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.
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.
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.
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.
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.
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;
* 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
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.
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.
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.
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.
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.
ITEM 1B. UNRESOLVED STAFF COMMENTS
N/A
ITEM 2.
ITEM 2. PROPERTIES
Our executive offices are located at Suite 116 - 930 West 1st Street, North Vancouver, B.C., Canada, in a 8,207 square foot facility. We have a month-to-month sub-lease at a current monthly rent of $11,000. The lease expires in December 30, 2011. We house our equipment in a high-speed infrastructure
co-location in British Columbia to ensure our support coverage is manned 24/7/365. We do not own any real estate.
ITEM 3.
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,
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.
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.
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDERS MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Currently, our common stock is traded on the OTCBB and quoted under the symbol "APTD". The high and low bid prices for the Common Stock as reported by our content provider, Reuters Information Ltd. are listed below. The prices in the table reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
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
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
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.
ITEM 6. SELECTED FINANCIAL DATA
N/A
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
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
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 $240,000 in 2007. The companies agreed to cancel $240,000 of the compensation for 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 for accounting purposes but discounted by the consultants for their services. We hope to be able pay for more services with cash in 2009 so that we can reduce the expense effect of this discounting.
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.
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 $834,369 for the year ended December 31, 2008 compared to a net loss of $4,574,003 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. Excluding these non-cash expenses, the net income for 2008 and loss for 2007 would have been $1,604,482 and $3,126,942, 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
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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
N/A
ITEM 8.
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.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 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.
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.
ITEM 9B. OTHER INFORMATION.
None
PART III
ITEM 10.
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
* 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.
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.
(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.
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.
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.
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.
(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.
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). (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.
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.
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.
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.
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.
ALPHATRADE.COM
FINANCIAL STATEMENTS
December 31, 2008 and 2007
C O N T E N T S
Report of Independent Registered Public Accounting Firms.............
Balance Sheets.......................................................
Statements of Operations.............................................
Statements of Stockholders' Equity (Deficit).........................
Statements of Cash Flows.............................................
Notes to the Financial Statements....................................
Report of Independent Registered Public Accounting Firms
ALPHATRADE.COM Balance Sheets
ASSETS ------ December 31, December 31, 2008 2007 ------------ ------------ 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.
ALPHATARADE.COM Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) --------------------------------------------- December 31, December 31, 2008 2007 ------------ ------------ 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 33,681,184 32,719,057 Accumulated other comprehensive income (1,742,626) (1,647,531) Accumulated deficit (34,851,381) (35,685,750) ----------- ----------- 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.
ALPHATRADE.COM Statements of Operations and Other Comprehensive Income (Loss)
For the Years Ended December 31, ------------------------- 2008 2007 ------------ ------------ 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 480,000 240,000 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 7,678,369 ----------- ----------- INCOME (LOSS) FROM OPERATIONS 1,123,860 (4,317,779) ----------- ----------- OTHER INCOME (EXPENSE) Realized gains (losses) on sale of marketable securities (223,068) (44,223) Gain on settlement of debt 307,974 - Interest expense (374,397) (212,001) ----------- ----------- Total Other Income (Expense) (289,491) (256,224) ----------- ----------- NET INCOME (LOSS) BEFORE INCOME TAXES 834,369 (4,574,003)
INCOME TAX EXPENSE - - ----------- -----------
The accompanying notes are a integral part of these financials statements.
ALPHATRADE.COM Statements of Operations and Other Comprehensive Income (Loss) (Continued)
For the Years Ended December 31, ------------------------- 2008 2007 ------------ ------------ NET INCOME (LOSS) $ 834,369 $(4,574,003) =========== =========== OTHER COMPREHENSIVE INCOME (LOSS) $ (95,095) $ (929,671)
TOTAL COMPREHENSIVE INCOME (LOSS) $ 739,274 $(5,503,674) =========== =========== BASIC EARNINGS (LOSS) PER SHARE $ 0.02 $ (0.09) =========== =========== FULLY DILUTED INCOME (LOSS) PER SHARE $ 0.01 $ (0.09) =========== =========== 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.
ALPHATRADE.COM Statements of Stockholders' (Deficit)
The accompanying notes are a integral part of these financials statements.
ALPHATRADE.COM Statements of Cash Flows For the Year Ended December 31, --------------------------- 2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES ------------- ------------- Net income (loss) $ 834,369 $ (4,574,003) 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 Gain on settlement of debt (307,974) - 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.
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.
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 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.
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
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
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
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 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.
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
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. 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 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 1,724,320 Realized gains and losses (44,223) Unrealized gains and losses (1,300,465)
Balance, December 31, 2007 $ 664,090 Marketable securities received for services in 2008 1,201,911 Transfer of investments at cost 300,000 Realized gains and losses (223,068) Unrealized gains and losses (384,057)
Balance, December 31, 2008 $ 1,558,876
Marketable Securities-Available for Sale $ 1,556,783 Marketable Securities-Available for sale-related party 2,093
Balance, December 31, 2008 $ 1,558,876
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.
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 its cost investments for impairment of value annually. No impairment was made in 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 ===========
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 $ - =========== 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"
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:
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 ========== ==========
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.
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.
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 2007 --------------- --------------- Deferred tax assets: NOL carryover $ 4,151,616 $ 4,777,364 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 (4,272,657) (4,898,405) -------------- -------------- 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 2007 ---------------------------- Book Income (Loss) $ 325,404 $ (1,438,477) Stock for services/options 300,344 564,354 Valuation allowance (625,748) 874,123 ------------ ------------- $ - $ - ============ =============
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
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 2007 ---------------- --------------- Income (Loss) (numerator) $ 834,369 $ (4,574,003) --------------- -------------- Comprehensive Income (numerator) 739,279 (5,503,674) --------------- -------------- 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 $ 0.02 $ (0.09) --------------- -------------- Basic per share amount $ 0.01 $ (0.11) =============== ============== Fully diluted per share amount $ 0.01 $ (0.09) --------------- -------------- Fully diluted per share amount $ 0.01 $ (0.11) =============== ==============
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.
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 negotiated discounts payments of several of its advertising liabilities which it has recorded as a gain on settlement of debt in the amount of $307,974.
ITEM 15.
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
Balance Sheets as of December 31, 2008 and December 31, 2007
Statements of Operations for the years ended December 31, 2008 and December 31, 2007
Statement of Changes in Stockholders' Equity (Deficit) for the years ended December 31, 2008 and December 31, 2007
Statements of Cash Flows for the years ended December 31, 2008 and December 31, 2007 Notes to Financial Statements
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)
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.
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 2, 2009 By: /s/ Penny Perfect ------------------------ Penny Perfect Chief Executive Officer, President, Chairman and Director
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date - ---------------------- ---------------------------------------- --------------
/s/ Penny Perfect Chief Executive Officer, President, April 2, 2009 - ------------------ Chairman, Director Penny Perfect
/s/ Gordon Muir Chief Technology Officer and Director April 2, 2009 - ------------------ Gordon J. Muir
/s/ Katharine Johnston Vice President - Business Operations, April 2, 2009 - ---------------------- Principal Financial Officer and Director Katharine Johnston
/s/ Lisa McVeigh Director April 2, 2009 - ---------------------- Lisa McVeigh