| [×] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the fiscal year ended December 31, 2008 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 |
| Signatures | |
The Issuer's revenue for its fiscal year ended December 31, 2008 is $6,075,031.
As of March 31, 2009, the aggregate market value of the registrant's common
stock held by non-affiliates of the registrant was approximately $768,362 based
on approximately 38,418,083 shares held by non affiliates at a price of $0.02.
Stock.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
2
TABLE OF CONTENTS
PAGE
PART I
ITEM 1. Description of Business. 4
ITEM 1A. Risk Factors 6
ITEM 1B. Unresolved Staff Comments 14
ITEM 2. Properties. �� 14
ITEM 3. Legal Proceedings. 15
ITEM 4. Submission of Matters to a Vote of Security Holders. 16
PART II
ITEM 5. Market for Common Equity Related Stockholder Matters And Issuer
Purchases of Equity Securities. 16
ITEM 6. Selected Financial Data 19
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations. 19
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk. 23
ITEM 8. Financials Statements And Supplementary Data. 23
ITEM 9. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure. 23
ITEM 9A. Controls and Procedures. 23
ITEM 9B. Other Information. 24
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance. 24
ITEM 11. Executive Compensation. 25
ITEM 12. Security Ownership of Certain Beneficial Owners and 30
Management Related Stockholder Matters.
ITEM 13. Certain Relationships and Related Transactions,
and Director Independence. 31
ITEM 14. Principal Accountant Fees and Services 33
ITEM 15. Exhibits. 34
Signatures 36
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. Over the
years, we have augmented that product with other complimentary products. The
single most important element of our business is our ever expanding database -
it is one of the most prized databases in the business environment. Every person
in our database has an interest in the markets, makes above average income, are
independent thinkers, and are receptive to new ideas and products. All of our
products are created out of a demand that presented itself from market
conditions. Our real time stock quote service is a recognized and welcomed
quality alternative to products offered by competitors that require signing long
term agreements, they charge much higher prices and have complicated operating
instructions.
4
Every new product we developed maintained our standard of high quality and
affordability. As of this filing date, we have five diversified and unique
revenue streams: real time stock quotes - E-Gate; financial information for
websites - E-Trax; advertising, web design and web hosting services.
We have three websites all providing information and services that compliment
all of our products - www.alphatrade.com, www.zenobank.com and
http://finance.alphatrade.com . Our targeted online digital advertising and
marketing programs are designed to serve many functions - every company has a
need to maximize their advertising dollars.
Our marketing programs are multi-faceted - as visitors cruise our sites they
will see many ads we have created. If they have a further interest in the
company profiled they will be able to conduct their own due diligence on that
company either from E-gate, E-trax or from our finance site. If a company
decides to utilize our marketing programs to augment their investor relations or
public relations program, we can provide them with E-Trax to ensure they are
compliant from a regulatory point of view, and we can definitely give them a
tremendous amount of exposure to a database that is proven to have an interest
in publicly traded companies. Our marketing programs are much more professional
than most investor relations activities that are mainstream for smaller cap
companies.
Our own brand has become well recognized and trusted in the financial community.
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 over charged and fraught with under-performers. Our entire
digital advertising business evolved from a lack we noticed in the advertising
industry - no one was specifically serving the needs of developing and emerging
companies. We launched our advertising program to serve that need and to bring
some professionalism to a tainted industry. In the process, our operational
costs have been lowered, our database is growing at a fast pace, our web traffic
is soaring and our brand is becoming well recognized. This initiative has given
us the opportunity to withstand the tremendous negative business environment of
2008. In fact, yet again, AlphaTrade has emerged with a new marketing
opportunity that emerged because of the business environment of 2008 when so
many people have lost their job. We have initiated a Home Based Business
opportunity to allow people to work out of their homes and become sales people
selling all of our products. This is yet another example of business
diversification that becomes a win win situation for everyone involved.
Business Strategy
Our marketing strategy is building products and creating services that can
survive and prosper in all economic times especially those times that are most
challenging. Our advertising programs are a significant portion of our revenue
now and our web traffic is building constantly. We aggressively market all of
our products and services to the financial community. Our strongest revenue
growth for 2008 came from our advertising programs and we expect this to
continue into 2009.
AlphaTrade's unique positioning in the marketplace is protected by a number of
factors: reasonable price, targeted advertisement placement, high volume web
traffic, valuable associations, strong networking ability, and worldwide
audience.
5
Our database is expanding as a direct result of our successful advertising
promotions. This is generating new business for a variety of our products. 2008
has been a difficult business environment for all companies and we did
experience a downturn in all facets of business at the close of the year. Since
our products are very price conscious, we were able to reduce the migration of
clients and are beginning to notice a small resurgence of new business. We fully
expect a turbulent business environment over the next year but
anticipate new business based on our price point, our large, targeted audience
and our success rate for our advertising clients. All these factors favor growth
even during a tumultuous business environment.
Our overall strategy reflects the attention we are paying to our revenue growth
for 2008 and beyond. The Investor and Public relations business is very
fragmented and needs some consolidation. This is exactly the type of business
environment that requires a multi-pronged approach to get sustained results.
AlphaTrade is partnering and networking to build an association of companies
that work together to expand the reach and the exposure for all their clients.
This approach is providing us with access to new clients and new strategic
alliances that provide new opportunities to sell all of our products and
services. Every one of our clients are exposed to all of our products and for
the most part, can utilize more than one. The Internet public is fickle and
expects unique content, interesting material, and clear concise content. For the
most part, publicly traded companies cannot deliver this information in a form
that is interesting to internet traffic so they do not have a lot of website
traffic. Our websites accomplishes this for them - people coming to our sites
already know they are getting condensed information and if they find it
interesting they will make the decision to visit the corporate website. This
approach alleviates a lot of unnecessary work for the company and ensure our
clients are satisfied. Our goal is to get long term clients by providing
services that help them build their business
Employees
We currently retain, through contracts with corporations, the services of two
executive officers on a full time basis. In addition, through a Canadian
management company, we employ eleven 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
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.
6
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 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, 2008, we have incurred an accumulated net loss of
approximately $34.8 million. 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.
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.
7
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 additional 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 2009. 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.
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;
8
* 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.
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, 2008. 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
9
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,
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. 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.
10
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 Morningstar, 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
$3,500, and an annual contract with Hemscott, Inc. which was subsequently taken
over by Morningstar, 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 Nasdaq, the Pink
Sheets, and the New York and Toronto exchanges. 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
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.
11
Our independent auditors have expressed a going concern qualification in their
report dated March 31, 2009.
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, 2008, 54,076,023 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 55,210,200 are outstanding as of December 31, 2008, and 40,730,200 are
exercisable at a weighted average exercise price of $0.33 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 14,000,000 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
limited trading volume for our common stock. 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.
12
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
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.
13
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 55,210,200 warrants and options to purchase shares of our
common stock outstanding as of December 31, 2008, of which 40,730,200 are
exercisable at a weighted average exercise price of $0.33 as of equal date. The
exercise of warrants and/or options by a substantial number of holders within a
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
N/A
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
14
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.
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.
Professional Bull Riders, Inc. v. AlphaTrade.com,
United Stated District Court, District of Colorado, Case No. 08-cv-01017 (MSK)
Plaintiff Professional Bull Riders, Inc. ("PBR") commenced this action against
the Company on or about April 15, 2008 in the District Court of Pueblo County,
Colorado, Case No. 2008CV527. The Company removed this action to the United
States District Court for the District of Colorado on May 15, 2008. In its
Complaint, PBR alleges two causes of action arising from the alleged breach of a
Sponsorship Agreement, as amended, and the alleged breach of a settlement
agreement, and seeks damages of over $1,500,000.
The Company denies the material allegations of the Complaint and intends to
vigorously defend this action.
Tommy G Productions, LLC v. AlphaTrade.com,
District Court, Pueblo County, Colorado, Case No. 2008CV1008
Plaintiff Tommy G Productions ("Tommy G") commenced this action against the
Company on or about June 27, 2008 in the District Court of Pueblo County,
15
Colorado, Case No. 2008CV1008. In its Complaint, Tommy G alleges a cause of
action arising from the alleged breach of a Sponsorship Agreement, and seeks
damages of $30,000. The Company denies the allegations of the Complaint and
intends to vigorously defend this action.
Center Operating Company v. AlphaTrade.com,
68th Judicial District Court, Dallas County, Texas, Case No. 2009-156001-1
Plaintiff Center Operating Company ("COC") commenced this action against the
Company on or about September 3, 2008 in the District Court of Dallas County,
Texas, Case No. 2009-156001-1. In its Complaint, COC alleges a cause of action
arising from the alleged breach of a Sponsorship Agreement, and seeks damages of
$185,621.
The Company denies the allegations of the Complaint and intends to vigorously
defend this action.
Sterling Mets, L.P. and Brooklyn Baseball Company, LLC v. AlphaTrade.com,
Supreme Court of the State of New York, County of Queens Case No. 27541/2008
Plaintiff Sterling Mets, L.P. and Brooklyn Baseball Company, LLC ("Mets")
commenced this action against the Company on or about November 12, 2008 in the
Supreme Court of the State of New York, County of Queens. In its Complaint, Mets
alleges a cause of action arising from the alleged breach of a Sponsorship
Agreement, and seeks damages of $650,000.
The Company denies the allegations of the Complaint and intends to vigorously
defend this action.
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
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.
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, 2008.
PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDERS MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
16
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.
2008 Fiscal Year - Quarterly Information
High Low
First 0.24 0.125
Second 0.18 0.10
Third 0.17 0.05
Fourth 0.09 0.01
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
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
17
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, 2008 there were 390 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
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, 2008 and
have been previously disclosed in our Form 10-QSB's unless otherwise noted:
Fiscal year ended December 31, 2008
Valued
Date No. of Shares Title At Reason
Jan./2008 400,000 Common $0.20 For cash
Jan./2008 440,750 Common $0.20 For services
Feb./2008 300,000 Common $0.20 For cash
Feb./2008 480,000 Common $0.20 For services
March/2008 45,000 Common $0.20 For services
March/2008 25,000 Common $0.20 For cash
April/2008 10,000 Common $0.17 For services
May/2008 520,000 Common $0.17 For services
June/2008 415,000 Common $0.17 For services
June/2008 300,000 Common $0.20 For cash
July/2008 130,500 Common $0.165 For services
Aug./2008 150,000 Common $0.13 For services
Aug./2008 200,000 Common $0.16 For services
Sept./2008 50,000 Common $0.15 For cash
Oct. 23/2008 400,000 Common $0.04 Services
Oct. 29/2008 1,120,000 Common $0.05 Services
Dec. 31/2008 500,000 Common $0.02 Services
18
Information regarding our sales of our unregistered securities for the Fiscal
years ended December 31, 2008 and 2007, other then what is set forth above, has
been previously furnished in our Quarterly Reports on Form 10-Q 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, 2008.
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 51,520,347 $0.33 14,480,000
Total 51,520,347 $0.33 14,480,000
ITEM 6. SELECTED FINANCIAL DATA
N/A
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
19
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 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, 2008, 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.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate our estimates, including those related to uncollectible receivables, revenue recognition, deferred revenue, and contingencies. We base our estimates on historical performance and on various other assumptions that we believe to be reasonable under the circumstances. These estimates allow us to make judgments about the carrying values of assets and liabilities that are not readily apparen t from other sources.
20
We believe the following accounting policies are our critical accounting policies because they are important to the portrayal of our financial condition and results of operations and they require critical management judgments and estimates about matters that may be uncertain. If actual results or events differ materially from those contemplated by us in making these estimates, our reported financial condition and results of operations for future periods could be materially affected.
Revenue Recognition
The Company follows the guidance of SAB 104 in recognizing subscription
fees revenue and advertising revenue when the services have been
provided. Revenues are recognized when they are realized, realizable
and earned. Revenues are recognized on a pro-rata basis in consistent, equal increments over the term of contract.
Advertising revenues are often earned under contracts extending beyond
a financial reporting period. The Company generally receives its
monthly subscriptions in the month prior to the service being provided.
Accordingly the Company had deferred revenue of $737,010 and $1,130,178
at December 31, 2008 and 2007, respectively. 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, 2008 and 2007.
The Company occasionally licenses its technology to some customers. The
Company recognizes its license revenue over the term of the license.
The Company also 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.
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,
2008 and 2007, the Company had an allowance for bad debts of $3,450 and
$3,450, respectively.
Result of Operations for the twelve months ended December 31, 2008 and 2007
During the fiscal year ended December 31, 2008, we saw revenue increase every
quarter. Total revenues for fiscal 2008 were $6,075,031 which is a 19% increase
over fiscal 2007 sales of $5,093,225. 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 decreased to $3,027,619 from $3,064,459 in
2007. That is a 1% decrease due to the international financial crisis during the
fourth quarter of 2008.
Our advertising revenue continued to grow at a fast pace in 2008. Advertising
revenues increased from $1,926,276 in 2007 to $2,851,003 in 2008, an increase of
48%. Due to the success of our advertising campaigns and the increased
21
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 $192,126 in E-Trax revenue compared to $88,846 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, 2008 the cost was $1,854,268 compared to $1,727,258 in 2007.
The percentage of cost of sales to subscription revenues was 61% in 2008
compared to 56% in 2007 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 2009 we expect the
cost of sales percentage to decline. We also had $2,839 in other cost of
sales in 2008 compared to $5,377 in 2007.
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 2007 and 2008.
The total compensation expense to these entities was $480,000 in 2008 and $480,000 in 2007. The 2007 compensation was not paid, but was contributed to the Company. Accordingly, the Company recorded a credit of $240,000 to additional paid-in capital during the year ended December 31, 2007. Similarly, the related party cash compensation is expected to be $480,000 in 2009.
We incurred $1,127,880 in professional fees in 2008 compared to $1,668,878 in
2007. $479,451 and $1,087,943 of this expense was paid in shares of our common
stock in 2008 and 2007, respectively. Professional fees include fees paid to
accountants, attorneys and investor relation firms. We had limited cash
available to pay our professional consultants in 2008, so we paid many of them
with shares of common stock. The shares were valued at market value. We
hope to be able pay for more services with cash in 2009.
We recorded research and development expense of $468,884 for 2008 compared to
$439,456 in 2007. 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
2009.
We expended $678,551 for marketing in 2008 compared to $4,511,673 in 2007.
This decrease from 2007 is due to our cancelled sports partnerships. Our cash
resources will determine how much we can spend on marketing for 2009 but do not
anticipate that it will increase substantially over 2008.
22
Our general and administrative expenses decreased by 59% in 2008 from $818,362
to $338,749. The decrease was primarily due to reduced rent and corporate costs.
We expect the our general and administrative costs will remain low in 2009.
We realized a net income of $41,413 for the year ended December 31, 2008
compared to a net loss of $5,723,130 for the year ended December 31, 2007.
Included in the net income for 2008 and the loss for 2007 was $770,113 and
$1,447,061 respectively as the value of options and shares issued for services. Additionally, the Company recorded an other-than-temporary impairment of available-for-sale equity securities in the amount of $792,956 and $909,127 for 2008 and 2007, respectively. Excluding these non-cash expenses, the net income for 2008 and loss for 2007 would have been $1,604,482 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 $197,500 of cash in 2008 compared to $456,500
of cash in financing activities in 2007. For the twelve months ended December
31, 2008 we used net cash of $582,574 compared to $525,660 for the
same period of 2007 in our operating activities. We had proceeds from investment
activity of $270,384 and $47,097 in 2008 and 2007, respectively.
We expect that our 2009 cash inflows from operations due to the continuing
difficulties in the world's financial markets. 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 our financial
obligations.
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 2009.
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
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
23
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, 2008 and
2007 been examined to the extent indicated in their report by Chisholm,
Bierwolf, Nilson & Morrill, LLC, independent certified public accountants, and
have been prepared in accordance with Generally Accepted Accounting Principles
and pursuant to Regulation S-K 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.
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.
24
Our management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2008. 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, 2008, our internal control over
financial reporting were not effective based on those criteria. Management
determined that at December 31, 2008, 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 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, 2008.Due to its limited number of employees, the Company has determined that it cannot adequately segregate critical control duties to the extent where these control functions do not represent a material weakness. Until such time that the Company is able to sustain a greater employee base, it cannot provide assurances that its internal controls over financial reporting do not have material weaknesses.
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
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, 2008:
Name Age Position Director Since
------------------- --- ----------------------------------------- --------------
Penny Perfect* 55 Founder, Chairman, Chief Executive October 1999
Officer, President and Director
Gordon Muir 55 Founder, Chief Technology Officer and October 1999
Director
Katharine Johnston* 55 Vice-President January 2005
Director
Lisa McVeigh* 45 Director January 2000
25
* 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
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 held
the position of Financial Officer with British Columbia Film for over fourteen
years and now is a Financial Consultant. Ms. McVeigh 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.
26
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, 2008, 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.
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, 2008.
27
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 years
ended December 31, 2008 and December 31, 2007.
28
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
--------------------------------------------------- ---------------------------
Penny Perfect 2008 $240,000
CEO & President 2007 $120,000 -- -- -----
Chairman
Gordon J. Muir 2008 $240,000
Chief Technical 2007 $120,000 -- -- -------
Officer
(1) We have contracted with two companies for the services of above noted
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. The
management fees for 2008 are accrued and remain unpaid. With the exception of
reimbursement of expenses incurred by our named executive officers during the
scope of their consultancy none of the named executives received any other
compensation, perquisites, personal benefits in excess of $10,000.
In addition, we do not have either (i) a plan that provides for the payment of
retirement benefits, or benefits that will be paid primarily following
retirement, including but not limited to tax-qualified defined benefit plans,
supplemental executive retirement plans, tax-qualified defined contribution
plans and nonqualified defined contribution plans, nor (ii) any contract,
agreement, plan or arrangement, whether written or unwritten, that provides for
payment(s) to any of our named executive officers at, following, or in
connection with the resignation, retirement or other termination of any of our
named executive officers, or in connection with the change in control of our
company or a change in any of our named executive officers' responsibilities
following a change in control, with respect to each of our named executive
officers.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth information with respect concerning unexercised
options; stock that has not vested; and equity incentive plan awards for each of
our named executive officers outstanding as of the end of our to grants of
options to purchase our common stock under our Stock Incentive Plan to the named
executive officers during the fiscal year ended December 31, 2008.
29
Option Awards Stock Awards
---------------------------------------------------------------------------- ---------------------------------
Equity Equity
Incentive Incentive
Plan Plan Awards:
Market Awards: Market or
Equity Value Number Payout
Incentive of of Value
Plan Shares Unearned of
Awards: Number or Shares, Unearned
Number of Shares Units Units or Shares,
Number of Number of of or Units of Other Units or
Securities Securities Securities of Stock Stock Rights Other
Underlying Underlying Underlying That That That Rights
Unexercised Unexercised Unexercised Option Have Have Have That Have
Options Options Unearned Exercise Option Not Not Not Not
($) ($) Options Price Expiration Vested Vested Vested Vested
Name Exercisable Unexercisable (#) ($) Date ($) ($) (#) ($)
------------------------------------------------------------------------------ ------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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.
30
(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 March 31, 2009, 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, 2008, 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) 33%
c/o AlphaTrade.com
Suite 116 - 930 West 1st Street
North Vancouver, B.C.
Gordon Muir 22,716,320 (4) 33%
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 66%
officers as a group (3 in all)
(1) The shares are held in various private companies in which the officer may
or may not 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.
(2) Percentage ownership is based upon 54,076,023 shares of common stock
outstanding on December 31, 2008 and is calculated separately for each
person on the basis of the actual number of outstanding shares beneficially
owned as of December 31, 2008 and assumes the conversion of preferred
shares held by such person (but not by anyone else).
31
(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, 2008.
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 51,520,347 $0.33 14,480,000
Total 51,520,347 $0.33 14,480,000
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, 2008, two companies owned for the benefit of
the two officers of the Company accrued management fees of $480,000 which was
recorded as related party compensation.
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.
Related party payables at December 31, 2008 consisted of the following:
Officer bonuses $ 78,000
Officer accrued wages $ 578,330
Loan advances $2,089,932
----------
$2,746,262
==========
There have not been any other transactions or proposed transactions during the
fiscal years ended December 31, 2008 and 2007, 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.
32
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
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.
33
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
approximately 13 meetings in 2008 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, 2008 and December 31, 2007:
Fee Category Fiscal 2008 Fees Fiscal 2007 Fees
------------------------- ---------------- ----------------
Audit Fees $27,940.00 $28,376.00
Audit-Related Fees -- --
Tax Fees --
All Other Fees -- --
---------- ----------
Total Fees $27,940.00 $28,376.00
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.
34
ALPHATRADE.COM
FINANCIAL STATEMENTS
December 31, 2008 and 2007
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-8
Statements of Cash Flows............................................. F-9
Notes to the Financial Statements.................................... F-10
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, 2008 and 2007 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 Public Company Accounting Oversight Board (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 fin ancial 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, 2008 and 2007 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 9 to the financial statements, the Company has negative cash-flows from operations and a working capital deficit, 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 9. 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 determined that the unrealized losses on their available for sale securities are other than temporary and therefore have decreased the cost basis of the investments and recognized a loss on impairment of $792,956.
Chisholm, Bierwolf, Nilson & Morrill, LLC
Bountiful, Utah
March 30, 2009 except for Notes 1(n), 7, 8 and 11, dated March 23, 2010
PCAOB Registered, Members of AICPA, CPCAF and UACPA
F-3
ALPHATRADE.COM
Balance Sheets
ASSETS
------
December 31, December 31,
2008 2007
(Restated)
------------ ------------
CURRENT ASSETS
Cash $ 55,650 $ 153,760
Accounts receivable, net 1,172,064 28,047
Marketable securities-available for sale 1,558,876 658,858
Marketable securities-available for sale
related party 2,093 5,232
Prepaid expenses 1,000 750
----------- -----------
Total Current Assets 2,789,683 846,647
----------- -----------
PROPERTY AND EQUIPMENT, net 45,776 45,633
----------- -----------
OTHER ASSETS
Investments, at cost - 300,000
----------- -----------
TOTAL ASSETS $ 2,835,459 $ 1,192,280
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-4
ALPHATARADE.COM
Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
---------------------------------------------
December 31, December 31,
2008 2007
(Restated)
------------ ------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 2,161,854 $ 2,404,822
Related party payables 2,746,262 2,190,414
Deferred revenues 737,010 1,130,178
----------- -----------
Total Current Liabilities 5,645,126 5,725,414
----------- -----------
TOTAL LIABILITIES 5,645,126 5,725,414
----------- -----------
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' (DEFICIT)
Preferred shares: $0.001 par value, 10,000,000
shares authorized: 2,000,000 Class A and
2,000,000 Class B shares issues and outstanding 4,000 4,000
Common shares: $0.001 par value, 100,000,000
shares authorized: 54,076,023 and 48,589,773
shares issues and outstanding, respectively 54,076 48,590
Stock subscription payable 45,080 28,500
Additional paid-in capital 33,921,184 32,959,057
Accumulated other comprehensive income (40,543) (738,404)
Accumulated deficit (36,793,464) (36,834,877)
----------- -----------
Total Stockholders' (Deficit) (2,809,667) (4,533,134)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 2,835,459 $ 1,192,280
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-5
ALPHATRADE.COM
Statements of Operations and Other Comprehensive Income (Loss)
For the Years Ended
December 31,
-------------------------
2008 2007
(Restated)
------------ ------------
REVENUES
Subscription revenue $ 3,027,619 $ 3,064,459
Advertising revenue 2,851,003 1,926,276
Other revenue 196,409 102,490
----------- -----------
Total Revenues 6,075,031 5,093,225
----------- -----------
COST OF SALES
Financial content 1,854,268 1,727,258
Other cost of sales 2,839 �� 5,377
----------- -----------
Total Cost of Sales 1,857,107 1,732,635
----------- -----------
GROSS PROFIT 4,217,924 3,360,590
----------- -----------
OPERATING EXPENSES
Management expense 480,000 480,000
Professional fees 1,127,880 1,668,878
Research and development 468,884 439,456
Marketing expense 678,551 4,511,673
General and administrative 338,749 818,362
----------- -----------
Total Operating Expenses 3,094,064 7,918,369
----------- -----------
INCOME (LOSS) FROM OPERATIONS 1,123,860 (4,557,779)
----------- -----------
OTHER INCOME (EXPENSE)
Realized gains (losses) on sale of
marketable securities (223,068) (44,223)
Other-than temporary impairment of
Marketable securities (792,956) (909,127)
Gain on settlement of debt 307,974 -
Interest expense (374,397) (212,001)
----------- -----------
Total Other Income (Expense) (1,082,447) (1,165,351)
----------- -----------
NET INCOME (LOSS) BEFORE INCOMETAXES 41,413 (5,723,130)
INCOME TAX EXPENSE - -
----------- -----------
The accompanying notes are a integral part of these financials statements.
F-6
ALPHATRADE.COM
Statements of Operations and Other Comprehensive Income (Loss)
(Continued)
For the Years Ended
December 31,
-------------------------
2008 2007
(Restated)
------------ ------------
NET INCOME (LOSS) $ 41,413 $(5,723,130)
=========== ===========
OTHER COMPREHENSIVE INCOME (LOSS) $ 697,861 $ (20,544)
TOTAL COMPREHENSIVE INCOME (LOSS) $ 739,274 $(5,743,674)
=========== ===========
BASIC EARNINGS (LOSS) PER SHARE $ 0.00 $ (0.12)
=========== ===========
FULLY DILUTED INCOME (LOSS) PER SHARE $ 0.01 $ (0.12)
=========== ===========
BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 51,175,987 48,589,773
=========== ===========
FULLY DILUTED WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 81,175,987 48,589,773
=========== ===========
The accompanying notes are a integral part of these financials statements.
F-7
ALPHATRADE.COM
Statements of Stockholders' (Deficit)(Restated)
Preferred Stock Common Stock Additional Stock Other Total
---------------- ------------------ Paid-In Subscription Comprehensive Accumulated Stockholders'
Shares Amount Shares Amount Capital Receivable Income Deficit Equity
--------- ------ ---------- ------- ----------- ---------- ------------- ------------- --------------
Balance,
December 31, 2006 4,000,000 $4,000 40,425,027 $40,425 $30,853,661 $ (30,000) $ (717,860) $(31,111,747) $ (961,521)
Common stock issued
for cash at $0.18 per share - - 2,287,500 2,288 454,212 28,500 - - 485,000
Common stock issued
for services at
$0.20 per share - - 5,877,246 5,877 1,052,066 - - - 1,057,943
Value of stock
purchase warrants
granted - - - - 207,728 - - - 207,728
Value of stock
options issued
under the 2007
stock option plan - - - - 131,540 - - - 131,540
Contributed capital - - - - 19,850 - - - 19,850
Amortization of
prepaid expense - - - - - 30,000 - - 30,000
Executive compensation
contributed by
related party - - - - 240,000 - - - 240,000
Net income for the
year ended December
31, 2007 - - - - - - (20,544) (5,723,130) (5,743,674)
--------- ------ ---------- ------- ----------- --------- ------------ ------------ -------------
Balance,
December 31, 2007 4,000,000 4,000 48,589,773 48,590 32,959,057 28,500 (738,404) (36,834,877) (4,533,134)
ALPHATRADE.COM
Statements of Stockholders' (Deficit) (Restated)
Preferred Stock Common Stock Additional Stock Other Total
---------------- ------------------ Paid-In Subscription Comprehensive Accumulated Stockholders'
Shares Amount Shares Amount Capital Receivable Income Deficit Equity
--------- ------ ---------- ------- ----------- ---------- ------------- ------------- --------------
Balance,
December 31, 2007 4,000,000 4,000 48,589,773 48,590 32,959,057 28,500 (738,404) (36,834,877) (4,533,134)
Common stock issued
for cash at $0.15
and $0.20 per share - - 1,075,000 1,075 196,425 16,580 - - 214,080
Common stock issued
for services at $0.02
to $0.21 per share - - 4,411,250 4,411 475,040 - - - 479,451
Value of stock
purchase warrants
vested - - - - 25,652 - - - 25,652
Value of stock options
issued under stock
option plans - - - - 265,010 - - - 265,010
Net income for the
year ended
December 31, 2008 - - - - - - 697,861 41,413 739,274
--------- ------ ---------- ------- ----------- --------- ------------ ------------ -------------
Balance,
December 31, 2008 4,000,000 $4,000 54,076,023 $54,076 $33,921,184 $ 45,080 $ (40,543) $(36,793,464) $ (2,809,667)
========= ====== ========== ======= =========== ========= ============ ============ =============
The accompanying notes are a integral part of these financials statements.
F-8
ALPHATRADE.COM
Statements of Cash Flows
For the Year Ended
December 31,
---------------------------
2008 2007
(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES ------------- -------------
Net income (loss) $ 41,413 $ (5,723,130)
Adjustments to reconcile net income (loss) to
net cash used by operating activities:
Depreciation expense 18,435 15,614
Value of stock options and warrants granted 290,662 359,118
Loss on sale of investments 223,068 44,223
Other-than-temporary impairment of
available-for-sale investments 792,956 909,127
Gain on settlement of debt (307,974) -
Contribution of executive compensation - 240,000
Investments received as payment for accounts
receivable (1,204,004) (1,724,320)
Common stock issued for services 479,451 1,087,943
Changes in operating assets and liabilities:
Changes in accounts receivable (1,144,017) 36,719
Changes in prepaid expenses (250) 6,398
Changes in deferred revenues (393,168) 888,846
Changes in related party payables 555,848 1,476,119
Changes in accounts payable and accrued expenses 65,006 1,857,683
------------ ------------
Net Cash Used in Operating Activities (582,574) (525,660)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of securities 288,962 70,794
Purchase of fixed assets (18,578) (23,697)
------------ ------------
Net Cash Provided by Investing Activities 270,384 47,097
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash 197,500 456,500
Stock subscriptions payable 16,580 28,500
------------ ------------
Net Cash Provided by Financing Activities 214,080 485,000
------------ ------------
NET DECREASE IN CASH (98,110) 6,437
CASH AT BEGINNING OF PERIOD 153,760 147,323
------------ ------------
CASH AT END OF PERIOD $ 55,650 $ 153,760
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ 64,513 $ 212,001
Income Taxes $ - $ -
NON CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for services $ 479,451 $ 1,087,943
Value of stock options and warrants vested $ 290,662 $ 359,118
Increase of investments from non-cash receipt of
advertising revenues $ 1,501,911 $ 1,724,320
The accompanying notes are an integral part of these financial statements.
F-9
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
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.
F-10
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
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, 2008 and 2007, the Company's cash balance exceeded Federal
Deposit Insurance Corporation (FDIC) limits by approximately $-0- and
$53,000. The Company's advertising revenues are often collected in the
form of marketable securities which are subject to limited liquidity
and fluctuations in price.
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 follows the guidance of SAB 104 in recognizing subscription
fees revenue and advertising revenue when the services have been
provided. Revenues are recognized when they are realized, realizable
and earned. Revenues are recognized ratably, in consistent and equal increments, over the term of contract.
Advertising revenues are often earned under contracts extending beyond
a financial reporting period. The Company generally receives its
monthly subscriptions in the month prior to the service being provided.
Accordingly the Company had deferred revenue of $737,010 and $1,130,178
at December 31, 2008 and 2007, respectively. 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, 2008 and 2007.
The Company occasionally licenses its technology to some customers. The
Company recognizes its license revenue over the term of the license.
The Company also 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.
F-11
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
i. Recently Issued Accounting Pronouncements
In June 2008, the FASB issued FASB Staff Position EITF 03-6-1,
Determining Whether Instruments Granted in Share-Based Payment
Transactions Are Participating Securities, ("FSP EITF 03-6-1"). FSP
EITF 03-6-1 addresses whether instruments granted in share-based
payment transactions are participating securities prior to vesting, and
therefore need to be included in the computation of earnings per share
under the two-class method as described in FASB Statement of Financial
Accounting Standards No. 128, "Earnings per Share." FSP EITF 03-6-1 is
effective for financial statements issued for fiscal years beginning on
or after December 15, 2008 and earlier adoption is prohibited. We are
not required to adopt FSP EITF 03-6-1; neither do we believe that FSP
EITF 03-6-1 would have material effect on our consolidated financial
position and results of operations if adopted.
In May 2008, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 163, "Accounting for Financial Guarantee Insurance
Contracts-and interpretation of FASB Statement No. 60". SFAS No. 163
clarifies how Statement 60 applies to financial guarantee insurance
contracts, including the recognition and measurement of premium revenue
and claims liabilities. This statement also requires expanded
disclosures about financial guarantee insurance contracts. SFAS No. 163
is effective for fiscal years beginning on or after December 15, 2008,
and interim periods within those years. SFAS No. 163 has no effect on
the Company's financial position, statements of operations, or cash
flows at this time.
In May 2008, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 162, "The Hierarchy of Generally Accepted Accounting
Principles". SFAS No. 162 sets forth the level of authority to a given
accounting pronouncement or document by category. Where there might be
conflicting guidance between two categories, the more authoritative
category will prevail. SFAS No. 162 will become effective 60 days after
the SEC approves the PCAOB's amendments to AU Section 411 of the AICPA
Professional Standards. SFAS No. 162 has no effect on the Company's
financial position, statements of operations, or cash flows at this
time.
In March 2008, the Financial Accounting Standards Board, or FASB,
issued SFAS No. 161, Disclosures about Derivative Instruments and
Hedging Activities--an amendment of FASB Statement No. 133. This
standard requires companies to provide enhanced disclosures about (a)
how and why an entity uses derivative instruments, (b) how derivative
instruments and related hedged items are accounted for under Statement
133 and its related interpretations, and (c) how derivative instruments
and related hedged items affect an entity's financial position,
financial performance, and cash flows. This Statement is effective for
financial statements issued for fiscal years and interim periods
F-12
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
i. Recently Issued Accounting Pronouncements (Continued)
beginning after November 15, 2008, with early application encouraged.
The Company has not yet adopted the provisions of SFAS No. 161, but
does not expect it to have a material impact on its financial position,
results of operations or cash flows.
In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No.
110 regarding the use of a "simplified" method, as discussed in SAB No.
107 (SAB 107), in developing an estimate of expected term of "plain
vanilla" share options in accordance with SFAS No. 123 (R), Share-Based
Payment. In particular, the staff indicated in SAB 107 that it will
accept a company's election to use the simplified method, regardless of
whether the company has sufficient information to make more refined
estimates of expected term. At the time SAB 107 was issued, the staff
believed that more detailed external information about employee
exercise behavior (e.g., employee exercise patterns by industry and/or
other categories of companies) would, over time, become readily
available to companies. Therefore, the staff stated in SAB 107 that it
would not expect a company to use the simplified method for share
option grants after December 31, 2007. The staff understands that such
detailed information about employee exercise behavior may not be widely
available by December 31, 2007. Accordingly, the staff will continue to
accept, under certain circumstances, the use of the simplified method
beyond December 31, 2007. The Company currently uses the simplified
method for "plain vanilla" share options and warrants, and will assess
the impact of SAB 110 for fiscal year 2009. It is not believed that
this will have an impact on the Company's financial position, results
of operations or cash flows.
In December 2007, the FASB issued SFAS No. 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 ownership interest in the consolidated
entity that should be reported as equity in the consolidated financial
statements. Before this statement was issued, limited guidance existed
for reporting noncontrolling interests. As a result, considerable
diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as
liabilities or in the mezzanine section between liabilities and equity.
This statement improves comparability by eliminating that diversity.
This statement is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15, 2008
(that is, January 1, 2009, for entities with calendar year-ends).
Earlier adoption is prohibited. The effective date of this statement is
the same as that of the related Statement 141 (revised 2007). The
Company will adopt this Statement beginning March 1, 2009. It is not
F-13
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
i. Recently Issued Accounting Pronouncements (Continued)
believed that this will have an impact on the Company's financial
position, results of operations or cash flows.
In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations.'This Statement replaces FASB Statement No. 141, Business
Combinations, but retains the fundamental requirements in Statement
141. This Statement establishes principles and requirements for how the
acquirer: (a) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree; (b) recognizes and measures
the goodwill acquired in the business combination or a gain from a
bargain purchase; and (c) determines what information to disclose to
enable users of the financial statements to evaluate the nature and
financial effects of the business combination. This statement applies
prospectively to business combinations for which the acquisition date
is on or after the beginning of the first annual reporting period
beginning on or after December 15, 2008. An entity may not apply it
before that date. The effective date of this statement is the same as
that of the related FASB Statement No. 160, Noncontrolling Interests in
Consolidated Financial Statements. The Company will adopt this
statement beginning March 1, 2009. It is not believed that this will
have an impact on the Company's financial position, results of
operations or cash flows.
In February 2007, the FASB, issued SFAS No. 159, The Fair Value Option
for Financial Assets and Liabilities--Including an Amendment of FASB
Statement No. 115. This standard permits an entity to choose to measure
many financial instruments and certain other items at fair value. This
option is available to all entities. Most of the provisions in FAS 159
are elective; however, an amendment to FAS 115 Accounting for Certain
Investments in Debt and Equity Securities applies to all entities with
available for sale or trading securities. Some requirements apply
differently to entities that do not report net income. SFAS No. 159 is
effective as of the beginning of an entities first fiscal year that
begins after November 15, 2007. Early adoption is permitted as of the
beginning of the previous fiscal year provided that the entity makes
that choice in the first 120 days of that fiscal year and also elects
to apply the provisions of SFAS No. 157 Fair Value Measurements. The
Company adopted SFAS No. 159 beginning March 1, 2008. The adoption of
this pronouncement did not have an impact on the Company's financial
position, results of operations or cash flows.
In September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements This statement defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles
(GAAP), and expands disclosures about fair value measurements. This
statement applies under other accounting pronouncements that require or
F-14
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
i. Recently Issued Accounting Pronouncements (Continued)
permit fair value measurements, the Board having previously concluded
in those accounting pronouncements that fair value is the relevant
measurement attribute. Accordingly, this statement does not require any
new fair value measurements. However, for some entities, the
application of this statement will change current practice. This
statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those
fiscal years. Earlier application is encouraged, provided that the
reporting entity has not yet issued financial statements for that
fiscal year, including financial statements for an interim period
within that fiscal year. The Company adopted this statement March 1,
2008. The adoption of this pronouncement did not have an impact on the
Company's financial position, results of operations or cash flows.
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, 2008 and 2007 was $204,167 and $403,308, respectively.
k. Stock Options
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 to value
and record expenses relative to share based payments when granted and
vested.
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, 2008 and 2007, the Company's accounts
payable included $611,237 and $385,843, respectively, due to various
markets and quotation services.
m. Accounts Receivable and Bad Debts
The Company evaluates accounts receivable for potential bad debts utilizing the allowance method, based upon past experience and current market conditions, on a quarterly basis. At such time collection of the receivable is determined to be doubtful, or if the promised securities have fallen in value to the point where their liquidation would not satisfy the balance of the receivable, the Company allows for the account in full. At December 31, 2008 and 2007, the Company had an allowance for bad debts of $3,450 and $3,450, respectively.
F-15
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
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" because it is managements' intent to
sell them within the year. All of the Company’s available for sale securities are equity securities. 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, 2006 $ 284,458
Marketable securities received
for services in 2007 1,353,526
Realized losses (44,223)
Unrealized gains and losses (20,544)
Other-than temporary impairment (909,127)
Balance, December 31, 2007 $ 664,090
Marketable securities received
for services in 2008 1,201,911
Transfer of investments at cost 300,000
Realized losses (223,068)
Unrealized gains or losses 410,972
Other-than-temporary impairment (792,956)
Balance, December 31, 2008 $ 1,560,949
Marketable Securities-Available
for Sale $ 1,558,876
Marketable Securities-Available
for sale-related party 2,093
Balance, December 31, 2008 $ 1,560,949
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,
2008 and December 31, 2007.
F-16
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
o. Fair Value of Financial Instruments (Continued)
The Company also follows the provisions of Statement of Financial
Accounting Standards No. 157 with respect to its marketable securities.
The disclosures of required under its provisions are as follows:
Assets measured at fair value on a recurring basis:
December 31, 2008
Trading securities $1,560,969
==========
Quoted Prices in Active Markets
for identical assets $1,560,969
Significant Other Observable Inputs -
Significant Unobservable Inputs -
Total $1,560,969
==========
Assets measured at fair value on a non recurring basis:
Long lived assets held and used $ 45,776
==========
Quoted Prices in Active Markets
for identical assets $ -
Significant Other Observable Inputs 45,776
Significant Unobservable Inputs -
----------
Total $ 45,776
----------
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, 2008 or 2007. When cost investments become
marketable they are reclassified to Market Securities-Available for
Sale. Investments are as follows:
Balance, December 31, 2007 $ -
Restricted investments received
for services in 2007 300,000
Realized gains and losses -
Unrealized gains and losses -
-----------
Balance, December 31, 2007 $ 300,000
===========
F-17
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
p. Investments (Continued)
Balance, December 31, 2007 $ 300,000
Restricted investments received
for services in 2008 -
Realized gains and losses -
Investments reclassified as
Marketable Securities-Available
for Sale (300,000)
Unrealized gains and losses -
-----------
Balance, December 31, 2008 $ -
===========
q. Common Stock Issued for Products and Services
The Company will at times issue shares of its common stock to non-employees in exchange for various services and/or products. The Company determines the fair value of the common stock by noting the closing market quote on the date of issuance.
r. Loss Contingencies
The Company has been involved in various legal disputes in which judgment and/or outcome is uncertain. The Companyaccounts for loss contingencies relating to its litigation based upon the likelihood of a negative result, and if the amount of the result can be reasonably estimated.
s. Operating Segments
The Company aggregates its operations into one reportable business segment, pursuant to paragraph 17 of SFAS 131. The Company records and earns revenues from both subscriptions and advertising. Each class of revenue is produced in a similar manner and marketed to similar customers. Distribution methods are similar. Because of these factors, the Company has determined it to be unnecessary to segregate these two revenue streams as independent business segments.
F-18
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
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:
December 31,
2008 2007
Office equipment $ 44,179 $ 28,804
Computer equipment 197,138 193,934
Software 68,175 68,175
Less accumulated depreciation (263,716) (245,280)
---------- ----------
$ 45,776 $ 45,633
========== ==========
Depreciation expense for the years ended December 31, 2008 and 2007 was
$18,435 and $15,614, respectively. Expenditures for maintenance and
repairs are expensed when incurred and betterments are capitalized.
NOTE 3 - CAPITAL STOCK
Common Stock:
The Company has one class of common stock. Each share of common stock
is entitled to one vote in matters submitted to the Company's
shareholders. The common shares are not entitled to any dividends or
liquidation rights except as may be determined by the board of
directors.
Preferred Stock:
The Company has 2,000,000 outstanding shares of convertible Class "A"
F-19
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 3 - CAPITAL STOCK
Preferred Stock (Continued):
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, 2008 and 2007: dividend yield of zero
percent for all years; expected volatility of 76.05% and 55.50%;
risk-free interest rates of 4.25% and 5.03% and expected lives of 1.0
and 1.0, respectively.
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, 2008 and
changes during the years ended December 31, 2008 and 2007 is presented
below:
F-20
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 4 - OUTSTANDING COMMON STOCK OPTIONS AND STOCK PURCHASE WARRANTS(Continued)
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
========== ======== =========
Weighted Weighted
Options Average Average
and Exercise Grant Date
Warrants Price Fair Value
�� -------------- -------- ----------
Outstanding, December 31, 2007 51,570,347 $ 0.38 $ 0.38
Granted 9,245,000 0.21 0.21
Expired (5,046,497) 0.47 0.47
Exercised (558,650) 0.25 0.25
---------- -------- ---------
Outstanding, December 31, 2008 55,210,200 $ 0.32 $ 0.32
========== ======== =========
Exercisable, December 31, 2008 40,730,200 $ 0.33 $ 0.33
========== ======== =========
Outstanding Exercisable
------------------------- --------------------
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
Range of Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices at 12/31/08 Life Price at 12/31/08 Price
------------ ----------- ----------- -------- ----------- ---------
$ 0.22 6,000,000 15.56 $ 0.22 2,000,000 $ 0.22
0.35 20,000 2.85 0.35 20,000 0.20
0.35 4,000,000 6.92 0.35 4,000,000 0.35
0.35 4,605,000 0.50 0.50 4,605,000 0.50
0.25 810,000 0.25 0.25 810,000 0.25
0.50 1,350,000 0.75 0.50 1,350,000 0.50
0.25 1,340,200 0.85 0.25 1,340,200 0.25
0.45 15,000,000 4.00 0.45 15,000,000 0.45
0.25 4,500,000 6.65 0.25 4,500,000 0.25
0.32 4,500,000 6.65 0.32 3,375,000 0.32
0.21 6,000,000 3.56 0.21 3,000,000 0.21
$ 0.15 7,085,000 3.71 0.15 730,000 $ 0.15
---------- ----------
55,210,200 40,730,200
========== ==========
F-21
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 5 - RELATED PARTY TRANSACTIONS
Compensation
------------
During the year ended December 31, 2008, 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 2008.
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.
NOTE 5 - RELATED PARTY TRANSACTIONS (CONTINUED)
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.
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 $10,435 and
$89,039 as of December 31, 2008 and 2007, respectively.
Related party payables consisted of the following:
December 31,
2008 2007
Officer bonuses $ 78,000 $ 78,000
Officer accrued wages 578,330 253,767
Cash advances 2,089,932 1,858,647
------------ ------------
$ 2,746,262 $ 2,190,414
============ ============
Komodo, Inc.
------------
The Company is holding marketable securities in a related company
valued at $2,093 and $5,232, respectively. In 2007 and 2006, the
Company was paid shares of Komodo, Inc. for its advertising services.
F-22
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
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,
2008 and 2007 was $111,598 and $163,054, 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.
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 - INCOME TAXES
The Financial Accounting Standards Board (FASB) has issued Financial
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes-An
Interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No.
109, Accounting for Income Taxes. FIN 48 requires a company to
determine whether it is more likely than not that a tax position will
be sustained upon examination based upon the technical merits of the
position. If the more-likely-than-not threshold is met, a company must
measure the tax position to determine the amount to recognize in the
financial statements. As a result of the implementation of FIN 48, the
Company performed a review of its material tax positions. At the
adoption date of January 1, 2007, the Company had no unrecognized tax
benefit which would affect the effective tax rate.
F-23
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 7 - INCOME TAXES(Continued)
At December 31, 2008, the Company had net operating loss carryforwards
of approximately $10,188,907 that may be offset against future taxable
income from the year 2008 through 2028. No tax benefit has been
reported in the December 31, 2008 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, 2008 and 2007:
2008 (Restated) 2007 (Restated)
--------------- ---------------
Deferred tax assets:
NOL carryover $ 4,505,428 $ 5,122,832
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 (4,626,469) (5,243,873)
-------------- --------------
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, 2008 and 2007 due to the following:
2008 (Restated) 2007 (Restated)
-------------- -------------
Book Income (Loss) $ 15,737 $ (2,174,789)
Stock for services/options 300,344 564,354
Impairment of investments 301,323 345,468
Valuation allowance (617,404) 1,264,967
------------ -------------
$ - $ -
============ =============
NOTE 8 - 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
F-24
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 8 - BASIC (LOSS) PER SHARE(Continued)
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. Common stock equivalents
include convertible preferred stock and stock purchase options and
warrants at exercise prices equal to or below the market price of the
common stock. Incremental shares have been considered in the
computation of diluted earnings per share. Common stock equivalents of
33,106,250 are excluded from the computation of diluted earnings per
share in 2007 because they are anti-dilutive.
December 31,
2008 (Restated) 2007 (Restated)
---------------- ---------------
Income (Loss) (numerator) $ 41,413 $ (5,723,130)
--------------- --------------
Basic Shares (denominator) 51,175,987 48,589,773
--------------- --------------
Diluted Shares
Convertible preferred stock 30,000,000 -
Options and warrants - -
--------------- --------------
Total Diluted Shares 81,175,987 48,589,773
--------------- --------------
Basic per share amount $ 0.00 $ (0.12)
--------------- --------------
Fully diluted per share amount $ 0.00 $ (0.12)
--------------- --------------
NOTE 9 - 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 negative
cash flow 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-25
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 2008 and 2007
NOTE 9 - 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 10- GAIN ON SETTLEMENT OF DEBT
During the year ended December 31, 2008 the Company incurred liabilitieswith an unrelated third-party pertaining to its advertising operations. Through various legal negotiations, these liabilities were settled and satisfied for an amount less than the amount of the originally-recorded liability. The result was recorded as a gain on settlement of debt in the amount of $307,974.
NOTE 11 - RESTATED FINANCIAL STATEMENTS
The Company's financial statements for the year ended December 31, 2008 have been restated to reflect an other-than-temporary impairment of available-for-sale investment securities. This restatement resulted in the Company recognizing an additional expense in the amount of $792,956 for the period.
The following summarized financial statements compare of the Company's original and restated financial statements.
Balance Sheet Original Restated
Cash $ 55,650 $ 55,650
Accounts receivable - trade, net 1,172,064 1,172,064
Prepaid expenses 1,000 1,000
Marketable securities-available for sale 1,558,876 1,558,876
Marketable securities-available for
sale-related party 2,093 2,093
----------- -----------
Total Current Assets 2,789,683 2,789,683
----------- -----------
PROPERTY AND EQUIPMENT, NET 45,776 45,776
----------- -----------
OTHER ASSETS
Investments, at cost - -
----------- -----------
Total Other Assets - -
----------- -----------
TOTAL ASSETS $ 2,835,459 $ 2,835,459
=========== ===========
F-26
NOTE 11 - RESTATED FINANCIAL STATEMENTS (CONTINUED)
Original Restated
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 2,161,854 $ 2,161,854
Related party payables 2,746,262 2,746,262
Deferred revenue 737,010 737,010
----------- -----------
Total Current Liabilities 5,645,126 5,645,126
----------- -----------
Total Liabilities 5,645,126 5,645,126
----------- -----------
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; 54,076,023 shares
issued and outstanding 54,076 54,076
Additional paid-in capital 33,681,184 33,921,184
Stock subscription payable 45,808 45,080
Accumulated other comprehensive income (1,742,626) (40,543)
Accumulated deficit (34,851,381) (36,793,464)
----------- -----------
Total Stockholders' (Deficit) (2,809,667) (2,809,667)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'(DEFICIT) $ 2,835,459 $ 2,835,459
=========== ===========
STATEMENT OF OPERATIONS
Original Restated
REVENUE
Subscription revenue $ 3,027,619 $ 3,027,619
Advertising revenue 2,851,003 2,851,003
Other revenue 196,409 196,409
----------- -----------
Total Revenue 6,075,031 6,075,031
COST OF SALES
Financial content 1,854,268 1,854,268
Other cost of sales 2,839 2,839
----------- -----------
Total Cost of Sales 1,857,107 1,857,107
----------- -----------
Gross profit 4,217,924 4,217,924
EXPENSES
Related party compensation 480,000 480,000
Professional fees 1,127,880 1,127,880
Research and development 468,884 468,884
Marketing expense 678,551 678,551
General and administrative expenses 338,749 338,749
----------- -----------
Total Expenses 3,094,064 3,094,064
----------- -----------
INCOME FROM OPERATIONS 1,123,860 1,123,860
F-27
OTHER INCOME (EXPENSE)
Interest expense (374,397) (374,397)
Other-than temporary impairment of
available-for-sale equity securities - (792,956)
Gain on settlement of debt 307,974 307,974
Gain (loss) on marketable securities (223,068) (223,068)
----------- -----------
Total Other Income (Expense) (289,491) (1,082,447)
----------- -----------
NET INCOME 834,369 41,413
----------- -----------
UNREALIZED INCOME/(LOSS) ON AVAILABLE
FOR SALE SECURITIES (95,095) 697,861
----------- -----------
TOTAL COMPREHENSIVE LOSS $ 739,274 $ 739,274
=========== ===========
BASIC AND DILUTED NET LOSS PER SHARE
Net income per share $ 0.02 $ 0.00
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 51,585,987 51,585,987
=========== ===========
FULLY DILUTED WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 81,585,987 81,585,987
=========== ===========
F-28
ITEM 15. EXHIBITS
The following financial statements for AlphaTrade.com. are filed as a part of
this report:
For the Years Ended December 31, 2008 and 2007 Page
---------------------------------------------- ----
Report of Independent Registered Certified Public Accounting Firm F-2
Balance Sheets as of December 31, 2008 and December 31, 2007 F-3
Statements of Operations for the years ended December 31, 2008 and
December 31, 2007 F-4
Statement of Changes in Stockholders' Equity (Deficit) for the
years ended December 31, 2008 and December 31, 2007 F-5
Statements of Cash Flows for the years ended December 31, 2008 and
December 31, 2007 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.
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)
34
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.
35
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/Dire ctor
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
36
