Alternet Systems (ALYI) 8-K/A Entry into a Material Definitive Agreement

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K /A

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act

December 31, 2007
Date of Report

ALTERNET SYSTEMS, INC.
(Exact name of Registrant as Specified in its Charter)

Nevada	000-31909	88-0473897
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification No.)

#610-815 West Hastings Street, Vancouver, BC, V6C 1B4
(Address of Principal Executive Offices)

604-608-2540
(Registrant's Telephone Number)

Check the appropriate box below if the Form-K filing is intended to simultaneously satisfy the filing obligations of the
registrant under any of the following provisions (seeGeneral Instructions A.2 below):

[   ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230. 425)

[   ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240. 14a-12)

[   ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240. 14d-2(b))

[   ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c))

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ITEM 1.01 Entry into a Material Definitive Agreement

ITEM 3.02 Unregistered Sale of Equity Securities

          On December 31, 2007, Alternet Systems, Inc. (the “Company”) Fabio Alvino, Eduardo & Monica Bello, Henryk Dabrowski, Manfred Koroschetz, New Market Technology, Inc., John Puente, Red Hawke, Inc., Hector Rodriguez (each, a “Transferor” and collectively, the “Transferors”) and TekVoice Communications, Inc. (“TekVoice”)entered into and closed a Stock Acquisition Agreement (the “Agreement”) pursuant to which the Company acquired all of the issued and outstanding shares of capital stock of TekVoice from the Transferors in consideration for an aggregate amount of four million (4,000,000) shares of common stock of the Company (the “Acquisition Shares”). In addition to the Acquisition Shares, the Transferors, in the aggregate, shall be entitled to receive an up to an additional two million (2,000,000) shares of common stock of the Company if TekVoice’s sales for the fiscal year ended December 31, 2008 exceed sales for fiscal year ended December 31, 2007 by twenty percent (20%) (the “Additional Consideration”). In the event the Company is merged with another entity prior to December 31, 2008, the Additional Consideration shall be issued to the Transferors on the day immediately prior to the day that such merger takes place. The Transferors shall be entitled to appoint three (3) members to the Company’s board of directors, effective at the closing,provided,however, in no event shall Transferors be required to appoint a member to the Company’s Board of Directors.

Item 9.01 Financial Statements and Exhibits.

(a) Financial statements of business acquired.

AUDITORS OPINIONS

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENT OF OPERATIONS

CONSOLIDATED STATEMENT OF CHANGES OF STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENT OF CASH FLOWS

Pollard-Kelley Auditing Services,Inc
Auditing Services	4500 Rockside Road, Suite 450, Independence, OH 44131 330-864-2265

Report of Independent Registered Public Accounting Firm

TekVoice Communications, Inc.
Miami, FL

We have audited the accompanying balance sheets of TekVoice Communications, Inc. as of December 31, 2006 and 2005, and the related statements of income, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2006. 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 conduct our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 5 the Company has not generated significant profits to date. This factor among others raises substantial doubt the Company will be able to continue as a going concern. The Company’s continuation as a going concern depends upon its ability to generate sufficient cash flow to conduct its operations and its ability to obtain additional sources of capital and financing. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management’s plans concerning this matter are also discussed in Note 5.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company at December 31, 2006 and 2005, and the results of its operations and it cash flows for each of the two years in the period ended December 31, 2006, in conformity with U.S. generally accepted accounting standards.

Pollard-Kelley Auditing Services, Inc.

/S/ Pollard-Kelley Auditing Services, Inc.

Independence, Ohio
October 8, 2007

TekVoice Communications, Inc.

BALANCE SHEET

December 31, 2006 and December 31, 2005

		2006			2005
ASSETS
Current Assets
Cash and cash equivalents	$	43,761		$	43,468
Accounts receivable - net of allowance for
doubtful accounts of $34,500 and 18,000 respectively		691,534			896,729
Total Current Assets		735,295			940,197
Fixed Assets
Equipment		309,990			309,990
Furniture and fixtures		8,609			8,609
Software and licenses		70,375			70,375
		388,974			388,974
Less: Accumulated depreciation		(346,109	)		(239,614	)
		42,865			149,360
Other Assets
Deposits		4,889			9,047
Goodwill		-			741,000
		4,889			750,047
Total Assets	$	783,049		$	1,839,604
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable		135,000			135,000
Accounts payable		182,736			984,400
Related party payables		27,215			381,019
Accrued taxes		15,718			2,799
Seller notes payable		-			147,000
Due to shareholders		80,677			106,369
Total Current Liabilities		441,346			1,756,587
Stockholders' Equity
Common stock		9,051			7,248
Additional contributed capital		3,818,697			3,008,500
Retained deficit		(3,486,045	)		(2,932,731	)
		341,703			83,017
Total Liabilities and Stockholders' Equity	$	783,049		$	1,839,604

See accompanying notes to financial statements.

TekVoice Communications, Inc.

STATEMENT OF OPERATIONS

For the Years Ended December 31, 2006 and 2005

		Year to			Year to
		Date			Date
		2006			2005
Revenues	$	3,344,903		$	1,461,335
Cost of Sales
Direct cost of sales		2,537,097			433,420
Gross Profit		807,806			1,027,915
Expenses
Office		30,408			81,489
Bad debts		55,550			41,635
Consulting fees		328,325			1,302,463
Depreciation		106,495			106,495
Interest		27,127			63,346
Marketing		8,356			201,852
Professional fees		1,434			27,761
Rent		10,000			21,050
Salaries		66,853			68,207
Travel		1,684			5,184
		636,232			1,919,482
		171,574			(891,567	)
Other Income and Expenses
Customer fees		4,744			11,514
Other income		11,368			42,211
Goodwill impairment		741,000			-
		(724,888	)		53,725
Income Before Taxes		(553,314	)		(837,842	)
Tax Provision
Tax provisions		-			-
Net Loss	$	(553,314	)	$	(837,842	)
Loss per share	$	(0.07	)	$	(0.13	)
Average shares outstanding		8,149,490			6,287,649

See accompanying notes to financial statements.

TekVoice Communications, Inc.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

For the Years Ending December 31, 2006 and 2005

					Additional
	Common Stock				Contributed		Retained
	Shares		Amount		Capital		Deficit			Total
Balance January 1, 2005	5,326,990	$	5,327	$	2,082,621	$	(2,094,889	)	$	(6,941	)
Share sales	357,244		357		172,243		-			172,600
Shares for services	1,138,113		1,138		548,262					549,400
Shares issued in connection	-		-		-		-			-
with acquisition	425,961		426		205,374					205,800
Net Loss	-		-		-		(837,842	)		(837,842	)
Balance December 31, 2005	7,248,308		7,248		3,008,500		(2,932,731	)		83,017
Share sales	594,555		595		286,675		-			287,270
Shares for services	781,848		782		376,948		-			377,730
Shares issued in connection										-
with acquisition	425,961		426		146,574		-			147,000
Net Income	-		-		-		(553,314	)		(553,314	)
Balance December 31, 2006	9,050,672	$	9,051	$	3,818,697	$	(3,486,045	)	$	341,703

See accompanying notes to financial statements.

TekVoice Communications, Inc.

STATEMENT OF CASH FLOWS

For the Years Ended December 31, 2006 and 2005

		Year to			Year to
		Date			Date
		2006			2005
Cash Flows from Operating Activities
Net Loss	$	(553,314	)	$	(837,842	)
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation and amortization		106,495			106,495
Stock for services		377,730			549,400
Write-off of Goodwill impairment		741,000			-
Decrease/(Increase) in Accounts receivable		205,195			(911,319	)
(Decrease)/Increase in Accounts payable		(801,664	)		637,233
(Decrease)/Increase in Related party payables		(353,804	)		239,336
Increase in Accrued taxes		12,919			(181	)
Increase in Accrued interest		-			-
Net Cash (Used) by Operating Activities		(265,443	)		(216,878	)
Cash Flows from Investing Activities
Reduction in Deposits		4,158			7,071
Net Cash (Used) by Investing Activities		4,158			7,071
Cash Flows from Financing Activities
(Decrease)/Increase in net Shareholder loans		(25,692	)		24,994
Sale of Common stock		287,270			172,600
Cash Flows Provided by Financing Activities		261,578			197,594
Net Increase in Cash and Cash Equivalents		293			(12,213	)
Cash and Cash Equivalents - Beginning		43,468			55,681
Cash and Cash Equivalents - Ending	$	43,761		$	43,468

See accompanying notes to financial statements.

TekVoice Communications, Inc.

NOTES TO FINANCIAL STATEMENTS

December 31, 2006 and 2005

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

History:

The Company is a Florida corporation incorporated on May 17, 2002. The Company is a Voice over IP provider primarily in Latin America.

On June 12, 2003 the Company acquired, in an asset purchase agreement, selected assets and assumed selected liabilities of American Telecom Services, Inc. (ATS, Inc) for shares of the Company’s common stock. The purchase resulted in the recognition of $735,000 of goodwill.

In June 2003, the Company acquired, in an asset purchase agreement, selected assets of Catelyst Communications, Inc. for cash. The purchase resulted in the recognition of $6,000 in goodwill.

Revenue Recognition:

Revenues are recognized when title transfers or the services are rendered. Telecommunications services are billed at the end of the month the services are provided, unless the client is prepays the services.

Cash and Cash Equivalents:

For the purposes of the Statement of Cash Flows, the Company considers all short-term debt securities to be cash equivalents.

Cash paid during the year for:

	2006	2005
Interest	$27,127	$63,346
Income taxes	$0	$0

Income Taxes:

The Company accounts for income taxes under a method, which requires a company to recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in a company’s financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements carrying amounts and tax basis of assets and liabilities using enacted tax rates. The Company presently prepares its tax return on the

TekVoice Communications, Inc.

NOTES TO FINANCIAL STATEMENTS

December 31, 2006 and 2005

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

cash basis and its financial statements on the accrual basis. No deferred tax assets or liabilities have been recognized at this time, since the Company has shown losses for both tax and financial reporting. The Company’s net operating loss carry forward at December 31, 2006 is approximately $2,900,000.

Use of Estimates:

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

Goodwill:

The net assets of companies acquired in purchase transactions are recorded at fair value at the date of acquisition, as such, the historical cost basis of individual assets and liabilities are adjusted to reflect their fair value. Goodwill is not amortized, but is reviewed for potential impairment on an annual basis at the reporting unit level. The impairment test is performed in two phases. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of the reporting unit with its carrying amount, including goodwill of the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired; however, if the carrying amount of the reporting unit exceeds its fair value, an additional procedure must be performed. That additional procedure compares the implied fair value of the reporting units’ goodwill with the carrying amount of that goodwill. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value. In 2006 management reviewed the Company’s Goodwill for impairment. Management decided that since the Company has suffered losses since inception for both book and tax purposes the Company’s Goodwill was impaired. Accordingly the Goodwill was written off at December 31, 2006.

NOTE 2 - NOTES PAYABLE

The Company has two line of credit arrangements outstanding at December 31, 2006 and 2005. One note is for $85,000 and the second note for $50,000. The terms of the notes are the same. Interest is at 2% above the banks prime rate and is payable monthly. The notes are due on demand and are renewed annually. The $85,000 note is secured by two certificates of deposit, one held by a related company, Optimized Holdings, LLC., a company owned by Mr. Henryk Dabrowski and Mr. Manfred Koroschetz, for $42,500 and one held by Henryk Dabrowski, a shareholder for $42,500. The $50,000 note is secured by a certificate of deposit held by Manfred Koroschetz, a shareholder.

TekVoice Communications, Inc.

NOTES TO FINANCIAL STATEMENTS

December 31, 2006 and 2005

NOTE 3 – STOCKHOLDERS’ EQUITY

Common Stock

At December 31, 2006 the Company had 30,000,000 shares authorized common stock with a par value of $0.001 per share. There were 9,050,672 and 7,248,308 shares outstanding at December 31, 2006 and 2005 respectively.

NOTE 4 – RELATED PARTIES

The Company from time to time sells products and services to and purchases products and services form several related Companies. Total sales to these companies for 2006 and 2005 were $000 and $000 respectively. In addition purchases from these related Companies for 2006 and 2005 were $000 and $000 respectively. In addition total receivable from the related Companies at December 31, 2006 and 2006 were 4000 and $000 respectively. Total payable to these related Companies at December 31, 2006 and 2005 were $182,736 and $984,400 respectively.

The Company also owes two officers and shareholders $80,677 and $106,369 at December 31, 2006 and 2005 respectively. These monies represent advances to the Company made from time to time by these officers. The arrangement is non-interest bearing, and unsecured.

NOTE 5 – GOING CONCERN

The Company has only generated profits in 2006. This factor among others raises substantial doubt the Company will be able to continue as a going concern. The Company’s continuation as a going concern depends upon its ability to generate sufficient cash flow to conduct its operations and its ability to obtain additional sources of capital and financing. The accompanying consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.

Managements plans to relieve these problems by continuing to raise working capital either through stock sales or loans.

(b) Pro forma financial information.

ALTERNET SYSTEMS INC. AND SUBSIDIARIES

Pro Forma Consolidated Balance Sheet

December 31, 2007

		Alternet			TekVoice
		Systems			Communications			Adjustments		Consolidated
		Inc.			Inc.
ASSETS
Current Assets
Cash	$	41		$	18,563		$	-	$	18,604
Accounts receivable		-			430,497			-		430,497
Prepaid expenses		1,926			10,181			-		12,107
Total Current Assets		1,967			459,241			-		461,208
Fixed Assets
Computer and Equipment		18,735			309,990			-		328,725
Furniture and fixtures		-			8,609			-		8,609
Software and licenses		4,684			67,875			-		72,559
		23,419			386,474			-		409,893
Less: Accumulated depreciation		(15,868	)		(386,474	)		-		(402,342	)
		7,551			-			-		7,551
TOTAL ASSETS	$	9,518		$	459,241		$	-	$	468,759

ALTERNET SYSTEMS INC. AND SUBSIDIARIES

Pro Forma Consolidated Balance Sheet

December 31, 2007

		Alternet			TekVoice
		Systems			Communications			Adjustments			Combined
		Inc.			Inc.
LIABILITIES
Current Liabilities
Note payable	$	-		$	147,000		$	-		$	147,000
Accounts payable & accrued liabilities		207,627			188,797			-			396,424
Sales taxes payable		-			39,261			-			39,261
Due to related parties		3,838			32,321			-			36,159
Total Current Liabilities		211,465			407,379			-			618,844
TOTAL LIABILITIES		211,465			407,379			-			618,844
STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
Capital Stock
Common stock, $0.00001 par value, 100,000,000 shares		63			9,501			(9,461	)		103
authorized 10,278,146 (2006 – 4,755,643) issued and outstanding
Additional Paid-In Capital		5,136,702			3,818,696			(6,929,370	)		2,026,028
Private Placement Subscriptions		231,487			-			-			231,487
Accumulated Other Comprehensive Income (Loss)		256			-			1,398,053			1,398,309
Deferred Compensation		(29,677	)		-			-			(29,677	)
Deficit		(5,540,778	)		(3,776,335	)		5,540,778			(3,776,335	)
TOTAL STOCKHOLDERS' EQUITY		(201,947	)		51,862			-			(150,085	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,518		$	459,241		$	-		$	468,759

ALTERNET SYSTEMS INC. AND SUBSIDIARIES

Pro Forma Statement of Loss

For the Year ended December 31, 2007

		Alternet			TekVoice
		Systems			Communications			Adjustments		Combined
		Inc.			Inc.
REVENUE
Sales	$	-		$	3,161,118		$	-	$	3,161,118
Cost of Sales
Direct cost of sales		-			2,102,176			-		2,102,176
GROSS PROFIT		-			1,058,942			-		1,058,942
OPERATING EXPENSES
Bad Debt		-			51,683			-		51,683
Commissions		-			535,570			-		535,570
Depreciation and Amortization		3,074			42,250			-		45,324
Interest		-			29,095			-		29,095
Management and Consulting		283,233			746,996			-		1,030,229
Marketing		717,895			7,419			-		725,314
Office and General		35,296			20,264			-		55,560
Professional fees		77,674			17,525			-		95,199
Rent		40,089			21,600			-		61,689
Telephone and Utilities		5,217			12,114			-		17,331
Travel		4,707			14,007			-		18,714
TOTAL OPERATING EXPENSES		1,167,185			1,498,523			-		2,665,708
NET LOSS BEFORE OTHER ITEMS		(1,167,185	)		(439,581	)		-		(1,606,766	)
Customer fees		-			4,294			-		4,294
Other income		-			144,997			-		144,997
NET LOSS FOR THE YEAR	$	(1,167,185	)	$	(290,290	)	$	-	$	(1,457,475	)
BASIC NET LOSS PER SHARE									$	(0.25	)
WEIGHTED COMMON SHARES OUTSTANDING										5,738,328

Alternet Systems Inc. and Subsidiaries
Pro Forma Footnotes

These proforma consolidated financial statements are based on the unaudited financial statements of Alternet Systems Inc. (“Alternet”) for the year ended December 31, 2007 and the unaudited financial statements of Tekvoice Communications Inc. (“Tekvoice”) for the year ended December 31, 2007, as prepared by management. These proforma consolidated financial statements reflect the reverse takeover as if it had occurred effective December 31, 2007 for the purposes of the balance sheet and as of January 1, 2007 for the purposes of the statement of loss.

The pro forma financial information is not necessarily indicative of what the Registrant’s consolidated results of operations actually would have been had the acquisition been completed as of January 1, 2007. Additionally, the unaudited pro forma financial information does not attempt to project the future results of operations of the Registrant combined with the Tekvoice business. In the opinion of management, all significant adjustments necessary to reflect the effects of the acquisition have been made.

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(c) Exhibits

Exhibit Number	Description
10.1	Stock Purchase Agreement, dated December 31, 2007, by and between Alternet Systems, Inc , Reliablecom Inc., Fabio Alvino, Eduardo & Monica Bello, Henryk Dabrowski, Manfred Koroschetz, New Market Technology, Inc., John Puente, Red Hawke, Inc., Hector Rodriguez and TekVoice Communications, Inc.

SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

	ALTERNET SYSTEMS, INC.
Dated:           March 11, 2008	By:	/s/ Patrick Fitzsimmons
		Patrick Fitzsimmons
		Director/Secretary