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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934
For Quarterly period Ended: March 31, 2010; or
----- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934
For the transition period _________ to __________
Commission File Number: 0-25631
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ALPHATRADE.COM
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 98-0211652
------------------------------ ------------------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
SUITE 116 - 930 West 1st Street, North Vancouver, B.C. V7P3N4 Canada
-------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(604)986-9866
-------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that a registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
--- ---
State the number of shares outstanding of the issuer's common equity:
$0.001 par value, as of April 30, 2010, is 53,756,023.
Transitional Small Business Disclosure Format. Yes No X
--- ---
1
Report on Form 10-Q
For the Quarter Ended March 31, 2010
INDEX
Page
----
Part I. Financial Information
Item 1. Financial Statements.................................. 3
Balance Sheets.......................................3-4
Statements of Operations ............................5-6
Statement of Stockholders' Equity (Deficit)........... 7
Statements of Cash Flows.............................. 8
Notes to the Financial Statements ..................9-12
Item 2. Management's Discussion and Analysis
or Plan of Operation ............................13-14
Item 3. Controls and Procedures ............................. 15
Part II. Other Information
Item 1. Legal Proceedings ................................... 15
Item 2. Changes in Securities ............................... 15
Item 3. Defaults Upon Senior Securities ..................... 15
Item 4. Submission of Matters to a Vote of Security Holders . 15
Item 5. Other Information ................................... 15
Item 6. Exhibits and Reports on Form 8-K .................... 16
Signatures........................................... 17
Certifications.....................................18-23
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ALPHATRADE.COM
Balance Sheets
ASSETS
------
March 31, December 31,
2010 2009
------------- -------------
(Unaudited) (Audited)
CURRENT ASSETS
Cash $ 4,815 $ 63,897
Accounts receivable, net - -
Marketable securities-available for sale 396,077 552,714
Marketable securities-available for sale
related party 1,360 1,256
Prepaid expenses 20,669 1,885
------------ ------------
Total Current Assets 422,921 619,752
------------ ------------
PROPERTY AND EQUIPMENT, net 30,038 28,913
------------ ------------
TOTAL ASSETS $ 452,959 $ 648,665
============ ============
The accompanying notes are an integral part of these financial statements.
3
ALPHATARADE.COM
Balance Sheets
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
---------------------------------------
March 31, December 31,
2010 2009
------------- -------------
(Unaudited) (Audited)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,126,498 $ 1,162,451
Bank overdraft 40,699 -
Related party payables 5,727,865 5,756,567
Deferred revenues 362,799 524,383
------------ ------------
Total Current Liabilities 7,257,861 7,443,401
------------ ------------
TOTAL LIABILITIES 7,257,861 7,443,401
------------ ------------
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, 300,000,000
shares authorized: 53,756,023 and 53,756,023
shares issued and outstanding, respectively 53,756 53,756
Stock subscription payable 45,080 45,080
Additional paid-in capital 34,606,348 34,606,348
Accumulated other comprehensive income (231,956) (159,098)
Accumulated deficit (41,282,130) (41,344,822)
------------ ------------
Total Stockholders' (Deficit) (6,804,902) (6,794,736)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 452,959 $ 648,665
============ ============
The accompanying notes are an integral part of these financial statements.
4
ALPHATRADE.COM
Statements of Operations and Other Comprehensive Income (Loss)
(Unaudited)
For the Three Months Ended
March 31,
-----------------------------
2010 2009
--------------- -------------
REVENUES
Subscription revenue $ 540,898 $ 652,858
Advertising revenue 263,001 1,045,846
Other revenue 88,496 52,442
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Total Revenues 892,395 1,751,146
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COST OF SALES
Financial content 450,535 401,863
Other cost of sales - 202
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Total Cost of Sales 450,535 402,065
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GROSS PROFIT 441,860 1,349,081
-------------- ------------
OPERATING EXPENSES
Management expense - 120,000
Bad debt expense 104 1,030,477
Professional fees 87,748 90,339
Research and development 86,634 65,049
Marketing expense 48,233 50,958
General and administrative 118,661 127,937
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Total Operating Expenses 341,380 1,484,760
-------------- ------------
INCOME (LOSS) FROM OPERATIONS 100,480 (135,679)
-------------- ------------
OTHER INCOME (EXPENSE)
Realized gains (losses) on sale of
marketable securities (25,674) (70,525)
Interest expense (12,114) (103,975)
-------------- ------------
Total Other Income (Expense) (37,788) (174,500)
-------------- ------------
NET INCOME (LOSS) BEFORE INCOME TAXES 62,692 (310,179)
INCOME TAX EXPENSE - -
-------------- ------------
NET INCOME (LOSS) $ 62,692 $ (310,179)
============== ============
The accompanying notes are an integral part of these financial statements.
5
ALPHATRADE.COM
Statements of Operations and Other Comprehensive Income (Loss)
(Unaudited)
For the Three Months Ended
March 31,
-----------------------------
2010 2009
--------------- -------------
NET INCOME (LOSS) $ 62,692 $ (310,179)
============== =============
OTHER COMPREHENSIVE INCOME (LOSS) $ (72,858) $ (1,197,972)
-------------- -------------
TOTAL COMPREHENSIVE INCOME (LOSS) $ (10,166) $ (1,508,151)
============== =============
BASIC EARNINGS (LOSS) PER SHARE $ 0.00 $ (0.01)
============== =============
BASIC WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 53,756,023 54,200,467
============== =============
The accompanying notes are an integral part of these financial statements.
6
ALPHATRADE.COM
Statements of Stockholders' (Deficit)
(Unaudited)
Preferred Stock Common Stock Additional Stock Other Total
---------------- ------------------- Paid-In Subscription Comprehensive Accumulated Stockholder's
Shares Amount Shares Amount Capital Receivable Income Deficit Equity (Deficit)
--------- ------ ---------- -------- ----------- ---------- ------------- ------------- ----------------
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)
Common
stock
issued
for services
at $0.02 per
share - - 400,000 400 7,600 - - - 8,000
Common stock
canceled - - (720,000) (720) 720 - - - -
Contributed
interest - - - - 676,844 - - - 676,844
Net loss for
the nine months
ended December
31, 2009 - - - - - - (118,555) (4,551,358) (4,669,913)
--------- ------ ---------- ------- ----------- --------- ------------ ------------ ---------------
Balance,
December
31, 2009 4,000,000 4,000 53,756,023 53,756 34,606,348 45,080 (159,098) (41,344,822) (6,794,736)
Net income
for the
three months
ended March
31, 2010 - - - - - (72,858) 62,692 (10,166)
--------- ------ ---------- ------- ----------- --------- ------------ ------------ ---------------
Balance,
March 31,
2010 4,000,000 $4,000 53,756,023 $53,756 $34,606,348 $ 45,080 $ (231,956) $(41,282,130) $ (6,804,902)
========= ====== ========== ======= =========== ========= ============ ============ ===============
The accompanying notes are an integral part of these financial statements.
7
ALPHATRADE.COM
Statements of Cash Flows
(Unaudited)
For the Three Months Ended
March 31,
----------------------------
2010 2009
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 62,692 $ (310,179)
Adjustments to reconcile net income (loss) to
net cash used by operating activities:
Depreciation expense # 3,665 # 4,792
Loss on sale of investments 25,675 153,422
Increase of investments from non-cash receipt
of advertising revenues (3,000) (620,657)
Common stock issued for services - 8,000
Changes in operating assets and liabilities:
Changes in accounts receivable # - # 308,551
Changes in prepaid expenses (18,784) 1,000
Changes in deferred revenues (161,584) 274,920
Changes in related party payables (28,702) 130,061
Changes in accounts payable and accrued expenses (35,953) (23,470)
------------ ------------
Net Cash Used in Operating Activities (155,991) (73,560)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of securities 61,000 (11,494)
Purchase of fixed assets (4,790) -
------------ ------------
Net Cash Provided by Investing Activities 56,210 (11,494)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank overdraft 40,699 # 31,488
------------ ------------
Net Cash Provided by Financing Activities 40,699 31,488
------------ ------------
NET DECREASE IN CASH (59,082) (53,566)
CASH AT BEGINNING OF PERIOD 63,897 55,650
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CASH AT END OF PERIOD $ 4,815 $ 2,084
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ - $ 72,491
Income Taxes $ - $ -
NON CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for services $ - $ 8,000
Value of stock options and warrants vested $ - $ -
The accompanying notes are an integral part of these financial statements.
8
ALPHATRADE.COM
Notes to Consolidated Financial Statements
March 31, 2010 and December 31, 2009
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations, and cash flows at March 31, 2010 and March 31, 2009, and
for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted. It is suggested
that these condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's December 31,
2009 audited financial statements. The results of operations for the periods
ended March 31, 2010 and 2009 are not necessarily indicative of the operating
results for the full year.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles in the United States of America applicable to a going
concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has not yet
established an ongoing source of revenues sufficient to cover its operating
costs and allow it to continue as a going concern. The ability of the Company to
continue as a going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable. If the Company is
unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other
things, additional capital resources. Management's plan is to obtain such
resources for the Company by obtaining capital from management and significant
shareholders sufficient to meet its minimal operating expenses and seeking
equity and/or debt financing. However management cannot provide any assurances
that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. 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 3 - RELATED PARTY PAYABLES
Related party payables consisted of the following:
March 31, December 31,
2010 2009
Officer bonuses $ 78,000 $ 78,000
Officer accrued wages 578,925 581,119
Cash advances 1,870,940 1,897,448
Officer death benefit liability 3,200,000 3,200,000
----------- ---------------
$ 5,727,865 $ 5,756,567
=========== ===============
9
ALPHATRADE.COM
Notes to Consolidated Financial Statements
March 31, 2010 and December 31, 2009
NOTE 4 - OUTSTANDING COMMON STOCK OPTIONS AND STOCK PURCHASE WARRANTS
In according with Accounting Standards Codification ("ASC") Topic 718 (FAS123R),
the Company estimates the fair value of each stock award at the grant date by
using the Black-Scholes option pricing model. There were no grants during the
quarter ended March 31, 2010.
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 March 31, 2010 and changes during the periods ended December 31, 2009 and
March 31, 2010 is presented below:
Weighted Weighted
Options Average Average
and Exercise Grant Date
Warrants Price Fair Value
------------ --------- ----------
Outstanding, December 31, 2009 47,105,000 $ 0.30 $ 0.30
Exercisable, December 31, 2009 32,625,000 $ 0.30 $ 0.30
------------ --------- ----------
Granted - - -
Expired - - -
Exercised - - -
------------ --------- ----------
Outstanding, March 31, 2010 47,105,000 $ 0.30 $ 0.30
============ ========= ==========
Exercisable, March 31, 2010 32,625,000 $ 0.30 $ 0.30
============ ========= ==========
NOTE 5 - SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
- ----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ
from those estimates.
10
ALPHATRADE.COM
Notes to Consolidated Financial Statements
March 31, 2010 and December 31, 2009
NOTE 5 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements
- --------------------------------
In January 2010, the FASB issued Accounting Standards Update 2010-02,
Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership
of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the
scope of current US GAAP. It clarifies the decrease in ownership provisions of
Subtopic 810-10 and removes the potential conflict between guidance in that
Subtopic and asset derecognition and gain or loss recognition guidance that may
exist in other US GAAP. An entity will be required to follow the amended
guidance beginning in the period that it first adopts FAS 160 (now included in
Subtopic 810-10). For those entities that have already adopted FAS 160, the
amendments are effective at the beginning of the first interim or annual
reporting period ending on or after December 15, 2009. The amendments should be
applied retrospectively to the first period that an entity adopted FAS 160. The
Company does not expect the provisions of ASU 2010-02 to have a material effect
on the financial position, results of operations or cash flows of the Company.
In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity
(Topic 505): Accounting for Distributions to Shareholders with Components of
Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This
amendment to Topic 505 clarifies the stock portion of a distribution to
shareholders that allows them to elect to receive cash or stock with a limit on
the amount of cash that will be distributed is not a stock dividend for purposes
of applying Topics 505 and 260. Effective for interim and annual periods ending
on or after December 15, 2009, and would be applied on a retrospective basis.
The Company does not expect the provisions of ASU 2010-01 to have a material
effect on the financial position, results of operations or cash flows of the
Company.
NOTE 6 - MARKETABLE SECURITIES
The Company has investments in marketable equity securities. Management
determines the appropriate classification of the securities at the time they are
acquired and evaluates the appropriateness of such classifications at each
balance sheet date. The classification of those securities and the related
accounting polices are as follows:
Available-for-sale securities consist of marketable equity securities not
classified as trading or held-to-maturity. Available-for-sale securities are
stated at fair value, and unrealized holding gains and losses, which continuous
less than 12 months, are reported in Accumulated Other Comprehensive Income of
stockholders' equity. The Company determines the cost of securities sold by
specific identification method.
The following is a summary of the Company's investment in available-for-sale
securities as of March 31, 2010:
11
ALPHATRADE.COM
Notes to Consolidated Financial Statements
March 31, 2010 and December 31, 2009
NOTE 6 - MARKETABLE SECURITIES (CONTINUED)
Amortized Gross Gross Fair
Cost Unrealized Unrealized Market
Basis Gains Loss Value
--------- ---------- ----------- --------
Available-for-sale
Securities $ 629,393 $ 83,061 $ (315,017) $397,437
Included in marketable securities are shares of common stock with a fair value
of $226,330, which is subject to the Rule 144 hold restriction.
For the 3 months ended March 31, 2010, there were ($25,674) in realized losses
resulting from sales of marketable securities.
NOTE 7 - SUBSEQUENT EVENTS
Management has evaluated subsequent events and determined that there are no
subsequent events to report.
NOTE 8 - CASH AND CASH EQUIVALANT
During the three months ended March 31, 2010 and 2009, the Company wrote checks
in excess of cash for $40,699 and $31,488 respectively.
12
Item 2. Management's Discussion and Analysis of Financial Condition or Plan of
Operations
The following information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Form 10-Q.
Forward-looking and Cautionary Statements
This report contains certain forward-looking statements. These statements relate
to future events or our future financial performance and involve known and
unknown risks and uncertainties. These factors may cause our company's, or our
industry's actual results, levels of activity, performance or achievements to be
materially different from those expressed or implied by the forward-looking
statements. In some cases, you can identify forward-looking statements by
terminology such as "may," "will" "should," "expects," "intends," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential," "continue," or
the negative of these terms or other comparable terminology.
Results of Operations.
THREE MONTHS ENDED MARCH 31, 2010 AND 2009
- -----------------------------------------
During the three months ended March 31, 2010, total revenues were $892,395,
which was a decline of 49% from $1,751,146 for the same period in 2009. The
decrease was mainly due to a decline in advertising revenue.
Advertising revenues for the three months ended March 31, 2010 were $263,001
compared to $1,045,846 in 2009.
Other revenues were $88,496 during the quarter ended March 31, 2010 compared to
$52,442 for the same period in 2009, which is a 69% increase. This increase was
the result of growth in our web site development program and sales of our E-Trax
tools.
In addition, we had $362,799 in deferred revenue to be realized in subsequent
quarters. This deferred revenue is derived from both our E-Gate subscriptions
and our extended advertising contracts and will be realized in the subsequent
quarters based on the terms of the contracts and the service being provided.
We continue to focus on increasing the traffic to our stable of websites to
ensure our advertising clients have a highly desirable demographic target
audience. We are experiencing success with building new subscribers to our
business networking site, www.zenobank.com. This site provides a comprehensive
forum for companies, businesses associated with the financial markets and
investors to network using all of the modern, web-based tools available such as
blogs, forums, and chat rooms. Every public company, once they sign up, will
have complete and accurate financial data on their profile pages on ZenoBank -
this will ensure they are compliant with all regulatory policies with respect to
investor relations.
Our cost of sales for our financial products is directly related to the price of
our financial feeds and content. Some of these costs are fixed monthly fees and
others are based on the number of users or subscribers.
13
We believe the market conditions at present will encourage people to save money
in every way possible. The cost effective products AlphaTrade offers in both the
E-Gate and advertising should help us grow the client base for all of our
products. For the first quarter of 2010 our cost of sales was 51% of revenues
compared to 23% of revenues in the same period in 2009. The increase in the
percentage was mainly due to fee increases from some exchanges.
Our operating expenses decreased to $341,380 in 2010 from $1,484,760 in 2009
primarily due to a write-down of non-cash trade receivables in 2009 and a
reduction in management expenses in 2010. We are generating referrals and long
term established relationships with marketing and public relations firms. During
2010 we paid $48,233 to consultants for marketing fees compared to $50,958 in
2009.
The total other expenses were $37,788 in 2010 compared with $174,500 in 2009.
The decrease was the result of $44,851 less in realized losses on sales of
marketable securities and $91,861 of lower interest expenses in 2010. As well
the interest rate on one of the Company's debts was reduced in the second half
of 2009.
We realized a net income of $62,692 for the three months ended March 31, 2010
compared to a loss of ($310,179) for the three months ended March 31, 2009.
Historically, many of our expenses are paid in shares of our common stock. The
expenses are recorded at the fair value of the shares issued. Excluding these
non-cash expenses the income (loss) for the three months ended March 31, 2010
and 2009 would have been $62,192 and ($302,179), respectively.
Liquidity and Capital Resources.
We have consistently been financed through loans from related parties and from
raising capital through private equity offerings. We used $155,991 and $73,560
of cash in our operating activities in the three months ended March 31, 2010 and
2009, respectively. Net cash from investing activities of $56,210 was received
from the sale of marketable securities during the three months ended March 31,
2010 compared to cash used of ($11,494) for the same period in 2009.
We expect that our 2010 cash inflows from operations may not be adequate to
cover cash out-flows from operations. We expect that we will need to raise
approximately $1,000,000 from either increased advertising revenues, a private
placement of our common stock or a loan to meet these commitments.
Given the right circumstances, we would entertain a secondary financing if it
would ensure our growth could be greatly fast-tracked otherwise we will focus on
building our business via revenue growth. Currently, we do not have any
definitive plans for a secondary financing.
We currently have no material commitments for major capital expenditures.
Dependence on Key Personnel
We are dependent on the services of Gordon Muir, the Chief Executive Officer of
the Company. The loss of Mr. Muir, or other key executives and personnel, or the
inability to attract and retain the additional highly skilled employees required
for the expansion of our activities, may have a material adverse effect on our
business or our future operations.
14
Item 3. Controls and Procedures
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 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 effective to ensure 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. 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.
PART II - OTHER INFORMATION.
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
15
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 31.1 Certification of C.E.O. Pursuant to Section 302 of the
Sarbanses-Oxley Act of 2002.
Exhibit 31.2 Certification of Principal Accounting Officer Pursuant
to Section 302 of the Sarbanses-Oxley Act of 2002.
Exhibit 32.1 Certification of C.E.O. Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2 Certification of Principal Accounting Officer Pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Report on Form 8-K
None
16
SIGNATURES
In accordance with the requirements of the Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
ALPHATRADE.COM
Date: May 14, 2010 / s / Gordon J. Muir
----------------------------
Chief Executive Officer
Date: May 14, 2010 / s / Katharine Johnston
----------------------------
Principal Accounting Officer
Date: May 14, 2010 / s / Lisa McVeigh
----------------------------
Director
17