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EX-32.2 - SECTION 1350 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER - ALPHATRADE COMexhibit_32-2.txt
EX-31.2 - RULE 13A-14(A)/15D-14(A) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER - ALPHATRADE COMexhibit_31-2.txt
EX-31.1 - RULE 13A-14(A)/15D-14(A) CERTIFICATION OF CHIEF EXECUTIVE OFFICER - ALPHATRADE COMexhibit_31-1.txt
EX-32.1 - SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER - ALPHATRADE COMexhibit_32-1.txt

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             -----------------------
                                   FORM 10-Q/A
                                 Amendment No. 2

           X      QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
         -----    EXCHANGE ACT OF 1934

                  For Quarterly period Ended: June 30, 2009; or

         -----    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  EXCHANGE ACT OF 1934

This  Amendment No. 2 on Form 10-Q/A hereby  amends the  registrant's  quarterly
report on Form 10-Q, which the registrant filed with the Securities and Exchange
Commission  initially  on August 19, 2009 with  Amendment  No. 1 filed April 22,
2010.

                For the transition period           to
                                          ---------    ----------


                         Commission File Number: 0-25631

                             -----------------------


                                 ALPHATRADE.COM
         ---------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

           Nevada                                               98-0211652
 ------------------------------                             ------------------
(State or other Jurisdiction of                            (I.R.S. Employer
 Incorporation or Organization)                             Identification No.)

      SUITE 116 - 930 West 1st Street, North Vancouver, B.C. V7P3N4 Canada
      --------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                  (604)986-9866
                            -------------------------
                           (Issuer's telephone number)


        Check  whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15 (d) of the  Exchange Act during the past 12 months (or for such
shorter period that a registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes  X  No
                                                                   ---    ---

        State the number of shares outstanding of the issuer's common equity:
$0.001 par value, as of August 13, 2009, was 54,476,023.

         Transitional Small Business Disclosure Format. Yes       No  X
                                                            ---      ---

                                        1

Report on Form 10-Q/A For the Quarter Ended June 30, 2009 Explanatory Note: This Amendment No. 2 on Form 10-Q/A hereby amends the registrant's quarterly report on Form 10-Q, which the registrant filed with the Securities and Exchange Commission initially on August 19, 2009 with Amendment No. 1 filed April 22, 2010. This amendment is being filed in order to clarify the fair market value of shares assigned to a third party. INDEX Page ---- Part I. Financial Information Item 1. Financial Statements.................................. 3 Balance Sheets.......................................3-4 Statements of Operations.............................5-6 Statement of Stockholders' Equity (Deficit)............7 Statements of Cash Flows...............................8 Notes to the Financial Statements ..................9-12 Item 2. Management's Discussion and Analysis or Plan of Operation .............................. 13 Item 3. Controls and Procedures.............................. 15 Part II. Other Information Item 1. Legal Proceedings.................................... 15 Item 2. Changes in Securities ............................... 16 Item 3. Defaults Upon Senior Securities ..................... 17 Item 4. Submission of Matters to a Vote of Security Holders.. 17 Item 5. Other Information.................................... 17 Item 6. Exhibits and Reports on Form 8-K..................... 17 Signatures........................................... 18 Certifications.....................................19-24 2
PART I - FINANCIAL INFORMATION Item 1. Financial Statements ALPHATRADE.COM Balance Sheets ASSETS ------ June 30, December 31, 2009 2008 ------------- ------------- (Unaudited) (Audited) CURRENT ASSETS Cash $ 94,097 $ 55,650 Accounts receivable, net 19,607 1,172,064 Marketable securities-available for sale 187,661 1,558,876 Marketable securities-available for sale related party - 2,093 Prepaid expenses - 1,000 ------------ ------------ Total Current Assets 301,365 2,789,683 ------------ ------------ PROPERTY AND EQUIPMENT, net 36,191 45,776 ------------ ------------ TOTAL ASSETS $ 337,556 $ 2,835,459 ============ ============ The accompanying notes are an integral part of these financial statements. 3
ALPHATARADE.COM Balance Sheets LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) ---------------------------------------------- June 30, December 31, 2009 2008 ------------- ------------- (Unaudited) (Audited) CURRENT LIABILITIES Accounts payable and accrued expenses $ 1,245,327 $ 2,161,854 Related party payables 3,172,764 2,746,262 Deferred revenues 731,732 737,010 ------------ ------------ Total Current Liabilities 5,149,823 5,645,126 ------------ ------------ TOTAL LIABILITIES 5,149,823 5,645,126 ------------ ------------ 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 issued and outstanding 4,000 4,000 Common shares: $0.001 par value, 100,000,000 shares authorized: 54,476,023 and 54,076,023 shares issued and outstanding, respectively 54,476 54,076 Stock subscription payable 45,080 45,080 Additional paid-in capital 33,928,784 33,921,184 Accumulated other comprehensive income (1,305,294) (40,453) Accumulated deficit (37,539,313) (36,793,464) ------------ ------------ Total Stockholders' (Deficit) (4,812,267) (2,809,667) ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 337,556 $ 2,835,459 ============ ============ The accompanying notes are an integral part of these financial statements. 4
ALPHATRADE.COM Statements of Operations and Other Comprehensive Income (Loss) (Unaudited) For the Three Months Ended For the Six Months Ended June 30, June 30, ------------------------- ------------------------- 2009 2008 2009 2008 ------------ ------------ ------------ ------------ REVENUES Subscription revenue $ 609,328 $ 787,835 $ 1,262,186 $ 1,559,763 Advertising revenue 473,453 1,660,240 1,519,299 2,468,295 Other revenue 67,151 57,743 119,593 95,144 ----------- ----------- ----------- ----------- Total Revenues 1,149,932 2,505,818 2,901,078 4,123,202 ----------- ----------- ----------- ----------- COST OF SALES Financial content 397,070 457,094 798,933 940,497 Other cost of sales 906 1,042 1,108 2,142 ----------- ----------- ----------- ----------- Total Cost of Sales 397,976 458,136 800,041 942,639 ----------- ----------- ----------- ----------- GROSS PROFIT 751,956 2,047,682 2,101,037 3,180,563 ----------- ----------- ----------- ----------- OPERATING EXPENSES Management expense 120,000 120,000 240,000 240,000 Bad debt expense 1,000 - 1,031,477 - Professional fees 85,541 229,496 175,880 667,988 Research and development 68,795 124,225 133,844 271,703 Marketing expense 113,251 258,226 164,209 492,923 General and administrative 203,822 97,540 331,759 254,425 ----------- ----------- ----------- ----------- Total Operating Expenses 592,409 829,487 2,077,169 1,927,039 ----------- ----------- ----------- ----------- INCOME (LOSS) FROM OPERATIONS 159,547 1,218,195 23,868 1,253,524 ----------- ----------- ----------- ----------- OTHER INCOME (EXPENSE) Realized gains (losses) on sale of marketable securities (249,305) (12,194) (319,830) (97,932) Gain/(loss) on forgiveness of debt (240,000) 307,972 (240,000) 307,972 Interest expense (105,912) (91,691) (209,887) (180,171) ----------- ----------- ----------- ----------- Total Other Income (Expense) (595,217) 204,087 (769,717) 29,869 ----------- ----------- ----------- ----------- NET INCOME (LOSS) BEFORE INCOME TAXES (435,670) 1,422,282 (745,849) 1,283,393 INCOME TAX EXPENSE - - - - ----------- ----------- ----------- ----------- NET INCOME (LOSS) $ (435,670) $ 1,422,282 $ (745,849) $ 1,283,393 =========== =========== =========== =========== The accompanying notes are a integral part of these financials statements. 5
ALPHATRADE.COM Statements of Operations and Other Comprehensive Income (Loss) (Unaudited) For the Three Months Ended For the Six Months Ended June 30, June 30, ------------------------- ------------------------- 2009 2008 2009 2008 ------------ ------------ ------------ ------------ NET INCOME (LOSS) $ (435,670) $ 1,422,282 $ (745,849) $ 1,283,393 =========== =========== =========== =========== OTHER COMPREHENSIVE LOSS $ (66,779) $ 346,331 $(1,264,751) $ 117,979 ----------- ----------- ----------- ----------- TOTAL COMPREHENSIVE LOSS $ (502,449) $ 1,768,613 $(2,010,600) $ 1,401,372 =========== =========== =========== =========== BASIC EARNINGS (LOSS) PER SHARE $ (0.01) $ 0.03 $ (0.01) $ 0.03 =========== =========== =========== =========== FULLY DILUTED INCOME (LOSS) PER SHARE $ (0.01) $ 0.01 $ (0.01) $ 0.01 =========== =========== =========== =========== BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 54,476,023 50,513,858 54,337,561 50,065,120 =========== =========== =========== =========== FULLY DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 54,476,023 118,399,208 54,337,561 117,950,470 =========== =========== =========== =========== The accompanying notes are a integral part of these financials statements. 6
ALPHATRADE.COM Statements of Stockholders' Equity (Deficit) Preferred Stock Common Stock Additional Stock Other Total ---------------- ------------------ Paid-In Subscription Comprehensive Accumulated Stockholders' Shares Amount Shares Amount Capital Payable Income Deficit Equity --------- ------ ---------- ------- ----------- ------------ ------------- ----------- ------------- Balance, December 31, 2008 4,000,000 4,000 54,076,023 54,076 33,921,184 45,080 (40,543) (36,793,464) (2,809,667) Common stock issued for services at $0.02 per share (unaudited) - - 400,000 400 7,600 - - - 8,000 Net income for the six months ended June 30, 2009 (Unaudited) - - - - - - (1,264,751) (745,849) (2,010,600) --------- ------ ---------- ------- ----------- ------------ ------------- ----------- ------------- Balance, June 30, 2009 (Unaudited) 4,000,000 $4,000 54,476,023 $54,476 $33,928,784 $ 45,080 $(1,305,294) $(37,539,313) $(4,812,267) ========= ====== ========== ======= =========== ============ ============= =========== ============= The accompanying notes are a integral part of these financials statements. 7
ALPHATRADE.COM Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, --------------------------- 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES ------------- ------------- Net income (loss) $ (745,849) $ 1,283,393 Adjustments to reconcile net income (loss) to net cash used by operating activities: Depreciation expense 9,585 9,158 Value of stock options and warrants granted - 14,233 Loss on sale of investments 411,483 97,932 Gain (Loss) on settlement of debt 240,000 (307,972) Transfer of investments to settle debt 500,000 - Investments received as payment for accounts receivable (869,057) (1,305,809) Common stock issued for services 8,000 321,568 Changes in operating assets and liabilities: Changes in accounts receivable 1,152,457 (25,099) Changes in prepaid expenses 1,000 (17,343) Changes in deferred revenues (5,278) (715,276) Changes in related party payables 426,502 268,943 Changes in accounts payable and accrued expenses (1,156,527) (91,408) ------------ ------------ Net Cash Used in Operating Activities (27,684) (467,680) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Sale of securities 66,131 91,418 Purchase of fixed assets - (3,204) ------------ ------------ Net Cash Provided by Investing Activities 66,131 88,214 ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Common stock issued for cash - 190,000 Proceeds from bank overdraft - 22,664 Stock subscriptions payable - 16,580 ------------ ------------ Net Cash Provided by Financing Activities - 229,244 ------------ ------------ NET DECREASE IN CASH 38,447 (150,222) CASH AT BEGINNING OF PERIOD 55,650 153,760 ------------ ------------ CASH AT END OF PERIOD $ 94,097 $ 3,538 ============ ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION CASH PAID FOR: Interest $ 73,279 $ 45,640 Income Taxes $ - $ - NON CASH INVESTING AND FINANCING ACTIVITIES: Common stock issued for services $ 8,000 $ 321,568 Value of stock options and warrants vested $ - $ 14,233 The accompanying notes are an integral part of these financial statements. 8
ALPHATRADE.COM, INC Notes to ALPHATRADE.COM INC Financial Statements June 30, 2009 and December 31, 2008 NOTE 1 - CONDENSED FINANCIAL STATEMENTS The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2009 and 2008, and for all periods presented herein, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2008 audited financial statements. The results of operations for the periods ended June 30, 2009 and 2008 are not necessarily indicative of the operating results for the full year. NOTE 2 - GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. NOTE 3 - RELATED PARTY PAYABLES The company accrued an additional $296,441 and $426,502 in related party payables during the three and six months ended June 30, 2009, respectively. A majority of this accrual consists of payable related to management fees. 9
ALPHATRADE.COM, INC Notes to ALPHATRADE.COM INC Financial Statements June 30, 2009 and December 31, 2008 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 periods ended June 30, 2009 and December 31, 2008: dividend yield of zero percent for all years; expected volatility of 74.36% and 62.01%; risk-free interest rates of 5.03% and 3.35% and expected lives of 1.0 and 3.0, 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 June 30, 2009 and changes during the periods ended December 31, 2008 and June 30, 2009 is presented below: 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, December 31, 2008 55,210,200 $0.32 $0.32 Granted -0- -0- -0- Expired (5,415,000) 0.46 0.46 Exercised -0- -0- -0- Outstanding, June 30, 2009 49,795,200 $0.31 $0.31 Exercisable, June 30, 2009 35,315,200 $0.31 $0.31 10
ALPHATRADE.COM, INC Notes to ALPHATRADE.COM INC Financial Statements June 30, 2009 and December 31, 2008 NOTE 5 - SIGNIFICANT ACCOUNTING POLICIES Use of Estimates ---------------- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Recent Accounting Pronouncements -------------------------------- In May 2009, the FASB issued FAS 165, "Subsequent Events". This pronouncement establishes standards for accounting for and disclosing subsequent events (events which occur after the balance sheet date but before financial statements are issued or are available to be issued). FAS 165 requires and entity to disclose the date subsequent events were evaluated and whether that evaluation took place on the date financial statements were issued or were available to be issued. It is effective for interim and annual periods ending after June 15, 2009. The adoption of FAS 165 did not have a material impact on the Company's financial condition or results of operation. In June 2009, the FASB issued FAS 166, "Accounting for Transfers of Financial Assets" an amendment of FAS 140. FAS 140 is intended to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets: the effects of a transfer on its financial position, financial performance , and cash flows: and a transferor's continuing involvement, if any, in transferred financial assets. This statement must be applied as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009. The Company does not expect the adoption of FAS 166 to have an impact on the Company's results of operations, financial condition or cash flows. In June 2009, the FASB issued FAS 167, "Amendments to FASB Interpretation No. 46(R)". FAS 167 is intended to (1) address the effects on certain provisions of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, as a result of the elimination of the qualifying special-purpose entity concept in FAS 166, and (2) constituent concerns about the application of certain key provisions of Interpretation 46(R), including those in which the accounting and disclosures under the Interpretation do not always provided timely and useful information about an enterprise's involvement in a variable interest entity. This statement must be applied as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009. The Company does not expect the adoption of FAS 167 to have an impact on the Company's results of operations, financial condition or cash flows. 11
ALPHATRADE.COM, INC Notes to ALPHATRADE.COM INC Financial Statements June 30, 2009 and December 31, 2008 NOTE 5 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Recent Accounting Pronouncements (Continued) -------------------------------------------- In June 2009, the FASB issued FAS 168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles". FAS 168 will become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009.The Company does not expect the adoption of FAS 168 to have an impact on the Company's results of operations, financial condition or cash flows. NOTE 6 - LAWSUITS SETTLEMENTS Professional Bull Riders, Inc. v. AlphaTrade.com, ------------------------------------------------- United States District Court, District of Colorado, Case No. 08-cv-01017 (MSK) On May 21, 2009, the Company entered into a Release and Settlement Agreement with PBR (the "PBR Settlement Agreement"), pursuant to which the Company and PBR agreed to settle all disputes and claims arising from and relating to the Company's sponsorship agreement with the PBR. Pursuant to the PBR Settlement Agreement, the Company agreed to transfer an aggregate of 300,000 shares of common stock of two unrelated entities held for investment purposes by the Company. Of these shares, 250,000 relate to Clean Coal Technology, Inc. (CCTC), and the remaining 50,000 shares relate to HSTC Global, Inc. (HSTC). The transferred shares were valued at their respective market closing prices on May 21, 2009, the date the Settlement Agreement was consummated. The CCTC shares were valued at $1.77 per share ($442,500 total), while the HSTC shares were valued at $1.15 per share ($57,500 total) The aggregate value of the shares transferred was $500,000. In addition, the Company agreed to make payments to PBR, for each of its 2009, 2010 and 2011 fiscal years, equal to the lesser of $100,000 or 30% of the Company's net profit for each fiscal year. The Company transferred the 300,000 shares to the unrelated entities on May 29, 2009. Tommy G Productions, LLC v. AlphaTrade.com, -------------------------------------------- District Court, Pueblo County, Colorado, Case No. 2008CV1008 On May 28, 2009, the Company entered into a Settlement Agreement and Mutual Release with Tommy G (the "Tommy G Settlement Agreement"), pursuant to which the Company and Tommy G agreed to settle all disputes and claims arising from and relating to the Company's sponsorship agreement with Tommy G for aggregate consideration of $10,000. NOTE 7 - SUBSEQUENT EVENTS Management has evaluated subsequent events as of August 13, 2009 and report that there are no subsequent events to report. 12
Item 2. Management's Discussion and Analysis of Financial Condition or Plan of Operations The following information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Form 10-Q/A. Forward-looking and Cautionary Statements This report contains certain forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks and uncertainties. These factors may cause our company's, or our industry's actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will" "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. These statements are only predictions. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Results of Operations. SIX MONTHS ENDED JUNE 30, 2009 AND 2008 ----------------------------------------- During the three and six months ended June 30, 2009, revenue growth began to decline due to the unparalleled turbulence and overall decline in all of the financial markets. Our advertising business was adversely affected as many clients put their marketing and advertising budgets on hold. Revenue for the three and six months ended June 30, 2009 was $1,149,932 and $2,901,078, respectively. This is a decline of 54% and 30% over the three and six months ended June 30, 2008, which had revenues of $2,505,818 and $4,123,202. Advertising revenues for the three and six month period ended June 30 were $473,453 and $1,519,299 in 2009 and $1,660,240 and $2,468,295 in 2008. In addition, we had $731,732 in deferred revenue to be realized in subsequent quarters. This deferred revenue is derived from our long term advertising and marketing which was not realized in this quarter. We revised our advertising model from a price point to accommodate new client interest and to make it easier for clients to make a marketing buying decision. We continue to focus on increasing the traffic to our stable of websites to ensure our advertising clients have a highly desirable demographic target audience. We are experiencing success with building new subscribers to our business networking site, www.zenobank.com. The site provides a comprehensive forum for companies, businesses associated with the financial markets and investors to network using all of the modern, web-based tools available such as blogs, forums, and chat rooms. Every public company, once they sign up, will have complete and accurate financial data on their profile pages on ZenoBank - this will ensure they are compliant with all regulatory policies with respect to investor relations. Our cost of sales for our financial products is directly related to the price of our financial feeds and content. Some of these costs are fixed monthly fees and others are based on the number of users or subscribers. 13
We believe the market conditions at present will encourage people to save money in every way possible and with the cost effective products AlphaTrade has in both the E-Gate and advertising programs, we believe this could be beneficial for us in increasing our client base for all of our products. For the three and six months ended June 30, 2009 our cost of sales was 35% and 28% of revenues compared to 18% and 23% of revenues for the same periods in 2008. The increase in cost of sales was due to the decline in advertising revenues as a percentage of our total revenues. During the three and six month period ended June 30 we realized a net loss of $435,670 and $745,849 in 2009 and a net income of $1,422,282 and $1,283,393 in 2008. This is a decrease of $1,857,952 and $2,029,242, respectively. We are generating referrals and long term, established relationships with marketing and public relations firms. During the three and six months ended June 30, 2009 we paid $108,571 and $164,209 in marketing fees. Included in professional fees for 2009 are shares of common stock to investor relations consultants valued at $-0- and $8,000 for the three and six month periods, respectively. For the same periods in 2008 this expense was $14,233 and $103,478. For the most part, the investor relations consultants are hired to bring new advertising clients to the company. We realized related party compensation expense of $120,000 and $240,000 for the three and six month ended June 30, 2009 and 2008. Our operating expenses decreased to $592,409 and increased to $2,077,169 in 2009 from $829,487 and $1,927,039 in 2008 mainly due to a large write down in non-cash accounts receivable. The $1,031,477 bad debt expense recognized during the six months ended June 30, 2009 was deemed appropriate by management during a subsequent analysis of accounts receivable. Management determined that collection of these receivables was unlikely due to some previously unforeseen factors. Subsequent to this significant write-down of accounts receivable we have initiated a policy to more aggressively analyze and allow for doubtful receivables, so as to avoid recognizing such a large bad debt expense in any single future reporting period. The Company recognized Other Expenses totaling $595,170 and $846,349 for the three and six months ended June 30, 2009, respectively, compared to Other Income of $204,087 and $29,869 during the comparable periods of 2008. The current period's Other Expenses includes a $240,000 loss on forgiveness of debt, pertaining to the Company's forgiveness of a receivable in the amount of $240,000 during the period. Historically, many of our expenses are paid in shares of our common stock. The expenses are recorded at the fair value of the shares issued. Excluding these non-cash expenses the income (loss) for the three months ended June 30 would have been ($435,670) and ($737,849) for 2009 and $1,436,515 and $1,386,871, respectively. Liquidity and Capital Resources. We have consistently been financed through loans from related parties and from raising capital through private equity offerings. We used $27,684 and $467,680 of cash in our operating activities in the six months ended June 30, 2009 and 2008, respectively. Cash provided by investing activities for the same periods in 2009 and 2008 were $66,131 and $88,214, respectively. Cash received through 14
financing activities totaled $-0- and $229,244 from the issuance of our common stock and contributed capital. We expect that in the next twelve months the cash generated by our operations will be adequate to cover our operating expenses. Given the right circumstances, we would entertain a secondary financing if it would ensure our growth could be greatly fast-tracked otherwise we will focus on building our business via revenue growth. Currently, we do not have any definitive plans for a secondary financing. We currently have no material commitments for major capital expenditures. Dependence on Key Personnel We are dependent on the services of Gordon Muir, the Chief Executive Officer of the Company. The loss of Mr. Muir, or other key executives and personnel, or the inability to attract and retain the additional highly skilled employees required for the expansion of our activities, may have a material adverse effect on our business or our future operations. Item 3. Controls and Procedures As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based upon that evaluation, our chief executive officer and principal financial officer concluded that our disclosure controls and procedures are not effective to cause the information required to be disclosed by us in the reports that we file or submit under the Exchange Act to be recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. There have been no changes in our internal controls or in other factors which could significantly affect internal controls subsequent to the date we carried out our evaluation. PART II - OTHER INFORMATION. Item 1. Legal Proceedings. Professional Bull Riders, Inc. v. AlphaTrade.com, United States 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 alledged 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. On May 21, 2009, the Company entered into a Release and Settlement Agreement with PBR (the "PBR Settlement Agreement"), pursuant to which the Company and PBR agreed to settle all disputes and claims arising from and relating to the Company's sponsorship agreement with the PBR. Pursuant to the PBR Settlement Agreement, the Company agreed to transfer an aggregate of 300,000 shares of common stock of two unrelated entities held for investment purposes by the 15
Company. In addition, the Company agreed to make payments to PBR, for each of its 2009, 2010 and 2011 fiscal years, equal to the lesser of $100,000 or 30% of the Company's net profit for each fiscal year. 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. On May 28, 2009, the Company entered into a Settlement Agreement and Mutual Release with Tommy G (the "Tommy G Settlement Agreement"), pursuant to which the Company and Tommy G agreed to settle all disputes and claims arising from and relating to the Company's sponsorship agreement with Tommy G for aggregate consideration of $10,000. Equistock Incorporated and Nicholas Thomas v. AlphaTrade.com U.S. District Court for the Southern District of Texas, Houston Division Civil Action No. 4:09-CV-01645 Plaintiffs Equistock and Thomas ("Plaintiffs") initiated this action in April 2009 with the filing of their Original Petition in the state district courts of Harris County, Texas. The lawsuit arises from a marketing agreement between Equistock and AlphaTrade whereby AlphaTrade provided advertising and marketing services to Equistock on behalf of Equistock's client, Dalrada Financial, Inc. The Plaintiffs have asserted claims for breach of contract, quantum meruit, breach of the duty of good faith and fair dealing, and damage to business goodwill and are seeking $1.19 million in damages. AlphaTrade has answered the Original Petition by denying these claims and removed the case to U.S. District Court for the Southern District of Texas, Houston Division. Additionally, AlphaTrade has asserted counterclaims against Plaintiffs for fraud, negligent misrepresentation, deceptive trade practices, fraudulent inducement, and breach of contract and is seeking approximately $257,000 in damages. This action is currently in the discovery stage. AlphaTrade intends to vigorously defend the claims made against it and pursue its counterclaims. Item 2. Changes in Securities. The following unregistered securities have been issued since January 1st, 2009: Valued Date No. of Shares Title At Reason March 2009 400,000 Common $0.02 For services The above noted shares were issued in private, isolated transactions without registration under the Securities Act. The shares were issued in reliance on the exemption provided by Rule 506 and/or Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering to Consultants or to companies owned or controlled by Consultants or Officers of AlphaTrade. 16
Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. On August 10, 2009, the Board of Directors of the Company authorized the removal of Penny Perfect as Chief Executive Officer of the Company. Ms. Perfect shall continue to serve as President and on the Board of Directors of the Company. On August 10, 2009, the Board of Directors appointed Gordon Muir as Chief Executive Officer of the Company. Mr. Muir has served as a director of the Company since October 21, 1999 and became Chief Technology Officer in January 2004. He also previously served as the Company's Chief Executive Officer from February 2000 through January 2004. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 31.1 Certification of C.E.O. Pursuant to Section 302 of the Sarbanses-Oxley Act of 2002. Exhibit 31.2 Certification of Principal Accounting Officer Pursuant to Section 302 of the Sarbanses-Oxley Act of 2002. Exhibit 32.1 Certification of C.E.O. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit 32.2 Certification of Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Report on Form 8-K None 17
SIGNATURES In accordance with the requirements of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALPHATRADE.COM Date: January 13, 2011 / s / Gordon J. Muir ---------------------------- Gordon J. Muir, CEO/Director Date: January 13, 2011 / s / Katharine Johnston ---------------------------- Principal Financial Officer 1