Attached files

file filename
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-32.2 - SECTION 1350 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER - ALPHATRADE COMexhibit_32-2.txt
EX-32.1 - SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER - ALPHATRADE COMexhibit_32-1.txt

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

                                  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 September 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
                                         ---------  ---------
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 November 14, 2008 with Amendment No. 1 filed March 23,
2009 and Amendment No. 2 filed on April 22, 2010.

                        Commission File Number: 000-25631




                                 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: 52,056,023 as of September 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 November 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 $200,000 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 September 30, 2008 INDEX Page ---- Part I. Financial Information Item 1. Financial Statements (unaudited)............................4 Balance Sheets.............................................4-5 Statements of Operations..................................6-7 Statement of Stockholders' Equity (Deficit)...............8 Statements of Cash Flows...................................9 Notes to the Financial Statements.....................10-13 Item 2. Management's Discussion and Analysis or Plan of Operation....................................14 Item 3. Controls and Procedures....................................18 Part II. Other Information Item 1. Legal Proceedings...........................................17 Item 2. Changes in Securities......................................20 Item 3. Defaults Upon Senior Securities...........................20 Item 4. Submission of Matters to a Vote of Security Holders ........20 Item 5. Other Information...........................................20 Item 6. Exhibits and Reports on Form 8-K........................20 Signatures...................................................21 Certifications............................................... 3
PART I - FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) ALPHATRADE.COM Balance Sheets (restated) ASSETS ------ September 30, December 31, 2008 2007 ------------- ------------- (unaudited) CURRENT ASSETS Cash $ 355 $ 153,760 Accounts receivable 2,554 28,047 Marketable securities-available for sale 2,370,478 658,858 Marketable securities-available for sale related party 2,093 5,232 Prepaid expenses 8,900 750 ------------ ------------ Total Current Assets 2,384,380 846,647 ------------ ------------ PROPERTY AND EQUIPMENT, net 50,467 45,633 ------------ ------------ OTHER ASSETS Investments, at cost 300,000 300,000 ------------ ------------ TOTAL ASSETS $ 2,734,847 $ 1,192,280 ============ ============ The accompanying notes are an integral part of these financial statements. 4
ALPHATARADE.COM Balance Sheets (restated) LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) ---------------------------------------------- September 30, December 31, 2008 2007 ------------- ------------- (unaudited) CURRENT LIABILITIES Accounts payable and accrued expenses $ 2,091,429 $ 2,404,822 Bank overdraft 16,038 - Related party payables 2,626,573 2,190,414 Deferred revenues 214,793 1,130,178 ------------ ------------ Total Current Liabilities 4,948,833 5,725,414 ------------ ------------ TOTAL LIABILITIES 4,948,833 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: 52,506,023 and 48,589,773 shares issues and outstanding,respectively 52,056 48,590 Stock subscription payable 45,080 28,500 Additional paid-in capital 33,705,069 32,959,057 Accumulated other comprehensive income (919,824) (738,404) Accumulated deficit (35,100,367) (36,834,877) ------------ ------------ Total Stockholders' Equity/(Deficit) (2,213,986) (4,533,134) ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) $ 2,734,847 $ 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 Nine Months Ended September 30, September 30 -------------------------- -------------------------- 2008 2007 2008 2007 ------------ ------------- ------------ ------------- REVENUES (restated) (restated) Subscription revenue $ 757,287 $ 773,818 $ 2,317,050 $ 2,298,473 Advertising revenue 1,060,491 817,523 3,528,786 1,675,992 Other revenue 49,409 19,037 144,553 53,725 ----------- ------------ ----------- ----------- Total Revenues 1,867,187 1,610,378 5,990,389 4,028,190 ----------- ------------ ----------- ----------- COST OF SALES Financial content 490,615 364,973 1,431,112 1,262,087 Other cost of sales 396 1,082 2,538 3,875 ----------- ------------ ----------- ----------- Total Cost of Sales 491,011 366,055 1,433,650 1,265,962 ----------- ------------ ----------- ----------- GROSS PROFIT 1,376,176 1,244,323 4,556,739 2,762,228 ----------- ------------ ----------- ----------- OPERATING EXPENSES Management expense 120,000 - 360,000 240,000 Professional fees 216,500 49,609 884,488 1,111,773 Research and development 123,841 139,971 395,544 327,840 Marketing expense 146,899 1,819,988 639,822 3,276,579 General and administrative 175,398 268,242 429,825 638,067 ----------- ------------ ----------- ----------- Total Operating Expenses 782,638 2,277,810 2,709,679 5,594,259 ----------- ------------ ----------- ----------- INCOME (LOSS) FROM OPERATIONS 593,538 (1,033,487) 1,847,060 (2,832,031) ----------- ------------ ----------- ----------- OTHER INCOME (EXPENSE) Gain (Loss) on sale of assets (47,215) (114,771) (145,147) (48,350) Gain on settlement of debt - - 307,974 - Interest expense (95,206) - (275,377) - ----------- ------------ ----------- ----------- Total Other Income (Expense) (142,421) (114,771) (112,550) (48,350) ----------- ------------ ----------- ----------- NET INCOME (LOSS) BEFORE INCOME TAXES 451,117 (1,148,258) 1,734,510 (2,880,381) INCOME TAX EXPENSE - - - ----------- ------------ ----------- ----------- NET INCOME (LOSS) $ 451,117 $ (1,148,258) $ 1,734,510 $(2,880,381) =========== ============ =========== =========== 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 Nine Months Ended September 30, September 30, -------------------------- -------------------------- 2008 2007 2008 2007 ------------ ------------- ------------ ------------- (restated) (restated) OTHER COMPREHENSIVE INCOME (LOSS) $ (527,751) $ - $ (181,420) $ (342,452) ----------- ------------ ----------- ----------- TOTAL COMPREHENSIVE INCOME(LOSS)$ (76,634) $ (1,148,258) $ 1,553,090 $(3,222,833) =========== ============ =========== =========== BASIC EARNINGS (LOSS) PER SHARE $ 0.01 $ (0.03) $ 0.03 $ (0.07) =========== ============ =========== =========== BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 51,708,336 44,613,473 50,616,857 43,029,594 =========== ============ =========== =========== FULLY DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 118,685,186 44,613,472 117,593,707 43,029,594 =========== ============ =========== =========== The accompanying notes are an integral part of these financial statements. 7
ALPHATRADE.COM Statements of Stockholders' Equity/(Deficit) (restated) 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, 2006 4,000,000 $4,000 40,425,027 $40,425 $30,853,661 $ (30,000) $ (717,860) $(31,111,747) $ (961,521) Common stock issued for cash at $0.18 per share - - 2,287,500 2,288 454,212 28,500 - - 485,000 Common stock issued for services at $0.20 per share - - 5,877,246 5,877 1,052,066 - - - 1,057,943 Value of stock purchase warrants granted - - - - 207,728 - - - 207,728 Value of stock options issued under the 2007 stock option plan - - - - 131,540 - - - 131,540 Contributed capital - - - - 19,850 - - - 19,850 Executive compensation contributed by related party - - - - 240,000 - - - 240,000 Amortization of prepaid expense - - - - - 30,000 - - 30,000 Net income for the year ended December 31, 2007 - - - - - - (20,544) (5,723,130) (5,743,674) --------- ------ ---------- ------- ----------- ----------- ------------- ---------- ------------ Balance, December 31, 2007 4,000,000 4,000 48,589,773 48,590 32,959,057 28,500 (738,404) (36,834,877) (4,533,134) Common stock issued for cash at $0.20 per share - - 1,075,000 1,075 196,425 16,580 - - 214,080 Common stock issued for services at $0.17 per share - - 2,391,250 2,391 392,210 - - - 394,601 Value of stock purchase warrants granted - - - - 14,233 - - - 14,233 Value of stock options issued under stock option plans - - - - 143,144 - - - 143,144 Net income for the nine months ended September 30, 2008 - - - - - - (181,420) 1,734,510 1,553,090 --------- ------ ---------- ------- ----------- ----------- ------------- ---------- ------------ Balance, September 30, 2008 (unaudited) 4,000,000 $4,000 52,056,023 $52,056 $33,705,069 $ 45,080 $ (919,824) $(35,100,367) $(2,213,986) ========= ====== ========== ======= =========== =========== ============= ========== ============ The accompanying notes are an integral part of these financial statements. 8
ALPHATRADE.COM Statements of Cash Flows (unaudited) For the Nine Months Ended September 30, --------------------------- 2008 2007 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES (restated) Net income (loss) $ 1,734,510 $ (2,880,381) Adjustments to reconcile net income (loss) to net cash used by operating activities: Depreciation expense # 13,745 # 10,010 Value of stock options and warrants granted 157,377 103,478 Loss on sale of assets 145,147 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 (2,135,263) (862,139) Common stock issued for services 394,601 693,240 Changes in operating assets and liabilities: Proceeds from bank overdraft 16,038 - Changes in accounts receivable # (34,077) # 63,483 Changes in prepaid expenses (8,150) 4,148 Changes in deferred revenues (855,815) 7,050 Changes in related party payables 436,159 1,239,072 Changes in accounts payable and accrued expenses (5,421) 1,239,143 ------------ ------------ Net Cash Used in Operating Activities (449,121) (304,546) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Sale of securities 100,215 57,899 Purchase of fixed assets (18,579) (23,396) ------------ ------------ Net Cash Provided by Investing Activities 81,636 34,503 ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Stock subscriptions payable 16,580 - Common stock issued for cash 197,500 191,000 Contributed capital - 19,850 ------------ ------------ Net Cash Provided by Financing Activities 214,080 210,850 ------------ ------------ NET DECREASE IN CASH (153,405) (59,193) CASH AT BEGINNING OF PERIOD 153,760 147,323 ------------ ------------ CASH AT END OF PERIOD $ 355 $ 88,130 ============ ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION CASH PAID FOR: Interest $ 64,513 $ - Income Taxes $ - $ - NON CASH FINANCING ACTIVITIES: Common stock issued for services and contributions$ 394,601 $ 693,240 Value of stock options and warrants granted $ 157,377 $ 103,478 9
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 September 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 September 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 September 30, 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 December 31, 2007 and changes during the periods ended December 31, 2007and September 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 10
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 9,245,000 0.21 0.21 Expired (2,043,497) 0.73 0.73 Exercised (448,650) 0.25 0.25 Outstanding, September 30, 2008 58,323,200 $ 0.32 $ 0.32 Exercisable, September 30, 2008 36,976,850 $ 0.37 $ 0.37 NOTE 3 - RESTATED FINANCIAL STATEMENTS The Company has restated its financial statements as of and for the period ended September 30, 2008 to reflect 1) the reversal of $2,180,912 of advertising revenues not properly recognized in accordance with the Company's revenue recognition policy; 2) the recording of other-than-temporary impairment of available-for-sale securities during the 2007 fiscal year; and 3) the correction of a $200,000 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 $ 355 $ 355 Accounts receivable 4,293,267 2,554 Marketable securities-available for sale 2,370,478 2,370,478 Marketable securities-available for sale related party 2,093 2,093 Prepaid expenses 8,900 8,900 ------------ ------------ Total Current Assets 6,675,093 2,384,380 ------------ ------------ PROPERTY AND EQUIPMENT, net 50,467 50,467 ------------ ------------ OTHER ASSETS Investments, at cost 300,000 300,000 ------------ ------------ TOTAL ASSETS $ 7,025,560 $ 2,734,847 ============ ============ 11
ALPHATRADE.COM Notes to the Financial Statements NOTE 3 - RESTATED FINANCIAL STATEMENTS (Continued) CURRENT LIABILITIES (Original) (Restated) Accounts payable and accrued expenses $ 2,091,429 $ 2,091,429 Bank overdraft 16,038 16,038 Related party payables 2,626,573 2,626,573 Deferred revenues 1,438,994 214,793 ------------- ------------ Total Current Liabilities 6,173,034 4,948,833 ------------- ------------ TOTAL LIABILITIES 6,173,034 4,948,833 ------------- ------------ 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: 52,506,023 and 48,589,773 shares issues and outstanding, respectively 52,056 52,056 Stock subscription payable 45,080 45,080 Additional paid-in capital 33,465,069 33,705,069 Accumulated other comprehensive income (1,828,951) (918,824) Accumulated deficit (30,884,728) (35,100,367) ------------- ------------ Total Stockholders' Equity/(Deficit) 852,526 (2,213,986) ------------- ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) $ 7,025,560 $ 2,734,847 ============= ============ STATEMENT OF OPERATIONS ----------------------- Subscription revenue $ 2,317,050 $ 2,317,050 Advertising revenue 5,909,699 3,528,786 Other revenue 144,553 144,553 ------------- ------------ Total Revenues 8,371,302 5,990,389 ------------- ------------ COST OF SALES Financial content 1,431,112 1,431,112 Other cost of sales 2,538 2,538 ------------- ------------ Total Cost of Sales 1,433,650 1,433,650 ------------- ------------ GROSS PROFIT 6,937,652 4,556,739 ------------- ------------ OPERATING EXPENSES Management expense 360,000 360,000 Professional fees 884,488 884,488 Research and development 395,544 395,544 Marketing expense 639,822 639,822 General and administrative 629,826 429,825 ------------- ------------ 12
ALPHATRADE.COM Notes to the Financial Statements NOTE 3 - RESTATED FINANCIAL STATEMENTS (Continued) (Original) (Restated) Total Operating Expenses 2,909,680 2,709,679 ------------- ------------ INCOME FROM OPERATIONS 4,027,972 1,847,060 ------------- ------------ OTHER INCOME (EXPENSE) Gain (Loss) on sale of assets (145,147) (145,147) Gain on settlement of debt 307,974 307,974 Interest expense (275,377) (275,377) ------------- ------------ Total Other Income (Expense) (112,550) (112,550) ------------- ------------ NET INCOME BEFORE INCOME TAXES 3,915,422 1,734,510 INCOME TAX EXPENSE - - ------------- ------------ NET INCOME $ 3,915,422 $ 1,734,510 ============= ============ OTHER COMPREHENSIVE INCOME (LOSS) $ (181,420) $ (181,420) ------------- ------------ TOTAL COMPREHENSIVE INCOME (LOSS) $ 3,734,002 $ 1,553,090 ============= ============ BASIC EARNINGS PER SHARE $ 0.08 $ 0.03 FULLY DILUTED INCOME PER SHARE $ 0.03 $ 0.01 ============= ============ BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 50,616,857 50,616,857 ============= ============ FULLY DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 117,593,707 117,593,707 ============= ============ 13
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 September 30, 2008 to reflect the reversal of $2,180,912 of advertising revenues not properly recognized in accordance with the Company's revenue recognition policy, and an impairment of other-than-temporary available-for-sale investment 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 SEPTEMBER 30, 2008 and 2007 ----------------------------------------------------- During the three months ended September 30, 2008, revenue growth slowed due to the unparalleled turbulence and overall decline in all of the financial markets. Our advertising business grew minimally as many clients put their marketing and advertising budgets on hold until the economy picked up or their business outlook improved. Revenue for 2008's third quarter was $1,867,187, which is a 16% increase over 2007's third quarter revenue of $1,610,378. Advertising revenues in the third quarter were $1,060,491 in 2008 and $817,523 in 2007. We revised our advertising pricing to reflect the downturn in the economy so we could attract new business 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, which was launched last quarter. 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 14
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. 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 third quarter of 2008 our cost of sales was 26% of revenues compared to 36% of revenues in 2007. As our revenues increase, this percentage may become more favorable in terms of profitable operations. We realized a net income of $451,117 for the three months ended September 30, 2008 compared to a loss of $1,148,258 for the three months ended September 30, 2007. This is an increase of $1,599,375 and directly related to the growth of our advertising business. During 2008 we paid $539,822 to consultants for marketing fees. Included in professional fees for 2008 are shares of common stock to investor relations consultants valued at $73,033 compared to $384,676 in 2007 and stock options to our employees valued at $143,144 compared to $103,864 in 2007. 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 for both 2008 and 2007. Our operating expenses decreased to $782,641 in 2008 from $2,277,810 in 2007 mainly due to the fact that we did not renew or we terminated 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 September 30, 2008 and 2007 would have been $667,294 and ($763,582), respectively. The loss in 2007 is almost entirely due to the payments made on behalf of our sports sponsorships. NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 --------------------------------------------- During the nine months ended September 30, 2008, revenue growth was driven by our increased advertising business. Revenue for the first three quarters of 2008 was $5,990,389, which is a 49% increase over the revenue for 2007's first three quarters of $4,028,190. The most substantial growth was advertising and within that category the largest increase was from referral and repeat business. Advertising revenue in 2008's first three quarters was $3,528,786 compared to $1,675,992 in 2007's first three quarters. 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. 15
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, which was launched last quarter. The ---------------- site provides a comprehensive forum for companies, business 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. 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 first three quarters of 2008 our cost of sales was 28% of revenues compared to 31% in 2007. As our advertising revenues increase, this percentage may become more favorable in terms of profitable operations. We realized net income of $1,734,510 for the first three quarters ended September 30, 2008 compared to a loss of $2,880,381 for the first three quarters ended September 30, 2007. This is an increase of $4,614,891 and directly related to the growth of our advertising business. During the first nine months 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 in2008 we paid a total of $158,445 to a number of our sports sponsorship programs. During 2008 we paid $481,377 to consultants for marketing fees. Included in professional fees for 2008 are shares of common stock to investor relations consultants valued at $394,601 compared to $693,240 in 2007 and stock options to our employees valued at $157,377 compared to $103,478 in 2007. 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 $360,000 for both 2008 and 2007. Our operating expenses decreased to $2,709,680 in 2008 from $5,594,259 in 2007 mainly due to the fact that we did not renew or we terminated 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 $2,286,488 and ($2,083,663), respectively. The loss in 2007 is almost entirely due to the payments made on behalf of our sports sponsorships. 16
Liquidity and Capital Resources. We have consistently been financed through loans from related parties and from raising capital through private equity offerings. We used $449,121 and $304,546 of cash in our operating activities in the first nine months of 2008 and 2007, respectively. For the nine months ended September 30, 2008 and 2007 we received cash totaling $214,080 and $210,850 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. 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. 17
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 aggressively 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 Defense 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. 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. 18
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. 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. 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. 19
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 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 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 20
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 -------------------------------------------------------------------------------- 21
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 -------------------------------------------------------------------------------- 2