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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A-1
Post-Effective Registration Statement on Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
ALPHATRADE.COM
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(Name of Small Business Issuer as specified in its charter)
NEVADA Applied For
- - ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. incorporation or
organization) Employer I.D. No.)
Suite 400, 1111 West Georgia Street
Vancouver, British Columbia, Canada V6E 4M3
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(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (604) 681-7503
Facsimile Number: (604) 681-7710
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
$0.001 Par Value Common Voting Stock
------------------------------------
Title of Class
DOCUMENTS INCORPORATED BY REFERENCE: See Item 15.
Item 1. Description of Business.
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Business Development.
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Organization and Charter Amendments
-----------------------------------
Alphatrade.com (the "Company" or "Alphatrade") was organized under
the laws of the State of Nevada on June 6, 1995, under the name "Sierra Gold
Development Corp." It had an initial authorized capital of 25,000 shares,
designated as common stock, no par value. The Company was formed to seek new
business opportunities believed to hold potential profit; there were no
acquisitions, reorganizations or mergers completed until early 1999.
This Registration Statement is being filed on a voluntary basis to
maintain the Company's quotations on the OTC Bulletin Board of the National
Association of Securities Dealers, Inc. (the "NASD"). See the heading
"Effects of Existing or Probable Governmental Regulations," Item I.
The following amendments to the Articles of Incorporation of the
Company have been made since its organization:
* Increased the authorized capital to 25,000,000 shares of
common stock, par value $0.001, and effected an 80 for one
forward split of the outstanding common stock (10/21/98).
* Changed the name of the Company to "Honor One Corporation"
(10/29/98).
* Effected a three for one forward split of the outstanding
common stock (12/18/98).
* Increased the authorized capital to 100,000,000 shares of
common stock, par value $0.001; 10,000,000 shares of
preferred stock, par value $0.001; created a series of
2,000,000 shares of Class A Preferred Stock (see the
caption " Description of Securities," Item 11, for a
description of the rights, privileges and preferences of
the Class A Preferred Stock); and changed its name from
"Honor One Corporation" to "Alphatrade.com" (1/5/99).
All computations in this Registration Statement take into account
these adjustments.
Copies of the initial Articles of Incorporation and these amendments
were attached to the 10-SB Registration Statement filed with the Securities
and Exchange Commission on March 25, 1999, and are incorporated herein by
reference. See Item 15.
General
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The only business operations conducted by the Company from its
inception to the date of its acquisition of certain software assets outlined
under the heading "Acquisitions," below, was the unsuccessful search for a
potential merger, joint venture or acquisition candidate. The recent software
acquisition will allow the Company to private label a financial portal, E-
Gate, on the Internet. The concept of private labeling is simple, AlphaTrade
builds the web site and some other company puts their name on it. Many
brokerage firms do not have the financial ability to develop a world class web
site for their clients. AlphaTrade will build the site for them and charge a
modest up-front fee that is more commensurate with their budget, and a monthly
maintenance fee which will be manageable for the cash flow derived from the
small and mid-size brokerage and financial houses. E-Gate can provide
turnkey, cost-effective, Internet based financial information systems and
on-line trading solutions to financial services companies and brokerage firms
who do not have large budgets available.
The technological advantages of a financial portal with AlphaTrade's
technologies is enhanced speed of response, the depth of information, the
quality of the overall design and the module based information stream which
enables true customization by the user.
AlphaTrade's unique technologies are both replacement products and
augmentation products and have been created to make a more responsive
environment for the user. The Company's unique technology changes the way
computers are used and information is presented. AlphaTrade's browser based
technology will replace the software of competitors because there will be no
need to purchase software or expensive program upgrades. AlphaTrades'
technology will augment current software programs by enhancing their
functionality and expanding their capabilities.
AlphaTrade is preparing a multi-faceted corporate strategy designed
to capture market share quickly and efficiently. AlphaTrade believes that
computer usage will be expanded in direct correlation to the simplicity and
the functionality of new computer programs for the user. Not only does
AlphaTrade's technology provide the high quality, performance and control
wanted by sophisticated computer users, but it will also provide ease of use
and minimal cost for the less sophisticated computer user.
Computer users are always demanding higher quality and lower prices.
With AlphaTrade's browser based technologies, applications will be upgraded at
the server, and therefore all users are always presented with the latest
version of the application for no additional cost. In addition, computer
users are becoming more knowledgeable and are less likely to put up with
computer glitches and problems with software incompatibilities. With
AlphaTrades' technologies, the user's hardware is less important than with
existing software programs. This is important to users because it eliminates
down-time and virtually eliminates the need for users to be hardware experts.
Consequently, having the latest and most powerful computer matters far less,
if at all. With PC prices dropping, users will increase and more users will
want the simplicity of AlphaTrade's browser technologies, thus increasing our
market share.
On July 10th, 1999, the Company released a beta version of E-Gate,
the browser based financial portal. E-Gate can be accessed through the
Company's web site www.alphatrade.com. The components that were released
included a stock ticker, a quote grid, a stock chart and numerous streaming
videos. All of these components are sizable, moveable and can be floated from
the browser to the user's desktop without interfering with the functionality
of any other application currently in use. More components, as needed, will
be added to suit the needs of each user group. AlphaTrade will be licensing
the use of the financial portal to financial service companies who want to
enhance the functionality of their own web site or create a new web site using
exclusively browser based technologies.
The Company is in preliminary discussions with many financial
companies that are interested in licensing the browser-based technology. In
order for companies to differentiate their web presence from all other
companies in the same industry, they need to utilize different technology so
they can present information in a unique format rather than the customary
newspaper format. AlphaTrade's system frees the user from the constraints of
linear processing, enabling companies to be more creative and interface with
the customers in a futuristic manner. Detailed information regarding the
present and intended business operations of the Company can be found under the
caption "Business," below.
NASD OTC Bulletin Board Quotations
----------------------------------
On December 1, 1998, the NASD confirmed unpriced quotations of the
Company's common stock on the OTC Bulletin Board under the symbol "HNRO"; the
OTC Bulletin symbol was changed to "EBNK," in January, 1999. For information
concerning these and other stock quotations regarding the Company's common
stock, which do not represent actual transactions or broker/dealer markups,
mark downs or commissions, see the caption "Market Price of and Dividends on
the Company's Common Equity and Other Stockholder Matters," Item 9.
Acquisitions
------------
The Board of Directors approved and the Company executed an Asset
Purchase Agreement with Unicorn Trade & Commerce (Europe) Ltd., a corporation
organized under the laws of the country of Ireland ("Unicorn"), whereby the
Company:
* Acquired 100% of the interest in certain software (the
"Software"), including computer programs and data files
known as "WebSprite" and the "Web Enabling Software" (for a
description of the Software, see the heading "Principal
Products and Services" of the caption "Business," Item 1).
* Issued 4,000,000 shares of "restricted securities" (common
stock) to Unicorn.
A copy of the Asset Purchase Agreement is attached hereto and is
incorporated herein by reference.
Changes of Control During the Past Three Years
----------------------------------------------
Pursuant to the Company's Bylaws and the applicable provisions of
the Nevada Revised Statutes, on December 23, 1998, James Barry Somervail, the
Company's President and a director, appointed Victor D. Cardenas and J.
Michael Pinkney as directors, to serve until the next annual meeting of the
stockholders or until their respective successors were appointed and qualified
or their prior resignations or terminations. Mr. Somervail resigned
immediately thereafter. Maggie Abbott, the Company's Secretary, also resigned
on this date.
Effective December 23, 1998, and pursuant to the Bylaws and the
applicable provisions of the Nevada Revised Statutes, the newly constituted
Board of Directors unanimously consented without a meeting to elect the
following persons to serve as executive officers: Victor D. Cardenas,
President; and J. Michael Pinkney, Secretary/Treasurer.
See the caption "Security Ownership of Certain Beneficial Owners and
Management, Item 4, for information respecting the beneficial ownership of
securities of the Company by Messrs. Cardenas and Pinkney; and see the caption
"Directors, Executive Officers, Promoters and Control Persons," Item 5, for
other material information regarding these persons.
Sales of "Unregistered" and "Restricted" Securities Over the Past Three
Years
-----
For information concerning sales of "unregistered" and "restricted"
securities during the past three years, see the caption " Recent Sales of
Unregistered Securities," Item 10.
Business.
- ---------
AlphaTrade has made a tremendous breakthrough in the development of
a revolutionary "web" based technology. To showcase the power of this
technology, AlphaTrade is creating the "Financial Portal for the new
Millenium." The "beta" launch for this technology was July 10, 1999. This
new portal will abandon the "online newspaper" format so common in the leading
financial web portals of today. Instead, AlphaTrade's technology leverages
the intelligence and quickness of this browser based technology to bring the
user a customized assortment of applications such as: tick by tick charting,
real-time quotes, dynamic portfolio management, live TV broadcasts, streaming
video with no delay, premium on-line trading platforms and comprehensive news
all delivered via a nimble, thin client platform.
The Company intends to utilize its browser technology to participate
in the explosive on-line financial services market through a unique subscriber
aggregation strategy. The strategy focuses on private labeling the Company's
browser technology to established brokerage and other financial
services firms which currently do not offer or offer inadequate on-line
financial information and trading tools. This unique business model will
allow the Company to take advantage of existing brand recognition and
loyalties already established between these firms and their clients.
Currently, there are 5,500 brokerage firms located in the United
States; approximately 78 of these are presently offering on-line trading
services. This number will have to increase in the future to keep up with the
explosive demand created by investors wanting to trade on-line. The remaining
firms are searching for direction and solutions. Most brokerage firms are
recognizing that the development of on-line business is imperative to their
long-term ability to remain a viable operation.
The Company does not intend to restrict its business operations or
its ability to generate online commerce via their financial portal; it will
consider all opportunities presented.
Risk Factors
------------
In any business venture, there are substantial risks specific to the
particular enterprise which cannot be ascertained in total until the business
is underway. However, at a minimum, the Company's present and proposed
business operations will be highly speculative and be subject to the same
types of risks inherent in any new or unproven venture, and will include those
types of risk factors outlined below.
Limited Assets; No Immediate Source of Revenue. The Company has
Software assets which are as of yet unproven; no revenues, and with none
expected until the Company has completed a sale of the Software to a brokerage
firm or a financial services firm; the Company can provide no assurance that
its business prospects will produce any material revenues for the Company; or
that its current and intended business operations will be profitable.
Limited Funds Available for Operating Expenses. The Company
currently has no operating capital. All funding necessary to meet the
Company's anticipating operating expenses during the next 12 months will
likely be advanced by management or principal stockholders as loans to the
Company; or will be raised through debt or equity financing with non-
affiliated parties. The Company's ability to raise debt or equity funding
from non-affiliated sources will be severely limited by reason of its lack of
positive historical operations, limited assets and the limited public market
for its common stock. See the heading "Plan of Operation" of the caption
"Management's Discussion and Analysis or Plan of Operation," Item 2,
respecting the Company's current and intended operations; and the caption
"Market Price of and Dividends on the Company's Common Equity and Other
Stockholder Matters," Item 9, respecting the limited market for the Company's
common stock.
No "Established Trading Market" for Common Stock. Although the
Company's common stock is quoted on the OTC Bulletin Board of the NASD, there
is currently no "established trading market" for its common stock; and there
can be no assurance that any such market will ever develop or be maintained.
Any market price for shares of common stock of the Company is likely to be
very volatile, and numerous factors beyond the control of the Company may have
a significant adverse effect. In addition, the stock markets generally have
experienced, and continue to experience, extreme price and volume fluctuations
which have affected the market price of many small capital companies and which
have often been unrelated to the operating performance of these companies.
These broad market fluctuations, as well as general economic and political
conditions, may adversely affect the market price of the Company's common
stock in any market that may develop. See the caption "Market for Common
Equity and Related Stockholder Matters," Item 9. Sales of "restricted
securities" under Rule 144 may also have an adverse effect on any market that
may develop in the Company's common stock. See the caption "Recent Sales of
Unregistered Securities," Item 10.
Further, effective January 4, 1999, the NASD adopted rules and
regulations requiring that prior to any issuer having its securities quoted on
the OTC Bulletin Board of the NASD that such issuer must be a "reporting
issuer" which is required to file reports under Section 13 or 15(d) of the
Securities and Exchange Act of the 1934, as amended (the "1934 Act"). The
Company is not currently a "reporting issuer," and this Registration Statement
will bring the Company into compliance with these listing provision of the OTC
Bulletin Board and should prevent the NASD from delisting quotations of the
Company's common stock. Under the "phase-in" schedule of the NASD, the
Company has until July, 1999, within which to become a "reporting issuer" and
to satisfy all comments of the Securities and Exchange Commission respecting
this Registration Statement. See Item 9.
Competition; Low Barriers to Entry. The market for Internet
trading services is relatively new, intensely competitive, rapidly
evolving and subject to rapid technological change. The Company expects
competition to persist, intensify and increase in the future. The Company's
potential competitors can be divided into several groups: computer hardware
and service vendors such as IBM and Hewlett Packard; advertising and media
agencies such as Ogilvy & Mather, Young & Rubicam and Foote, Cone & Belding;
Internet integrators and web presence providers such as Agency.com and iXL
Holdings; large information consulting service providers such as Anderson
Consulting, Cambridge Technology Partners and Electronic Data Systems
Corporation; telecommunications companies such as AT&T and MCI; Internet and
online service providers such as America Online, Netcom Online and UUNet
Technologies; and software vendors such as Microsoft, Netscape, Novell and
Oracle. Almost all of the Company's current and potential competitors have
longer operating histories, larger installed customer bases, longer
relationships with clients and significantly greater financial, technical,
marketing and public relation resources than the Company and could decide at
any time to increase their resource commitments to the Company's target
market. In addition, the market for on-line trading is relatively new and
subject to continuing definition, and, as a result, may better position the
Company's competitors to compete in this market as it matures. As a strategic
response to changes in the competitive environment, the Company may from time
to time make certain pricing, service technology or marketing decisions or
business or technology acquisitions that could have a material adverse effect
on the Company's business, financial condition, results of operations and
prospects. Competition of the type described above could materially adversely
affect the Company's business, results of operations, financial condition and
prospects.
In addition, the Company's ability to generate clients will depend
to a significant degree on the quality of its services and its reputation
among its clients and potential clients, compared with the quality of its
services provided by, and the reputations of, the Company's competitors. To
the extent the Company loses clients to its competitors because of
dissatisfaction with the Company's services or its reputation is adversely
affected for any other reason, the Company's business, result of operations,
financial condition and prospects could be materially adversely affected.
There are relatively low barriers to entry into the Company's
business. Because firms such as the Company rely on the skill of their
personnel and the quality of their client service, they have no patented
technology that would preclude or inhibit competitors from entering their
markets. The Company is likely to face additional competition from new
entrants into the market in the future. There can be no assurance that
existing or future competitors will not develop or offer services that provide
significant performance, price, creative or other advantages over those
offered by the Company, which could have a material adverse effect on its
business, financial condition, results of operations and prospects.
Management believes its proprietary Software and new browser based
technology is sufficiently unique to enable it to effectively compete in its
current and intended business operations.
Developing Internet Economy, Market for e-Commerce Solutions;
Unproven Acceptance of the Company's Software. A substantial portion of the
Company's revenue is expected to be derived from services that depend upon the
adoption of Internet solutions by companies to improve their business
positioning and processes, and the continued development of the World Wide
Web, the Internet and e-Commerce. The Internet may not prove to be a viable
commercial marketplace because of inadequate development of necessary
infrastructure, lack of development of complementary products, implementation
of competing technology, delays in the development or adoption of new
standards and protocols required to handle increased levels of Internet
activity, government regulation or other reasons. The Internet has
experienced, and is expected to continue to experience, significant growth in
the number of users and volume of traffic. There can be no assurance that the
Internet infrastructure will continue to be able to support the demands placed
on it by this continuous growth. Moreover, critical issues concerning the use
of Internet and e-Commerce solutions (including security, reliability, cost
ease of deployment and administration and quality of service) remain
unresolved and may affect the growth of the use of such technologies to
maintain, manage and operate a business, expand product marketing, improve
corporate communications and increase business efficiencies. The adoption of
Internet solutions for these purposes, particularly by those individuals and
enterprises that have historically relied on traditional means, can be capital
intensive and generally require the acceptance of a new way of conducting
business and exchanging information. If critical issues concerning the ability
of Internet solutions to improve business positioning and processes are not
resolved or, if the infrastructure is not developed, the Company's business,
financial condition, results of operations and prospects will be materially
adversely affected.
Rapid Technology Change. The market for Internet solutions and
marketing services is characterized by rapid technological change, changes in
user and client requirements and preferences, frequent new product and service
introductions embodying new processes and technologies and evolving industry
standards and practices that could render the Company's intended service
practices and methodologies obsolete. The Company's success will depend, in
part, on its ability to improve its existing services, develop new services
and solutions that address the increasingly sophisticated and varied needs of
any current and prospective clients, and respond to technological advances,
emerging industry standards and practices and competitive service offerings.
Failure to do so could result in the loss of customers or the inability to
attract and retain customers, either of which developments could have a
material adverse effect on the Company's business, financial condition,
results of operations and prospects. There can be no assurance that the
Company will be successful in responding quickly, cost-effectively and
sufficiently to these developments. If the Company is unable, for technical,
financial or other reasons, to adapt in a timely manner in response to change
in market conditions or client requirements, its business, financial
condition, result of operations and prospects would be materially adversely
affected.
Potential Liability to Clients. Many of the Company's intended
operations involve the development, implementation and maintenance of
applications that are critical to the operations of their clients' businesses.
Its failure or inability to meet a client's expectations in the performance of
its services could injure the Company's business reputation or result in a
claim for substantial damages, regardless of its responsibility for such
failure. In addition, the Company possesses technologies and content that
may include confidential or proprietary client information. Although the
Company will implement policies to prevent such client information from being
disclosed to unauthorized parties or used inappropriately, any such
unauthorized disclosure or use could result in a claim for substantial
damages. The Company will attempt to limit contractually its damages arising
from negligent acts, errors, mistakes or omissions in rendering professional
services; however, there can be no assurance that any contractual protections
will be enforceable in all instances or would otherwise protect the Company
from liability for damages. The successful assertion of one or more large
claims against the Company that are uninsured, exceed available insurance
coverage, if any, or result in changes to any insurance policies the Company
may obtain, including premium increases or the imposition of a large
deductible or co-insurance requirements, could adversely affect the Company's
business, results of operations and financial condition.
Future Capital Needs; Uncertainty of Additional Financing. The
Company currently does not have the available cash resources and credit
facilities sufficient to meet its presently anticipated working capital and
capital expenditure requirements for this year. Therefore, the Company will
need to raise substantial funds in order to conduct its intended operations or
to take advantage of unanticipated opportunities. The Company's future
liquidity and capital requirements will depend upon numerous factors,
including the success of its new service offerings and competing technological
and market developments. The Company will be required to raise additional
funds through public or private financing, strategic relationships or other
arrangements, particularly as its acquisition strategy matures. There can be
no assurance that such additional funding, if needed, will be available on
terms acceptable to the Company, or at all. Furthermore, any additional
equity financing may be dilutive to stockholders, and debt financing, if
available, may involve restrictive covenants, which may limit the Company's
operating flexibility with respect to certain business matters. Strategic
arrangements, if necessary to raise additional funds, may require the Company
to relinquish its rights to certain of its intellectual property or selected
business opportunities. If additional funds are raised through the issuance
of equity securities, the percentage ownership of the stockholders of the
Company will be reduced, stockholders may experience additional dilution in
net book value per share and such equity securities may have rights,
preferences or privileges senior to those of the holder of the Company's
common stock. If adequate funds are not available on acceptable terms, the
Company may be unable to develop or enhance its services and products, take
advantage of future opportunities or respond to competitive pressures, any of
which could have a material adverse effect on its business, financial
condition, results of operations and prospects.
Government Regulation and Legal Uncertainties. The Company is not
currently subject to direct governmental regulation, other than the securities
laws and the regulations thereunder applicable to all publicly owned
companies, and laws and regulations applicable to businesses generally, and
there are currently few laws or regulations directly applicable to access to
or commerce on the Internet. However, due to the increasing popularity and
use of the Internet, it is likely that a number of laws and regulations may be
adopted at the local, state, national and international levels with respect to
the Internet covering issues such as user privacy, freedom of expression,
pricing of products and services, taxation, advertising, intellectual property
rights, information security or the convergence of traditional communication
services with Internet communications. For example, the Telecommunications
Act of 1996 (the "Telecommunications Act") imposes criminal penalties on
anyone who distributes obscene or indecent communications over the Internet.
Although the anti-indecency provisions of the Telecommunications Act have been
declared unconstitutional by the federal courts, the increased attention
focused upon these liability issues as a result of the Telecommunications Act
could adversely affect the growth of the Internet and therefore demand for the
Company's services. In addition, because of the growth in the electronic
commerce market, Congress has held hearings on whether to regulate providers
of services and transactions in the electronic commerce market, which
regulations could negatively affect client demand for Internet solutions that
facilitate electronic commerce. Moreover, the adoption of any such laws or
regulations may decrease growth of the Internet, which could in turn decrease
the demand for the Company's services or increase the cost of doing business
or in some other manner have a material adverse effect on the Company's
business, financial conditions, results of operations or prospects. Further,
the applicability to the Internet of existing laws governing issues such as
property ownership, copyrights and other intellectual property issues,
taxation, libel and personal property is uncertain. The vast majority of such
laws were adopted prior to the advent of the Internet and related technologies
and, as a result, do not contemplate or address the unique issues of the
Internet and related technologies. Changes to such laws intended to address
these issues, including some recently proposed changes, could create
uncertainty in the marketplace which could reduce demand for the Company's
services or increase the cost of doing business as a result of litigation
expenses or increased service delivery costs, or could in some other manner
have a material adverse effect on the Company's business, financial condition,
results of operations and prospects.
Year 2000
---------
The hardware intended to be utilized by the Company in connection
with its intended business operations is believed by management to be Y2K
compliant. The Company's equipment is new, and the architecture and design of
its Software was taken into account in all equipment purchases. Purchases
have and will be limited to equipment from well known computer companies like
IBM, Cisco and other reputable hardware manufacturers.
The Company can give no assurance that third parties with whom it
intends to do business (e.g., brokerage firms, banks, financial institutions,
business and utilities) will ensure Year 2000 compliance in a timely manner or
that, if they do not, their computer systems will not have an adverse effect
on the Company. However, the Company does not believe that Year 2000
compliance issues of such third parties will result in a material adverse
effect on its financial condition or results of operations.
Principal Products and Services
--------------------------------
AlphaTrade has made a tremendous breakthrough in the development of
revolutionary "web" based technology. To showcase the power of this
technology, AlphaTrade is creating the "Financial Portal for the new
Millenium." The "beta" launch for this technology was July 10, 1999. This
new portal will abandon the "online newspaper" format so common in the leading
financial web portals of today. Instead, AlphaTrade's technology leverages
the intelligence and quickness of this browser based technology to bring the
user a customized assortment of applications such as: tick by tick charting,
real-time quotes, dynamic portfolio management, live TV broadcasts, streaming
video with no delay, premium on-line trading platforms and comprehensive news
all delivered via a nimble, thin client platform.
The Company's financial web portal (E-Gate) will be private labeled
to brokerage firms and other financial institutions which have not yet created
an on-line presence or ones that want to enhance their on-line presence. Many
web sites offer portfolio management capabilities, but few offer everything
needed for a person to be an intelligent stock trader and personal money
manager. A prime aspect of the AlphaTrade financial portal is that it will
provide choice and accessibility like no other portal or trading platform.
Our portfolio analysis will provide data views like Morningstar and Quicken
and streaming news to ensure that any analysis is complete and comprehensive.
AlphaTrade's unique technologies are both replacement products and
augmentation products and have been created to make a more responsive
environment for the user. These lightweight components are very compact and
streamlined; management believes the Company's technologies will quickly
replace and make the "World Wide Web" obsolete.
AlphaTrade is preparing a multi-faceted corporate strategy designed
to capture market share quickly and efficiently. AlphaTrade's technology
provides the high quality, performance and control the market is demanding.
The system frees the user from the constraints of linear processing, enabling
companies to be more creative and interface with the customers in a futuristic
manner.
On-line Brokerage Services
---------------------------
Developed a premier online investment portal, (E-Gate), which will
provide institutional and retail investors with the following capabilities, is
the Company's goal:
* Access to comprehensive financial information on all markets
and 160 stock exchanges.
* The ability to track investments through a user-driven
portfolio management system.
* The capability to access a complete array of interactive
applications directly to the user's desktop.
* To directly execute trades with an online private labeled
broker of choice.
* A "one-stop" philosophy that provides the user direct access
to the most common information requested on the web, i.e.,
finance, news, sports, weather and on-line trading.
* A unique graphical user interface which uses the latest in
web technologies; Dynamic HTML, Java Script, Live Video
Broadcasts, Java and XML.
* Unique, lightweight access to ECN's (Electronic
Communication Network). ECN's are computerized trading
networks that display and try to match buy orders with sell
orders in NASDAQ quoted securities.
* Real time streaming stock quotations direct to the browser
or desktop.
Financial Content
-----------------
The Company's financial content includes investment performance
data, financial and business news and company-specific information.
Investment performance data is raw financial data respecting a
company's stock, its industry and the economy as a whole. The Company's
financial data includes specific information in price quotes, performance
charts, specific fundamental data regarding companies and market indices.
Financial and business news consists of real-time and delayed
broadcasts of general and business/financial news as well company-specific
press releases. The Company will assemble the current news and press releases
from data feeds providers.
Company specific content is corporate information that complements
the investment performance data for a particular entity's securities offering.
This data includes a briefing about products and services, corporate
management, historic performance, financial statements and disclosure
documents.
Recent Public Announcements
---------------------------
See the Company's News Release dated February 16, 1999, Item 15.
Distribution Methods of the Products or Services
------------------------------------------------
The Company will utilize the Internet and/or the worldwide web as
its primary information distribution method. The Company will deliver
financial information and content in both the browser and non-browser
environments. The Company has developed unique lightweight (thin-client)
applications and Java based components, which deliver financial data over low
bandwidth connections.
Competitive Business Conditions
-------------------------------
The list of Company's direct and indirect online competitors is
diverse, exhaustive and difficult to calculate. Competitors range from the
North American stock exchanges, to well-established news providers, to
discount brokerage firms, and to mutual fund companies and content
aggregators. Since the Company expects to be a one-stop-shop for online
investing services, each of these types of competitors will compete with the
Company's products and services in one respect or another. The following is a
brief list of a few of the major potential competitors of the Company:
Microsoft Investor; DBC Online; The Motley Fool; Morningstar.net; and Yahoo!;
The Street.com; and PC Quote. Also see the heading "Risk Factors," under the
caption "Business" of this Item, specifically, the risk factor entitled
"Competition; Low Barriers to Entry."
Competitive Advantages & Differentiation
----------------------------------------
The Company's private labeling strategy differentiates the Company
from its rivals and establishes many competitive advantages.
A recent study by "Forrester Research" concluded that the average
cost to build and maintain a basic financial transaction site is US$5,000,000
for the first year. If a brokerage firm wished to launch a more serious effort
that would add personalization, stock trading and asset allocation to its
basic services, the development and maintenance costs of the site would
average US$17,500,000 per year.
Companies that have added comprehensive information, data and news
applications crested the U$25,000,000 range. Maintenance costs averaged 25% of
the total annual cost of the site.
The online discount brokerage industry is currently plagued by a
lack of comprehensive premium investment information for the investor,
obliging the investors to look elsewhere for content prior to conducting a
securities transaction.
The Company believes that its financial web portal, as well as new
applications and content, can be customized as a branded information gateway
for advanced trading, e-commerce and analytic applications online. Marketed to
small and medium sized financial services companies, the Company's P.P.
program is an attractive solution that allows companies to maintain their
investor customers by providing on-line trading and research capabilities.
The ultimate value of Company's portal to these small and medium
sized firms is the ability to offer them a real-time trading channel to their
retail customers.
The impact of P.P. services on this business model is extensive as
it allows the Company to directly participate in the trading revenue stream.
The Company's is developing the trading platform.
Patents, Trademarks, Licenses, Franchisees, Concessions, Royalty Payments
or Labor Contracts
------------------
On June 29, 1999, the AlphaTrade executed a Licensing Agreement with
PhantomFilm.com, a Nevada corporation ("PhantomFilm"), whereby AlphaTrade
granted to PhantomFilm a non-exclusive license to use, produce, distribute and
commercialize a streaming audio and video technology developed by
AlphaTrade (the "Technology"). A copy of the Licensing Agreement is
attached hereto and incorporated herein by reference. See Item 15.
The Licensing Agreement provides for an initial license period of
one year and the issuance of 250,000 "unregistered" and "restricted" shares of
the Phantom.film's common stock to AlphaTrade upon the execution of the
Licensing Agreement. The Licensing Agreement also provides for the payment to
AlphaTrade of $25,000 per month, commencing upon the date of execution of
an expanded version of the Licensing Agreement for a period of 12 months.
As of the date of this Registration Statement, the parties have not executed
an expanded Licensing Agreement and Phantomfilm has not made any cash payments
to AlphaTrade.
PhantomFilm has the option to extend the Licensing Agreement beyond
its initial one-year term by issuing the following numbers of shares of its
"unregistered" and "restricted" common stock to AlphaTrade on the dates
indicated. All anniversary dates are from June 29, 1999, the date of
execution of the Licensing Agreement.
Anniversary No. of Shares
----------- -------------
First 90,000
Second 80,000
Third 70,000
Fourth 60,000
Fifth 50,000
Sixth 50,000
and every anniversary
thereafter
The Technology consists of source code with base level encoding and
compression technology that is intended to provide high quality audio
and video access over the Internet. Using the Technology, PhantomFilm
plans to provide branded products that enable the creation and real-time
delivery of streaming media on the web. Potential business applications
include turnkey production of press conferences, investor conferences,
trade shows, stockholder meetings, training sessions, media events, rock
concerts, late breaking news, movie trailers, new product introductions
and numerous other media events.
The License Agreement can not be deemed to have been executed at
"arms length." Messrs. Cardenas, Muir and Perfect are controlling persons of
PhantomFilm and the Company. See Item 4. PhantomFilm is a "reporting issuer"
under the Securities and Exchange Act of 1934, and its reports may be accessed
through EDGAR; its SEC file number is 33-2150LA, and its former name is
"Panther Resources, Inc."
Need for Government Approval of Principal Products or Services
--------------------------------------------------------------
None, currently; however, see the following caption.
Effect of Existing or Probable Governmental Regulations on Business
-------------------------------------------------------------------
See the heading "Risk Factors," under the caption "Business" of this
Item, specifically, the risk factors entitled "Governmental Regulation; Legal
Uncertainties."; and "No 'Established Trading Market' for Common Stock."
Research and Development
------------------------
The Company has purchased technologies and software components from
other organizations, which involved extensive development time and investment.
The WebSprite technology was developed over 2 years by Dvorak Developments of
Denver Colorado. The browser based technologies had been developed by Rafael
Denoyo of Salem Oregon.
Management estimates $1,500,000 will be expended on research and
development during fiscal 1999, subject to the availability of funding from
debt or equity financing.
Number of Employees
-------------------
15.
Item 2. Management's Discussion and Analysis or Plan of Operation.
- -------------------------------------------------------------------
Plan of Operations.
- -------------------
The Company will need to raise additional capital in the next twelve
month period to satisfy its cash requirements. This will take the form of an
equity issue or a stockholders' loans from directors. The Company recently
completed a private placement for $1,000,000 in "restricted securities" and
issued 1,000,000 shares of "restricted securities" under Rule 144 of the
Securities and Exchange Commission. These funds are to be advanced over a
period of four months to coincide with the Company's product development
schedule. Thereafter, the Company will need to raise an additional $4,000,000
for new product development, market penetration and general and administrative
costs of operations.
AlphaTrade has made a tremendous breakthrough in the development of
a revolutionary "web" based technology. To showcase the power of this
technology, AlphaTrade is creating the "Financial Portal for the new
Millenium." The "beta" launch for this technology was July 10, 1999,
with the public launch slated for summer 1999. This new portal will abandon
the "online newspaper" format so common in the leading financial web portals
of today. Instead, AlphaTrade's technology leverages the intelligence and
quickness of this browser based technology to bring the user a customized
assortment of applications such as: tick by tick charting, real-time quotes,
dynamic portfolio management, live TV broadcasts, streaming video with no
delay, premium on-line trading platforms and comprehensive news all delivered
via a nimble, thin client platform.
The Company's financial web portal will be private labeled to
brokerage firms and other financial institutions which have not yet created an
on-line presence or ones that want to enhance their on-line presence. Many
web sites offer portfolio management capabilities, but few offer everything a
person would require to be an intelligent stock trader and personal money
manager. One of the prime aspects of the AlphaTrade financial portal is that
it provides choice and accessibility like no other portal or trading platform.
Our portfolio analysis will provide data views like Morningstar and Quicken
and streaming news to ensure that any analysis is complete and comprehensive.
It is anticipated that the Company will spend approximately
$1,500,000 on new equipment and add 50-60 new employees over the next 12 month
period.
The foregoing contains "forward-looking" statements and information,
all of which is modified by reference to the caption "Risk Factors," Item 1.
Results of Operations.
- ---------------------
There were no operations during the periods covered by the financial
statements of the Company which accompany this Registration Statement. See
Item 13.
Liquidity.
- ----------
For the period ended January 15, 1999, the Company had no cash with
$3,000 in prepaid expenses for total current assets of $3,000 with $29,072 in
current liabilities. The Company had no revenues with total expenses of
$105,510 for a net loss for the period of ($105,510). $17,271 was provided as
a loan by a stockholder.
Item 3. Description of Property.
- ---------------------------------
The Company's principal executive offices are located at Suite #400,
1111 W. Georgia Street, Vancouver, B.C., Canada V6E 4M3, and consist of 4,800
square feet at a cost of US $5,000 per month on a month to month basis.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
Security Ownership of Certain Beneficial Owners.
- ------------------------------------------------
The following table sets forth the share holdings of those persons
who own more than five percent of the Company's common stock as of the date
hereof:
<TABLE>
<CAPTION>
Number of Shares Percentage Beneficial Owners
Name and Address Beneficially Owned of Class* of Companies
- ---------------- ------------------ -------- -----------------
<S> <C> <C> <C>
Emerald Marketing Ltd. 500,000 2.36% Nancy Lake, sole
55 Frederick Street director and
Nassau, Bahamas officer;
Management is
unaware of the
actual beneficial
owners of this
entity, and the
Bahamian laws make
it unlawful to
disclose the
beneficial
ownership of any
of its
corporations;
Management has no
interest in this
entity, and to its
knowledge, neither
do Penny Perfect
nor Gordon Muir.
Jupiter Consultants 285,000 1.34% Penny Perfect
Inc. controlling person
55 Frederick Street and beneficial
Nassau, Bahamas owner.
Micro American, Inc. 280,000 1.32% Gordon Muir
43 Elizabeth Avenue controlling person
Nassau, Bahamas and beneficial
owner.
Montblanc Enterprises 500,000 2.36% Elizabeth Nominees
Ltd. Limited is its
43 Elizabeth Avenue sole director and
Nassau, Bahamas officer;
management is
unaware of the
actual beneficial
owners of this
entity, and the
Bahamian laws make
it unlawful to
disclose the
beneficial
ownership of any
of its
corporations;
Management has no
interest in this
entity, and to its
knowledge, neither
do Penny Perfect
or Gordon Muir.
Gordon J. Muir 290,000 1.37%
2940 Mathers Avenue
West Vancouver, BC Canada
Penny Perfect 295,000 1.39%
2940 Mathers Avenue
West Vancouver, BC Canada
Sandy Coastline 10,280,000 48.49% Gordon Muir and
Investments Ltd. Penny Perfect
43 Elizabeth Avenue controlling person
Nassau, Bahamas and beneficial
owners.
Unicorn Trade and
Commerce 4,000,000 18.87% Rafael DeNoyo
20 Clanwilliam Terrace beneficially owns
Dublin 2, Ireland the 4,000,000
shares issued to
Unicorn
Yangtze Management 280,000 1.32% J. Michael Pinkney
Ltd. controlling person
1115 Cleridge Road and beneficial
Pt. Coquitian, BC Canada V3C 6H2 owner.
* Assumes the conversion of the outstanding 2,000,000 shares of
Series A Preferred Stock to 10,000,000 shares of common stock,
resulting in 21,200,000 shares being outstanding, but excludes
shares underlying the warrants owned by Emerald Marketing Ltd. and
Montblanc Enterprises Ltd. See Items 10 and 11; and Exhibits 3.6,
4.1 and 4.2, Item 15.
</TABLE>
Security Ownership of Management.
- ---------------------------------
The following table sets forth the share holdings of the Company's
directors and executive officers as of the date hereof:
<TABLE>
<CAPTION>
Number of Shares Percentage of
Name and Address Beneficially Owned of Class(1)
- ---------------- ------------------ -------------
<S> <C> <C>
Victor D. Cardenas (2) 50,000 .002%
J. Michael Pinkney (2)(3) 330,000 1.56%
Rafael DeNoyo (2)(4) 4,000,000 18.87%
</TABLE>
(1) Assumes the conversion of the outstanding 2,000,000 shares of
Series A Preferred Stock to 10,000,000 shares of common stock,
resulting in 21,200,000 shares being outstanding, but excludes
shares underlying the warrants owned by Emerald Marketing Ltd. and
Montblanc Enterprises Ltd.. See Items 10 and 11; and Exhibits
3.6, 4.2 and 4.2, Item 15.
(2) See the caption "Directors, Executive Officers, Promoters and
Control Persons," Item 5, for information concerning the offices
or other capacities in which these persons serve with the Company.
(3) Mr. Pinkney beneficially owns Yangtze Management Ltd.
(4) Mr. DeNoyo beneficially owns the 4,000,000 shares of AlphaTrade held
by Unicorn.
Changes in Control.
- -------------------
There are no present arrangements or pledges of the Company's
securities which may result in a change in control of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
- ---------------------------------------------------------------------
Identification of Directors and Executive Officers.
- ---------------------------------------------------
The following table sets forth the names of all current directors
and executive officers of the Company. These persons will serve until the
next annual meeting of the stockholders (held in June of each year) or until
their successors are elected or appointed and qualified, or their prior
resignations or terminations.
<TABLE>
<CAPTION>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
<S> <C> <C> <C>
Victor D. Cardenas Director and 12/98 *
President
J. Michael Pinkney Director and 12/98 *
Secretary/
Treasurer
Rafael DeNoyo Director 2/99 *
</TABLE>
* These persons presently serve in the capacities indicated.
Business Experience.
- --------------------
Victor D. Cardenas, Age 48, President and a Director. For over 30
years Mr. Cardenas has been a senior level manager with IBM and as such has
been involved in marketing, sales and computer software systems development
for large clients. He is currently the Utilities Industry Executive. Mr.
Cardenas holds a Bachelors Degree in Electrical Engineering from IPN in Mexico
City, Mexico; and has attended a one year accelerated business management
program in New York; he has also taken business educations courses at Harvard
University and Cambridge University, UK. He has been presented with nine
annual sales recognition awards; one "top" performer sales award (Golden
Circle); and four excellence in management awards.
J. Michael Pinkney, Age 56, Secretary/Treasurer and a Director. Mr.
Pinkney earned a Bachelor's Degree in commerce from the University of Alberta,
Canada. He was employed with the Alberta government for over 20 years as a
Senior Administrator, and since 1996, has been working as an independent
contractor specializing with large corporate clients.
Rafael DeNoyo, Age 37, Director and Chief Technical Officer. Mr.
DeNoyo is a quantitative specialist in a variety of financial market
applications and has over fourteen years of experience in developing
quantitative models for the financial market. He has successfully guided the
production of automated trading platforms for the futures, stocks and foreign
exchange markets. Mr. DeNoyo has extensive experience in developing data feed
parsers, data collection engines and other software related to data feed
manipulation and Internet communications. He has worked closely with
different modules related to an advanced net technology that provides the
ability to access applications through the web browser.
Significant Employees.
- ----------------------
The Company currently has four significant employees who are not
executive officers; however, as its business develops, it may be required to
engage the services of various technical and executive personnel.
Sam Halim, Age 57, Project Management. Mr. Halim has degrees in
Physics, Chemistry and studies on advanced Management Science. Mr. Halim has
developed a recognized expertise in evaluation trading systems and trading
advisors. Mr. Halim is an expert in stocks and commodity trading and has
managed his own multi-advisor commodity pool. His dual expertise in both
technical trading and large-scale project management lends well to managing
and coordinating the Alphatrade.com undertaking.
John O'Donahue, Age 52, Manager of Artificial Intelligence. Mr.
O'Donahue has over fifteen years experience in the application of Artificial
Intelligence to stock and commodity trading. He has developed proprietary
Genetic Algorithm software used in the automation of model building and
optimization. He has also done extensive work in the areas of Expert Systems
and Fuzzy Logic. He has successfully led projects to build trading platforms
used by a variety of major financial companies.
James A. Steiner, Age 36, Systems Manager. Fluent in German,
Spanish, French and English, he began his computer industry career in 1989,
joining the staff of American and European Investments in Bethesda, Maryland,
as a Programmer and Research Analyst. Formerly also with Labyrinth Research,
Richmond Research & Trading, and Fox River Financial Resources, Chemware, and
Dynamix, his career has so far culminated in his appointment as Project Lead
on MCI's now legendary "Views" component, now deployed at 150 MCI/Worldcom
Service Centers at every trouble ticket terminal. While working on contract
for Dynamix on a remote Pacific Island, he experienced an epiphany which has
caused him to devote his life to Java and reusable, scalable, object oriented
database technology. Since that time, he has achieved the highest level of
Java certification and built an international reputation in the field. He is
an expert in nearly every major relational database, and is in the vanguard in
the OODBMS movement. A COBRA expert, he is known as the "Godfather of
Enterprise Java Beans" to the component cognoscenti.
Steve Budrys, Age 41, Platform Manager. Formerly CTO for one of the
world's foremost Internet casinos, he has been involved in the computer
industry as a programmer, analyst and programming manager since 1984. He has
worked for Alpha-Beta, Odesta Corp., Vertical Solutions, Killer Sports,
Dynamix and GMT. Most recently, he spearheaded Net Bet's foray into Internet
wagering. His experience includes work on a variety of operating systems and
hardware/software platforms. Mr. Budrys is an internationally recognized
authority on dynamical, nonlinear systems design, mathematical modeling and
numerical optimization methods. For the past six years, he has devoted his
talents to time-series forecasting and modeling using the most advanced forms
of computational intelligence. Mr. Budrys is an experienced programmer in a
wide variety of computer languages, programming environments, hardware
platforms, and operating systems. He has done duty as a systems/database
administrator of UNIX, PC/Novell and Macintosh LANS, and is familiar with
their operating systems and hardware. Mr. Budrys, the [self-anointed] Cook
Islands Chess Champion, is an expert in the art of "cold reading," having
scored some truly amazing hits. A published author, his books "Killer
Football" and "Killer Basketball" are now considered collectors items. A
former professional poker and blackjack player, Mr. Budrys is also the creator
of the popular shareware video poker tutor, "Deuces Wild."
Family Relationships.
- ---------------------
There are no family relationships between any director or executive
officer; however, Gordon Muir and Penny Perfect, persons who may be deemed to
be "affiliates," are husband and wife.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
During the past five years, no present or former director, executive
officer or person nominated to become a director or an executive officer of
the Company:
(1) was a general partner or executive officer of any business
against which any bankruptcy petition was filed, either at the time of the
bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or
(4) was found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment
has not been reversed, suspended or vacated.
Item 6. Executive Compensation.
- --------------------------------
The following table sets forth the aggregate compensation paid by
the Company for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Optionsouts ensat'n
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Victor
Cardenas, 12/30/98 0 0 0 0 0 0 0
President, 1/15/99 0 0 0 (1) 0 0 0
Director
J. Michael
Pinkney, 12/31/98 0 0 0 0 0 0 0
Sec'y/Treas.1/15/99 0 0 0 (1) 0 0 0
Director
Rafael
DeNoyo,(2) 12/31/98 0 0 0 0 0 0 0
Director 1/15/99 0 0 0 0 0 0 0
</TABLE>
(1) On January 8, 1999, 50,000 "unregistered" and "restricted"
shares of the Company's common stock were issued to Victor
D. Cardenas and J. Michael Pinkney for services rendered.
See the caption "Recent Sales of Unregistered Securities,"
Item 10.
(2) Mr. DeNoyo's term of office did not commence until February,
1999.
No cash compensation, deferred compensation or long-term incentive
plan awards were issued or granted to the Company's management during the
years ended December 31, 1998 or 1997, or the period ended January 15, 1999,
except as set forth in the Summary Compensation Table. Further, no member of
the Company's management has been granted any option or stock appreciation
rights; accordingly, no tables relating to such items have been included
within this Item.
The Company has adopted a 1999 Stock Incentive Plan (the "Stock
Incentive Plan")pursuant to which the Board of Directors may grant "restricted
securities" awards to selected participants, based upon performance standards
and set vesting guidelines based upon performance. The grants may be
designated as "Stock Options" or "Non-Qualified Stock Options." The prices
for the stock options shall in no case be less than 100% of the fair market
value of the underlying shares on the date of grant, unless determined
otherwise by the Committee established under the Stock Incentive Plan. There
are certain restrictions on transfer during the life time of any participant;
and on termination, stock options may be exercised for a period of 90 days
thereafter; in the event of retirement, stock options may continue to be
exercised without time limitations, but to the extent that such stock options
are exercised after 90 days, they shall be treated as "Non-Qualified Stock
Options. No stock options have been granted, but 1,200,000 shares at an
exercise price of $1.00 have been reserved for issuance; a maximum of 20% of
the outstanding common stock of the Company can be reserved for this purpose.
A Copy of the Stock Incentive Plan is attached hereto and is incorporated
herein by reference. See Item 15.
Compensation of Directors.
- --------------------------
Except for a $7,500 per month salary received by Mr. DeNoyo which
commenced January 15, 1999, there are no standard arrangements pursuant to
which the Company's directors are compensated for any services provided as a
director. No additional amounts are payable to the Company's directors for
committee participation or special assignments.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements.
- -------------
There are no employment contracts, compensatory plans or
arrangements, including payments to be received from the Company, with respect
to any director or executive officer of the Company which would in any way
result in payments to any such person because of his or her resignation,
retirement or other termination of employment with the Company or its
subsidiaries, any change in control of the Company, or a change in the
person's responsibilities following a change in control of the Company.
Item 7. Certain Relationships and Related Transactions.
- --------------------------------------------------------
The only transactions between members of management, nominees to
become a director or executive officer, 5% stockholders, or promoters or
persons who may be deemed to be parents of the Company are:
* Issuance 4,000,000 shares of "restricted securities" (common
stock) to Unicorn (see the heading "Acquisitions" of the
caption "Business Development," Item 1, and the caption
"Recent Sales of Unregistered Securities," Item 10, and
Exhibit 10.1, Item 15.
* Issued 50,000 shares of "restricted securities" to two of
the Company's current directors and executive officers,
Victor D. Cardenas and J. Michael Pinkney (see the footnote
to the Summary Compensation Table, Item 6, and the caption
"Recent Sales of Unregistered Securities," Item 10.
* Issued 2,000,000 shares of Series A Preferred stock to Sandy
Coastline Investments Ltd., which is owned and controlled by
Penny Perfect and Gordon J. Muir, persons who may be deemed
to be "affiliates" of the Company. See Items 4, 10 and 11.
Item 8. Legal Proceedings.
- ---------------------------
Except as indicated below, the Company is not a party to any pending
legal proceeding. No federal, state or local governmental agency is presently
contemplating any proceeding against the Company. No director, executive
officer or persons who may be deemed to be an "affiliate" of the Company or
owner of record or beneficially of more than five percent of the Company's
common stock is a party adverse to the Company or has a material interest
adverse to the Company in any proceeding.
On June 8th, 1999, AlphaTrade.com was named as a defendant in a
Complaint filed in the District Court, Clark County, Nevada by WebData Corp.
and two of its shareholders. The Complaint alleges that AlphaTrade.com and
the other Defendants infringed upon trade secrets and other intellectual
property belonging to WebData. The Complaint also alleges that WebData was
deprived of certain corporate opportunities. Damages and declaratory relief
were requested.
AlphaTrade believes that the alleged technology described by WebData
in its Complaint is either in the public domain or uses rudimentary parsing
technology. Thus, AlphaTrade did not deprive WebData of any corporate
opportunity. An Answer to this effect was filed on July 6, 1999. AlphaTrade
will vigorously defend this position and the Company does not believe that the
WebData lawsuit will have a material effect on business. An 8-K Current
Report dated June 16, 1999, was filed by the Company with the Securities and
Exchange Commission on June 25, 1999, respecting this proceeding, and is
incorporated herein by reference. See Item 15.
Item 9. Market Price of and Dividends on the Company's Common Equity and
Other Stockholder Matters.
- --------------------------
Market Information.
- -------------------
There has never been any "established trading market" for shares of
common stock of the Company. Quotation of its common stock on the OTC
Bulletin Board of the NASD only commenced December 2, 1998, as "unpriced"; no
assurance can be given that any current market for the Company's common stock
will develop or be maintained. For any market that develops for the Company's
common stock, the sale of "restricted securities" (common stock) pursuant to
Rule 144 of the Securities and Exchange Commission by members of management,
Unicorn or any other person to whom any such securities may be issued in the
future may have a substantial adverse impact on any such public market.
Information about the date when current holders' holding period of "restricted
securities" commenced can be found under the caption "Recent Sales of
Unregistered Securities," Item 10. A minimum holding period of one year is
required for resales under Rule 144, along with other pertinent provisions,
including publicly available information concerning the Company (this
requirement will be satisfied by the filing and effectiveness of this
Registration Statement, the passage of 90 days and the continued timely filing
by the Company of all reports required to be filed by it with the Securities
and Exchange Commission; limitations on the volume of "restricted securities"
which can be sold in any 90 day period; the requirement of unsolicited
broker's transactions; and the filing of a Notice of Sale of Form 144.
The following quotations were provided by the National Quotation
Bureau, LLC, and do not represent actual transactions; these quotations do not
reflect dealer markups, markdowns or commissions.
<TABLE>
<CAPTION>
STOCK QUOTATIONS*
CLOSING BID
Quarter ended: High Low
- -------------- ---- ---
<S> <C> <C>
December 31, 1998 Unpriced Unpriced
January 4, 1999 $25 $0.60
thru
March 31, 1999
April 1, 1999 $13.4375 $2.25
thru
June 30, 1999
</TABLE>
Holders.
- --------
The number of record holders of the Company's securities as of the
date of this Registration Statement is approximately 175.
Dividends.
- ----------
The Company has not declared any cash dividends with respect to its
common stock or its preferred stock, and does not intend to declare dividends
in the foreseeable future. The future dividend policy of the Company cannot
be ascertained with any certainty, and if and until the Company completes any
sales of its products, no such policy will be formulated. There are no
material restrictions limiting, or that are likely to limit, the Company's
ability to pay dividends on its securities.
Item 10. Recent Sales of Unregistered Securities.
- -------------------------------------------------
<TABLE>
<CAPTION>
Common Stock
------------
Date Number of Aggregate
Name Acquired Shares Consideration
---- -------- --------- -------------
<S> <C> <C> <C>
James Barry
Summervail 6/6/95 6,000,000 $2,500(1)
J. Michael Pinkney 1/8/99 50,000 Services(2)
Victor D. Cardenas 1/8/99 50,000 Services(2)
Unicorn 1/8/99 4,000,000 Acquisition(3)
Emerald Marketing
Ltd. 1/8/99 500,000 Subscription(4)
International Resort
Properties Corp. 2/4/99 100,000 Services(5)
Montblanc Enterprises
Ltd. 2/18/99 500,000 Subscription(4)
Preferred Stock
---------------
Sandy Coastline Investments
Ltd.(6) 1/8/99 2,000,000 $0.001 (par value)
</TABLE>
(1) Mr. Somervail then served as the President and a director of
the Company. Mr. Somervail sold a portion of these "restricted securities"
from 1995 to June, 1996, to a number of persons believed to have been
"sophisticated investors" as defined in Rule 506 of the Securities and
Exchange Commission; and some of these persons also transferred and/or sold a
portion of these "restricted securities" to others, who were also believed to
be "sophisticated investors," resulting in there being approximately 30
stockholders, who were not deemed to be "affiliates" of the Company, in June,
1996.
(2) See the footnote to the Summary Compensation Table, Item 6.
(3) See the heading "Acquisitions" of the caption "Business
Development," Item 1, and Exhibit 10.1, Item 15.
(4) Subscriptions providing for promissory notes in the amount of
$500,000 each, due one year from subscription date, together with a warrant
for each to purchase an additional 500,000 shares of "restricted securities"
(common stock) at an exercise price of $1.00 per share, on or before one year
from the date of the subscriptions, and $1.25 per share, if exercised after
one year but prior to two years from the date of the subscriptions, with the
common stock and the warrants to be void unless the promissory notes are paid
when due.
(5) Issued for services valued at $50,000 under Rule 701 of the
Securities and Exchange Commission in connection with the Company's
restructuring, the acquisition outlined in Item 1 and its 10-SB Registration
Statement. See Item 15.
(6) Issued at par value to an "affiliate" of the Company; see Item
4.
Each of these persons had access to all material information
regarding the Company prior to the offer or sale of these securities; Unicorn
is beneficially owned by a current director, Rafael DeNoyo; Sandy Coastline
Investments Ltd. is owned by "affiliates"; the other corporations are believed
to be "accredited investors"; and the other shares were issued to directors or
executive officers. The offers and sales of these securities are believed to
have been exempt from the registration requirements of Section 5 of the
Securities Act of 1933, as amended, pursuant to Section 4(2) thereof, and from
similar applicable states' securities laws, rules and regulations exempting
the offer and sale of these securities by available state exemptions from
required registration.
Item 11. Description of Securities.
- -----------------------------------
Common Stock
------------
The Company has a class of securities authorized, consisting of
100,000,000 shares of $0.001 par value common voting stock. The holders of
the Company's common stock are entitled to one vote per share on each matter
submitted to a vote at a meeting of stockholders. The shares of common stock
do not carry cumulative voting rights in the election of directors.
Stockholders of the Company have no pre-emptive rights to acquire
additional shares of common stock or other securities. The common stock is
not subject to redemption rights and carries no subscription or conversion
rights. All shares of the common stock now outstanding are fully paid and
non-assessable.
Preferred Stock
---------------
The Company has authorized 10,000,000 preferred shares, $0.001 par
value per share, to be issued in series with attributes to be determined by
the Board of Directors. A series of 2,000,000 shares of Class A Preferred
Stock has been authorized by the Board of Directors. The Class A Preferred
Stock, all of which are currently outstanding, has the following rights,
privileges and preferences:
* Each share is convertible into five shares of common
stock at a conversion price of $0.05 per share.
* Each share is accorded five votes on any matter
submitted to the stockholders of the Company.
* These shares are assignable, subject to compliance
with any applicable securities laws, rules and
regulations.
* Ownership of these shares vests on issuance, and they
are not subject to cancellation.
See Exhibit 3.6, Item 15; and see the caption "Recent Sales of
Unregistered Securities," Item 10.
No Outstanding Options, Warrants or Calls
-----------------------------------------
With the exception of the shares of common stock into which the
Series A Preferred Stock are convertible, currently, there are no outstanding
options, warrants or calls to purchase any of the authorized securities of the
Company.
No Provisions Limiting Change of Control
----------------------------------------
There is no provision in the Company's Articles of Incorporation or
Bylaws that would delay, defer, or prevent a change in control of the Company.
Item 12. Indemnification of Directors and Officers.
- ---------------------------------------------------
Section 78.751(1) of the Nevada Revised Statutes ("NRS")
authorizes a Nevada corporation to indemnify any director, officer, employee,
or corporate agent "who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, except an action by or
in the right of the corporation" due to his or her corporate role. Section
78.751(1) extends this protection "against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with the action, suit or proceeding if he
or she acted in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful."
Section 78.751(2) of the NRS also authorizes indemnification of
the reasonable defense or settlement expenses of a corporate director,
officer, employee or agent who is sued, or is threatened with a suit, by or in
the right of the corporation. The party must have been acting in good faith
and with the reasonable belief that his or her actions were not opposed to the
corporation's best interests. Unless the court rules that the party is
reasonably entitled to indemnification, the party seeking indemnification must
not have been found liable to the corporation.
To the extent that a corporate director, officer, employee, or
agent is successful on the merits or otherwise in defending any action or
proceeding referred to in Section 78.751(1) or 78.751(2), Section 78.751(3) of
the NRS requires that he be indemnified "against expenses, including
attorneys' fees, actually and reasonably incurred by him or her in connection
with the defense."
Section 78.751 (4) of the NRS limits indemnification under
Sections 78.751 (1) and 78.751(2) to situations in which either (1) the
stockholders, (2)the majority of a disinterested quorum of directors, or (3)
independent legal counsel determine that indemnification is proper under the
circumstances.
Pursuant to Section 78.751(5) of the NRS, the corporation may
advance an officer's or director's expenses incurred in defending any action
or proceeding upon receipt of an undertaking. Section 78.751(6)(a) provides
that the rights to indemnification and advancement of expenses shall not be
deemed exclusive of any other rights under any bylaw, agreement, stockholder
vote or vote of disinterested directors. Section 78.751(6)(b) extends the
rights to indemnification and advancement of expenses to former directors,
officers, employees and agents, as well as their heirs, executors, and
administrators.
Regardless of whether a director, officer, employee or agent has
the right to indemnity, Section 78.752 allows the corporation to purchase and
maintain insurance on his behalf against liability resulting from his or her
corporate role.
Item 13. Financial Statements and Supplementary Data.
<PAGE>
ALPHATRADE.COM
(Formerly Honor One Corporation)
(A Development Stage Company)
FINANCIAL STATEMENTS
January 15, 1999 and December 31, 1998
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
AlphaTrade.com
(Formerly Honor One Corporation)
(A Development Stage Company)
Vancouver, B.C. Canada
We have audited the accompanying balance sheets of AlphaTrade.com (formerly
Honor One Corporation) (a development stage company) as of January 15, 1999,
and the related statements of operations, stockholders' equity (deficit) and
cash flows for the period from January 1, 1999 through January 15, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AlphaTrade.com (formerly
Honor One Corporation) (a development stage company) as of January 15, 1999,
and the results of its operations and its cash flows for the period from
January 1, 1999 through January 15, 1999 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company is a development stage company with no
significant operating results to date, which raises substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 3. The financial statements do not
include any adjustments that might result from the outcome of the uncertainty.
Jones, Jensen & Company
Salt Lake City, Utah
February 8, 1999
<PAGE>
ALPHATRADE.COM
(Formerly Honor One Corporation)
(A Development Stage Company)
Balance Sheets
<TABLE>
<CAPTION>
ASSETS
January 15, December 31,
1999 1998
<S> <C> <C>
CURRENT ASSETS
Cash $ - $ -
Prepaid expenses 3,000 -
Total Current Assets 3,000 -
FIXED ASSETS
Office equipment 10,411 -
Software 464 -
Total Fixed Assets 10,875 -
OTHER ASSETS
Technology (Note 6) - -
Total Other Assets - -
TOTAL ASSETS $13,875 $ -
</TABLE>
ALPHATRADE.COM
(Formerly Honor One Corporation)
(A Development Stage Company)
Balance Sheets (Continued)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
January 15, December 31,
1999 1998
<S> <C> <C>
CURRENT LIABILITIES
Cash overdraft $ 114 $ -
Accounts payable 11,687 11,687
Note payable 17,271 -
Total Current Liabilities 29,072 11,687
Total Liabilities 29,072 11,687
STOCKHOLDERS' EQUITY (DEFICIT)
Convertible preferred stock; par
value $0.001 per share; 10,000,000
shares authorized, 2,000,000 shares
issued and outstanding (Note 5) 2,000 -
Common stock: $0.001 par value,
100,000,000 shares authorized;
11,200,000, and 6,100,000 shares
issued and outstanding, respectively 11,200 6,100
Additional paid-in capital 1,091,300 46,400
Common stock subscriptions receivable (1,000,000) (50,000)
Accumulated deficit (119,697) (14,187)
Total Stockholders' Equity (Deficit) (15,197) (11,687)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 13,875 $ -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALPHATRADE.COM
(Formerly Honor One Corporation)
(A Development Stage Company)
Statements of Operations
From
From Inception on
January 1, June 6,
1999 through For the Years Ended 1995 Through
January 15, December 31, January 15,
1999 1998 1997 1999
<S> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ -
EXPENSES 105,510 11,687 - 119,697
NET INCOME (LOSS) $ (105,510) $ (11,687) $ - $ (119,697))
BASIC LOSS PER SHARE
OF COMMON STOCK $ (0.01) $ (0.00) $ (0.00)
FULLY DILUTED LOSS
PER SHARE $ (0.01) $ (0.00) $ (0.00)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALPHATRADE.COM
(Formerly Honor One Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From Inception on June 6, 1995 through January 15, 1999
Preferred Stock Common Stock
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Balance at inception on
June 6, 1995 - $ - - $ -
Issuance of 6,000,000
shares of common stock
for cash at $0.0004 per
share on June 6, 1995 - - 6,000,000 6,000
Net loss from inception on
June 6, 1995 through
December 31, 1995 - - - -
Balance,
December 31, 1995 - - 6,000,000 6,000
Net loss for the year ended
December 31, 1996 - - - -
Balance,
December 31, 1996 - - 6,000,000 6,000
Net loss for the year ended
December 31, 1997 - - - -
Balance,
December 31, 1997 - $ - 6,000,000 $ 6,000
Stock issued on
subscription for services
at $0.50 per share on
December 28, 1998 - - 100,000 100
Net loss for the year ended
December 31, 1998 - - - -
Balance,
December 31, 1998 - - 6,100,000 6,100
Stock issued for technology,
recorded at predecessor
cost, January 6, 1999
(Note 6) - - 4,000,000 4,000
Stock issued for services
at $0.50 per share on
January 6, 1999 - - 100,000 100
Stock issued on
subscription at $1.00 per
share, January 8, 1999 - - 1,000,000 1,000
Stock issued to founders
recorded at $0.001 which
approximates predecessor
cost, January 8, 1999 2,000,000 2,000 - -
Performance on stock
subscription, January 8
1999 - - - -
Net loss for the period
from January 1, 1999
through January 15, 1999 - - - -
Balance, January 15, 1999 2,000,000 $ 2,000 11,200,000 $ 11,200
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALPHATRADE.COM
(Formerly Honor One Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From Inception on June 6, 1995 through January 15, 1999
Additional
Paid-In Subscriptions Accumulated
Capital Receivable Deficit
<S> <C> <C> <C>
Balance at inception on
June 6, 1995 $ - $ - $ -
Issuance of 6,000,000
shares of common stock
for cash at $0.0004 per
share on June 6, 1995 (3,500) - -
Net loss from inception on
June 6, 1995 through
December 31, 1995 - - (2,500)
Balance,
December 31, 1995 (3,500) - (2,500)
Net Loss for the year ended
December 31, 1996 - - -
Balance,
December 31, 1996 (3,500) - (2,500)
Net loss for the year ended
December 31, 1997 - - -
Balance,
December 31, 1997 (3,500) - (2,500)
Balance,
December 31,1997 (3,500) - (2,500)
Stock issued on
subscription for services
at $0.50 per share on
December 28,1998 49,900 (50,000) -
Net loss for the year ended
December 31, 1998 - - (11,687)
Balance,
December 31, 1998 46,400 (50,000) (14,187)
Stock issued for technology,
recorded at predecessor
cost, January 6, 1999
(Note 6) 4,000 - -
Stock issued for services
at $0.50 per share on
January 6, 1999 49,900 - -
Stock issued on
subscription at $1.00 per
share, January 8, 1999 999,000 (1,000,000) -
Stock issued to founders
recorded at $0.001 which
approximates predecessor
cost, January 8, 1999 - - -
Performance on stock
subscription, January 9
1999 - 50,000 -
Net loss for the period
from January 1, 1999
through January 15, 1999 - - (105,510)
Balance, January 15, 1999 $1,091,300 $ (1,000,000) $(119,697)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALPHATRADE.COM
(Formerly Honor One Corporation)
(A Development Stage Company)
Statements of Cash Flows
From
From Inception on
January 1, June 6,
1999 through For the Years Ended 1995 Through
January 15, December 31, January 15,
1999 1998 1997 1999
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (105,510) $ (11,687) $ - $ (119,697)
Adjustments to reconcile net
loss to net cash provided
(used) by operating activities:
Common stock issued for services 100,000 - - 100,000
Preferred stock issued for services 2,000 - - 2,000
Changes in operating assets and
liabilities:
(Increase) decrease in prepaid
expenses (3,000) - - (3,000)
Increase (decrease) in accounts
payable 17,385 11,687 - 29,072
Net Cash Provided by
Operating Activities 10,875 - - 8,375
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of fixed assets (10,875) - - (10,875)
Net Cash Used by
Investing Activities (10,875) - - (10,875)
CASH FLOWS FROM
FINANCING ACTIVITIES
Common stock issued for cash - - - 2,500
Net Cash Provided by
Financing Activities - - - 2,500
NET CHANGE IN CASH - - - -
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD - - - -
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ - $ - $ - $ -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALPHATRADE.COM
(Formerly Honor One Corporation)
(A Development Stage Company)
Statements of Cash Flows (Continued)
From
From Inception on
January 1, June 6,
1999 through For the Years Ended 1995 Through
January 15, December 31, January 15,
1999 1998 1997 1999
<S> <C> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION
Interest paid $ - $ - $ - $ -
Income taxes paid $ - $ - $ - $ -
SCHEDULE OF NON-CASH
FINANCING ACTIVITIES:
Common stock issued
for services $ 100,000 $ - $ - $ 100,000
Preferred stock issued
for services $ 2,000 $ - $ - $ 2,000
</TABLE>
<PAGE>
ALPHATRADE.COM
(Formerly Honor One Corporation)
(A Development Stage Company)
Notes to the Financial Statements
January 15, 1999 and December 31, 1998
NOTE 1 - NATURE OF ORGANIZATION
This summary of significant accounting policies of AlphaTrade.com is
presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations
of the Company's management, which is responsible for their
integrity and objectivity. These accounting policies conform to
generally accepted accounting principles and have been consistently
applied in the preparation of the financial statements.
a. Organization and Business Activities
AlphaTrade.com was incorporated under the laws of the State of
Nevada on June 6, 1995. The Company has been in the development
stage since incorporation.
b. Depreciation
The cost of the property and equipment will be depreciated over the
estimated useful lives (5 years) of the related assets.
Depreciation will be computed using the straight-line method when
the assets are placed in service.
c. Accounting Method
The Company's consolidated financial statements are prepared using
the accrual method of accounting. The Company has elected a
December 31 year-end.
d. Cash and Cash Equivalents
For the purpose of the statement of cash flows, the Company
considers all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents.
e. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
f. Basic Loss Per Share
The computation of basic loss per share of common stock is based on
the weighted average number of shares of common stock outstanding
during the periods presented. Common stock equivalents have been
included in the diluted loss per share calculation.
g. Income Taxes
No provision for income taxes has been accrued because the Company
has net operating losses from inception. The net operating loss
carry forward of approximately $119,700 at January 15, 1999 expire
in 2014. No tax benefit has been reported in the financial
statements because the Company is uncertain if the carry forward
will expire unused. Accordingly, the potential tax benefits are
offset by a valuation account of the same amount.
NOTE 2 - FIXED ASSETS
Fixed assets at January 15, 1999 and December 31, 1998 consisted of
the following:
January 15, December 31,
1999 1998
Computer equipment $ 10,411 $ -
Software 464 -
Less accumulated depreciation - -
$ 10,875 $ -
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the relation of assets and liquidation of liabilities
in the normal course of business. However, the Company does not
have significant cash or other material assets, nor does it have an
established source of revenues sufficient to cover its operating
costs and to allow it to continue as a going concern. The Company
intends to complete the development of its technology and to market
that technology. It also intends to collect the proceeds of its
stock subscription receivable.
NOTE 4 - NOTE PAYABLE
The Company owes $17,271 to a private company for funds expended on
the Company's behalf. The debt is unsecured, non-interest bearing
and due upon demand.
NOTE 5 - CONVERTIBLE PREFERRED STOCK
The Company has 2,000,000 outstanding shares of convertible Class
A preferred stock with the following features:
Each preferred share is convertible into five underlying common
shares at a conversion price of $0.05 per common share.
Each holder of Class A preferred shares shall be entitled to
five(5) votes (which can be voted prior to conversion) for every
preferred share held to vote on any matters brought before the
shareholders of the Company.
The preferred shares are assignable.
The preferred shares vest immediately to the holder upon issuance
and cannot be canceled.
NOTE 6 - PURCHASE OF TECHNOLOGY
On January 4, 1999, the Board of Directors issued 4,000,000 shares
of unregistered restricted common stock for the purchase of
software for development and eventual resale. The acquired
software is still in a developmental state and has uncertain net
realizable value. The software was recorded at its predecessor
cost of $-0-.
NOTE 7 - STOCK OPTION PLAN
On January 4, 1999, the Board of Directors voted to approve the
1999 Stock Option Plan. The plan reserves a maximum of 20 percent
of the issued and outstanding shares of the Company's common stock
for issuance pursuant to stock options and restricted stock awards.
Such shares are to be issued at the discretion of the Board of
Directors of the Company. As of January 15, 1999, no options had
been awarded.
NOTE 8 - STOCK SUBSCRIPTION RECEIVABLE
The Company has issued 1,000,000 shares of its common stock
pursuant to a subscription. The subscription price is $1.00 per
share and the subscription provides that if the shares are not paid
for by January 8, 2001, the shares will be canceled. The
subscription is unsecured and non-interest bearing. The
subscription also includes warrants to purchase an additional
1,000,000 shares of common stock at $1.25 per share. The warrants
expire on January 8, 2001.
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ---------------------
Barry L. Friedman, Certified Public Accountant, of Las Vegas,
Nevada, audited the financial statements of the Company for the calendar years
ended December 31, 1998, 1997 and 1996; these financial statements are filed
as a part of this Registration Statement. See Items 13 and 15.
Jones, Jenson & Company, LLC, Certified Public Accountants, of Salt
Lake City, Utah, were engaged on or about January 6, 1999, by the Board of
Directors of the Company to prepare the audited financial statements of the
Company for the period ended January 15, 1999; and will prepare the financial
statements for the calendar year, 1999.
There were no disagreements between the Company and Mr. Friedman,
whether resolved or not resolved, on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure,
which, if not resolved, would have caused them to make reference to the
subject matter of the disagreement in connection with their reports.
The Report of Mr. Friedman did not contain any adverse opinion or
disclaimer of opinion, and with the exception of a "going concern"
qualification because of the lack of material operations of the Company on the
date of the Report, were not qualified or modified as to uncertainty, audit
scope or accounting principles.
During the Registrant's three most recent calendar years, and since
then, neither Mr. Friedman nor Jones, Jensen & Company has advised the Company
that any of the following exists or is applicable:
(1) That the internal controls necessary for the Company to
develop reliable financial statements do not exist, that
information has come to their attention that has lead them
to no longer be able to rely on management's representations
or that has made them unwilling to be associated with the
financial statements prepared by management;
(2) That the Company needs to expand significantly the scope of
its audit, or that information has come to their attention
that if further investigated may materially impact the
fairness or reliability of a previously issued audit report
or the underlying financial statements or any other
financial presentation, or cause them to be unwilling to
rely on management's representations or be associated with
the Company's financial statements for the foregoing reasons
or any other reason; or
(3) That they have advised the Company that information has come
to their attention that they have concluded materially
impacts the fairness or reliability of either a previously
issued audit report or the underlying financial statements
for the foregoing reasons or any other reason.
During the Company's three most recent calendar years and since
then, the Company has not consulted Jones Jenson & Company regarding the
application of accounting principles to a specified transaction, either
completed or proposed; or the type of audit opinion that might be rendered on
the Company's financial statements or any other financial presentation
whatsoever.
The Company has provided Mr. Friedman with a copy of the disclosure
provided under this caption of this Registration Statement, and has advised
him to provide the Company with a letter addressed to the Securities and
Exchange Commission as to whether he agrees or disagrees with the disclosures
made herein. A copy of its response is attached hereto and is incorporated
herein by this reference. See Item 15.
Item 15. Financial Statements and Exhibits
- -------------------------------------------
(a)
Jones Jenson & Company, LLC
Index to Financial Statements
Report of Certified Public Accountants
Financial Statements
- --------------------
Audited Financial Statements for the period
January 15, 1999, and December 31, 1998
---------------------------------------
Independent Auditors' Report
Balance Sheet
Statements of Operations
Statements of Stockholders' Equity
Statements of Cash Flows
Notes to the Financial Statements
(b) The following exhibits are filed as a part of this Registration
Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description*
- ------ ------------
<S> <C>
10 Licensing Agreement with PhantomFilm.com
16 Letter of Barry L. Friedman, C.P.A., regarding change
Certifying Accountant.
27 Financial Data Schedule
</TABLE>
* Summaries of all exhibits contained within this
Registration Statement are modified in their
entirety by reference to these Exhibits.
Exhibits incorporated herein by reference.
3.1 Initial Articles of Incorporation dated June 6, 1995.
3.2 By-laws.
3.3 Certificate of Amendment increasing the authorized capital to
25,000,000 shares of common stock, par value $0.001, and effected
an 80 for one forward split of the outstanding common stock
(10/21/98).
3.4 Certificate of Amendment changing the name of the Company to
"Honor One Corporation" (10/29/98).
3.5 Certificate of Amendment effecting a three for one forward split
of the outstanding common stock (12/18/98).
3.6 Certificate of Amendment increasing the authorized capital to
100,000,000 shares of common stock, par value $0.001; 10,000,000
shares of preferred stock, par value $0.001; created a series of
2,000,000 shares of Class A Preferred Stock (see the caption "
Description of Securities," Item 11, for a description of the
rights, privileges and preferences of the Class A Preferred
Stock); and changed its name from "Honor One Corporation" to
"Alphatrade.com" (1/5/99).
4.1 Common Stock Purchase Warrant No. 1 of Emerald Marketing Ltd.
4.2 Common Stock Purchase Warrant No. 2 of Montblanc Enterprises
Limited.
10.1 Asset Purchase Agreement between the Company and
Unicorn, dated January 6, 1999.
10.2 1999 Stock Incentive Plan.
10.3 Written Compensation Agreement with International Resort
Properties Corp.
10.4 Promissory Note dated January 8, 1999.
10.5 Promissory Note dated February 18, 1999.
16 Letter of Barry L. Friedman, C.P.A., consent.
27 Financial Data Schedule
99 News Release dated February 16, 1999.
8-K Current Report dated was filed by the Company with the Securities and
Exchange Commission on June 25, 1999, respecting this proceeding, and is
incorporated herein by reference.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the Registrant has caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
ALPHATRADE.COM
Date: 7/21/99 By:/s/ Victor D. Cardenas
------------------------
Victor D. Cardenas, Director
and President
Date: 7/21/99 By:/s/ J. Michael Pinkney
------------------------
J. Michael Pinkney, Director
Secretary/Treasurer
Date: 7/21/99 By:/s/ Rafael DeNoyo
--------------------------
Rafael DeNoyo, Director
LICENSING AGREEMENT
GENERAL TERMS & CONDITIONS June 29, 1999
Between:
AlphaTrade.com a company incorporated pursuant to the laws of the State
of Nevada;
(the "Licensor")
AND:
PhantomFilm.com, a company incorporated pursuant to the laws of the
state of Nevada;
(the "Company")
Whereas the Licensor has a 100% ownership interest in certain streaming
video technology known as the "Technology", which it wishes to license
to the Company on a non-exclusive basis and the Company wishes to have a
non-exclusive license to the Technology.
Now therefore this agreement witnesses that in consideration of the
premises and the mutual agreements and covenants herein contained (the
receipt and sufficiency of which is acknowledged by each party) the
parties hereby covenant and agree as follows:
1. DEFINITIONS
1.1 The terms defined in this section shall have the following
meanings for the purposes of this Agreement:
(a) "Closing Date" is the date of execution of this agreement; .
(b) "Confidential Information" means all information (including,
without limitation, Technology, trade secrets, know-how,
specifications, analyses, formulas, drawings, data, reports,
patterns, devices, plans, processes, methodologies or
compilations) and any other documentation, whether written,
graphic or stored electronically or magnetically, belonging
to either party which may not be generally known;
c) "Standard Code" means the current version of the streaming
audio and video Technology developed by the Licensor. It is
expressly understood that base level encoding and
compression technology is part of the Standard Code;
further, thinning and bandwidth negotiation are part of the
Standard Code to the extent such technologies are used in
the current version of the Technology.
Page 2
"Documentation" shall mean any and all systems manuals.
2. LICENSE GRANTS
2.1 Licensor hereby grants to the Company, and the Company hereby
accepts, a non- exclusive worldwide right and license, with right
to sublicense, to do any and all of the following: use, modify,
prepare derivative works of, include in other product material,
copy and produce, make and have made, publicly display, publicly
perform, license, support, maintain, market, distribute otherwise
commercialize the Licensed Technology, in both object code and
source code form, the Documentation and any related know-how.
2.2 The Company shall assume no liabilities nor shall it become liable
for any liabilities of the Licensor or its business undertaking
and the Licensor shall pay, satisfy, assume, discharge, observe,
perform, fulfill and indemnify and save harmless the Company from
and against any such liabilities.
2.3 The Company shall issue on the Closing Date to the Licensor TWO
HUNDRED AND FIFTY THOUSAND (250,000) common shares in
consideration of granting an non-exclusive license in the
Technology to the Company for a period of twelve months.
2.4 The Company shall also pay to the Licensor the sum of TWENTY FIVE
THOUSAND DOLLARS ($25,000) per month commencing on the date of
execution of the expanded version of the Licensing Agreement for a
period of twelve months thereafter. The monthly payment of
$25,000 will be renegotiated at the completion of the initial
twelve month term.
2.5 After the expiration of the initial one year term, the Company may
extend the agreement by issuing the following Rule 144 shares to
the Licensor on the anniversary date of this Agreement:
First anniversary 90,000 common Rule 144 shares
Second anniversary 80,000 common Rule 144 shares
Third anniversary 70,000 common Rule 144 shares
Fourth anniversary 60,000 common Rule 144 shares
Fifth anniversary 50,000 common Rule 144 shares
Sixth anniversary and
Every anniversary thereafter 50,000 common Rule 144 shares
Page 3
2.6 Both parties agree that within 60 days an expanded version of this
Licensing Agreement listing the exact code and terms and use for
optimal benefit of the parties will be finalized.
3. SHARE RESTRICTIONS
3.1 The Licensor acknowledges that the PhantomFilm.com shares to be
issued hereunder are issued pursuant to Rule 144 of the Securities
and Exchange Commission and as such are subject to certain selling
restrictions. The Licensor agrees not to resell the PhantomFilm
shares otherwise than in accordance with application securities
legislation. The Licensor agrees to execute all documents and make
such filings as may be required on the part of the Licensor under
applicable securities legislation.
ADJUSTMENT IN SHARE CAPITAL OF THE COMPANY
4.1 In case of any capital reorganization or reclassification of the
shares of common stock of the Company, or in case of any
consolidation or merger of the Company into another corporation,
then the number of shares that the Licensor shall receive shall be
proportionately decreased or increased accordingly.
5. LICENSOR'S REPRESENTATIONS AND WARRANTIES
5.1 The Licensor represents and warrants to the Company that:
(a) the Licensor is duly incorporated and validly exists under the
laws of the State of Nevada and is in good standing with respect
to all statutory filings required by the applicable corporate and
securities laws of the State of Nevada;
(b) the Licensor has good and sufficient corporate capacity, power and
authority to enter into this Agreement on the terms and conditions
herein set forth, to complete the transactions contemplated hereby
and to duly observe and perform all of its covenants and
obligations in accordance with the Agreement and all necessary
action has been taken by or on the part of the Licensor to
authorize the execution and delivery of the Agreement,
(c) the completion of the transactions contemplated hereby will not
result in any fees, duties, taxes, assessments or other amounts
relating to the Technology becoming due or payable;
Page 4
(d) the Licensor is the sole and exclusive owner of the entire right,
title, and interest in and to, and has the sole and exclusive
right to use, free and clear of any payment obligation or other
encumbrances or liabilities, all intellectual property relating to
the Technology, whether registered or not, which registrations are
in good standing, valid, subsisting and in full force and effect
in accordance with their terms;
(e) The Technology is legally and beneficially owned by the Licensor
and the Licensor has good and marketable title thereto free and
clear of all encumbrances and liabilities and the Technology is in
the Licensor's possession;
(f) The Licensor has full knowledge of the purpose for which the
Company intends to use the Technology and that the Technology is
free and clear of any and all defects which may adversely affect
the purpose for which the Company intends to use the Technology;
(g) The Agreement has been duly executed and delivered by the Licensor
and constitutes a legal, valid and binding obligation of the
Licensor, enforceable against it in accordance with its terms
subject to applicable bankruptcy, insolvency and other similar
laws affecting creditors' rights generally and except that the
remedies of specific performance, injunctive relief or other
equitable remedies may not be available in any particular
instance;
(h) The performance of this Agreement will not be in violation of the
incorporating documents of the Licensor, any law, judgement, rule,
or regulation to which the Licensor, its assets or the Technology
are subject or of any agreement to which the Licensor is a party
and will not result in the creation or imposition of any lien,
encumbrance or restriction of any nature whatsoever in favor of a
third party upon or against the Technology,
(i) The use of the Technology by the Licensor does not infringe or
otherwise violate any rights of any person or entity, and there is
no pending or, to the knowledge of the Licensor, threatened claim
alleging any such infringement or violation, or alleging any
defect in or invalidity, misuse or unenforceability of, or
challenging the ownership or use of the Licensor's rights with
respect to the Technology.
5.2 The representations and warranties of the Licensor contained in
this Agreement or any certificates or documents delivered pursuant
to the provisions hereof or in connection with the transactions
contemplated hereby will be true at and as of the Closing Date as
though such representations and warranties were made at and as of
such time.
Page 5
5.3 In the event that any of the said representations and warranties
are found to be incorrect and such incorrectness results in any-
loss or damage sustained directly or indirectly by the Company
then the Licensor will pay the amount of such loss or damage to
the Company within 30 days of receiving notice thereof provided
that the Company will not be entitled to make any claim unless the
loss or damage suffered will exceed the amount of $1,000.
6. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants to the Licensor that:
(a) the Company is duly incorporated and validly exists under
the laws of the State of Nevada and is in good standing;
(b) on the Closing Date, 100,000 shares will be issued as fully
paid and non-assessable;
(c) the Company has the corporate power to own the assets owned
by it and to carry on the business carried on by it and is
licensed to carry on business in all places where it
conducts business;
(d) the Company has good and sufficient corporate capacity,
power and authority to enter into this Agreement on the
terms and conditions herein set forth, to complete the
transactions contemplated hereby and to duly observe and
perform all of its covenants and obligations in accordance
with this Agreement and all necessary action has been taken
by or on the part of the Company to authorize the execution
and delivery of this Agreement;
(e) the performance of this Agreement will not be in violation
of the incorporating documents of the Company or of any
agreement to which the Company is a party and will not give
any person or company any right to terminate or cancel any
agreement or any right enjoyed by the Company and will not
result in the creation or imposition of any lien,
encumbrance or restriction of any nature whatsoever in favor
of a third party upon or against the assets of the Company,
there are no actions, suits, proceedings, investigations,
complaints, orders, directives or notices of defect or
non-compliance by or before the courts, administrative
tribunal, arbitrator or governmental authority issued,
pending
Page 6
or, to the knowledge of the Company, threatened against or
affecting the Company, its business or its assets (including
proceedings or actions by any taxation authority) which, if
successful, could have a materially adverse effect on the
business of the Company.
6.2 The representations and warranties of the Company contained in
this Agreement or any certificates or documents delivered pursuant
to the provisions hereof or in connection with the transactions
contemplated hereby will be true at and as of the Closing Date as
though such representations and warranties were made at and as of
such time.
6.3 In the event that any of the said representations and warranties
are found to be incorrect and such incorrectness results in any
loss or damage sustained directly or indirectly by the Licensor,
then the Company will pay the amount of such loss or damage to the
Licensor within 30 days of receiving notice thereof provided that
the Licensor will not be entitled to make any claim unless the
loss or damage suffered will exceed the amount of $1,000.
7. CONDITIONS PRECEDENT
7.1 All obligations of the Licensor under this Agreement are further
subject to the Company delivering or causing to be delivered, on
the Closing Date,
(a) to the Licensor:
(i) a copy of the resolutions of the Directors of the
Company authorizing the form, execution and delivery
of this Agreement and the completion of the
transactions contemplated in this Agreement
(ii) a copy of the resolution of the Directors of the
Company authorizing the issue of 100,000 "restricted"
and "unregistered" shares to the Licensor.
7.2 All obligations of the Company under this Agreement are further
subject to:
(a) all consents and approvals required to be obtained by the
Licensor for the purpose of licensing the Technology have
been obtained;
(b) no material loss or damage having occurred to the Technology
since the date of this Agreement;
(c) the Licensor delivering or causing to be delivered to the
Company on the Closing Date:
Page 7
(i) a copy of the resolution of the Directors of the
Licensor authorizing the licensing of the Technology
to the Company;
(ii) a copy of the resolution of the Directors of the
Licensor authorizing the form, execution and delivery
of this Agreement and the transactions contemplated
herein;
(iii) the Technology.
7.3 The conditions set forth in paragraph 7.2 of this Agreement are
for the exclusive benefit of the Company and the Company may waive
the conditions in whole or in part by delivering to the Licensor,
at or before the time of closing, a written waiver to that effect
stated to be made pursuant to this subsection and executed by the
Company.
8 CLOSING
8.1 The licensing of the Technology and the issuance of the
PhantomFilm shares will take place on the Closing Date at the
offices of PhantomFilm.com, #400, 1111 W. Georgia Street,
Vancouver, British Columbia following the satisfaction of the
conditions precedent set out in Part 7 of this Agreement.
9 GENERAL
9.1 Time is of the essence in this Agreement.
9.2 The terms and provisions herein contained constitute the entire
agreement between the parties and supersede all previous oral or
written communications.
9.3 This Agreement will be governed by, construed and enforced in
accordance with the laws of the State of Nevada in the United
States.
9.4 References to dollar amounts in this Agreement means United
States.
9.5 This Agreement and each of its terms and provisions will enure to
the benefit of and be binding upon the parties to this Agreement
and their respective heirs, executors,administrators, personal
representatives, successors and assigns.
Page 8
9.6 If any one or more of the provisions contained in- this Agreement
should be invalid, illegal or unenforceable in any respect in any
jurisdiction, the validity, legality and enforceability of such
provisions or provisions will not in any way be affected or
impaired thereby in any other jurisdiction and the validity,
legality and enforceability of the remaining provisions contained
herein will not in any way be affected or impaired thereby, unless
in either case as a result of such determination this Agreement
would fail in its essential purpose.
9.7 This Agreement is not transferable or assignable without the
written consent of the other parties.
9.8 Any notices under this Agreement must be:
(a) in writing,
(b) delivered, telecopied or mailed by prepaid post, and
(c) addressed to the party to which notice is to be given at the
address for such party indicated herein or at another
address designed by such party in writing.
9.9 Notices shall be addressed as follows:
(a) if to the Company:
#400, 1111 West Georgia Street
Vancouver, British Columbia V6E 4M3
Attention: President
Facsimile: (604) 689-5377
(b) if to the Licensor:
#400, 1111 West Georgia Street
Vancouver, British Columbia V6E 4M3
Attention: President
Facsimile: (604) 681-7710
Page 9
9.10 This Agreement may be executed in as many counterparts as may be
necessary or by facsimile and each of the facsimile or counterpart
so executed shall be deemed to be an original and such
counterparts together shall constitute one and the same instrument
and notwithstanding the date of execution shall be deemed to bear
the date as set out on the first page of this Agreement.
MISCELLANEOUS
It is agreed that this Letter of Intent has been prepared solely
to outline the agreed upon licensing terms and as such may be
altered or amended by either party's legal representatives as long
as the terms of this Letter of Intent remain the same.
AlphaTrade.com PhantomFilm.com
Per: Per:
/s/ Rafael de Noyo /s/ Penny Perfect
------------------ -----------------
Authorized Signatory Authorized Signatory
Barry L. Friedman, P.C. [letterhead]
Certified Public Accountants
1582 Tulita Drive
Las Vegas, Nevada 89123
Office (702) 361-8414
Fax No. (702) 896-0278
July 19, 1999
Securities and Exchange Commission
Washington, D.C. 20509
Re: AlphaTrade.com formerly Sierra Gold Development Corp. and Honor
One Corporation
Change of Auditors-Form 8-K
Dear Sirs:
We have reviewed the contents and disclosures regarding the changes in
Registrants' Certifying Accountants and have no disagreements with all such
disclosures.
Yours very truly,
/s/Barry L. Friedman
Barry L. Friedman
Certified Public Accountant
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