,500 Common $0.23 Services
Dec. 11/2007 100,000 Common $0.28 Services
Dec. 27/2007 50,000 Common $0.28 Services
�� 21
Information regarding our sales of our unregistered securities for the Fiscal
years ended December 31, 2007, 2006 and 2005, other then what is set forth
above, has been previously furnished in our Quarterly Reports on Form 10-QSB and
our Current Reports on Form 8-K.
All of the above offerings and sales were deemed to be exempt under rule 506 of
Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended. No
advertising or general solicitation was employed in offering the securities. The
offerings and sales were made to a limited number of persons, all of whom were
accredited investors, business associates of our company or executive officers
of our company, and transfer was restricted by us in accordance with the
requirements of the Securities Act of 1933. In addition to representations by
the above-referenced persons, we have made independent determinations that all
of the above-referenced persons were accredited or sophisticated investors, and
that they were capable of analyzing the merits and risks of their investment,
and that they understood the speculative nature of their investment.
Furthermore, all of the above-referenced persons were provided with access to
our Securities and Exchange Commission filings.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Other than the Plans below, we maintain no other equity compensation plan
pursuant to which we may grant equity awards to eligible persons.
The following table summarizes our equity compensation plan information as of
December 31, 2007.
Number of Shares
Remaining Available
for Future Issuance
Number of Shares to Under Equity
Be Issued upon Weighted-Average Compensation Plans
Exercise of Exercise Price of (Excluding Shares
Outstanding Outstanding Options, Reflected in
Options, Warrants Warrants and Rights Column (a))
Plan Category(1) and Rights) (b) (c)
-------------------- ------------------- ------------------- ----------------
Equity Compensation
plans approved by
stockholders N/A N/A N/A
Equity Compensation
plans not approved
by stockholders 36,075,350 $0.40 15,644,997
Total 36,075,350 $0.40 15,644,997
ITEM 6. SELECTED FINANCIAL DATA
N/A
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
22
Some of the information contained in this Annual Report forward-looking
statements (within the meaning of the Private Securities Litigation Reform Act
of 1995) Some of the statements contained in this Annual Report on Form 10-KSB
(the "Annual Report") that are not historical facts are "forward-looking
statements" which can be identified by the use of terminology such as
"estimates," "projects," "plans," "believes," "expects," "anticipates,"
"intends," or the negative or other variations, or by discussions of strategy
that involve risks and uncertainties. We urge you to be cautious of the
forward-looking statements, that such statements, which are contained in this
Annual Report, reflect our current beliefs with respect to future events and
involve known and unknown risks, uncertainties and other factors affecting our
operations, market growth, services, products and licenses. No assurances can be
given regarding the achievement of future results, as actual results may differ
materially as a result of the risks we face, and actual events may differ from
the assumptions underlying the statements that have been made regarding
anticipated events. Factors that may cause actual results, our performance or
achievements, or industry results, to differ materially from those contemplated
by such forward-looking statements include without limitation:
1. Our ability to attract and retain management, and to integrate and maintain
technical information and management information systems;
2. Our ability to generate customer demand for our products;
3. The intensity of competition; and
4. General economic conditions.
Overview
We provide a broad array of financial products and services including in depth
market information from all North American exchanges, the London stock exchange
and many of the exchanges in the Middle East. We seek to grow our subscriber
base by expanding to other geographic markets to meet the needs of our
increasing subscriber base, to diversify the subscriber revenue stream and to
mitigate our exposure to regional economic downturns.
During the twelve months ended December 31, 2007, we expanded our core products
to include advertising aimed at satisfying the needs of small, mid-sized and
large businesses with a desire to target specific demographics. This advertising
service is unique in that it is entwined within the financial products and
presented to the viewer for long periods during each business day.
Result of Operations for the twelve months ended December 31, 2007 and 2006
During the fiscal year ended December 31, 2007, we saw revenue increase every
quarter. Total revenues for fiscal 2007 were $5,093,225 which is a 16% increase
over fiscal 2006 sales of $4,395,996. The increase in revenue is directly
attributable to the increase in our advertising revenue. We focused on building
our advertising business to provide a more diversified revenue model for our
future growth. Subscription revenues increased to $3,064,459 from $2,817,955 in
2006. That is only a 9% increase due in part because we focused our marketing
efforts on building our advertising business. We contracted with our sports
properties because their demographics are ideal for our subscription products
and for our advertising. We felt this association would be a catalyst for
potential growth in both revenue categories as well as introduce revenue from
text message promotions. Our advertising revenue grew at a fast pace in 2007.
Advertising revenues increased from $1,500,556 in 2006 to $1,926,276 in 2007, an
23
increase of 28%. Due to the success of our advertising campaigns and the
increased visibility that our website is getting, our advertising programs are
becoming more marketable to the mid-size and larger companies with expanded
marketing budgets. Our advertising clients come from our direct marketing
efforts. We recognized $88,846 in E-Trax revenue compared to $76,491 in the
prior year
Our cost of sales is primarily the cost to purchase and disseminate the
financial content we provide our customers. For the calendar year ended December
31, 2007 the cost was $1,727,258 compared to $1,750,533 in 2006. The percentage
of cost of sales to subscription revenues was 56% in 2007 compared to 62% in
2006 due mainly to price increases from the major financial content providers.
Most of our financial content costs are fixed, meaning that the data and
exchange providers charge a flat monthly fee. As our subscription volume goes up
our cost of sales does not go up proportionately. Accordingly, as revenues
increase in 2008 we expect the cost of sales percentage to decline. We also had
$5,377 in other cost of sales in 2007 compared to $5,486 in 2006.
We have contracted with two companies for the services of two of the Company's
officers and directors. These companies are not owned by the officers but the
compensation earned by them is to the future benefit of the officers. Under the
terms of the contracts entered into in 2005 the companies are to continue to
receive a base salary of $240,000 each per year. The contracts also provide for
annual bonuses equal to the annual salary and for stock options based upon
performance levels. The companies declined bonuses for 2006 or 2007.
The total compensation expense to these entities was $480,000 in 2006 and
$480,000 in 2007. The companies agreed to cancel $240,000 of the compensation
for 2007, which was therefore recorded as a contribution to capital. Similarly, the related party cash compensation is expected to be $240,000 in 2008. During 2006, the companies were also awarded bonuses of 1,000,000 preferred shares each. The preferred shares are convertible into common shares on a 10 for 1 basis. We recognized an additional $3,080,011 in expense for the fair value of these preferred shares in 2006.
We incurred $1,956,125 in professional fees in 2006 compared to $1,668,878 in
2007. $1,087,943 of this expense was paid in shares of our common stock.
Professional fees include fees paid to accountants, attorneys and investor
relation firms. We had limited cash available to pay our professional
consultants in 2007, so we paid many of them with shares of common stock. The
shares were valued at market value for accounting purposes but discounted by the
consultants for their services. We hope to be able pay for more services with
cash in 2008 so that we can reduce the expense effect of this discounting.
We recorded research and development expense of $411,595 for 2006 compared to
$439,456 in 2007, an increase of 7%. This expense reflects the cost of creating
our digital media promotions, website enhancements, and development staff. This
is what keeps us at the cutting edge of technology and ensures that our clients,
both advertising and our monthly subscribers have the latest in Internet
products at their disposal. The costs for research and development are expected
to decline in 2008.
We expended $902,167 for marketing in 2006 compared to $4,511,673 in 2007. Since
most of our direct marketing efforts in 2006 were via the Internet or from our
sales people, this cost was relatively low. This increase for 2007 is due to our
sports partnerships. We expect our marketing costs to decrease substantially for
24
2008 due to the following: we selected narrowed the
sports associations we will continued to work with, we have staffed out sales
departments. Since, our cash resources will determine how much we can spend on
marketing, our associations with the sports teams provide us with a built-in
audience with which to capitalize on revenue opportunities to further our
marketing efforts.
Our general and administrative expenses increased by 62% in 2007 from $503,409
to $818,362. The increase was primarily due to increased travel related to the
generation of brand awareness for our products. We expect a similar increase for
2007 as we activate our sponsorships with our sports organizations.
We incurred a net loss of $4,736,540 for the year ended December 31, 2006
compared to $5,723,130 for the year ended December 31, 2007. Included in the
loss for 2006 and 2007 was $4,603,954 and $1,447,061, respectively as the value
of options and shares issued for services.In addition, the 2007 loss figure includes an other-than-temporary impairment of available-for-sale securities in the amount of $909,127. Excluding these non-cash expenses,the losses for 2006 and 2007 would have been $132,586 and $3,366,942, respectively. Due to our improved cash position we hope to minimize the practice of issuing shares of stock for services which will serve to also decrease our related party expense.
Liquidity and Capital Resources.
AlphaTrade has consistently been financed from raising capital through private
equity offerings. We were provided $485,000 of cash in 2007 compared to $338,250
of cash in financing activities in 2007. For the twelve months ended December
31, 2007 we used net cash of $525,660 compared to $383,731 for the same period
of 2006 in our operating activities. We invested $23,697 and $3,935 in asset
purchases in 2007 and 2006, respectively.
We expect that our 2007 cash inflows from operations may not be adequate to
cover cash out-flows from operations because of our financial commitments to our
sports partnerships. We expect that we will need to raise approximately
$1,000,000 from either increased advertising revenues, a private placement of
our common stock or a loan to meet these commitments.
We are continually investigating acquisition targets and our stock may be
required as part of the consideration for any acquisition.
We currently have no material commitments for capital requirements. We believe
that our capital inflows and our equipment infrastructure is adequate to handle
the expected growth in 2007.
We are not aware of any material trend, event or capital commitment, which would
potentially adversely affect liquidity. In the event a material trend develops,
we believe we will have sufficient funds available to satisfy working capital
needs through debt or from funds received from equity sales.
Recent Accounting Pronouncements
In December 2007, the FASB issued SFAS 160, "Noncontrolling interests in
Consolidated Financial Statements - an amendment of ARB No. 51". This Statement
amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
25
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. This Statement is effective for fiscal
years beginning on or after December 15, 2008. Early adoption is not permitted.
Management is currently evaluating the effects of this statement, but it is not
expected to have any impact on the Company's financial statements.
In February 2007, the FASB issued SFAS 159, "The Fair Value Option for Financial
Assets and Financial Liabilities. SFAS 159 creates a fair value option allowing
an entity to irrevocably elect fair value as the initial and subsequent
measurement attribute for certain financial assets and financial liabilities,
with changes in fair value recognized in earnings as they occur. SFAS 159 also
requires an entity to report those financial assets and financial liabilities
measured at fair value in a manner that separates those reported fair values
from the carrying amounts of assets and liabilities measured using another
measurement attribute on the face of the statement of financial position.
Lastly, SFAS 159 requires an entity to provide information that would allow
users to understand the effect on earnings of changes in the fair value on those
instruments selected for the fair value election. SFAS 159 is effective for
fiscal years beginning after November 15, 2007 with early adoption permitted.
The Company is continuing to evaluate SFAS159 and to assess the impact on its
results of operations and financial condition if an election is made to adopt
the standard.
In September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 157, "Fair Value Measurements" 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 effect on its financial position or results of operation.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
N/A
ITEM 8. FINANCIAL STATEMENTS
Financial statements as of and for the fiscal years ended December 31, 2007 and
2006 been examined to the extent indicated in their report by Chisholm, Bierwolf
& Nilson, LLC, independent certified public accountants, and have been prepared
in accordance with Generally Accepted Accounting Principles and pursuant to
Regulation S-B as promulgated by the SEC. The aforementioned financial
statements are included herein under Item 14 starting with page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
26
ITEM 9A. CONTROLS AND PROCEDURES.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Our internal control system was designed to
provide reasonable assurance to our management and Board of Directors regarding
the preparation and fair presentation of published financial statements.
Our management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2007. In making this assessment, it used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control--Integrated Framework Based on our
assessment we believe that, as of December 31, 2007, our internal control over
financial reporting were not effective based on those criteria. Management
determined that at December 31, 2007, the Company had a material weakness in its
internal control over financial reporting because it did not have sufficient
personnel with adequate knowledge, experience and training of United States
Generally Accepted Accounting Principles commensurate with the Company's
reporting requirements. This annual report does not include an attestation
report of the Company's registered accounting firm regarding internal control
over financial reporting. Management's report was not subject to attestation by
the Company's registered public accounting firm pursuant to temporary rules of
the Securities and Exchange Commission.
As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of management,
including our Chief Executive Officer and a person who performs the functions of
the Principal Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures as defined in Rules
13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based upon that
evaluation, our chief executive officer and principal financial officer
concluded that our disclosure controls and procedures are not effective to cause
the material information required to be disclosed by us in the reports that we
file or submit under the Exchange Act to be recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms.
Management determined that due to the lack of personnel with adequate knowledge,
experience and training of United States Generally Accepted Accounting
Principles, the Company's disclosure controls and procedures were not effective
as of December 31, 2007.
There have been no significant changes in our internal controls or in other
factors which could significantly affect internal controls subsequent to the
date we carried out our evaluation.
ITEM 9B. OTHER INFORMATION.
None
27
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE
The following table sets forth information regarding our directors and executive
officers as of December 31, 2007:
Name Age Position Director Since
------------------- --- ----------------------------------------- --------------
Penny Perfect* 54 Founder, Chairman, Chief Executive October 1999
Officer, President and Director
Gordon Muir 54 Founder, Chief Technology Officer and October 1999
Director
Katharine Johnston* 54 Vice-President - Business Operations, January 2005
Director
Lisa McVeigh* 44 Director January 2000
* Member of the audit committee
The term of office of each director of the Company ends at the next annual
meeting of the Company's stockholders or when such director's successor is
elected and qualifies. No date for the annual meeting of stockholders is
specified in the Company's bylaws or has been fixed by the Board of Directors.
The following information sets forth the backgrounds and business experience of
the directors, executive officers and key employees:
PENNY PERFECT: Penny Perfect is the Chairman, Chief Executive Officer, President
and a Director of AlphaTrade.com. Ms. Perfect is also one of the founders of
AlphaTrade. During the past 20 years, Ms. Perfect has headed several companies
with full management responsibility which includes delivering on the company's
mission of enabling people and growing the businesses. Ms. Perfect first role in
business was a successful run as an independent stock broker. As a broker, Ms.
Perfect was involved in many aspects of investment products including
structuring and raising capital. Before joining AlphaTrade, Ms. Perfect served
as President of Worldwide Investment Network (WIN), a membership-based community
of investment executives. As President, Ms. Perfect was responsible for
providing investment banking and administration services to early stage
development companies. Ms. Perfect is a graduate of the University of Alberta.
GORDON MUIR has served as a Director of AlphaTrade since October 21, 1999. He
became Chief Executive Officer in February, 2000 and resigned from that position
and was appointed Chief Technology Officer in January, 2004. Mr. Muir has been
an independent investor and business consultant since 1990. He was the founder
of Navmaster Technologies, a company credited with developing the first GPS
charting systems for the Marine Industry that relied on optical imaging rather
than computers. He has over 16 years experience in senior level management in a
variety of business mainly in the automotive and industrial industries.
KATHARINE JOHNSTON was appointed as a Director in January, 2005. As the
principal financial officer and VP-Business Operations of AlphaTrade Mrs.
Johnston oversees all AlphaTrade financial transactions and department heads, as
well as interagency relationships with accountants and lawyers. Mrs. Johnston
has been with AlphaTrade since its inception in 1999 and was appointed managing
director in January 2005 and VP-Business Operations in February, 2007. Prior to
28
AlphaTrade, Mrs. Johnston was a self-employed administrator and legal assistant
for over fifteen years. Knowledgeable in British Columbia securities and
regulatory issues, Mrs. Johnston sat on many financial boards and has vast
experience in the administration and management of public companies. Mrs.
Johnston attended the University of British Columbia.
LISA McVEIGH has served as a Director since January 21, 2000. Ms. McVeigh has
held the position of Financial Officer with British Columbia Film for over
fourteen years and serves on the audit committee for AlphaTrade.com.
Family Relationships
Penny Perfect, our CEO, President, Chairman and a member of our board of
directors, and Gordon Muir, our CTO and a member of our board of directors, are
married to each other and both are founding members of Alphatrade.com. There are
no other family relationships between any other Directors or executive Officers.
With the exception of the foregoing, none of the other directors and executive
officers are related by blood, marriage or adoption.
Board Committees
At this time, other then an audit committee, the board has no committees,
including nominating or compensation committee, but we intend to create such
committees following the annual meeting and election of directors.
Audit Committee
The members of the audit committee are Penny Perfect, Katharine Johnston and
Lisa McVeigh.
Code of Ethics
We adopted a Code of Ethics (the "Code of Ethics") applicable to our principal
executive, financial and accounting officer and persons performing similar
functions. In addition, the Code of Ethics applies to our employees, officers,
directors, agents and representatives. The Company's Code of Ethics is intended
to comply with the rules and regulations of the Securities and Exchange
Commission and the rules of the NASDAQ Stock Market. The Code of Ethics is
available, at no cost, from the Company upon written request to Katharine
Johnston, VP Business Development of AlphaTrade.Com, and a copy is annexed as
Exhibit 14 to the Company's Annual Report filed on Form 10-KSB with the SEC on
March 31, 2006.
Compliance with Section 16 of the Exchange Act.
Section 16(a) of the Exchange Act requires our directors, officers and persons
who own more than 10% of a registered class of our equity securities to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Directors, officers and greater than 10% shareholders are required
by SEC regulations to furnish us with copies of all Section 16(a) forms they
file. Based solely upon our review of the copies of such forms that we received
during the fiscal year ended December 31, 2007, we believe that each person who
at any time during the fiscal year was a director, officer or beneficial owner
of more than 10% of our common stock complied with all Section 16(a) filing
requirements during such fiscal year.
29
Director Compensation
The following table sets forth with respect to the named director, compensation
information inclusive of equity awards and payments made in the fiscal year
ended December 31, 2007.
Fees Change in
Earned Pension Value
or Non-Equity and
Paid Incentive Nonqualified
in Stock Option Plan Deferred All Other
Cash Awards Awards Compensation Compensation Compensation Total
Name ($) ($) ($) ($) Earnings ($) ($)
(a) (b) (c) (d) (e) (f) (g) (5) (h)
--------------------- ------- ------ ----- ------------ ------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Penny Perfect (1) -- -- -- -- -- -- --
Gordon Muir (2) -- -- -- -- -- -- --
Katharine Johnston (3) -- -- -- -- -- -- --
Lisa McVeigh (4) -- -- -- -- -- -- --
(1) Ms. Perfect appointed as a director of the Company effective as of
October 21, 1999.
(2) Mr. Muir appointed as a director of the Company effective as of
October 21, 1999.
(3) Ms. Johnston appointed as a director of the Company effective as of
January 31, 2005.
(4) Ms. McVeigh appointed as a director of the Company effective as of
January 21, 2000.
(5) With the exception of reimbursement of expenses incurred by our named
executive officers during the scope of their employment, none of the
named executive received any other compensation, perquisites,
personal benefits in excess of $10,000.
(6) See Executive Compensation table below for the total amount of
compensation received by Ms. Perfect and Mr. Muir in their capacities
as our executive officers.
Directors that are non-officers of the Company do not receive a cash retainer
annually nor do they receive any remuneration for attendance at a board meeting,
other than reimbursement for travel expenses.
ITEM 11. EXECUTIVE COMPENSATION
The following table provides certain summary information concerning compensation
awarded to, earned by or paid to our Chief Executive Officer and other named
executive officers and directors of our Company whose total annual salary and
bonus exceeded $100,000 (collectively, the "named officers") for fiscal year
ended December 31, 2007.
30
SUMMARY COMPENSATION TABLE
Long-Term and Other
Annual Compensation Compensation
------------------------------- --------------------------
Number of
Name and Other Securities All Other
Principal Fiscal Annual Underlying Compensation
Positions Year Salary(1) Bonus Comp Options (2)
--------------------------------------------------- ---------------------------
Penny Perfect 2007 $120,000
CEO & President 2006 $240,000 -- -- 3,000,000 shares (i)
Chairman
Gordon J. Muir 2007 $120,000
Chief Technical 2006 $240,000 -- -- 3,000,000 shares (i)
Officer
i) Shares issued to companies in which the executive officers may have a
residual interest.
(1) The management fees for 2007 are accrued and remain unpaid. With the
exception of reimbursement of expenses incurred by our named executive officers
during the scope of their consultancy and stated stock award amounts, none of
the named executives received any other compensation, perquisites, personal
benefits in excess of $10,000.
(2) Ms. Perfect received the following stock awards during the 2006 fiscal year
in consideration for her services as the CEO and President: 1,000,000 shares of
Class B preferred stock. The Company's board of directors approved the award in
light of believing that the grant was a fair estimate of the amount of
compensation that should be granted to Ms. Perfect for her services to the
Company during 2006 fiscal year.
(3) Mr. Muir received the following stock awards during the 2006 fiscal year in
consideration for his services as the CTO: 1,000,000 shares of Class B preferred
stock. The Company's board of directors approved the award in light of believing
that the grant was a fair estimate of the amount of compensation that should be
granted to Mr. Muir for his services to the Company during 2006 fiscal year.
In addition, we do not have either (i) a plan that provides for the payment of
retirement benefits, or benefits that will be paid primarily following
retirement, including but not limited to tax-qualified defined benefit plans,
supplemental executive retirement plans, tax-qualified defined contribution
plans and nonqualified defined contribution plans, nor (ii) any contract,
agreement, plan or arrangement, whether written or unwritten, that provides for
payment(s) to any of our named executive officers at, following, or in
connection with the resignation, retirement or other termination of any of our
named executive officers, or in connection with the change in control of our
company or a change in any of our named executive officers' responsibilities
following a change in control, with respect to each of our named executive
officers.
31
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth information with respect concerning unexercised
options; stock that has not vested; and equity incentive plan awards for each of
our named executive officers outstanding as of the end of our to grants of
options to purchase our common stock under our Stock Incentive Plan to the named
executive officers during the fiscal year ended December 31, 2007.
Option Awards Stock Awards
----------------------------------------------------------------------------------------------------------------------
Equity Equity
Incentive Incentive
Plan Plan Awards:
Market Awards: Market or
Equity Value Number Payout
Incentive of of Value
Plan Shares Unearned of
Awards: Number or Shares, Unearned
Number of Shares Units Units or Shares,
Number of Number of of or Units of Other Units or
Securities Securities Securities of Stock Stock Rights Other
Underlying Underlying Underlying That That That Rights
Unexercised Unexercised Unexercised Option Have Have Have That Have
Options Options Unearned Exercise Option Not Not Not Not
($) ($) Options Price Expiration Vested Vested Vested Vested
Name Exercisable Unexercisable (#) ($) Date ($) ($) (#) ($)
-------------------------------------------------------------------------- ---------- ------- ---------- -----------
Penny 14,500,000 750,000 -- $0.42 -- -- -- -- --
Perfect
Gordon
Muir 14,500,000 750,000 -- $0.42 -- -- -- -- --
</TABLE>
Employment Agreements
Effective November 1, 2005 we executed Consulting Agreements with Jupiter
Consultants, Inc. for the services of Penny Perfect and Micro-American, Inc. for
the services of Gordon Muir for a three year term ending October 31, 2008. The
contracts will automatically renew unless terminated by giving notice by either
party. The contracts provide for the same compensation to each of Ms. Perfect
and Mr. Muir as noted below.
(a) Base Salary at a monthly rate of at least US $20,000 to be renewed
annually to be paid in either cash or our common shares.
(b) an annual bonus of two hundred thousand (200,000) common shares
issued by December 31st of each year of the agreement beginning December 31,
2005 and this amount may be upwardly amended at the election of the Board of
Directors. The bonus will increase to one million (1,000,000) shares annually
when AlphaTrade's gross annual revenue reaches $5,000,000.
32
(c) In addition, when AlphaTrade reaches gross annual revenue of
$10,000,000 AlphaTrade will grant an option to purchase two million five hundred
thousand (2,500,000) common shares of AlphaTrade's restricted common stock with
an exercise price of $0.40 per share.
(d) Cash Bonus. For each full fiscal year beginning January 1, 2006,
the consultants will be eligible to earn an annual cash bonus in such amount as
shall be determined by the Board of Directors based on the achievement by the
Company of performance goals established by Management for each such fiscal
year, which may include targets related to the earnings before interest, taxes,
depreciation and amortization ("EBITDA") of the Company; provided, that the
Annual Bonus shall be no less than the annual base compensation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the stock
ownership as of December 31, 2007, of each person who is known to be the
beneficial owner of more than 5% of our common stock; held directly or
indirectly by each director; or by each person who was our executive officer or
director during the fiscal year ended December 31, 2007, and by our directors
and executive officers as a group.
Shares
Beneficially
Name of Beneficial Owner Owned(1) Percent (2)
Penny Perfect 22,941,620 (3) 36%
c/o AlphaTrade.com
Suite 116 - 930 West 1st Street
North Vancouver, B.C.
Gordon Muir 22,716,320 (4) 36%
c/o AlphaTrade.com
Suite 116 - 930 West 1st Street
North Vancouver, B.C.
Katharine Johnston none
c/o AlphaTrade.com
Suite 116 - 930 West 1st Street
North Vancouver, B.C.
Lisa McVeigh none
c/o AlphaTrade.com
Suite 116 - 930 West 1st Street
North Vancouver, B.C.
All current directors and named 45,657,940 72%
officers as a group (3 in all)
(1) The shares are held in various private companies in which the officer may
hold a minority interest. Ms. Perfect and Mr. Muir are spouses.
Accordingly, each spouse's holdings may also be deemed to be beneficially
owned by the other.
33
(2) Percentage ownership is based upon 48,589,773 shares of common stock
outstanding on December 31, 2007 and is calculated separately for each
person on the basis of the actual number of outstanding shares beneficially
owned as of December 31, 2007 and assumes the conversion of preferred
shares held by such person (but not by anyone else).
(3) Includes direct and indirect ownership of common shares and includes
5,000,000 shares to be issued upon the conversion of A Series preferred
Shares and 10,000,000 shares to be issued upon the conversion of B series
preferred shares.
(4) Includes direct and indirect ownership of common shares and includes
5,000,000 shares to be issued upon the conversion of A Series preferred
shares and 10,000,000 shares to be issued upon the conversion of B series
preferred shares.
Equity Compensation Table
The following table summarizes our equity compensation plan information as of
December 31, 2007.
Number of Shares
Remaining Available
for Future Issuance
Number of Shares to Under Equity
Be Issued upon Weighted-Average Compensation Plans
Exercise of Exercise Price of (Excluding Shares
Outstanding Outstanding Options, Reflected in
Options, Warrants Warrants and Rights Column (a))
Plan Category(1) and Rights) (b) (c)
-------------------- ---------------- ------------------- -------------------
Equity Compensation
plans approved
by stockholders N/A N/A N/A
Equity Compensation
plans not approved
by stockholders 36,075,350 $0.40 15,644,997
Total 36,075,350 $0.40 15,644,997
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Certain Relationships And Related Transactions: Transactions With Related
Persons, Promoters And Certain Control Persons
During the year ended December 31, 2007, two companies owned for the benefit of
the two officers of the Company accrued management fees of $240,000 which was
recorded as related party compensation.
During the year ended December 31, 2006, two companies owned for the benefit of
the two officers of the Company received cash of $480,000 which was recorded as
related party compensation. No bonus was awarded for 2005. A bonus of $34,000
was also awarded to each company in 2006.
In December 2006, the Company awarded a 1,000,000 preferred stock bonuses to two
of its executive officers for services rendered. These shares are convertible
into common stock and accordingly were valued as per Black Scholes at the fair
value of the common stock on the date of issuance of $3,080,011.
34
In July 2005, we granted 6,000,000 warrants to our executive officers, of which
2,000,000 warrants vested upon grant, the balance will vest at the determination
of our board of directors. In July 2005, we also issued 3,800,000 options to our
executive officers as part of our 2005 option plan. 950,000 of these options
vested upon grant, the balance will vest at the determination of the board of
directors.
In January 2006, we issued 2,000,000 options to our executive officers as part
of our 2006 option plan. 500,000 of these options vested upon grant, the balance
will be vested at 25% per year.
Related party payables at December 31, 2007 consisted of the following:
Officer bonuses $ 78,000
Officer accrued wages 253,766
Loan advances 1,780,648
------------
$ 2,112,414
============
In 2006 we were paid via shares of Komodo, Inc. valued at $240,000 for our
advertising services. We did not provide any advertising services to Komodo in
2007. The shares are held as an investment by the Company.
There have not been any other transactions or proposed transactions during the
fiscal years ended December 31, 2007, 2006 and 2005, to which we were or is are
to be a party, in which our officers, directors or nominees had or are to have a
direct or indirect material interest.
Review, Approval or Ratification of Transactions with Related Persons
We believe that the terms of all of the above transactions are commercially
reasonable and no less favorable to us than we could have obtained from an
unaffiliated third party on an arm's length basis. Our policy requires that all
related parties recuse themselves from negotiating and voting on behalf of our
company in connection with related party transactions.
Parents
Not applicable
Promoter and Certain Control Persons
Not applicable.
CORPORATE GOVERNANCE
Board Determination of Independence
-----------------------------------
Our board of directors has determined that Lisa McVeigh is "independent" as that
term is defined by the National Association of Securities Dealers Automated
Quotations ("NASDAQ"). Under the NASDAQ definition, an independent director is a
person who (1) is not currently (or whose immediate family members are not
35
currently), and has not been over the past three years (or whose immediate
family members have not been over the past three years), employed by the
company; (2) has not (or whose immediate family members have not) been paid more
than $60,000 during the current or past three fiscal years; (3) has not (or
whose immediately family has not) been a partner in or controlling shareholder
or executive officer of an organization which the company made, or from which
the company received, payments in excess of the greater of $200,000 or 5% of
that organizations consolidated gross revenues, in any of the most recent three
fiscal years; (4) has not (or whose immediate family members have not), over the
past three years been employed as an executive officer of a company in which an
executive officer of AlphaTrade has served on that company's compensation
committee; or (5) is not currently (or whose immediate family members are not
currently), and has not been over the past three years (or whose immediate
family members have not been over the past three years) a partner of
AlphaTrade's outside auditor. A director who is, or at any time during the past
three years, was employed by the Company or by any parent or subsidiary of the
Company, shall not be considered independent.
Board of Directors Meetings and Attendance
------------------------------------------
The Board of Directors has responsibility for establishing broad corporate
policies and reviewing our overall performance rather than day-to-day
operations. The primary responsibility of our Board of Directors is to oversee
the management of our company and, in doing so, serve the best interests of the
company and our stockholders. The Board of Directors selects, evaluates and
provides for the succession of executive officers and, subject to stockholder
election, directors. It reviews and approves corporate objectives and
strategies, and evaluates significant policies and proposed major commitments of
corporate resources. Our Board of Directors also participates in decisions that
have a potential major economic impact on our company. Management keeps the
directors informed of company activity through regular communication, including
written reports and presentations at Board of Directors and committee meetings.
We have no formal policy regarding director attendance at the annual meeting of
stockholders, although all directors are expected to attend the annual meeting
of stockholders if they are able to do so. The board of directors held 12
meetings in 2007 either in person or telephonic. During both all of the board
meetings, all four board members were present, either by person or on the
telephone in the case of the telephonic meetings.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following is a summary of the fees billed to us by Chisholm, Bierwolf &
Nilson, LLC for professional services rendered for the fiscal years ended
December 31, 2007 and December 31, 2006:
Fee Category Fiscal 2007 Fees Fiscal 2006 Fees
------------------------- ---------------- ----------------
Audit Fees $28,376.00 $25,229.78
Audit-Related Fees -- --
Tax Fees --
All Other Fees -- --
---------- ----------
Total Fees $28,376.00 $25,229.78
36
Audit Fees. Consists of fees billed for professional services rendered for the
audit of our financial statements and review of the interim financial statements
included in quarterly reports and services that are normally provided by
Chisholm, Bierwolf & Nilson, LLC in connection with statutory and regulatory
filings or engagements.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Auditors
The Audit Committee's policy is to pre-approve all audit and permissible
non-audit services provided by the independent auditors. These services may
include audit services, audit-related services, tax services, and other
services. Pre-approval is generally provided for up to one year, and any
pre-approval is detailed as to the particular service or category of services
and is generally subject to a specific budget. The independent auditors and
management are required to periodically report to the Audit Committee regarding
the extent of services provided by the independent auditors in accordance with
this pre-approval and the fees for the services performed to date. The Audit
Committee may also pre-approve particular services on a case-by-case basis.
37
ALPHATRADE.COM
FINANCIAL STATEMENTS
December 31, 2007 and 2006 Restated
Page F-1
C O N T E N T S
Report of Independent Registered Public Accounting Firms............. F-3
Balance Sheets....................................................... F-4
Statements of Operations............................................. F-6
Statements of Stockholders' Equity (Deficit)......................... F-7
Statements of Cash Flows.......................................... F-9 - F10
Notes to the Financial Statements.................................... F-11
Page F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
AlphaTrade.com
Vancouver, BC Canada
We have audited the accompanying balance sheets of AlphaTrade.com at December
31, 2007 and 2006 and the related statements of operations, stockholders' equity
(deficit) 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 PCAOB (United
States). Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to
perform, an audit of its internal controls over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. 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 AlphaTrade.com at December 31,
2007 and 2006 and the results of its operations and its 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 that the
Company will continue as a going concern. As discussed in Note 10 to the
financial statements, the Company has recorded significant losses from
operations, and is dependent on financing to continue operations, which together
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 10. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
As discussed in Note 11 to the financial statements, management has discovered
an error in recording revenue from several advertising agreements that provided
services into 2008, resulting in deferred revenue at December 31, 2007 of
$885,600, the company also recognized an impairment to it’s investment holdings of 909,127 due to other than temporary declines. The effects to the financial statements are described in Note 11.
Accordingly, the financial statements have been restated to correct this error.
Chisholm, Bierwolf & Nilson, LLC
Bountiful, Utah
January 18, 2008 except for Notes 1(n), 8, 9 & 11 dated March 23, 2010
F-3
ALPHATRADE.COM
Balance Sheets
ASSETS
------
December 31,
2007 2006
(restated)
------------ ------------
CURRENT ASSETS
Cash $ 153,760 $ 147,323
Accounts receivable - trade, net 28,047 64,766
Prepaid expenses 750 7,148
Marketable securities-available for sale 5,232 68,467
Marketable securities-available for
sale-related party 658,858 215,991
----------- -----------
Total Current Assets 846,647 503,695
----------- -----------
PROPERTY AND EQUIPMENT, NET 45,633 37,550
----------- -----------
OTHER ASSETS
Investments, at cost 300,000 -
----------- -----------
Total Other Assets 300,000 -
----------- -----------
TOTAL ASSETS $ 1,192,280 $ 541,245
=========== ===========
The accompanying notes are an integral part of these financial statements.
Page F-4
ALPHATRADE.COM
Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
--------------------------------------
December 31,
2007 2006
------------ ------------
CURRENT LIABILITIES (restated)
Accounts payable and accrued expenses $ 2,404,822 $ 547,139
Related party payables 2,190,414 714,295
Deferred revenue 1,130,178 241,332
----------- ------------
Total Current Liabilities 5,725,414 1,502,766
----------- ------------
Total Liabilities 5,725,414 1,502,766
----------- ------------
COMMITMENTS
STOCKHOLDERS' (DEFICIT)
Convertible preferred stock: $0.001 par value;
10,000,000 shares authorized, 2,000,000 Class A
and 2,000,000 Class B shares issued and outstanding 4,000 4,000
Common stock: $0.001 par value 100,000,000 shares
authorized; 48,589,773 and 40,425,027 shares
issued and outstanding, respectively 48,590 40,425
Additional paid-in capital 32,959,057 30,853,661
Prepaid expenses-related parties - (30,000)
Stock subscription payable 28,500 -
Accumulated other comprehensive income (738,404) (717,860)
Accumulated deficit (36,834,877) (31,111,747)
----------- -----------
Total Stockholders' (Deficit) (4,533,134) (961,521)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'(DEFICIT) $ 1,192,280 $ 541,245
=========== ===========
The accompanying notes are an integral part of these financial statements.
Page F-5
ALPHATRADE.COM
Statements of Operations
Years Ended
December 31,
------------------------------
2007 2006
-------------- --------------
REVENUE (restated)
Subscription revenue $ 3,064,459 $ 2,817,955
E-Trax revenue 88,846 76,491
Advertising revenue 1,926,276 1,256,656
Advertising revenue-related party - 243,900
Other revenue 13,644 994
------------- -------------
Total Revenue 5,093,225 4,395,996
COST OF SALES
Financial content 1,727,258 1,750,533
Other cost of sales 5,377 5,486
------------- -------------
Total Cost of Sales 1,732,635 1,756,019
------------- -------------
Gross profit 3,360,590 2,639,977
------------- -------------
EXPENSES
Related party compensation 480,000 3,560,011
Professional fees 1,668,878 1,956,125
Research and development 439,456 411,595
Marketing expense 4,511,673 902,167
General and administrative expenses 818,362 503,409
------------- -------------
Total Expenses 7,918,369 7,333,307
------------- -------------
LOSS FROM OPERATIONS (4,557,779) (4,693,330)
OTHER INCOME (EXPENSE)
Interest expense (212,001) -
Other-than-temporary impairment of
available-for-sale equity securities (909,127) -
Gain (loss) on marketable securities (44,223) (43,209)
------------- -------------
Total Other Income (Expense) (1,165,351) (43,209)
------------- -------------
NET LOSS (5,723,130) (4,736,539)
------------- -------------
UNREALIZED GAIN/(LOSS) ON AVAILABLE
FOR SALE SECURITIES (20,544) (903,660)
------------- -------------
TOTAL COMPREHENSIVE LOSS $ (5,743,674) $ (5,640,199)
============= =============
BASIC AND DILUTED NET LOSS PER SHARE
Net loss per share $ (0.12) $ (0.13)
============= =============
Comprehensive loss per share $ (0.12) $ (0.16)
============= =============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 48,589,773 35,408,202
============= =============
The accompanying notes are an integral part of these financial statements.
Page F-6
ALPHATRADE.COM
Statements of Stockholders' (Deficit)(restated)
Preferred Stock Common Stock Additional Stock Other
---------------- ------------------ Paid-In Subscription Comprehensive Accumulated
Shares Amount Shares Amount Capital Receivable Income Deficit
--------- ------ ---------- ------- ----------- ---------- ------------- -------------
Balance,
December 31, 2005 2,000,000 $2,000 32,888,751 $32,889 $26,020,790 $(99,797) $ 185,800 $(26,375,208)
Common stock issued
for cash at an
average price of
$0.18 per share - - 2,015,750 2,016 336,234 - - -
Common stock issued
for services at an
average price of
$0.21 per share - - 5,520,526 5,520 1,035,525 69,797 - -
Preferred stock issued
for services at an
average price of
$0.38 per share 2,000,000 2,000 - - 3,078,011 - - -
Value of common stock
options issued - - - - 383,101 - - -
Net loss for year ended
December 31, 2006 - - - - - - (903,660) (4,736,539)
---------- ----- ---------- ------- ----------- -------- ------------ ------------
Balance,
December 31, 2006 4,000,000 $4,000 40,425,027 $40,425 $30,853,661$(30,000) $ (717,860) $(31,111,747)
========= ====== ========== ======= =========== ========= ============ =============
The accompanying notes are an integral part of these financial statements.
Page F-7
ALPHATRADE.COM
Statements of Stockholders' (Deficit)(Continued)
(restated)
Preferred Stock Common Stock Additional Stock Other
---------------- ------------------ Paid-In Subscription Comprehensive Accumulated
Shares Amount Shares Amount Capital Receivable Income Deficit
--------- ------ ---------- ------- ----------- ---------- ------------- -------------
Balance,
December 31, 2006 4,000,000 $4,000 40,425,027 $40,425 $30,853,661$ (30,000) $ (717,860) $(31,111,747)
Common stock issued
for services at an
average price of
$0.20 per share - - 5,877,246 5,877 1,052,066 - - -
Value of common stock
options issued under
the 2007 stock
option plan - - - - 131,540 - - -
Value of stock purchase
warrants granted - - - - 207,728 - - -
Contributed capital - - - - 19,850 - - -
Common stock issued
for cash at $0.20
per share - - 2,287,500 2,288 454,212 28,500 - -
Executive compensation
contributed by related
party - - - - 240,000 - - -
Net loss for year ended
December 31, 2007 - - - - - - (20,544) (5,723,130)
---------- ------ ---------- ------- ----------- -------- ----------- -------------
Balance,
December 31, 2007 4,000,000 $4,000 48,589,773 $48,590 $32,959,057 $ 28,500 $ (738,404) $ (36,834,877)
========= ====== ========== ======= =========== ========= ============ =============
The accompanying notes are an integral part of these financial statements.
Page F-8
ALPHATRADE.COM
Statements of Cash Flows
Years Ended
December 31,
-------------------------
2007 2006
(restated)
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(5,723,130) $(4,736,539)
Adjustments to reconcile net loss to
net cash used by operating activities:
Common and preferred stock issued for
services 1,087,943 4,220,853
Common stock options and warrants issued
for services 359,118 383,101
Depreciation expense 15,614 12,916
Investments received as payment for
accounts receivable (1,724,320) (958,339)
Loss on sale of investments 44,223 43,209
Other-than-temporary impairment of
available-for sale equity securities 909,127 -
Services contributed by related party 240,000 -
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 36,719 (58,936)
(Increase) decrease in prepaid expenses 6,398 192,312
Increase (decrease) in accounts payable
and accrued expenses 1,857,683 198,264
Increase (decrease) in deferred revenue 888,846 35,060
Increase is related party payable 1,476,119 284,368
----------- -----------
Net Cash (Used) by Operating Activities (525,660) (383,731)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of investments 70,794 49,331
Purchase of fixed assets (23,697) (3,935)
----------- -----------
Net Cash Provided by Investing Activities 47,097 45,396
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash 456,500 338,250
Stock subscriptions payable 28,500 -
----------- -----------
Net Cash Provided by Financing Activities 485,000 338,250
----------- -----------
The accompanying notes are an integral part of these financial statements.
Page F-9
ALPHATRADE.COM
Statements of Cash Flows
Years Ended
December 31,
-------------------------
2007 2006
(restated)
------------ ------------
NET CHANGE IN CASH 6,437 (85)
CASH AT BEGINNING OF YEAR 147,323 147,408
----------- -----------
CASH AT END OF YEAR $ 153,760 $ 147,323
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Interest paid $ 212,001 $ -
Income taxes paid $ - $ -
SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
Common and preferred stock issued
for services $ 1,087,943 $ 4,220,853
Investments received as payment for
accounts receivable $ 1,724,320 $ 958,339
The accompanying notes are an integral part of these financial statements.
Page F-10
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2007 and 2006
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of AlphaTrade.com is
presented to assist in understanding the Company's 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.
a. Organization and Business Activities
AlphaTrade.com was incorporated under the laws of the State of Nevada
on June 6, 1995 as Sierra Gold Development Corp. It then changed its
name to Honor One Corporation on October 29, 1998 and on January 6,
2001 changed its name to AlphaTrade.com (the Company). The Company
provides both real-time and delayed stock market quotes to subscribers
via the internet.
b. Depreciation
The cost of the property and equipment is depreciated over the
estimated useful life of 5 years. Depreciation is computed using the
straight-line method when the assets are placed in service.
c. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a December 31 year-end.
d. Cash and Cash Equivalents
For the purpose of the statement of cash flows, the Company considers
all highly liquid investments purchased with a maturity of three
months or less to be cash equivalents.
e. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Page F-11
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2007 and 2006
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
f. Concentrations of Credit Risk
The Company maintains its cash in one commercial account at a major
financial institution. Although the financial institution is
considered creditworthy and has not experienced any losses on its
deposits, at December 31, 2007 and 2006, the Company's cash balance
exceeded Federal Deposit Insurance Corporation (FDIC) limits by
approximately $53,000 and $47,000.
g. Income Taxes
Deferred taxes are provided on a liability method whereby deferred
operating loss and tax credit carryforwards and deferred tax
liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts
of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the
date of enactment.
h. Revenue Recognition and Deferred Revenue
The Company recognizes subscription fees revenue and advertising
revenue when the services have been provided. The Company generally
receives its monthly subscriptions in the month prior to the service
being provided, accordingly the Company had deferred revenue of
$244,578 at December 31, 2007. Cost of sales is comprised of data feed
expenses charged by various stock market exchanges. The Company had no
customer which accounted for 10% of the revenue during the years ended
December 31, 2007 and 2006.
The Company occasionally licenses its technology to some customers.
The Company recognizes its license revenue over the term of the
license.
The Company develops modified products for customers. The Company
recognizes development revenue as the services are performed.
The Company records deferred revenue when it receives cash receipts in advance of performing the related service. These advance payments received are considered a current liability, and are amortized to revenue over the term of the service contract.
i. Recently Issued Accounting Pronouncements
In December 2007, the FASB issued SFAS 160, "Noncontrolling interests
in Consolidated Financial Statements - an amendment of ARB No. 51".
This Statement amends ARB 51 to establish accounting and reporting
Page F-12
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2007 and 2006
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
i. Recently Issued Accounting Pronouncements (Continued)
standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It clarifies that a noncontrolling
interest in a subsidiary is an ownership interest in the consolidated
entity that should be reported as equity in the consolidated financial
statements. This Statement is effective for fiscal years beginning on
or after December 15, 2008. Early adoption is not permitted.
Management is currently evaluating the effects of this statement, but
it is not expected to have any impact on the Company's financial
statements.
In February 2007 , the FASB issued SFAS 159, "The Fair Value Option
for Financial Assets and Financial Liabilities. SFAS 159 creates a
fair value option allowing an entity to irrevocably elect fair value
as the initial and subsequent measurement attribute for certain
financial assets and financial liabilities, with changes in fair value
recognized in earnings as they occur. SFAS 159 also requires an entity
to report those financial assets and financial liabilities measured at
fair value in a manner that separates those reported fair values from
the carrying amounts of assets and liabilities measured using another
measurement attribute on the face of the statement of financial
position. Lastly, SFAS 159 requires an entity to provide information
that would allow users to understand the effect on earnings of changes
in the fair value on those instruments selected for the fair value
election. SFAS 159 is effective for fiscal years beginning after
November 15, 2007 with early adoption permitted. The Company is
continuing to evaluate SFAS159 and to assess the impact on its results
of operations and financial condition if an election is made to adopt
the standard.
In June 2007, the Financial Accounting Standards Board issued FAS No.
141R, Business Combinations - This Statement implements certain
revisions to SFAS 141, including changes to the measurement of
purchase consideration, measurement of goodwill, capitalization of
in-process research and development, and definition of the acquisition
date. This statement is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15,
2008. The implementation of this pronouncement had no effect on the
Company's consolidated financial statements.
In September 2006, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 157, "Fair Value
Measurements" 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
Page F-13
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2007 and 2006
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
i. Recently Issued Accounting Pronouncements (Continued)
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 effect on
its financial position or results of operation.
j. Advertising
The Company follows the policy of charging the costs of advertising to
expense as incurred. Advertising expense for the years ended December
31, 2007 and 2006 was $340,808 and $109,424, respectively.
k. Stock Options
As permitted by FASB Statement No. 148 "Accounting for Stock Based
Compensation", the Company elected to measure and record compensation
cost relative to employee stock option costs in accordance with
Accounting Principles Board ("APB") Opinion 25, "Accounting for Stock
Issued to Employees," and related interpretations and make proforma
disclosures of net income and earnings per share as if the fair value
method of valuing stock options had been applied. Under APB Opinion
25, compensation cost is recognized for stock options granted to
employees when the option price is less than the market price of the
underlying common stock on the date of grant.
In April 2005, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 123R. The Company has adopted the
fair value based method of accounting for stock-based employee
compensation in accordance with Statement of Financial Accounting
Standards Number 123 (REVISED 2004), "Share-Based Payment" (SFAS
123[R]). The Company uses the Black-Scholes valuation model.
l. Financial Content
The Company's cost of sales is the cost of the stock quotation data it
purchases from the various stock markets to which its customers
subscribe. At December 31, 2007, the Company's accounts payable
included $524,848 due to various markets and quotation services.
m. Accounts Receivable and Bad Debts
The Company estimates bad debts utilizing the allowance method, based
upon past experience and current market conditions. At December 31,
2007 and 2006, the Company had an allowance for bad debts of $3,450
and $17,954, respectively.
Page F-14
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2007 and 2006
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
n. Marketable Securities-Available for Sale (Restated)
The Company occasionally receives marketable securities as
compensation for its advertising services. The Company's marketable
securities are classified as "available for sale". Accordingly, the
Company originally recognizes the shares at the fair value of the
services performed. The shares are evaluated quarterly using the
specific identification method. Any unrealized holding gains or losses
are reported as Other Comprehensive Income and as a separate component
of stockholder's equity. Realized gains and losses and other-than-
temporary impairments are included in earnings.
A company related to the Company by common management issued shares of
common stock for advertising services, which are classified as
available for sale.
Marketable Securities-Available for Sale are as follows:
Balance, December 31, 2005 $ 320,800
Marketable securities received
for services in 2006 910,527
Realized gains and losses (43,210)
Unrealized gains and losses (903,659)
-----------
Balance, December 31, 2006 $ 284,458
Balance, December 31, 2006 $ 284,458
Marketable Securities-Available
for Sale 68,466
Marketable Securities-Available
for sale-related party 215,992
-----------
Balance, December 31, 2006 $ 284,458
===========
Balance, December 31, 2006 $ 284,458
Marketable securities received
for services in 2007 1,353,526
Realized gains and losses (44,223)
Unrealized gains and losses (20,544)
Other-than temporary impairment (909,127)
-----------
Balance, December 31, 2007 $ 664,090
===========
Marketable Securities-Available
for Sale $ 5,232
Marketable Securities-Available
for sale-related party 658,858
-----------
Balance, December 31, 2007 $ 664,090
===========
Page F-15
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2007 and 2006
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
o. Fair Value of Financial Instruments
The Company's financial instruments as defined by Statement of
Financial Accounting Standards No. 107, "Disclosures about Fair Value
of Financial Instruments," include cash, trade accounts receivable,
and accounts payable and accrued expenses. All instruments are
accounted for on a historical cost basis, which, due to the short
maturity of these financial instruments, approximates fair value at
December 31, 2007 and December 31, 2006.
p. Investments
The Company accounts for its investment in non marketable securities
using the cost method because the shares held are less than 20% of the
outstanding shares of the investee. The investment was received as
compensation for advertising services performed during 2007. The
Company evaluates securities for other-than-temporary impairment at
least on a yearly basis, and more frequently when economic or
market conditions warrant such evaluation. Consideration is given to the
length of time and amount of the loss relative to cost, the nature and
financial condition of the issuer and the ability and intent of the
Company to hold the investment for a time sufficient to allow
any anticipated recovery in fair value. There were no securities with
unrealized losses which management considers to be other-than-temporary
impairments at December 31, 2007. If cost investments become
marketable they are reclassified to Market Securities-Available for
Sale.
Investments are as follows:
Balance, December 31, 2006 $ -
Marketable securities received
for services in 2007 300,000
Realized gains and losses -
Unrealized gains and losses -
-----------
Balance, December 31, 2007 $ 300,000
===========
q. Restated Financial Statements
Marketable Securities have been restated in the 2006 financial
statements as current assets to be consistent with the 2007
presentation.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and Equipment are recorded at cost, less accumulated
depreciation. Depreciation and amortization on capital leases and
property and equipment are determined using the straight-line method
over the estimated useful lives (usually 5 years) of the assets or
terms of the leases.
The following is a summary of the Company's major categories of
property and equipment at December 31, 2007:
Page F-16
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2007 and 2006
NOTE 2 - PROPERTY AND EQUIPMENT (Continued)
Office equipment $ 193,934
Computer equipment 28,805
Software 68,175
Less accumulated depreciation (245,281)
-------------------
$ 45,633
===================
Depreciation expense for the years ended December 31, 2007 and 2006
was $15,614 and $12,916, respectively. Expenditures for maintenance
and repairs are expensed when incurred and betterments are
capitalized.
NOTE 3 - CONVERTIBLE PREFERRED STOCK
The Company has 2,000,000 outstanding shares of convertible Class "A"
preferred stock with the following features:
Each preferred share is convertible into five common shares, Each
holder of Class "A" preferred shares is entitled to
five(5)votes(which can be voted prior to conversion) for every
preferred share held to vote on any matters brought before the
shareholders of the Company.
The Company has 2,000,000 outstanding shares of convertible Class "B"
preferred stock with the following features:
Each preferred share is convertible into ten common shares, Each
holder of Class "B" preferred shares is entitled to
ten(10)votes(which can be voted prior to conversion) for every
preferred share held to vote on any matters brought before the
shareholders of the Company,
In case of liquidation of the Company each preferred share has
a priority to assets in the amount of $1.00 per share.
NOTE 4 - OUTSTANDING COMMON STOCK OPTIONS AND STOCK PURCHASE WARRANTS
The Company uses the instruments identified as stock options and
common stock warrants somewhat interchangeably. Both forms of equity
instruments have been granted as compensation to the Company's
officers and directors.
Under FASB Statement 123R, the Company estimates the fair value of
each stock award at the grant date by using the Black-Scholes option
pricing model. The following weighted average assumptions used for
grants in the years ended December 31, 2007 and 2006: dividend yield
of zero percent for all years; expected volatility of 55.50% and
93.61%; risk-free interest rates of 5.03% and 5.35% and expected lives
of 1.0 and 1.0, respectively.
Page F-17
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2007 and 2006
NOTE 4 - OUTSTANDING COMMON STOCK OPTIONS AND STOCK PURCHASE WARRANTS
(Continued)
The general terms of awards such as vesting requirements(usually 1 to
2 years), term of options granted (usually 10 years), and number of
shares authorized for grants of options or other equity instruments
are determined by the Board of Directors. A summary of the status of
the Company's stock options and warrants as of December 31, 2007 and
changes during the years ended December 31, 2007and 2006 is presented
below:
Weighted Weighted
Options Average Average
and Exercise Grant Date
Warrants Price Fair Value
-------------- -------- ----------
Outstanding, December 31, 2005 33,797,497 $ 0.38 $ 0.38
Granted 6,780,000 0.41 0.46
Expired (225,000) 0.77 0.77
Exercised (529,500) 0.76 0.76
------------- -------- ---------
Outstanding, December 31, 2006 39,822,997 $ 0.38 $ 0.38
============= ======== =========
Exercisable, December 31, 2006 28,440,500 $ 0.42 $ 0.42
============= ======== =========
Weighted Weighted
Options Average Average
and Exercise Grant Date
Warrants Price Fair Value
-------------- -------- ----------
Outstanding, December 31, 2006 39,822,997 $ 0.38 $ 0.38
Granted 13,618,000 0.25 0.25
Expired (1,130,000) 0.72 0.72
Exercised (740,650) 0.76 0.76
------------- -------- ---------
Outstanding, December 31, 2007 51,570,347 $ 0.36 $ 0.36
============= ======== =========
Exercisable, December 31, 2007 35,925,350 $ 0.40 $ 0.40
============= ======== =========
Page F-18
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2007 and 2006
NOTE 4 - OUTSTANDING COMMON STOCK OPTIONS AND STOCK PURCHASE WARRANTS
(Continued)
Outstanding Exercisable
------------------------- --------------------
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
Range of Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices at 12/31/07 Life Price at 12/31/07 Price
------------ ----------- ----------- -------- ----------- ---------
$ 0.22 6,000,000 17.56 $ 0.22 2,000,000 $ 0.22
0.25 4,500,000 7.64 0.25 1,125,000 0.25
0.35 4,000,000 6.92 0.35 4,000,000 0.35
0.45 15,000,000 5.00 0.45 15,000,000 0.45
0.25 1,898,850 1.92 0.25 1,898,850 0.25
0.90 753,497 0.72 0.90 358,500 0.90
0.15-1.00 1,300,000 0.70 0.59 1,300,000 0.59
0.32 4,500,000 7.56 0.32 1,125,000 0.32
0.15-0.50 7,618,000 1.06 0.40 7,618,000 0.40
$ 0.21 6,000,000 4.56 0.21 1,500,000 $ 0.21
---------- ----------
51,570,347 35,925,350
========== ==========
NOTE 5 - RELATED PARTY TRANSACTIONS
Compensation
------------
During the year ended December 31, 2006, two companies owned for the
benefit of the two officers of the Company received cash of $480,000
which was recorded as related party compensation. A bonus of $34,000
was also awarded to each company in 2006.
During the year ended December 31, 2007, two companies owned for the benefit of the two officers of the Company received cash of $240,000 which was recorded as related party compensation. No bonus was awarded for 2007. An additional $240,000 was agreed not to be paid, and was record as a contribution to capital during the 2007 fiscal year.
In December 2006, the Company awarded two 1,000,000 preferred stock
bonuses to its executive officers for services rendered. These shares
are convertible into common stock and accordingly were valued at the
fair value of the common stock on the date of issuance of $3,080,011.
In January 2006, the Company also issued 2,000,000 options to its
executive officers as part of its 2006 option plan. 500,000 of these
options vested upon grant, the balance will be vested at 25% per year.
In June 2007, the Company also issued 6,000,000 options to its
executive officers as part of its 2006 option plan. 25% of these
options vested upon grant, the balance will be vested at 25% per year.
Page F-19
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2007 and 2006
NOTE 5 - RELATED PARTY TRANSACTIONS (Continued)
Related Company
---------------
The principal accounting officer of the Company is an officer in a
Canadian company which pays the Canadian bills for the Company. All of
the Company's liabilities denominated in Canadian dollars have been
converted to US dollars at the year end exchange rate and are included
in related party payables. The Canadian company was owed $89,039 as of
December 31, 2007.
Related party payables at December 31, 2007 consisted of the
following:
Officer bonuses $ 78,000
Officer accrued wages 253,766
Cash advances 1,858,648
------------
$ 2,190,414
============
Komodo, Inc.
------------
In 2007 and 2006, the Company was paid shares of Komodo, Inc. valued
at $-0- and $244,410, respectively, for its advertising services. The
shares are held as an investment by the Company.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Office Lease
------------
The Company leases office space as a part of a sublease on a
month-to-month basis. Rent expense for the years ended December 31,
2007 and 2006 was $163,054 and $131,459, respectively, which includes
common area maintenance charges. The sublease is from a related party
who has a commitment through December 2011.
Litigation
----------
The Company is the defendant in litigation pending in the Supreme
Court of British Columbia, Canada. In this action which was filed on
December 23, 2003 the Plaintiff alleges it is owed the sum of $279,664
pursuant to a licensing Agreement executed by the Plaintiff and the
Defendant in 1999. The Company denies any liability and is vigorously
defending itself against this claim.
During the year ending December 31, 2002, a company filed an action
against the Company in the Supreme Court of British Columbia, Canada
claiming unspecified damages. The Company filed a Statement of Defense
in August, 2002. There has been no further developments in this
action. The Company denies any liability and plans to vigorously
defend itself.
Page F-20
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2007 and 2006
NOTE 6 - COMMITMENTS AND CONTINGENCIES (Continued)
The Company is subject to potential liability under contractual and
other matters and various claims and legal actions which may be
asserted. These matters arise in the ordinary course and conduct of
business. While the outcome of the potential claims and legal actions
cannot be forecast with certainty, the Company believes that such
matters should not result in any liability which would have a material
adverse effect on its business.
NOTE 7 - PREPAID EXPENSES-RELATED PARTIES
In November 2006, the Company issued 375,000 shares of its common
stock to consultants for services to be performed in 2006 and 2007.
The shares were valued at $90,000 and included in prepaid
expenses-related parties on the balance sheet at December 31, 2006.
NOTE 8 - INCOME TAXES
At December 31, 2007, the Company had net operating loss carryforwards
of approximately $11,793,389 that may be offset against future taxable
income from the year 2007 through 2027. No tax benefit has been
reported in the December 31, 2007 financial statements since the
potential tax benefit is offset by a valuation allowance of the same
amount.
Due to the change in ownership provisions of the Tax Reform Act of
1986, net operating loss carryforwards for Federal income tax
reporting purposes are subject to annual limitations. Should a change
in ownership occur, net operating loss carryforwards may be limited as
to use in future years.
Net deferred tax assets consist of the following components as of
December 31, 2007 and 2006:
2007 (Restated) 2006
--------------- ---------------
Deferred tax assets:
NOL carryover $ 5,122,832 $ 3,381,747
Contribution carryover 4,678 4,678
Capital loss 79,759 79,759
Depreciation 2,284 2,284
Accrued expenses 34,320 34,320
Deferred tax liabilities: - -
Valuation allowance (5,243,873) (3,502,788)
-------------- --------------
Net deferred tax asset $ - $ -
============== ==============
The income tax provision differs from the amount of income tax
determined by applying the U.S. federal and state income tax rates of
39% to pretax income from continuing operations for the years ended
December 31, 2007 and 2006 due to the following:
F-21
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2007 and 2006
NOTE 8 - INCOME TAXES (Continued)
2007 (Restated) 2006
-------------- --------------
Book Loss $ (2,174,789) $ (1,863,172)
Stock for services/options 564,354 1,795,542
Accrued bonus - 30,420
Capital loss - 31,252
Impairment of investments 345,468 -
Valuation allowance 1,264,467 5,958
------------ ------------
$ - $ -
============ ============
NOTE 9 - BASIC (LOSS) PER SHARE
Basic (loss) per share is calculated by dividing the Company's net
loss applicable to common shareholders by the weighted average number
of common shares during the period. Diluted earnings per share is
calculated by dividing the Company's net income available to common
shareholders by the diluted weighted average number of shares
outstanding during the year. The diluted weighted average number of
shares outstanding is the basic weighted number of shares adjusted for
any potentially dilutive debt or equity. The Company had 81,570,347
and 68,440,500 in such common stock equivalents outstanding as of
December 31, 2007 and 2006, respectively. Common stock equivalents
include convertible preferred stock and stock purchase options and
warrants.
2007 (Restated) 2006
------------- -------------
Loss (numerator) $ (5,723,130) $ (4,736,539)
------------ ------------
Comprehensive Loss (numerator) (5,743,674) (5,640,199)
------------ ------------
Shares (denominator) 48,589,773 35,408,202
------------ ------------
Per share amount $ (0.12) $ (0.13)
------------ ------------
Per share amount $ (0.12) $ (0.16)
============ ============
NOTE 10 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. The Company has recorded significant
losses from operations and has a deficit in its working capital as
well as in its stockholders' equity which together raise substantial
doubt about its ability to continue as a going concern.
In order to continue as a going concern and achieve a profitable level
of operations, the Company will need, among other things, to increase
sales of its advertising and subscription services.
F-22
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2007 and 2006
NOTE 10 - GOING CONCERN (Continued)
Management's plans to continue as a going concern include the
following items: 1) Concentrating its efforts on increasing the number
of subscribers to its stock-tracking product, known as e-gate thereby
increasing sales and increasing the advertisers on the Company's web
site and email program. 2) Continuing to increase its gross profit
percentage by increasing sales.
The ability of the Company to continue as a going concern is dependent
upon its ability to successfully accomplish the aforementioned plan
and eventually attain profitable operations. The accompanying
financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
NOTE 11 - RESTATED FINANCIAL STATEMENTS
The Company's financial statements for the year ended December 31,
2007 have been restated to record $885,600 of advertising revenues as
deferred revenues. The Company determined that all of the services to
be provided under the terms of the advertising agreements had not been
completed as of December 31, 2007. These advertising agreements called for the Company to provide services over an extended period of time. The Company has revised its revenue recognition policy so as to appropriately recognize revenues under these contracts as they are earned. Accordingly the Company is now recording deferred revenue when payments for services are received, and amortizing the deferred revenue on a pro-rata basis over the lives of the contracts. Therefore, revenues previously recorded for the year ended December 31, 2007 have been deferred to 2008 in these restated financial statements, so as to correspond to when the services were actually performed.
In addition, the financial statements are restated to as to correctly record a $240,000 value for professional services contributed to the Company by a related party, and to properly record other-than-temporary impairments of available-for-sale equity securities of $909,127.
The following summarized financial statements compare of the Company's
original and restated financial statements.
Balance Sheet Original Restated
Cash $ 153,760 $ 153,760
Accounts receivable - trade, net 28,047 28,047
Prepaid expenses 750 750
Marketable securities-available for sale 5,232 5,232
Marketable securities-available for
sale-related party 658,858 658,858
----------- -----------
Total Current Assets 846,647 846,647
----------- -----------
PROPERTY AND EQUIPMENT, NET 45,633 45,633
----------- -----------
OTHER ASSETS
Investments, at cost 300,000 300,000
----------- -----------
Total Other Assets 300,000 300,000
----------- -----------
TOTAL ASSETS $ 1,192,280 $ 1,192,280
=========== ===========
F-23
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2007 and 2006
NOTE 11 - RESTATED FINANCIAL STATEMENTS (CONTINUED)
Original Restated
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 2,404,822 $ 2,404,822
Related party payables 2,190,414 2,190,414
Deferred revenue 244,578 1,130,178
----------- -----------
Total Current Liabilities 4,839,814 5,725,414
----------- -----------
Total Liabilities 4,839,814 5,725,414
----------- -----------
COMMITMENTS
STOCKHOLDERS' (DEFICIT)
Convertible preferred stock: $0.001 par value;
10,000,000 shares authorized, 2,000,000 Class A
and 2,000,000 Class B shares issued and outstanding 4,000 4,000
Common stock: $0.001 par value 100,000,000 shares
authorized; 48,589,773 and 40,425,027 shares
issued and outstanding, respectively 48,590 48,590
Additional paid-in capital 32,719,057 32,959,057
Stock subscription payable 28,500 28,500
Accumulated other comprehensive income (1,647,531) (738,404)
Accumulated deficit (34,800,150) (36,834,877)
----------- -----------
Total Stockholders' (Deficit) (3,647,534) (4,533,134)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'(DEFICIT) $ 1,192,280 $ 1,192,280
=========== ===========
STATEMENT OF OPERATIONS
REVENUE
Subscription revenue $ 3,064,459 $ 3,064,459
E-Trax revenue 88,846 88,846
Advertising revenue 2,811,876 1,926,276
Other revenue 13,644 13,644
----------- -----------
Total Revenue 5,978,825 5,093,225
COST OF SALES
Financial content 1,727,258 1,727,258
Other cost of sales 5,377 5,377
----------- -----------
Total Cost of Sales 1,732,635 1,732,635
----------- -----------
Gross profit 4,246,190 3,360,590
F-24
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2007 and 2006
NOTE 11 - RESTATED FINANCIAL STATEMENTS (CONTINUED)
Statement of Operations (Continued)
Original Restated
----------- -----------
EXPENSES
Related party compensation 240,000 480,000
Professional fees 1,668,878 1,668,878
Research and development 439,456 439,456
Marketing expense 4,511,673 4,511,673
General and administrative expenses 818,362 818,362
----------- -----------
Total Expenses 7,678,369 7,918,369
----------- -----------
LOSS FROM OPERATIONS (3,432,179) (4,557,779)
OTHER INCOME (EXPENSE)
Interest expense (212,001) (212,001)
Other-than temporary impairment of
available-for-sale equity securities - (909,127)
Gain (loss) on marketable securities (44,223) (44,223)
----------- -----------
Total Other Income (Expense) (256,224) (1,165,351)
----------- -----------
NET LOSS (3,688,403) (5,723,130)
----------- -----------
UNREALIZED INCOME/(LOSS) ON AVAILABLE
FOR SALE SECURITIES (929,671) (20,544)
----------- -----------
TOTAL COMPREHENSIVE LOSS $(4,618,074) $(5,743,674)
=========== ===========
BASIC AND DILUTED NET LOSS PER SHARE
Net loss per share $ (0.08) $ (0.12)
=========== ===========
Comprehensive loss per share $ (0.10) $ (0.12)
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 48,589,773 48,589,773
=========== ===========
F-25
ITEM 15. EXHIBITS
The following financial statements for AlphaTrade.com. are filed as a part of
this report:
For the Years Ended December 31, 2007 and 2006 Page
---------------------------------------------- ----
Report of Independent Registered Certified Public Accounting Firm F-2
Balance Sheets as of December 31, 2007 and December 31, 2006 F-3
Statements of Operations for the years ended December 31, 2007 and
December 31, 2006 F-4
Statement of Changes in Stockholders' Equity (Deficit) for the
years ended December 31, 2007 and December 31, 2006 F-5
Statements of Cash Flows for the years ended December 31, 2007 and
December 31, 2006 F-7
Notes to Financial Statements F-8
The following exhibits are included herein, except for the exhibits marked with
a footnote, which are incorporated herein by reference and can be found in the
appropriate document referenced.
38
Exhibit
Number Description
--------------------------------------------------------------------------------
3(i).1 Initial Articles of Incorporation of the Company dated June 6,
1995. (1)
3(i).2 Certificate of Amendment increasing the authorized capital to
25,000,000 shares of common stock, Car value $0.001, and
effected an 80 for one forward split of the outstanding pommon
stock (1)
3(i).3 Certificate of Amendment changing the name of the company to
"Honor One Corporation". (1)
3(i).4 Certificate of Amendment effecting a three for one forward
split of the outstanding Common stock. (1)
3(i).5 Certificate of Amendment pursuant to which the Company
increased the authorized capital of the Company to 100,000,000
shares of common stock; 10,000,000 shares of preferred stock,
par value $0.001; created a series of 2,000,000 shares of
Class A Preferred Stock; and changed its name from "Honor One
Corporation" to "AlphaTrade.com" (1)
3(ii) By-laws of the Company. (1)
10.1* AlphaTrade.com 2005 Stock Incentive Plan. (10)
10.2+ Consulting Agreement dated November 1, 2005 entered into by
and between the Company and Jupiter Consultants, Inc. (3)
10.3+ Consulting Agreement dated November 1, 2005 entered into
by and between the Company and Micro-American, Inc. (3)
14.1 Code of Ethics and Business Conduct for officers, directors
and employees of AlphaTrade.com (3)
21.1 List of subsidiaries of the Company. *
31 Certification by Chief Executive Officer and acting Chief
Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)
of the Exchange Act. *
32 Certification by Chief Executive Officer acting Chief
Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b)
of the Exchange Act and Section 1350 of Chapter 63 of Title 18
of the United States Code. *
+ Compensatory plan or arrangement.
* Filed herewith.
(1) Incorporated by reference to the Company's Form 10-SB/A filed with the
SEC on November 23, 1999.
(2) Incorporated by reference to the Company's Registration Statement filed
on Form S-8 with the SEC on June 22, 2005.
(3) To be filed by an Amendment.
39
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ALPHATRADE.COM
Dated: April 21, 2010 /s/ Gordon J. Muir
----------------------------
Its: CEO/Director
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature Title Date
---------------------- ---------------------------------------- --------------
/s/ Gordon Muir Chief Executive Officer and Director April 21, 2010
------------------
Gordon J. Muir
/s/ Katharine Johnston Vice President - Business Operations, April 21, 2010
---------------------- Principal Financial Officer and Director
Katharine Johnston
/s/ Lisa McVeigh Director April 21, 2010
----------------------
Lisa McVeigh
40
