================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.20549
-----------------------
FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934
For Quarterly period Ended: September 30, 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
-----------------------
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 November 3, 2010, is 4,043,756,020.
Transitional Small Business Disclosure Format. Yes No X
--- ---
1
Report on Form 10-Q
For the Quarter Ended September 30, 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.............................8-9
Notes to the Financial Statements .................10-14
Item 2. Management's Discussion and Analysis
or Plan of Operation ............................15-16
Item 3. Controls and Procedures ..............................17
Part II. Other Information
Item 1. Legal Proceedings ................................... 18
Item 2. Changes in Securities ............................... 18
Item 3. Defaults Upon Senior Securities ..................... 18
Item 4. Submission of Matters to a Vote of Security Holders . 18
Item 5. Other Information ....................................18
Item 6. Exhibits and Reports on Form 8-K .................... 18
Signatures........................................... 19
Certifications.....................................20-26
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ALPHATRADE.COM
Balance Sheets
ASSETS
------
September 30, December 31,
2010 2009
------------- -------------
(Unaudited) (Audited)
CURRENT ASSETS
Cash $ 173,221 $ 63,897
Accounts receivable, net 39,777 -
Marketable securities-available for sale 301,183 552,714
Marketable securities-available for sale related party 1,360 1,256
Prepaid expenses 4,403 1,885
------------ ------------
Total Current Assets 519,944 619,752
------------ ------------
PROPERTY AND EQUIPMENT, net 165,750 28,913
------------ ------------
TOTAL ASSETS $ 685,694 $ 648,665
============ ============
The accompanying notes are an integral part of these financial statements.
3
ALPHATRADE.COM
Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
September 30, December 31,
2010 2009
------------- -------------
(Unaudited) (Audited)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,091,642 $ 1,162,451
Related party payables 2,101,272 5,756,567
Deferred revenues 346,779 524,383
Capital lease obligation - Current portion 58,597 -
------------ ------------
Total Current Liabilities 3,598,290 7,443,401
------------ ------------
LONG TERM LIABILITIES
Capital lease obligation 85,815 -
------------ ------------
Total Long Term Liabilities 85,815 -
------------ ------------
TOTAL LIABILITIES 3,684,105 7,443,401
------------ ------------
STOCKHOLDERS' EQUITY (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, 5,000,000,000
shares authorized: 4,043,756,020 and 53,756,023
shares issued and outstanding, respectively 4,043,756 53,756
Stock subscription payable 45,080 45,080
Additional paid-in capital 44,865,273 34,606,348
Accumulated other comprehensive income (220,115) (159,098)
Accumulated deficit (51,736,405) (41,344,822)
------------ ------------
Total Stockholders' Equity (Deficit) (2,998,411) (6,794,736)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 685,694 $ 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 For the Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2010 2009 2010 2009
------------ ------------ ------------ ------------
REVENUES
Subscription revenue $ 556,765 $ 578,690 $ 1,682,989 $ 1,840,876
Advertising revenue 70,000 462,421 422,545 1,981,720
Other revenue 116,710 73,827 299,551 193,420
----------- ----------- ----------- -----------
Total Revenues 743,475 1,114,938 2,405,085 4,016,016
----------- ----------- ----------- -----------
COST OF SALES
Financial content 433,014 337,664 1,172,773 1,136,597
Other cost of sales - (838) - 270
----------- ----------- ----------- -----------
Total Cost of Sales 433,014 336,826 1,172,773 1,136,867
----------- ----------- ----------- -----------
GROSS PROFIT 310,461 778,112 1,232,312 2,879,149
----------- ----------- ----------- -----------
OPERATING EXPENSES
Management expense - 120,000 - 360,000
Bad debt expense 466 121 (883) 1,031,598
Professional fees 77,531 66,112 286,273 241,993
Research and development 62,735 62,951 217,111 196,795
Marketing expense 68,163 145,433 188,747 309,643
General and administrative 245,691 92,847 482,397 424,604
----------- ----------- ----------- -----------
Total Operating Expenses 454,586 487,464 1,173,645 2,564,633
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS (144,125) 290,648 58,667 314,516
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Realized gains (losses) on
sale of marketable securities 671 (4,394) (52,682) (324,224)
Gain (Loss) on settlement
of debt (10,400,000) - (10,400,000) (240,000)
Other income 43,145 - 43,145 -
Interest Income (expense) (16,394) (16,675) (40,713) (226,562)
----------- ----------- ----------- -----------
Total Other Income
(Expense) (10,372,578) (21,069) (10,450,250) (790,786)
----------- ----------- ----------- -----------
NET INCOME (LOSS) BEFORE
INCOME TAXES (10,516,703) 269,579 (10,391,583) (476,270)
INCOME TAX EXPENSE - - - -
----------- ----------- ----------- -----------
The accompanying notes are an integral part of these financials statements.
5
ALPHATRADE.COM
Statements of Operations and Other Comprehensive Income (Loss)
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2010 2009 2010 2009
------------ ------------ ------------ ------------
NET INCOME (LOSS) $(10,516,703) $ 269,579 $(10,391,583) $ (476,270)
=========== =========== =========== ===========
OTHER COMPREHENSIVE
INCOME (LOSS) $ 1,436 $ 297,629 $ (61,017) $ (967,122)
----------- ----------- ----------- -----------
TOTAL COMPREHENSIVE
INCOME (LOSS) $(10,515,267) $ 567,208 $(10,452,600) $(1,443,392)
=========== =========== =========== ===========
BASIC EARNINGS (LOSS)
PER SHARE $ (0.00) $ 0.00 $ (0.01) $ (0.01)
=========== =========== =========== ===========
FULLY DILUTED EARNINGS
(LOSS) PER SHARE $ (0.00) $ 0.00 $ (0.01) $ (0.01)
=========== =========== =========== ===========
BASIC WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 3,960,712,542 54,357,342 1,370,386,059 54,345,620
============= =========== ============= ==========
FULLY DILUTED WEIGHTED
AVERAGE NUMBER OF
SHARES OUTSTANDING 3,960,712,542 84,357,342 1,370,386,059 54,345,620
============= =========== ============= ==========
The accompanying notes are an integral part of these financials statements.
6
ALPHATRADE.COM
Statements of Stockholders' Equity (Deficit)
(Unaudited)
Preferred Stock Common Stock Additional Stock Other Total
---------------- --------------------- Paid-In Subscription Comprehensive Accumulated Stockholders'
Shares Amount Shares Amount Capital Payable 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
year 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)
Contributed capital
from related parties - - - - 648,925 - - - 648,925
Common stock issued
for officer death
benefit - - 3,999,999,997 4,000,000 9,600,000 - - - 13,600,000
Common stock
surrendered and
cancelled - - (10,000,000) (10,000) 10,000 - - - -
Net loss for the
nine months ended
September 30, 2010 - - - - - - (61,017) (10,391,583) (10,452,600)
--------- ------ ------------- ---------- ----------- ----------- ------------ ------------ ---------------
Balance,
September 30, 2010 4,000,000 $4,000 4,043,756,020 $4,043,756 $44,865,273 $ 45,080 $ (220,115) $(51,736,405) $ (2,998,411)
========= ====== ============= ========== =========== =========== ============ ============ ===============
The accompanying notes are an integral part of these financials statements.
7
ALPHATRADE.COM
Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
September 30,
------------- ---------------
2010 2009
------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(10,391,583) $ (476,270)
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
Depreciation expense 22,532 14,377
Loss on sale of investments 52,682 324,224
(Gain) Loss on settlement of debt 10,400,000 240,000
Transfer of investments to settle debt - 500,000
Increase of investments from non-cash
receipt of advertising revenues (15,000) (933,481)
Common stock issued for services - 8,000
Changes in operating assets and liabilities:
Changes in accounts receivable (39,777) 1,170,912
Changes in prepaid expenses (2,518) (2,000)
Changes in deferred revenues (177,604) (163,427)
Changes in related party payables 201,630 304,333
Changes in accounts payable and accrued
expenses (78,809) (1,242,370)
------------ --------------
Net Cash Used in Operating Activities (28,447) (255,702)
------------ --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of securities 152,728 174,496
Purchase of fixed assets (14,957) -
------------ --------------
Net Cash Provided by Investing Activities 137,771 174,496
------------ --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank overdraft - 34,764
------------ --------------
Net Cash Provided by Financing Activities - 34,764
------------ --------------
NET INCREASE (DECREASE) IN CASH 109,324 (46,442)
CASH AT BEGINNING OF PERIOD 63,897 55,650
------------ --------------
CASH AT END OF PERIOD $ 173,221 $ 9,208
============ ==============
The accompanying notes are an integral part of these financial statements.
8
ALPHATRADE.COM
Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
September 30,
------------- ---------------
2010 2009
------------- ---------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ - $ 29,315
Income Taxes $ - $ -
NON CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for services $ - $ 8,000
Equipment purchased under capital lease
obligation $ (144,412) $ -
Contributed capital from forgiveness of
related party debt $ 648,925 $ -
Common stock issued for debt $ 13,600,000 $ -
The accompanying notes are an integral part of these financial statements.
9
ALPHATRADE.COM
Notes to Financial Statements
September 30, 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 September 30, 2010 and 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 September 30, 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 TRANSACTIONS
In June 2010, the Company entered into the Settlement Agreement and Release in
Full of All Claims with two related parties. Pursuant to the agreements, a total
of $656,925 related to the prior years' management fee were released.
In August, 2010, an officer of the Company and her spouse returned 10,000,000
shares of its common stock for surrender and cancellation resulting in a related
party payable of $8,000. The shares were cancelled on August 27, 2010.
10
ALPHATRADE.COM
Notes to Financial Statements
September 30, 2010 and December 31, 2009
NOTE 3 - RELATED PARTY TRANSACTIONS (CONTINUED)
Related parties payables consisted of the following:
September 30, December 31,
2010 2009
------------- -------------
Officer bonuses $ - $ 78,000
Officer accrued wages - 581,119
Cash advances 2,101,272 1,897,448
Officer death benefit liability - 3,200,000
------------ ------------
$ 2,101,272 $ 5,756,567
============ ============
The Company entered into Promissory Notes with the recipients of the officer
death benefit wherein interest accrued at the rate of three percent (3%) per
annum until paid. On July 6, 2010 the recipients of the death benefit were
issued shares in full and final satisfaction of all amounts due to them.
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 September 30, 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 September 30, 2010 and changes during the periods ended December 31, 2009
and September 30, 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, September 30, 2010 47,105,000 $ 0.30 $ 0.30
============ ======== ==========
Exercisable, September 30, 2010 32,625,000 $ 0.30 $ 0.30
============ ======== ==========
11
ALPHATRADE.COM
Notes to Financial Statements
September 30, 2010 and December 31, 2009
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.
Recent Accounting Pronouncements
- --------------------------------
The Company has evaluated recent accounting pronouncements and their adoption
has not had or is not expected to have a material impact on the Company's
financial position, or statements.
NOTE 6-MARKETABLE SECURITIES
FASB ASC 820, Fair Value Measurements and Disclosures establishes three levels
of inputs that may be used to measure fair value: quoted prices in active
markets for identical assets or liabilities (referred to as Level 1), observable
inputs other than Level 1 that are observable for the asset or liability either
directly or indirectly (referred to as Level 2), and unobservable inputs to the
valuation methodology that are significant to the measurement of fair value of
assets or liabilities (referred to as Level 3).
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 policies 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 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 September 30, 2010, consistent with the fair value hierarchy
provisions of ASC 820:
Fair Value Measurement
at Reporting Date Using
Fair Level Level Level
Market Value 1 2 3
------------ -------- -------- --------
Assets:
Available-for-sale $ 302,543 $302,543 - -
Securities
------------ -------- -------- ---------
Total Assets $ 302,543 $302,543 - -
============ ======== ======== =========
12
ALPHATRADE.COM
Notes to Financial Statements
September 30, 2010 and December 31, 2009
NOTE 6-MARKETABLE SECURITIES (CONTINUED)
Level 1: Quoted prices in active markets for identical assets
Level 2: Significant other observable inputs
Level 3: Significant unobservable inputs
Amortized Gross Gross Fair
Cost Unrealized Unrealized Market
Basis Gains Loss Value
--------- ---------- ----------- --------
Available-for-sale
Securities $ 522,658 $ 117,019 $ (337,134) $302,543
Included in marketable securities there are shares of common stock with a fair
value of $199,195, which is subject to the Rule 144 hold restriction.
For the 3 months and 9 months ended September 30, 2010, there were $671 in
realized gains and $52,682 in realized losses resulting from the sales of
marketable securities.
NOTE 7 - CAPITAL LEASE
The Company entered into a lease for computer equipment in June 2010. The term
of the lease is for 3 years. Total gross amount of assets recorded under the
capital lease as of September 30, 2010 is $144,412.
The following is a schedule by years of future minimum lease payment under
capital lease as of September 30, 2010.
Year ending December 31: Amount
--------
2010 $ 33,359
2011 57,186
2012 57,186
2013 23,832
--------
Total minimum lease payments 171,563
Less: Amount representing interest (27,151)
--------
Present value of net minimum lease payments $144,412
========
NOTE 8 - COMMON STOCK
The Articles of Incorporation were amended on June 1, 2010, to increase the
authorized number of shares of the Company's $.001 par value common stock from
300,000,000 to 5,000,000,000. On July 6, 2010, the Company issued 3,999,999,997
common shares at $0.0034 per share to satisfy an officer's death benefit
liability in the amount of $3,200,000. The Company recorded a loss $10,400,000
on the settlement of the debt for the difference between the value of the shares
issued and the amount of the debt. 10,000,000 outstanding common shares were
surrendered and cancelled on August 27, 2010.
13
ALPHATRADE.COM
Notes to Financial Statements
September 30, 2010 and December 31, 2009
NOTE 9 - CONTINGENCY
On May 21, 2009, the Company entered into a Release and Settlement Agreement
with Professional Bull Riders, Inc. (the "PBR Settlement Agreement"), pursuant
to which the Company and PBR agreed to settle all disputes and claims arising
from and relating to the Company's sponsorship agreement with the PBR. Pursuant
to the PBR Settlement Agreement, the Company agreed to make payments to PBR, for
each of its 2009, 2010 and 2011 fiscal years, equal to the lesser of $100,000 or
30% of the Company's net profit for each fiscal year. With considering of the
business performance projection and going concern, there is no liability related
to this contingency event included in the current period financial results.
NOTE 10- SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date of this report and
determined that there are no additional subsequent events to report.
14
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 AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
- ---------------------------------------------------------------
During the three and nine months ended September 30, 2010, total revenues were
$743,475 and $2,405,085, respectively. This is a decline of 33% and 40% over the
three and nine months ended September 30, 2009, which had revenues of $1,114,938
and $4,016,016, respectively.
Subscription revenue for the three and nine month period ended September 30 were
$556,765 and $1,682,989 in 2010 and $578,690 and $1,840,876 in 2009. The
decrease in our subscriber revenue is a result of the financial market downturn.
We are hopeful that as the financial markets strengthen that our subscription
revenues will increase.
Advertising revenues for the three and nine month period ended September 30 were
$70,000 and $422,545 in 2010 and $462,421 and $1,981,720 in 2009. The decrease
in our advertising revenues is mainly due to the whole economic and financial
market downturn as companies are not investing in advertising as well as the
loss of our key marketing officer.
Other revenues for the three and nine month period ended September 30 were
$116,710 and $299,551 in 2010 and $73,827 and $193,420 in 2009. This dramatic
increase of 58% for the quarter and 55% for our first nine months of 2010 is the
result of the growth in our web site development and E-Trax departments.
In addition, we had $346,779 in deferred revenue to be realized in subsequent
quarters. This deferred revenue is derived from our extended advertising, E-Trax
and subscription contracts and will be realized in the subsequent quarters based
on the terms of the contracts and the service being provided.
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 E-Trax should help us grow the client base for all of our products.
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.
15
For the three and nine months ended September 30, 2010, our cost of sales were
58% and 49% of revenues compared to 30% and 28% of revenues for the same periods
in 2009.
During the three and nine month period ended September 30, our operating
expenses decreased to $454,586 and $1,173,64 in 2010 from $487,464 and
$2,564,633 in 2009. The decrease is primarily due to 1) a reduction in
management fees incurred in 2010, 2) a $1,030,477 write-down of non-cash trade
receivables in 2009, 3) lower spending and savings on marketing, professional
and general fees and administration expenses. During the three and nine months
ended September 30, 2010 we incurred $68,163 and $188,747 in marketing fees
compared to $145,433 and $309,643 in 2009.
The Company recognized Other Expenses totaling $10,372,583 and $10,450,250 for
the three and nine months ended September 30, 2010, respectively, compared to
$21,069 and $790,786 during the comparable periods of 2009. The increase was the
result of a $10,400,000 loss on the settlement of the debt partially offset by
less realized losses on sales of marketable securities, lower interest expenses
in 2010 and $240,000 loss on forgiveness of debt incurred in 2009. The interest
rate on the Company's debt was reduced in the second half of 2009. We also
realized $43,145 of other income from the settlement of a lawsuit.
We realized a net loss of $(10,516,703) and $(10,391,583) for the three and nine
months ended September 30, 2010 compared to a net (loss) income of $269,579 and
($476,270) for the same periods ended September 30, 2009.
Liquidity and Capital Resources.
We have consistently been financed through loans from related parties and from
raising capital through private equity offerings. We used ($28,447) and
($255,702) of net cash in our operating activities in the nine months ended
September 30, 2010 and 2009, respectively. We expect that in the next twelve
months the cash generated by our operations will be adequate to cover our
operating expenses.
There were $137,771 net cash provided by investing activities for the same
periods in 2010 and $174,496 net cash was provided from the sale of marketable
securities in 2009. It was mainly resulting from $14,957 capital expenditures
which were offset by $152,728 sales of securities in 2010.
During the first nine months ended September 30, 2010, we incurred a $144,412
capital lease obligation in financing activities compared to $-0- for the same
period in 2009.
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.
16
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 on September 30, 2010 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, and are designed to
ensure that information required to be disclosed by us in these reports is
accumulated and communicated to our management, as appropriate to allow timely
decisions regarding required disclosures. There has been no change in our
internal controls or in other factors which could significantly affect internal
controls subsequent to the date we carried out our evaluation.
17
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.
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
Sarbanes-Oxley Act of 2002.
Exhibit 31.2 Certification of Principal Accounting Officer Pursuant
to Section 302 of the Sarbanes-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
18
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: November 15, 2010 / s / Gordon J. Muir
-----------------------------
Chief Executive Officer
Date: November 15, 2010 / s / Katharine Johnston
----------------------------
Principal Accounting Officer
19