Attached files
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 3
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2008 or
-------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------- --------
Commission File Number: 000-25631
This Amendment No. 3 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 14, 2008 with Amendment No. 1 filed March 23,
2009 and Amendment No. 2 filed on April 22, 2010.
AlphaTrade.com
--------------
(Exact name of registrant as specified in its charter)
NV 98-0211652
---------------------------- ---------------------
(State or other jurisdiction (IRS Employer
of incorporation) Identification Number)
930 West First Street, Ste 116, North Vancouver, BC V7P 3N4
--------------------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
(604) 986-9866
--------------
Registrant's telephone number, including area code
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [x] Yes [ ] No
1
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
[ ] Large accelerated filer [ ] Accelerated filer
[ ] Non-accelerated filer [x] Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). [ ] Yes [x] No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 51,525,523 as of June 30, 2008.
Explanatory Note:
This Amendment No. 3 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 14, 2008 with Amendment No. 1 filed March 23,
2009 and Amendment No. 2 filed on April 22, 2010. This amendment is being filed
in order to reflect the disclosure correction of a $100,000 overstatement of
general and administrative expenses pertaining to certain deferred costs in the
"Explanatory Notes" and "Notes to the Financial Statements".
--------------------------------------------------------------------------------
2
Report on Form 10-Q/A
For the Quarter Ended June 30, 2008
INDEX
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Page
----
Part I. Financial Information
Item 1. Financial Statements (unaudited)...........................5
Balance Sheets............................................5-6
Statements of Operations.................................7-8
Statement of Stockholders' Equity (Deficit)...........9-10
Statements of Cash Flows.................................11
Notes to the Financial Statements....................12-15
Item 2. Management's Discussion and Analysis
or Plan of Operation....................................16
Item 3. Controls and Procedures...................................19
Part II. Other Information
Item 1. Legal Proceedings..........................................19
Item 2. Changes in Securities.....................................20
Item 3. Defaults Upon Senior Securities..........................21
Item 4. Submission of Matters to a Vote of Security Holders ...21
Item 5. Other Information..........................................21
Item 6. Exhibits and Reports on Form 8-K.......................21
Signatures..................................................22
Certifications...........................................23-29
3
PART I - FINANCIAL INFORMATION
ALPHATRADE.COM
Balance Sheets
ASSETS
------
June 30, December 31,
2008 2007
-------------- -------------
(unaudited)
CURRENT ASSETS (restated)
Cash $ 3,538 $ 153,760
Accounts receivable 6,061 28,047
Marketable securities-available for sale 1,896,435 658,858
Marketable securities-available for sale
related party 2,093 5,232
Prepaid expenses 18,093 750
------------- ------------
Total Current
Assets 1,926,220 846,647
------------- ------------
PROPERTY AND EQUIPMENT, net 39,679 45,633
------------- ------------
OTHER ASSETS
Investments, at cost 300,000 300,000
------------- ------------
TOTAL ASSETS $ 2,265,899 $ 1,192,280
============= ============
The accompanying notes are an integral part of these financial statements.
4
ALPHATARADE.COM
Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
June 30, December 31,
2008 2007
-------------- -------------
(unaudited)
(restated)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 2,005,442 $ 2,404,822
Bank overdraft 22,664 -
Related party payables 2,459,357 2,190,414
Deferred revenues 367,817 1,130,178
------------- ------------
Total Current Liabilities 4,855,280 5,725,414
------------- ------------
TOTAL LIABILITIES 4,855,280 5,725,414
------------- ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred shares: $0.001 par value,
10,000,000 shares authorized: 2,000,000
Class A and 2,000,000 Class B shares
issues and outstanding 4,000 4,000
Common shares: $0.001 par value,
100,000,000 shares authorized: 51,525,523
and 48,589,773 shares issues and
outstanding,respectively 51,526 48,590
Stock subscription payable 45,080 28,500
Additional paid-in capital 33,481,922 32,959,057
Accumulated other comprehensive income (620,425) (738,404)
Accumulated deficit (35,551,484) (36,834,877)
------------- ------------
Total Stockholders' Equity (Deficit) (2,589,381) (4,533,134)
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 2,265,899 $ 1,192,280
============= ============
The accompanying notes are an integral part of these financial statements.
5
ALPHATRADE.COM
Statements of Operations and Other Comprehensive Income (Loss)
(unaudited)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
------------------------- -------------------------
2008 2007 2008 2007
------------ ------------ ------------ ------------
REVENUES (restated) (restated)
Subscription revenue $ 787,835 $ 751,994 $ 1,559,763 $ 1,524,655
Advertising revenue 1,660,240 460,102 2,468,295 858,469
Other revenue 57,743 14,509 95,144 34,688
----------- ----------- ----------- -----------
Total Revenues 2,505,818 1,226,605 4,123,202 2,417,812
----------- ----------- ----------- -----------
COST OF SALES
Financial content 457,094 444,820 940,497 897,114
Other cost of sales 1,042 1,307 2,142 2,793
----------- ----------- ----------- -----------
Total Cost of Sales 458,136 446,127 942,639 899,907
----------- ----------- ----------- -----------
GROSS PROFIT 2,047,682 780,478 3,180,563 1,517,905
----------- ----------- ----------- -----------
OPERATING EXPENSES
Management expense 120,000 120,000 240,000 240,000
Professional fees 229,496 604,339 667,988 1,062,164
Research and development 124,225 100,118 271,703 187,869
Marketing expense 258,226 565,094 492,923 1,456,591
General and administrative 97,540 189,028 254,425 369,825
----------- ----------- ----------- -----------
Total Operating Expenses 829,487 1,578,579 1,927,039 3,316,449
----------- ----------- ----------- -----------
INCOME (LOSS) FROM
OPERATIONS 1,218,195 (798,101) 1,253,524 (1,798,544)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Gain (Loss) on sale of assets (12,194) (48,350) (97,932) (48,350)
Gain on settlement of debt 307,972 - 307,972 -
Interest expense (91,691) - (180,171) -
----------- ----------- ----------- -----------
Total Other Income (Expense) 204,087 (48,350) 29,869 (48,350)
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
INCOME TAXES 1,422,282 (846,451) 1,283,393 (1,846,894)
INCOME TAX EXPENSE - - - -
----------- ----------- ----------- -----------
The accompanying notes are an integral part of these financial statements.
6
ALPHATRADE.COM
Statements of Operations and Other Comprehensive Income (Loss) Continued
(unaudited)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
------------------------- -------------------------
2008 2007 2008 2007
------------ ------------ ------------ ------------
(restated) (restated)
NET INCOME (LOSS) $ 1,422,282 $ (846,451) $ 1,283,393 $(1,846,894)
=========== =========== =========== ===========
OTHER COMPREHENSIVE INCOME
LOSS) $ 346,331 $ (218,199) $ 117,979 $ (227,681)
----------- ----------- ----------- -----------
TOTAL COMPREHENSIVE INCOME
LOSS) $ 1,768,613 $(1,064,650) $ 1,401,372 $(2,074,575)
=========== =========== =========== ===========
BASIC EARNINGS (LOSS) PER
SHARE $ 0.03 $ (0.02) $ 0.03 $ (0.04)
=========== =========== =========== ===========
COMPREHENSIVE BASIC EARNINGS
LOSS) PER SHARE $ 0.04 $ (0.02) $ 0.03 $ (0.05)
=========== =========== =========== ===========
BASICIC WEIGHTED AVERAGE
NUMBER SHARES OUTSTANDING 50,513,858 42,716,045 50,065,120 41,986,171
=========== =========== =========== ===========
FULLY DILUTED WEIGHTED
AVERAGE NUMBER
SHARES OUTSTANDING 118,399,208 42,716,045 117,950,470 41,986,171
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
7
ALPHATRADE.COM
Statements of Stockholders' Equity
(restated)
Preferred Stock Common Stock Additional Stock
---------------- ------------------ Paid-In Subscription
Shares Amount Shares Amount Capital Payable
--------- ------ ---------- ------- ----------- ------------
Balance,
December 31, 2006 4,000,000 $4,000 40,425,027 $40,425 $30,853,661 $ (30,000)
Common stock issued
for cash at $0.18
per share - - 2,287,500 2,288 454,212 28,500
Common stock
issued for services
at $0.20 per share - - 5,877,246 5,877 1,052,066 -
Value of stock purchase
warrants granted - - - - 207,728 -
Value of stock
options issued
under the 2007 stock
option plan - - - - 131,540 -
Contributed
capital - - - - 19,850 -
Executive
compensation
contributed
by related party - - - - 240,000 -
Amortization of
prepaid expense - - - - - 30,000
Net income for
the year ended
December
31, 2007 - - - - - -
--------- ------ ---------- ------- ----------- -----------
Balance,
December 31, 2007 4,000,000 4,000 48,589,773 48,590 32,959,057 28,500
Common stock issued
for cash at $0.20
per share - - 1,025,000 1,025 188,975 16,580
Common stock issued
for services at
$0.17 per share - - 1,910,750 1,911 319,657 -
The accompanying notes are an integral part of these financial statements.
8
ALPHATRADE.COM
Statements of Stockholders' Equity Continued
(restated)
Preferred Stock Common Stock Additional Stock
---------------- ------------------ Paid-In Subscription
Shares Amount Shares Amount Capital Payable
--------- ------ ---------- ------- ----------- ------------
Value of stock
purchase
warrants granted - - - - 14,233 -
Net income for
the six months
ended June 30,
2008 - - - - - -
--------- ------ ---------- ------- ----------- -----------
Balance, June
30, 2008 4,000,000 $4,000 51,525,523 $51,526 $33,481,922 $ 45,080
(unaudited)
========= ====== ========= ======= =========== ===========
The accompanying notes are an integral part of these financial statements.
9
ALPHATRADE.COM
Statements of Cash Flows
(unaudited)
(restated) For the Six Months Ended
June 30,
2008 2007
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ 1,283,393 $ (1,846,894)
Adjustments to reconcile net loss to net cash used
by operating activities:
Depreciation expense # 9,158 # 6,673
Value of stock options and warrants granted 14,233 103,478
Loss on sale of assets 97,932 48,350
Gain on settlement of debt (307,972) -
Amortization of services prepaid by common stock - 30,000
Investments received as payment for accounts
receivable (1,305,809) (305,750)
Common stock issued for services 321,568 308,354
Changes in operating assets and liabilities:
Proceeds from bank overdraft 22,664 -
Changes in accounts receivable # (25,099) # 50,120
Changes in prepaid expenses (17,343) (6,625)
Changes in deferred revenues (715,276) 60,290
Changes in related party payables 268,943 680,417
Changes in accounts payable and accrued expenses (91,408) 852,055
------------ ------------
Net Cash Provided by Operating Activities (445,016) (19,532)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of securities 91,418 57,899
Purchase of fixed assets (3,204) (9,329)
------------ ------------
Net Cash Used by Investing Activities 88,214 48,570
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Stock subscriptions payable 16,580 -
Common stock issued for cash 190,000 10,000
Contributed capital - 19,850
------------ ------------
Net Cash Provided by Financing Activities 206,580 29,850
------------ ------------
NET DECREASE IN CASH (150,222) 58,888
CASH AT BEGINNING OF PERIOD 153,760 147,323
------------ ------------
CASH AT END OF PERIOD $ 3,538 $ 206,211
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ 45,640 $ -
Income Taxes $ - $ -
NON CASH FINANCING ACTIVITIES:
Common stock issued for services
and contributions $ 321,568 $ 308,354
Value of stock options and warrants granted $ 14,233 $ 103,478
The accompanying notes are an integral part of these financial statements.
10
ALPHATRADE.COM
Notes to the Financial Statements
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, 2008 and for all periods presented 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, 2007 audited financial
statements. The results of operations for the periods ended June 30,
2008 and 2007 are not necessarily indicative of the operating results
for the full years.
NOTE 2 - 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 December 31, 2007 and June 30, 2008: dividend yield
of zero percent for all years; expected volatility of 55.50% and
62.01%; risk-free interest rates of 5.03% and 3.25% 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, 2007 and
changes during the periods ended December 31, 2007and June 30, 2008 is
presented below:
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
11
ALPHATRADE.COM
Notes to the Financial Statements
NOTE 2 - 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, 2007 51,570,347 $ 0.36 $ 0.36
Granted 2,160,000 0.41 0.41
Expired (310,000) 0.15 0.15
Exercised (298,650) 0.25 0.25
Outstanding, June 30, 2008 53,121,697 $ 0.36 $ 0.40
Exercisable, June 30, 2008 37,885,350 $ 0.40 $ 0.40
NOTE 3 - RESTATED FINANCIAL STATEMENTS
The Company has restated its financial statements as of and for the
period ended June 30, 2008 to reflect 1) the reversal of $2,480,201 of
advertising revenues because management concluded that the
collectability of the subject fees was not reasonably assured;2) an
other-than-temporary impairment of available-for-sale securities in the
amount of $909,127; and 3) the correction of a $100,000 overstatement
of general and administrative expenses pertaining to certain deferred
costs. The following summarized financial statements compare the
financial statements before and after the restatement.
BALANCE SHEET
-------------
CURRENT ASSETS (original) (restated)
Cash $ 3,538 $ 3,538
Accounts receivable 4,486,482 6,061
Marketable securities-available for sale 1,896,435 1,896,435
Marketable securities-available for sale
related party 2,093 2,093
Prepaid expenses 18,093 18,093
------------- -------------
Total Current Assets 6,406,641 1,926,220
------------- -------------
PROPERTY AND EQUIPMENT, net 39,679 39,679
------------- -------------
OTHER ASSETS
Investments, at cost 300,000 300,000
------------- -------------
TOTAL ASSETS $ 6,746,320 $ 2,265,899
============= =============
12
ALPHATRADE.COM
Notes to the Financial Statements
NOTE 3 - RESTATED FINANCIAL STATEMENTS (Continued)
(Original) (Restated)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 2,005,442 $ 2,005,442
Bank overdraft 22,664 22,664
Related party payables 2,459,357 2,459,357
Deferred revenues 1,482,437 367,817
------------- -------------
Total Current Liabilities 5,969,900 4,855,280
------------- -------------
TOTAL LIABILITIES 5,969,900 4,855,280
------------- -------------
STOCKHOLDERS' EQUITY
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: 51,525,523
shares issues and outstanding 51,526 51,526
Stock subscription payable 45,080 45,080
Additional paid-in capital 33,241,922 33,481,922
Accumulated other comprehensive income (1,529,552) (620,425)
Accumulated deficit (31,036,556) (35,551,484)
------------- -------------
Total Stockholders' Equity 776,420 (2,589,381)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,746,320 $ 2,265,899
============= =============
STATEMENTS OF OPERATIONS
REVENUES
Subscription revenue $ 1,559,763 $ 1,559,763
Advertising revenue 5,048,496 2,468,295
Other revenue 95,144 95,144
------------- -------------
Total Revenues 6,703,403 4,123,202
------------- -------------
COST OF SALES
Financial content 940,497 897,114
Other cost of sales 2,142 2,142
------------- -------------
Total Cost of Sales 942,639 942,369
------------- -------------
Total Operating Expenses 2,027,039 1,927,039
------------- -------------
INCOME (LOSS) FROM OPERATIONS 3,733,725 1,253,524
OTHER INCOME (EXPENSE)
Gain (Loss) on sale of assets (97,932) (97,932)
Gain on settlement of debt 307,972 307,972
Interest expense (180,171) (180,171)
------------- -------------
Total Other Income (Expense) 29,869 29,869
------------- -------------
13
ALPHATRADE.COM
Notes to the Financial Statements
NOTE 3 - RESTATED FINANCIAL STATEMENTS (Continued)
(Original) (Restated)
NET INCOME BEFORE INCOME TAXES 3,763,594 1,283,393
INCOME TAX EXPENSE - -
------------- -------------
NET INCOME $ 3,763,594 $ 1,283,393
============= =============
OTHER COMPREHENSIVE INCOME (LOSS) $ 117,979 $ 117,979
------------- -------------
TOTAL COMPREHENSIVE INCOME (LOSS) $ 3,881,573 $ 1,401,372
============= =============
BASIC EARNINGS (LOSS) PER SHARE $ 0.08 $ 0.03
============= =============
COMPREHENSIVE BASIC EARNINGS (LOSS)
PER SHARE $ 0.08 $ 0.03
============= =============
FULLY DILUTED INCOME (LOSS) PER SHARE $ 0.03 $ 0.01
============= =============
COMPREHENSIVE FULLY DILUTED INCOME
(LOSS) PER SHARE $ 0.03 $ 0.01
============= =============
BASIC WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 50,065,120 50,065,120
============= =============
FULLY DILUTED WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 117,950,470 117,950,470
============= =============
14
Item 2. Management's Discussion and Analysis of Financial Condition or Plan of
Operations
The following information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Form 10-Q/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.
Restated Financial Statements
The Company has restated its financial statements as of and for the period ended
June 30, 2008 to reflect the reversal of $2,480,201 of advertising revenues not
properly recognized in accordance with the Company's revenue recognition policy,
and to record an other-than-temporary impairment of available-for-sale
securities in the amount of $909,127. The following summarized financial
statements compare the financial statements before and after the restatement.
Restated Results of Operations.
THREE MONTHS ENDED JUNE 30, 2008 and 2007
------------------------------------------------
During the three months ended June 30, 2008, revenue growth was driven by our
increased advertising business. Revenue for 2008's second quarter was
$2,505,818, which is a 104% increase over 2007's second quarter revenue of
$1,226,605. The most substantial growth was advertising and within that category
the largest increase was from referral and repeat business. Advertising revenues
in the second quarter were $1,660,240 in 2008 and $460,102 in 2007. Our
advertising model is unique in the industry because we have a high traffic
website and our audience is comprised of a specific demographic. We are building
a client base of companies that are seeking brand awareness in combination with
building their shareholder base. Our advertising client base is increasing
because we have created relationships with investor and public relations firms
who refer us a lot of new business.
We are focused on increasing the traffic to our stable of websites to ensure our
advertising clients have a large, targeted viewing audience. We just completed a
business networking site www.zenobank.com which provides a forum for companies
----------------
and investors to associate using all of the modern, web-based tools available
such as blogs, forums, and chat rooms. Every public company will have complete
and accurate financial data on their profile pages on ZenoBank provided by
AlphaTrade to ensure they are compliant with all regulatory policies with
respect to investor relations.
15
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. As our subscribers
increase, our advertising clients will get more visibility and therefore we will
attract more advertising clients and the price for our advertising services
could increase accordingly. For the second quarter of 2008 our cost of sales was
18% of revenues compared to 36% in 2007. As our advertising revenues increase,
this percentage may become more and more favorable in terms of profitable
operations.
We realized a net income of $1,422,282 for the three months ended June 30, 2008
compared to a loss of $846,451 for the three months ended June 30, 2007. This is
an increase of $2,268,733 and directly related to the referral and long term
business from our established relationships with marketing and public relations
firms.
During the second quarter of 2008, none of our sports partnerships were active.
In some cases, we terminated the sports sponsorship program for lack of tangible
results and in some cases, we terminated due to breaches. To date in 2008 we
paid a total of $100,000 to a number of our sports sponsorship programs. During
2008 we paid $258,226 to consultants for marketing fees.
Included in professional fees for 2008 are shares of common stock to investor
relations consultants valued at $89,203 compared to $75,989 in 2007 and stock
options to our employees valued at $-0- compared to $93,350 in 2007. The
investor relations consultants bring new advertising clients to the company. We
realized related party compensation expense of $120,000 for both 2008 and 2007.
Our operating expenses decreased to $829,487 in 2008 from $1,578,579 in 2007
because we did not renew our sports sponsorships.
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, 2008 and
2007 would have been $1,511,485 and ($677,112), respectively. The loss in 2007
is almost entirely due to the payments to our sports sponsorships.
SIX MONTHS ENDED JUNE 30, 2008 AND 2007
----------------------------------------------
During the six months ended June 30, 2008, revenue growth was driven by our
increased advertising business. Revenue for the first half of 2008 was
$4,123,202, which is a 70% increase over the revenue for the first half of 2007
of $2,417,812. The most substantial growth was advertising and within that
category the largest increase was from referral and repeat business. Advertising
revenues in the first half of 2008 was $2,468,295 compared to $858,469 in 2007.
Our advertising model is strong and we expect this revenue stream to continue to
build in the future.
We are focused on increasing the traffic to our stable of websites to ensure our
advertising clients have a large, targeted viewing audience. We just completed a
business networking site www.zenobank.com which provides a forum for companies
----------------
and investors to associate using all of the modern, web-based tools available
such as blogs, forums, and chat rooms. Every public company will have complete
and accurate financial data on their profile pages on ZenoBank to ensure they
are compliant with all regulatory policies with respect to investor relations.
16
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. As our subscribers
increase, our advertising clients will get more visibility and therefore we will
attract more advertising clients and the price for our advertising services
could increase accordingly. For the first half of 2008 our cost of sales was 29%
of revenues compared to 37% in 2007. As our advertising revenues increase, this
percentage may become more and more favorable in terms of profitable operations.
We realized a net income of $1,283,393 for the six months ended June 30, 2008
compared to a loss of $1,846,894 for the six months ended June 30, 2007. This is
an increase of $3,130,287 and directly related to the referral and long term
business from our established relationships with marketing and public relations
firms.
During the first half of 2008, none of our sports partnerships were active. In
some cases, we terminated the sports sponsorship program for lack of tangible
results and in some cases, we terminated due to breaches. To date in 2008 we
paid a total of $158,445 to a number of our sports sponsorship programs. During
2008 we paid $492,923 to consultants for marketing fees.
Included in professional fees for 2008 are shares of common stock to investor
relations consultants valued at $312,568 compared to $308,354 in 2007 and stock
options to our employees valued at $14,233 compared to $103,478 in 2007. The
investor relations consultants bring new advertising clients to the company. We
realized related party compensation expense of $240,000 for both 2008 and 2007.
Our operating expenses decreased to $1,927,039 in 2008 from $3,316,449 in 2007
because we did not renew our sports sponsorships.
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 first half of 2008 and 2007 would
have been $1,610,194 and ($1,435,062), respectively. The loss in 2007 is almost
entirely due to the payments to our sports sponsorships.
Liquidity and Capital Resources.
We have consistently been financed through loans from related parties and from
raising capital through private equity offerings. We used $445,016 and $19,532
of cash in our operating activities in the first six months of 2008 and 2007,
respectively. For the six months ended June 30, 2008 and 2007 we received
cash totaling $206,580 and $29,850 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.
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Dependence on Key Personnel
We are dependent on the services of Penny Perfect, the Chief Executive Officer
of the Company. The loss of Ms. Perfect or Gordon Muir, our CTO 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 material information required to be
disclosed by us in the reports that we file or submit under the Exchange Act to
be recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms. There have been no 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.
AlphaTrade.com is the Defendant in litigation 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 5036907.
The Plaintiff alleges that it is owed the sum of $279,664 pursuant to a
licensing Agreement executed by the Plaintiff and the Defendant in 1999.
Alphatrade is agressively defending itself against this claim.
During the year ending December 31, 2002, a company filed an action against
AlphaTrade in the Supreme Court of British Columbia, Canada claiming unspecified
damages. AlphaTrade filed a Statement of Defence in August, 2002. There has been
no further developments in this action. AlphaTrade plans to vigorously defend
itself.
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.
18
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 is required to answer or move with respect to the Complaint on or
before August 10, 2008. The Company denies the allegations of the Complaint and
intends to vigorously defend this action.
We are 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 our business. While the outcome of the
potential claims and legal actions against us cannot be forecast with certainty,
we believe that such matters should not result in any liability which would have
a material adverse effect on our business.
Item 2. Changes in Securities.
The following unregistered securities have been issued since January 1st, 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
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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.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 31.1 Certification of C.E.O. Pursuant to Section 302 of the
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
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AlphaTrade.com
Date: January 13, 2011 By: /s/ Gordon J. Muir
-----------------------------------------
Gordon J. Muir
CEO/Director
AlphaTrade.com
Date: January 13, 2011 By: /s/ Katharine Johnston
-----------------------------------------
Katharine Johnston
Principal Accounting Officer
--------------------------------------------------------------------------------
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------- ----------------------
EX-31.1 Certifications required under Section 302 of the Sarbanes-Oxley Act
EX-31.2 Certifications required under Section 302 of the Sarbanes-Oxley Act
EX-32.1 Certifications required under Section 906 of the Sarbanes-Oxley Act
EX-32.2 Certifications required under Section 906 of the Sarbanes-Oxley Act
--------------------------------------------------------------------------------
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