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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 10-KSB
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-25631
ALPHATRADE.COM
(Exact name of registrant as specified in its charter)
Nevada 98-0211652
(State of incorporation) (I.R.S. Employer Identification No.)
Suite 400
1111 West Georgia Street
Vancouver, BC Canada V6E 4M3
(address of principal executive office) (zip code)
(604)681-7503
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (g) of the Act: None
Title of each class Name of each exchange on which registered
Common Shares, $0.001 par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ___
The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $39,500,000 as of December 31, 1999
The number of shares of common stock outstanding as of December 31, 1999 was
11,850,830.
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PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
Certain statements included herein and in other reports and public filings are
forward-looking within the meaning of the Private Securities Litigation Reform
Act of 1995. Readers are cautioned that such forward-looking statements, which
may be identified by words such as "may," "will," "expect," "anticipate,"
"continue," "estimate," "project," "intend," and similar expressions are subject
to risks and uncertainties that could cause the Company's actual results and
financial position to differ materially. Such risks and uncertainties include,
without limitation: (i) general economic conditions associated with the
provision of Information technology; (ii) possible adverse effects on the market
price of the Company's Common Stock due to the resale into the market of
significant amounts of Common Stock; (iii) the potential adverse effect a
decrease in the trading price of the Company's Common Stock would have upon the
Company's ability to acquire businesses through the issuance of its securities;
(iv) the Company's ability to obtain financing on satisfactory terms; (v) the
reliance of the Company upon the continued service of its executive officers;
(vi) the Company's ability to remain competitive in the markets which it serves;
(vii) the Company's ability to manage significant amounts of information, and
periodically expand and upgrade its information processing capabilities; (viii)
predictions as to the future need for the Company's services; and (ix) other
economic, competitive and governmental factors affecting the Company's
operations, market, products and services. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date made. The Company undertakes no obligation to publicly release the results
of any revision of these forward-looking statements to reflect these ends or
circumstances after the date they are made or to reflect the occurrence of
unanticipated events.
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ITEM 1. DESCRIPTION OF BUSINESS
INTRODUCTION
ALPHATRADE.COM'S (the "Company") objective is to provide real-time
streaming financial data, timely business news and comprehensive research and
analytical tools to allow subscribers to make informed investment decisions. To
this end, the Company has made a major breakthrough in the development of a
revolutionary web based technology with a network infrastructure and expertise
to deliver streaming financial content over the Internet to hundreds of
thousands of users simultaneously. Alphatrade's technology uses lightweight
components that enable users to view streaming data within their browser without
the need to download large, cumbersome applications or to install software. The
company licenses or purchases news feeds, stock exchange quotes, and other
financial information, in most cases, under multi-year agreements and
redistributes this information using its 100% Java based applications. As the
Web continues to develop as an effective manner for conducting financial
transactions, the Company believes that certain types of content will be
increasingly delivered over the Internet such as public company financial and
due diligence information.
The Internet environment is dependent not only on "what gets delivered" but "how
it gets delivered" since the quickness and scope of the information is a factor
of both the hard drive configurations of individual computers and their
connection speed to the Internet. Thus, AlphaTrade's fundamentally different
approach to the delivery of Internet information allows information to be useful
even for those users with slow connection speeds to the Internet. Unlike
standard frame based (standard HTML) web sites, AlphaTrade's technology
leverages the power and simplicity of the browser for maximum interactivity and
optimal responsiveness thereby increasing the availability of information to all
users regardless of their computer equipment.
AlphaTrade's streaming financial tools, E-Gate, is a suite of financial products
that is multi-lingual and can access any stock market via thin client
applications. All of the E-Gate financial products can also be private labeled
to brokerage firms and other financial institutions that have not yet created an
on-line presence or by firms who want to enhance their on-line presence. E-Gate
allows subscribers to access a variety of money management tools in addition to
all of the streaming real time financial quote and news information. Alphatrade
believes that browser based technologies have many potential benefits to the end
users. Customers and users are now able to access their personal stock
information on any computer from anywhere in the world and customize the
information to suit their particular needs. In addition, as enhancements and new
products are introduced, updates will be done automatically with no additional
cost. There is
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no software to purchase or upgrades to install. Business customers are able to
quickly implement the E-Gate applications on their corporate websites allowing
these companies to immediately offer to their clients all of the stock
information in an easy to use format. There is no development costs to budget
for nor is there any delay in time to market which gives our business clients
immediate customer response. Alphatrade believes that the E-Gate applications
are a value added service which greatly fosters customer loyalty.
AlphaTrade chose to abandoned the "online newspaper" format so prevalent on the
Internet today and instead embraced the concept of multi-tasking. By leveraging
the intelligence and quickness of the browser, Alphatrade is able to bring the
subscriber a customized assortment of streaming applications such as "e-charts,
real time stock quotes, portfolio management, live TV broadcasts, e-news, video,
premium e-trading platforms and NASDAQ Level II. The user is able to view any or
all of these financial applications at one time and in conjunction with many
desktop functions such as word processing or spreadsheets making the E-Gate
applications very versatile.
BUSINESS STRATEGY
ESTABLISH ALPHATRADE AS A LEADING FINANCIAL SERVICE PROVIDER AlphaTrade's
technology provides the high quality, performance and diversity the financial
market is demanding. Alphatrade's web-based technologies free users from the
constraints of historical linear processing, and enable companies to be more
creative and to interface with their customers in a futuristic manner.
One of AlphaTrade's goals is to become a premier provider of securities market
data. We collect securities market activity and financial news from exchanges
and other sources and we use the information to create a unique streaming suite
of financial tools. The database includes all North American equities, the most
comprehensive options data, major stock indices, Level 1 NASDAQ-quoted stocks,
Level 2 NASDAQ market-maker quotes, mutual funds, money market funds, futures
contracts and options on futures contracts. We process the database into a
single data-feed at our primary processing plant in Vancouver, BC and
disseminate to our customers via satellite or digital land lines. This database
gives our customers instant access to security prices from any computer anywhere
in the world unlike other services which are software programs and need to be
installed on a particular hard drive thereby limiting remote capabilities. The
Company intends to derive revenues from subscription fees charged for access to
the E-Gate financial tools and from individuals who purchase a monthly or yearly
subscription to our services. Our target customer base consists primarily of
professional investors, securities brokers, dealers and traders, portfolio
managers, brokerage firms, other financial institutions, Internet websites, and
other re-distributors of financial market data. Our customers are currently
located in North America.
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EXPAND OUR CAPACITY AND INFRASTRUCTURE Currently we are offering the E-Gate
suite of financial products in twelve languages. New languages can now be added
within 24 hours. In fiscal 2000, we hope to make substantial investments in
technology and infrastructure to meet the expected increase in business due to
the planned expansion into the European market. Alphatrade will be expanding our
management team, adding more support people and will be opening customer service
and support centers to support our growth. We also plan to build brand awareness
by selectively forming strategic alliances with international financial service
leaders.
CONTINUE TO OFFER INNOVATIVE TECHNOLOGIES AND SERVICE ENHANCEMENTS It is our
goal to provide our clients with the most advanced browser technology available
today. We intend to further develop our data gathering and dissemination
processes to tailor our products to meet the needs of investors and brokerage
firms well entrenched in the Internet.
BE THE LOWEST COST PROVIDER WHILE OFFERING THE HIGHEST QUALITY SERVICE As the
number of clients grows and the market begins to embrace the benefits of browser
technology, it is our goal to ensure that we will continue to maintain our cost
discipline with respect to the pricing of our services.
GENERAL DEVELOPMENT OF THE BUSINESS
The Company was incorporated in Nevada on June 6, 1995 and changed its name to
AlphaTrade.com in January, 1999. On January 6, 1999 the Company acquired certain
software assets pursuant to an Asset Purchase Agreement. These software assets
laid the foundation for the future development of our web-based technologies for
use in the financial industry. February 1, 1999 the company released the Beta
Version of our first financial application, The AlphaTicker. This rudimentary
tool portrayed the versatility and low bandwidth requirements for our browser
based technologies. On May 14, 1999 a revised and updated version of the
AlphaTicker was released that could be "ripped" from the browser and installed
on the desktop with full functionality and customization features. On June 23,
1999 the phase one stage of our streaming video was released. This initial
version of the video only worked in high end computers and with those computers
having a sophisticated cable, ISDN, ADSL or T1 connection to the Internet. On
July 9th, 1999 the rudimentary portal was released for select beta testing. On
September 7, 1999 the beta testing began on a commercial basis with a number of
financial web sites. The combined hit-rate for our test phase was estimated at
several million hits per month. Our first brokerage beta tester was established
on September 21, 1999 being Providential Securities of Orange County,
California. Sales of subscriptions began on November 1, 1999 and on November 2,
1999 Providential purchased 5,000 subscriptions. On November 10, 1999 the
company introduced the multi-lingual content which included Italian, French,
Spanish, Portuguese, and German. More
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languages were added by December 1999. On November 15, 1999 a private marketing
company purchased 10,000 subscriptions.
MARKET PENETRATION
The initial impact on the market will be slow since the pervasive thinking is
still in linear mode. AlphaTrade is essentially a trendsetter and will require a
"getting to know you" stage. Since the E-Gate tools will be private labeled to
brokerage firms that already have existing clients, the mass penetration will be
faster as more brokerage firms subscribe for our services.
GENERAL
The alternative to AlphaTrade's private labeling program, at least for the
brokerage industry, is not only costly but it also involves a tremendous length
of development time provided of course, that skilled and experienced computer
programmers are available. The initial and ongoing developments costs could well
exceed 25 million dollars with on-going monthly content and maintenance fees
approximately $150,000 to $250,000 per month. The time to completion of a
comparable system might range from 8 to 12 months. Alphatrade's subscription and
transaction based revenue model allows the company to provide E-Gate financial
tools to any website within twenty four hours. Their unique tool, aptly named,
the "Remote Control Device (RCD)", is fully customized for each new website and
provides instant access to the suite of E-Gate financial products without
leaving the host website. Now the clients of the host brokerage firm can sign up
directly at their website without ever leaving that site. Now, the host's users
become Alphatrades' users. This simple user aggregation strategy is widely used
by Internet companies to gain market share at an accelerated rate.
Most brokerage firms and financial services organizations realize that creating,
packaging, and hosting financial information is not their core business and
these tasks are much easier and quicker to out-source. The "bundling" of this
information and content within the E-Gate warehouse allows each Brokerage firm
to customize and selectively choose the information which best suits the needs
of their client base.
OUR PRODUCTS AND SERVICES
PRIVATE LABELLING WEB SITES AlphaTrade.com determined that in order to compete
in this huge fluctuating internet market, the Company must adopt an original and
animated strategy designed to provide exceptional service and revolutionary
technologies. By private labeling the E-Gate financial tools, AlphaTrade.com is
being provided access to huge client bases, all with similar underlying
investing demographic tendencies. AlphaTrade will benefit directly by enjoying
rapid expansion using the aggregation of their clients' customers. As
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the number of clients expand, there will be a corresponding rise in site
"loading" leading to further sales for other AlphaTrade private branded sites.
Benefits to the user of the private branding program for E-Gate financial tools
could include access to a wide selection of user friendly components some of
which are listed below:
o Research reports, analytical tools, applications and functions
o On-line trade execution in some cases
o Personalized registered rep/employee web pages
o Client to Representative e-mail response services
o Personalized Web Pages and site Identification
o Branded versions of AlphaTrade's other "Living desktop" technologies
o Streaming tickers and customized portfolio alert functions
o Premium investment information
Further information can be customized by each brokerage firm or other financial
service site depending on the needs of their own client bases.
WEB BASED FINANCIAL PRODUCTS
E-TICKER
This sophisticated, intelligent agent automatically retrieves user selected
information from E-Gate and seamlessly delivers it to the user's Desktop via the
Internet. The E-Ticker appears on the Desktop in a smooth customizable scrolling
ticker format and is updated at intervals pre-determined by the user. The Ticker
is also a unique portfolio tool that the user can "TEAR OFF" and keep on the
desktop.
The E-Ticker will operate independently of the user's Web browser of choice,
further complementing the move toward customization and personalization of the
channels of information. E-Ticker will transfer channels of information, ranging
from news to stock quotes to sports and financial analysis, at prescribed times
in accordance to user specifications. Information ranging from portfolio
performance, news, indices, and percentage gainers and losers, to sports,
weather and daily horoscope are also available for those wanting some
diversification from strictly financial content.
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E-QUOTE
The Company has had a technological breakthrough in the development of their
revolutionary web based technologies. All of these technologies are true "web to
desktop" convergence technologies meaning "THEY ARE MOVEABLE WITHIN THE BROWSER
WINDOW" and "THE USER CAN ALSO TEAR-OFF FROM THE BROWSER AND MOVE ONTO THE
DESKTOP". E-Quote provides real or delayed streaming stock quotes. Each user is
able to customize the quote grid in every capacity: the size of the grid, each
column within the grid can be customized and changed daily and the number of
stock listed can be anywhere from 1-300. For additional customization by the
client, the broker or the brokerage house offering this service to their
clients, each stock can have their own alert features. These alert features
could include news, buying or selling opportunities, put or call situations or
even analyst reports.
E-NEWS
The news is provided in an easy to read format and is accessed by a simple right
click of the mouse. The news can be sorted by company, by symbol, by events, by
industry, by date, by words, or even by category.
E-TRACKER
The portfolio tracker is presented in a format similar to the quote grid to
breed familiarity with the user. The user enters the stock symbol, the number of
shares owned, purchased or sold, the price received or paid and the value of his
portfolio is automatically updated as the prices change in the market. Alerts
can be added to the portfolio tracker to notify the user of news, of selling or
buying opportunities, of reaching a pre-designated strike price, of analyst
reports issued or any alert function determined to be of importance by the user.
E-CHART
AlphaTrade delivers premium online charting capabilities with professional power
through a standard web browser via the Internet. This type of functionality has
previously been available only with expensive, downloadable and stand-alone
charting packages. E-Charts are interactive charts for stocks, funds, and
indices, with trend-lines, indicators, moving averages, and stochastic studies.
Users can overlay multiple stock symbols, zoom in or out, detach, resize and
print.
REMOTE CONTROL DEVICE (RCD)
The Remote Control Device (RCD) acts as a mini-browser and becomes the center of
all activity on any web-site or for individual users. The main idea of the
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RCD is to make sure the user has immediate and easy access to a vast array of
applications with the least amount of effort. The RCD can be added to any
web-site with no interruption of service. Each RCD can be selectively
pre-programmed with specific information so as to fully meet the needs of each
sites' users. This device is automatically upgraded with all of the latest
developments and feature enhancements. It is the fastest way of getting real
time or delayed stock information on the web. No downloads, no plug-ins or
software purchases are necessary. Literally within minutes, the host site can
have a customized RCD, which will allow all of their users access to the latest
streaming stock information. The RCD can be fully customized for each site
complete with a personalized logo, and any advertising they permit or authorize.
All of our other financial applications are accessible through the RCD.
While our browser technology is customized for the retrieval and execution of
information and data, it is also a tool for selective advertising. The viewing
audience has such familiarity with Remote Control Devices that the learning
curve is minimal and the "expertise" is vast which makes it ideal as a selling
tool for our products.
AlphaTrade's approach is to establish relationships with leaders in the
financial industry and rework their websites to incorporate our browser based
technologies.
CAPTURE NEW MARKETS
AlphaTrade is not only focused on the burgeoning U.S. market, but the huge
international marketplace. The company's browser technology is already
multi-lingual and will soon have auto-monetary conversion tools and multilingual
help menus. This multi-lingual capability dramatically increases the number of
potential users since most financial investors prefer to access financial
information in their native language. The language can be changed in seconds to
another language making E-Gate truly versatile.
MARKETING STRATEGY AND DISTRIBUTION METHOD
AlphaTrade's services and products will be sold through an in-house sales team,
the Internet, our affiliates, print, radio, and television advertising. Word of
mouth will also be an important factor in distributing our services. Brand name
merchants and companies that use our products will also assist in promoting the
company's products. Advertising on the Web is not just about advertising and
distributing messages, it is about being FIRST. It is also about creating
customer loyalties, building cyber brands, providing customer service,
generating electronic sales of goods and services, efficiently delivering
marketing messages to appropriate audiences and creating mass customization and
interactive/direct marketing. The advertising opportunity on the Web is very
different than it is for
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other media. Internet advertising is more robust than radio or television
advertising. Through the Internet, users can receive very specialized
information, offered in an intriguing way, with new and rich measurement
opportunities.
STRATEGIC ACQUISITIONS
Seek Strategic Acquisitions. The Company will pursue strategic acquisitions. The
Company plans an acquisition strategy designed to enrich and strengthen the
scope of services and technical competencies that it needs to broaden its
capabilities. In targeting acquisitions, the Company will focus on companies
with technologies the Company has targeted for strategic value enhancement. To
retain and provide incentives for management the Company will try to structure a
significant portion of the acquisition price in the form of multi-tiered
consideration based on growth of operating profitability of the acquired company
over a two to three-year period. The Company believes it could achieve success
in completing acquisitions due to its entrepreneurial philosophy, its corporate
level support and resources and its status as a public company.
EMPLOYEES
As of December 31, 1999, the company had 23 full time employees. None of the
company's employees are subject to a collective bargaining agreement and the
company believes its relations with its employees are good.
ITEM 1A. COMPANY RISK FACTORS
We have a limited operating history.
We commenced selling our E-Gate financial tools effective November 1, 1999. We
have limited operating history with which to base an evaluation of our business
and prospects. Our prospects must be considered in light of the risks,
difficulties and uncertainties frequently encountered by companies in an early
stage of development, particularly companies in new and rapidly evolving markets
such as the market for Internet content, business services and advertising.
These risks include our ability to successfully market and sell our E-Gate
tools, effectively develop new and maintain existing contracts with content
providers and customers, respond to competitive developments, successfully
introduce enhancements to our existing products and services to address new
technologies and standards, and to continue to develop and upgrade our
technology and network infrastructure.
We expect to continue to incur operating losses for the foreseeable future. We
will need to generate significant revenues to become profitable. There can be no
assurances that we can achieve profitability or if we do attain profitability we
cannot assure you that we can sustain profitability on a quarterly or annual
basis. If revenues grow slower than we anticipate, or if operating expenses
exceed our
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expectations or cannot be adjusted accordingly, our business will be materially
and adversely affected.
If generated cash flow is not sufficient to fund operations, we may have to
raise additional capital externally. We have explored, and continue to explore,
multiple alternatives that may be available for the purpose of enhancing
stockholder value. These alternatives include a joint venture with another
technology or financial services firm and future equity financings. There can be
no assurances, however, that we will conclude a transaction. Any capital raised
through an equity financing could be costly to us and dilutive to our
stockholders.
We anticipate making significant investments in our sales and marketing
programs, personnel recruitment, product development and infrastructure.
Therefore, we believe that we will continue to experience significant losses on
a quarterly and annual basis for the foreseeable future. You must consider us
and our prospects in light of the risks and difficulties encountered by
companies in the early stage of development .
We may not be successful in meeting these challenges and addressing these risks
and uncertainties. If we are unable to do so, our business will not be
successful and your investment in our capital stock will decline in value. Our
business currently depends on revenue related to the E-Gate suite of financial
products and it is uncertain whether the market will increasingly accept this
product.
We generate our revenue from services related to the E-Gate products. We expect
that these products, and future upgraded versions of these products, will
continue to account for a large portion of our revenue for the foreseeable
future. Our future financial performance will depend on increasing acceptance of
our current products and on the successful development, introduction and
customer acceptance of new and enhanced versions of our products. Our business
could be harmed if we fail to deliver the enhancements to our products that
customers want.
Since our inception, we have experienced operating losses, negative cash flows
from operations and net losses in each quarterly and annual period. As of
December 31, 1999, we had an accumulated net deficit of approximately $2.2
million. Revenue from our E-Gate subscriptions may not be sufficient to make us
profitable in the future. If we do achieve profitability, we cannot be certain
that we can sustain or increase profitability on a quarterly or annual basis,
particularly to the extent that we face significant competition. In addition, we
expect to significantly increase our sales and marketing, product development,
and administrative expenses as we grow. As a result, we will need to generate
significant revenue increases to achieve and
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maintain profitability. To date we have not had any significant operating
revenue. There is no assurance we will achieve sales revenue in the future.
If we do not expand our customer base, we may never become profitable and our
stock price will likely decline.
The market for financial web products is newly emerging and there can be no
assurance that customers will adopt our products. Accordingly, we cannot
accurately estimate the potential demand for our products and services. We
believe that market acceptance of our products and services depends principally
on our ability to:
o effectively market E-Gate suite of financial products;
o hire, train and retain a sufficient number of qualified sales and
marketing personnel;
o provide high-quality and reliable customer support for our products;
o distribute and price our products and services in a manner that is more
appealing to customers than that of our competitors;
o develop for E-Gate a favorable reputation among our customers, potential
customers and participants in the financial community; and
o withstand downturns in general economic conditions or conditions that
would slow spending on financial information web sites.
Some of the foregoing factors are beyond our control. If our customer base does
not expand, we may never become profitable and our stock price will likely
decline.
We expect to experience significant fluctuations in our future results of
operations due to a variety of factors, many of which are outside of our
control, including:
o demand for and market acceptance of our products and services;
o our efforts to expand into international markets;
o introduction of products and services or enhancements by us and our
competitors;
o competitive factors that affect our pricing;
o the mix of products and services we sell;
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o the timing and magnitude of our capital expenditures, including costs
relating to the expansion of our operations;
o the size and timing of customer orders, particularly large orders, some
of which represent more than 10% of total revenue during a particular
quarter;
o the hiring and retention of key personnel;
o conditions specific to the information portal market and other general
economic factors;
o changes in generally accepted accounting policies, especially those
related to the recognition of subscription revenue; and
o new government legislation or regulation.
We plan to significantly increase our operating expenses to expand our sales and
marketing operations and consulting and training programs, broaden our customer
support capabilities and fund greater levels of research and development. Our
operating expenses, which include research and development, sales and marketing,
and general and administrative expenses, are based on our expectations of future
revenue and are relatively fixed in the short term. If revenue falls below our
expectations in any quarter and we are not able to quickly reduce our spending
in response, our operating results will be adversely affected and our stock
price may fall.
Our failure to manage our growth could adversely affect our business.
The planned expansion of our operations will place a significant strain on our
management, financial controls, operations systems, personnel and other
resources. Our ability to manage our future growth, should it occur, will depend
in large part upon a number of factors including our ability to rapidly:
o build and train our sales and marketing staff to create an expanding
presence in the evolving enterprise information portal market, and keep
them fully informed over time regarding the technical features, issues
and key selling points of our products;
o develop our customer support capacity as sales of our products grow, so
that we can provide customer support without diverting engineering
resources from product development efforts; and
o expand our internal management and financial controls significantly, so
that we can maintain control over our operations and provide support to
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other functional areas within AlphaTrade.com as the number of our
personnel and size of our organization increases.
Our inability to achieve any of these objectives could adversely affect our
business.
Future equity or debt financing may not be available to us on favorable terms or
at all. Future borrowing instruments such as credit facilities and lease
agreements are also likely to contain similar or more restrictive covenants and
will likely require us to pledge assets as security for borrowings under those
future arrangements. Our inability to obtain additional capital on satisfactory
terms may delay or prevent the expansion of our business, which could cause our
business and prospects to suffer.
If our business grows, we will also need to recruit a significant number of
management, technical and other personnel for our business. Competition for
employees in our industry is intense. We may not be able to continue to attract
and retain skilled and experienced personnel on acceptable terms.
We believe that proprietary rights are important to our business. We principally
rely upon a combination of trademark and trade secret laws as well as
contractual restrictions to protect our proprietary technology. Our trademark,
service mark and copyright rights may not provide significant proprietary
protection or commercial advantage to us, and the measures we take to maintain
the confidentiality of our trade secrets may be ineffective. If we are unable to
effectively protect our proprietary rights, our competitors may be able to copy
important aspects of our products or product message, which would undermine the
relative appeal of our products to customers and thus reduce our sales.
We also compete against providers of financial service products to businesses.
These providers may expand their technologies or acquire other companies to
support greater functionality and capability, particularly in the areas of query
response time and ability to support large numbers of users.
We cannot assure you that we will be able to successfully compete against
current and future competitors, or that competitive pressures we face will not
materially adversely affect our business, prospects, operating results and
financial condition.
If we fail to manage technological change or effectively respond to changes in
customer needs, demand for our products and services will drop and our business
will suffer.
Our future success depends upon our ability to aggregate and deliver
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compelling content over the Internet. We will rely heavily on third party
content providers. Our ability to maintain and build relationships with content
providers is critical to our future success. Although many agreements with third
party content providers may be for initial terms of more than two years, such
agreements may not be renewed or may be terminated prior to the expiration of
their terms if we do not fulfill our contractual obligations. Such termination
may result in decreased traffic on our Web sites and, as a result, decreased
revenue, which could adversely affect our business.
Many agreements with content providers will be nonexclusive, and many of our
competitors offer, or could offer, content that is similar to or the same as
that obtained by us from such nonexclusive content providers. Such direct
competition could adversely affect our business.
OUR STOCK PRICE MAY CONTINUE TO BE SUBJECT TO SIGNIFICANT VOLATILITY
The trading price of our Common Stock has been and may continue to be subject to
wide fluctuations. Trading prices of the Common Stock may fluctuate in response
to a number of factors, many of which are beyond our control. In addition, the
stock market in general, and the market for Internet-related and technology
companies in particular, has experienced extreme price and volume fluctuations
that have often been unrelated or disproportionate to the operating performance
of such companies. The trading prices of many technology companies' stocks are
at or near historical highs and reflect price earnings ratios substantially
above historical levels. There can be no assurance that these trading prices and
price earnings ratios will be sustained. These broad market and industry factors
may adversely affect the market price of the Common Stock, regardless of our
operating performance.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's executive offices are located in Vancouver, B.C., Canada in a
4,000 square foot facility that we sub-lease at a current monthly rent of
$5,000. We do not own any real estate.
ITEM 3. LEGAL PROCEEDINGS
The Company is the defendant in litigation pending in the District Court for the
County of Clark, State of Nevada. This action was filed on June 8, 1999, and is
entitled WebData, Inc., Joel A. Stone, and Michael Razar vs. AlphaTrade.com,
Rafael DeNoyo, Samir A. Halim, Gordon Muir, Penny Perfect, Parallax Advisory
Ltd., and Unicorn Trade and Commerce, Ltd.
<PAGE> 17
The complaint alleges nine different causes of action against the various
defendants. However, each cause of action revolves around the base allegation
that AlphaTrade.com improperly acquired proprietary technology that belongs to
plaintiff WebData. Plaintiffs allege that Rafael DeNoyo during 1998 was
overseeing the development of computer Internet Technology for Web Data. The
complaint further alleges that in early 1999, DeNoyo misappropriated that
technology, equipment and staff, providing them to AlphaTrade.com in return for
some AlphaTrade.com stock. Thus, included in the causes of action are claims of
improper transfer of proprietary technology, violation of trade secret laws,
violation of fiduciary duties, and exploitation of corporate opportunity.
AlphaTrade.com has denied all allegations of wrongdoing as being factually
untrue.
Plaintiffs are seeking, as it relates to the Company, an unspecified amount of
money over $10,000 for compensatory and punitive damages, attorney fees, as well
as an injuction prohibiting the Company from profiting or disseminating
WebData's trade secrets or proprietary techniques.
There is currently no trial date set in this matter.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On January 4th, 1999, the Company held a Meeting of Shareholders at its head
office in Vancouver, British Columbia, Canada to approve the following: (1) To
amend the Company's Articles of Incorporation to change the Company's name from
Honor One Corporation to AlphaTrade.com, (2) To amend the Company's Articles of
Incorporation to: (i) increase the authorized capital to 100,000,000 shares each
having a par value of $0.001; (ii) to establish a class of 10,000,000 preferred
shares; (iii) to establish the terms of the Class "A" preferred shares; and (iv)
to issue 2,000,000 of the Class "A" preferred shares; (3) To approve and ratify
the 1999 Stock Option Plan; (4) To change the auditors from Barry L. Friedman,
P.C. to Jones, Jensen & Company; (5) To amend the By-laws of the Company with
respect to annual general meetings and the number of Directors of the Company;
and (6) To provide the Directors with general authority to forward split the
common shares at its discretion.
On November 23, 1999 the Company took action by a consent meeting of the
majority shareholders pursuant to a Form 14C to approve the following: (1) To
remove Rafael deNoyo as a Director of the Company and (2) To amend the Articles
of the Company.
<PAGE> 18
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS.
At December 31, 1999 there were 1082 shareholders of record of the Company's
common stock.
Market Information
Currently, the Company's common stock is traded over-the-counter and quoted on
the OTC Bulletin Board of the NASD (the "Bulletin Board") under the symbol
"EBNK". The high and low bid prices for the Common Stock as reported by the
Bulletin Board since January 1, 1999 are listed below. The prices in the table
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.
<TABLE>
<CAPTION>
Calendar Year Quarter High Low
- ------------- ------- ------ -------
<S> <C> <C> <C>
1999 Jan. - March 35.00 1.50
April - June 13.75 2.00
July - September 9.9375 3.25
October - December 7.656 3.8125
2000 Jan. - March 8.9375 6.00
</TABLE>
Dividends
The Company has never declared any cash dividends and does not anticipate paying
such dividends in the near future. The Company anticipates all earnings, if any,
over the next twelve (12) to twenty (20) months will be retained for future
investments in business. Any future determination to pay cash dividends will be
at the discretion of the Board of Directors and will be dependent upon the
Company's results of operations, financial conditions, contractual restrictions,
<PAGE> 19
and other factors deemed relevant by the Board of Directors. The Company is
under no contractual restrictions in declaring or paying dividends to its common
or preferred shareholders.
The future sale of presently outstanding "unregistered" and "restricted" common
stock of the Company by present members of management and persons who own more
than five percent of the outstanding voting securities of the Company may have
an adverse effect on any market that may develop in the shares of the common
stock of the Company.
Recent Sales of "Unregistered" Securities
The following unregistered securities have been issued since January 1st, 1999
and are previously disclosed in the appropriate 10-QSB's indexed at the end of
this document unless otherwise noted:
<TABLE>
<CAPTION>
Offering
Date No. of Shares Title Price Rule Reason
- ---- ------------- ----- ----- ---- ------
<S> <C> <C> <C> <C> <C>
Jan. 6/99 4,000,000 Common $0.001 506 Technology
Jan. 6/99 100,000 Common $ 0.50 701 Services
Jan. 8/99 1,000,000 Common $ 1.00 506 Private
Placement
Mar. 31/99 830 Common $ 3.00 701 Services
July 6/9 400,000 Common $ 2.00 506 Private
Placement
Sept. 16/99 50,000 Common $ 2.00 506 Private
Placement
Dec. 1/99 200,000 Common $ 1.25 506 Exercise
Warrant
Jan. 10/00 100,000 Common $ 1.25 506 Exercise
Warrant
Feb. 2/00 30,000 Common $ 6.50 405 Services
Feb. 7/00 175,000 Common $ 5.75 506 Private
Placement
</TABLE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Alphatrade.com develops and markets browser-based products and services designed
to enable users of personal computers and other consumer electronic devices to
receive streaming content over the Internet. From its inception in January 1999
and throughout 1999, Alphatrade's operating activities related primarily to
recruiting personnel, raising capital, purchasing operating assets, conducting
research and development, building the E-Gate brand of streaming
<PAGE> 20
financial products and establishing a market for streaming browser-based
financial products. In November 1999, Alphatrade began selling the E-Gate
financial applications and in 60 days had sold over 26,000 subscriptions. Many
of these subscriptions were for streaming financial information in the delayed
mode. As these subscribers began using the applications, it was determined that
the "real-time" subscriptions were more favorable to their needs and
subsequently all of the "delayed" mode subscribers have been converted into
"real-time" subscriptions. Alphatrade now offers the delayed subscriptions for
no charge.
Alphatrade has a limited operating history upon which an evaluation of the
company and its prospects can be based. Alphatrade's prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in early stages of development, particularly companies
in rapidly changing markets. There can be no assurances that Alphatrade will
achieve or sustain profitability. Alphatrade has incurred significant losses
from its inception and as at December 31, 1999 had a net comprehensive loss of
$2,259,674. Alphatrade believes that its success will depend largely on the
growth of the online trading industry and the surge in wireless technological
development. Although Alphatrade expects significant growth in both those
industries, their significant growth is not necessarily indicative of
Alphatrade's future growth performance.
Alphatrade had limited operating revenues with which to base an evaluation as to
the cost of that revenue. Alphatrade will be generating revenues from the
distribution of their web-based financial products, from advertising revenues
and from transaction fees. At this stage of its development, it is difficult to
assess the specific costs associated with each source of revenues as gross
margins may be affected by one time costs associated with such revenues such as
legal fees to generate binging agreements and first time customers requiring
extra documentation in dealing with a relatively new company.
Research and Development expenses consist primarily of salaries and consulting
fees associated with product development and enhancement. The new products
currently under development are the Universal Stock Trading Platform and
Wireless Applications. To date, all research and development costs have been
expensed as incurred. Alphatrade believes that an investment in research and
development is crucial to attaining a strategic position in the burgeoning
markets of online trading and wireless applications.
Sales and Marketing expenses will consist of salaries, sales commissions,
consulting fees, trade show expenses, advertising and the cost of marketing
enhancements. Alphatrade plans to increase its branding and marketing efforts
and therefore expects sales and marketing expenses to increase significantly in
future periods. Sales and marketing expenses for the current period were
<PAGE> 21
minimal as there was limited time after the product was developed with which to
market.
General and Administrative expenses consist primarily of salaries, fees for
professional services and consulting fees. Alphatrade expects general and
administrative expenses to increase as it expands its staff and incurs
additional costs related to growth of its business.
Liquidity and capital resources
Since its inception, Alphatrade has financed its operations primarily through
sales of common stock. Net proceeds of these sales totaled $2,150,000. In
addition, Alphatrade received $454,462 in revenue from the sale of subscriptions
and a licensing agreement. $288,775 was accounted for as deferred revenues due
to the nature of providing a service over a twelve month period. Subsequent to
the financial statements, the delayed subscribers were converted to
subscriptions with real time access to the E-Gate financial applications.
In February, 2000, Alphatrade established a subsidiary called AlphaForce which
will primarily handle all of the network security issues. In addition, there is
a pool of potential Java programmers and other Internet consultants that may be
interested in working with Alphatrade but may not want to relocate. Alphatrade
felt that having an office in the heart of Silicon Valley would not only add to
our branding of our product and sales and marketing efforts, but could assist us
in hiring key development personnel.
Since its inception Alphatrade has significantly increased its operating
expenses. Alphatrade currently anticipates that it will continue to experience
rapid expansion and increased costs of operation. Subsequent to December 31,
1999 the company financed its operations through the sale of common stock to
directors. The financing was 175,000 shares at $5.75/share for total proceeds of
$1,006,250. Alphatrade believes that its current cash and expected revenues will
be sufficient to meet the basic operating expenses for the near future however,
Alphatrade will need to raise additional working capital to proceed with the
proposed expansion of our sales and marketing department. This increased
revenues will come from a combination of the sale of common stock and
subscription revenues.
Dependence on Key Personnel
The Company is dependent on the services of certain key people including, Penny
Perfect and Gordon Muir. The loss of these persons, other key executives or
personnel, or the inability to attract and retain the additional highly skilled
employees required for the expansion of the Company's activities, may have a
material adverse effect on the Company's business or future operations.
<PAGE> 22
The Company does not intend to maintain "Key-man" life insurance on any of its
executive officers or other personnel at this time.
ITEM 7. FINANCIAL STATEMENTS
Financial Statements for the year ended December 31, 1999
Independent Auditors Report
Consolidated Balance Sheet - December 31, 1999
Consolidated Statement of Operations for the period ended December 31, 1999
Consolidated Statements of Stockholders Equity to December 31, 1999
Consolidated Statements of Cash Flows to December 31, 1999
Notes to Consolidated Financial Statements
<PAGE> 23
ALPHATRADE.COM
FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
<PAGE> 24
CONTENTS
<TABLE>
<S> <C>
Independent Auditors' Report .............................................. 3
Balance Sheet ............................................................. 4
Statements of Operations .................................................. 6
Statements of Stockholders' Equity (Deficit) .............................. 7
Statements of Cash Flows .................................................. 9
Notes to the Financial Statements ......................................... 10
</TABLE>
<PAGE> 25
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
AlphaTrade.com
Vancouver, B.C. Canada
We have audited the accompanying balance sheet of AlphaTrade.com at December 31,
1999, and the related statements of operations, stockholders' equity (deficit)
and cash flows for the years ended December 31, 1999 and 1998. 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 audits.
We conducted our audits 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 audits provide 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 at December 31,
1999, and the results of its operations and its cash flows for the years ended
December 31, 1999 and 1998 in conformity with generally accepted accounting
principles.
Jones, Jensen & Company
Salt Lake City, Utah
February 3, 2000
<PAGE> 26
ALPHATRADE.COM
Balance Sheet
ASSETS
<TABLE>
<CAPTION>
December 31,
1999
------------
<S> <C>
CURRENT ASSETS
Cash $ 92,993
Prepaid expenses 7,969
-------
Total Current Assets 100,962
-------
FIXED ASSETS
Computer equipment 108,790
Office equipment 11,803
Software 35,330
Accumulated depreciation (20,144)
-------
Total Fixed Assets 135,779
-------
OTHER ASSETS
Investment (Note 8) 25,000
Technology (Note 4) -
-------
Total Other Assets 25,000
-------
TOTAL ASSETS $261,741
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 27
ALPHATRADE.COM
Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
December 31,
1999
------------
<S> <C>
CURRENT LIABILITIES
Accounts payable $ 239,422
Deferred revenue (Note 1) 288,775
----------
Total Current Liabilities 528,197
----------
Total Liabilities 528,197
----------
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 3) 2,000
Common stock: $0.001 par value 100,000,000
shares authorized; 11,850,830 shares issued
and outstanding 11,851
Additional paid-in capital 2,243,554
Common stock subscriptions receivable (250,000)
Other comprehensive loss (100,000)
Accumulated deficit (2,173,861)
----------
Total Stockholders' Equity (Deficit) (266,456)
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 261,741
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 28
ALPHATRADE.COM
Statements of Operations
<TABLE>
<CAPTION>
For the Years Ended
December 31,
-------------------------
1999 1998
----------- -----------
<S> <C> <C>
REVENUE
Subscription revenue $ 40,687 $ -
License fee revenue 125,000 -
----------- -----------
Total Revenue 165,687 -
----------- -----------
EXPENSES
Depreciation expense 20,144 -
Rent expense 50,877 -
General and administrative expenses 2,242,585 11,687
----------- -----------
Total Expenses 2,313,606 11,687
----------- -----------
LOSS FROM OPERATIONS (2,147,919) (11,687)
OTHER EXPENSES
Write off of equipment (11,755) -
----------- -----------
Total Other Expenses (11,755) -
----------- -----------
LOSS BEFORE INCOME TAX BENEFIT (2,159,674) -
----------- -----------
INCOME TAX (BENEFIT) - -
----------- -----------
NET LOSS (2,159,674) (11,687)
----------- -----------
OTHER COMPREHENSIVE LOSS
Loss on valuation of investment (100,000) -
----------- -----------
Total Other Comprehensive Loss (100,000) -
----------- -----------
NET COMPREHENSIVE LOSS $(2,259,674) $ (11,687)
=========== ===========
NET LOSS PER SHARE $ (0.19) $ (0.00)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 29
ALPHATRADE.COM
Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Other
Preferred Stock Common Stock Additional Compre-
--------------------- ---------------------- Paid-In Subscriptions hensive Accumulated
Shares Amount Shares Amount Capital Receivable Loss Deficit
------ --------- ---------- ---------- ----------- ------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1997 - $ - $6,000,000 $ 6,000 $ (3,500) $ - $ - $ (2,500)
Stock issued on
subscription for services
at $0.50 per share on
December 28, 1998 - - 100,000 100 49,900 (50,000) - -
Net loss for the year ended
December 31, 1998 - - - - - - - (11,687)
------ -------- ---------- ---------- ---------- ---------- ------- ----------
Balance,
December 31, 1998 - - 6,100,000 6,100 46,400 (50,000) - (14,187)
Stock issued for technology,
recorded at predecessor
cost, January 6, 1999
(Note 6) - - 4,000,000 4,000 (4,000) - - -
Common stock issued for
services at $0.50 per share - - 100,000 100 49,900 - - -
Common stock issued for
cash at $1.00 per share - - 1,000,000 1,000 999,000 - - -
------ ---------- ---------- ---------- ---------- ---------- ------- ----------
Balance Forward - $ - 11,200,000 $ 11,200 $1,091,300 $ (50,000) $ - $ (14,187)
------ ---------- ---------- ---------- ---------- ---------- ------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 30
ALPHATRADE.COM
Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Other
Preferred Stock Common Stock Additional Compre-
--------------------- ---------------------- Paid-In Subscriptions hensive Accumulated
Shares Amount Shares Amount Capital Receivable Loss Deficit
---------- --------- ---------- ---------- ----------- ------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Forward - $ - 11,200,000 $ 11,200 $1,091,300 $ (50,000) $ - $ (14,187)
Stock issued to founders
recorded at $0.001 which
approximates predecessor
cost, January 8, 1999 2,000,000 2,000 - - - - - -
Receipt of stock subscription - - - - - 50,000 - -
Loss on valuation of
investment - - - - - - (100,000) -
Common stock issued for
cash at $1.25 per share - - 200,000 200 249,800 (250,000) - -
Common stock issued for
cash at $3.50 per share - - 830 1 2,904 - - -
Common stock issued for
cash and services at $2.00
per share - - 450,000 450 899,550 - - -
Net loss for the year ended
December 31, 1999 - - - - - - - (2,159,674)
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
Balance, December 31, 1999 2,000,000 $ 2,000 11,850,851 $ 11,851 $2,243,554 $ (250,000) $ (100,000) $(2,173,861)
========== ========== ========== ========== ========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 31
ALPHATRADE.COM
Statements of Cash Flows
<TABLE>
<CAPTION>
For the Years Ended
December 31,
-------------------------------
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(2,159,674) $ (11,687)
Adjustments to reconcile net loss to net cash (used)
by operating activities:
Common stock issued for services 290,000 -
Preferred stock issued for services 2,000 -
Depreciation expense 20,144 -
Write off of equipment 11,755 -
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses (7,969) -
Increase (decrease) in accounts payable 124,290 11,687
Increase (decrease) in accounts payable - related party 103,447 -
Increase (decrease) in deferred revenue 288,775 -
----------- -----------
Net Cash Used by Operating Activities (1,327,232) -
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in PhantomFilm.com (125,000) -
Purchase of fixed assets (167,680) -
----------- -----------
Net Cash Used by Investing Activities (292,680) -
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash 1,712,905 -
----------- -----------
Net Cash Provided by Financing Activities 1,712,905 -
----------- -----------
NET CHANGE IN CASH 92,993 -
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR - -
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 92,993 $ -
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $ - $ -
Income taxes paid $ - $ -
SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
Common stock issued for services $ 290,000 $ -
Preferred stock issued for services $ 2,000 $ -
Common stock issued for subscription receivable $ 250,000 $ 50,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 32
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 1999 and 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 provides both real-time and delayed stock
market quotes to subscribers via the internet. The Company was a
development stage enterprise until it began operations in November
1999.
b. Depreciation
The cost of the property and equipment is depreciated over the
estimated useful life of 5 years. Depreciation is computed using the
straight-line method when the assets are placed in service.
c. Accounting Method
The Company's 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 not been included
because they are antidilutive in nature.
10
<PAGE> 33
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 1 - NATURE OF ORGANIZATION (Continued)
f. Basic Loss Per Share (Continued)
<TABLE>
<CAPTION>
For the Year Ended
December 31, 1999
----------------------------------------------
Loss Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ------------
<S> <C> <C> <C>
Net loss $(2,159,674) 11,303,391 $ (0.19)
=========== ============= ============
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended
December 31, 1999
----------------------------------------------
Loss Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ------------
<S> <C> <C> <C>
Net loss $ (11,687) 6,000,822 $ (0.00)
=========== ============= ============
</TABLE>
g. Income Taxes
No provision for income taxes has been accrued because the Company has
net operating losses from inception. The net operating loss
carryforwards of approximately $2,250,000 at December 31, 1999 expire
in 2019. No tax benefit has been reported in the financial statements
because the Company is uncertain if the carryforwards will expire
unused. Accordingly, the potential tax benefits are offset by a
valuation account of the same amount.
h. Revenue Recognition
The Company amortizes subscription fees over the life of the contract,
typically one year. At December 31, 1999, the Company had deferred
revenue of $288,775 which relates to subscriptions to the Company
quotation services which were received in November and December 1999.
11
<PAGE> 34
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 1 - NATURE OF ORGANIZATION
i. Recent Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires companies to record
derivatives as assets or liabilities, measured at fair market value.
Gains or losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. The key
criterion for hedge accounting is that the hedging relationship must
be highly effective in achieving offsetting changes in fair value or
cash flows. SFAS No. 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. Management believes the
adoption of this statement will have no material impact on the
Company's financial statements.
j. Advertising
The Company follows the policy of charging the costs of advertising to
expense as incurred.
NOTE 2 - FIXED ASSETS
Fixed assets at December 31, 1999 consisted of the following:
<TABLE>
<CAPTION>
December 31,
1999
------------
<S> <C>
Office equipment $ 11,803
Computer equipment 108,790
Software 35,330
Less accumulated depreciation (20,144)
------------
$ 135,779
============
</TABLE>
Depreciation expense for the years ended December 31, 1999 and 1998
was $20,144 and $-0-, respectively.
NOTE 3 - CONVERTIBLE PREFERRED STOCK
The Company has 2,000,000 outstanding shares of convertible Class "A"
preferred stock with the following features:
o Each preferred share is convertible into five underlying common
shares at a conversion price of $0.05 per common share.
o 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.
o The preferred shares are assignable.
o The preferred shares vest immediately to the holder upon issuance
and cannot be canceled.
12
<PAGE> 35
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 4 - 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 5 - OPTIONS
At December 31, 1999, the Company had authorized the following options
pursuant to the 1999 stock option plan:
<TABLE>
<CAPTION>
Exercise Number Number Number
Price Authorized Exercised Outstanding
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
$ 1.00 1,200,000 - 1,200,000
$ 3.50 800,000 - 800,000
----------- ------------
2,000,000 2,000,000
============ ============
</TABLE>
At December 31, 1999, the Company had granted the following stock options:
<TABLE>
<CAPTION>
Grant Exercise Vesting Number Number
Date Price Dates Granted Outstanding
------------ --------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
1/6/99 $1.00 20% each year 80,000 80,000
2000-2004
1/6/99 $1.00 Immediately 700,000 700,000
1/6/99 $1.00 Immediately 60,000 60,000
9/1/99 $3.50 20% each year 660,000 660,000
2000-2004
12/20/99 $7.00 Immediately 50,000 50,000
------------ ------------
Total 1,500,000 1,500,000
============ ============
</TABLE>
NOTE 6 - WARRANTS
The Company had the following warrants outstanding at December 31, 1999:
<TABLE>
<CAPTION>
Number of Number of
Grant Exercise Shares Shares Total Expiration
Date Price Granted Exercised Remaining Date
- ---------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1/7/99 $ 1.25 1,000,000 200,000 800,000 1/7/2001
6/7/99 $ 2.50 500,000 - 500,000 6/7/2001
10/19/99 $4.875 600,000 - 600,000 10/19/2001
11/16/99 $ 6.25 5,000 - 5,000 11/10/2002
11/11/99 $ 7.00 150,000 - 150,000 11/11/2004
</TABLE>
All warrants were issued at prices equal to or exceeding the trading
value of the stock on the date of grant.
13
<PAGE> 36
ALPHATRADE.COM
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 7 - STOCK SUBSCRIPTION RECEIVABLE
The Company has issued 200,000 shares of its common stock pursuant to
a subscription. The subscription price is $1.25 per share and the
subscription provides that if the shares are not paid for by January
8, 2001, the shares will be canceled.
NOTE 8 - INVESTMENT
In June 1999, the Company sold a non-exclusive licensing agreement to
PhantomFilm.com for $125,000. The Company received 250,000 shares of
PhantomFilm.com stock originally valued at $0.50 per share. At
December 31, 1999, the stock was worth $0.10 per share. Accordingly, a
loss on valuation of investment for $100,000 has been recorded as an
other comprehensive loss. The PhantomFilm.com stock is classified as
available for sale.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Office Lease
The Company leases office space on a month-to-month basis. The monthly
lease payment is $5,000. Rent expense for the year ended December 31,
1999 was $50,877.
14
<PAGE> 37
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers and directors of the Company:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Gordon Muir 46 Founder, Chairman of the Board, Director
Penny Perfect 46 Founder, Chief Executive Officer, President, Director
Victor Cardenas* 49 Director
J. Michael Pinkney 58 Secretary/Treasurer, Director
Lisa McVeigh* 36 Director
Ralph Drewitt* 75 Director
</TABLE>
* Member of the audit committee
<PAGE> 38
GORDON MUIR has served as Chairman and a Director of AlphaTrade since October
21, 1999. Mr. Muir is an independent investor and business consultant. He was
the founder of Navmaster Technologies, a company credited with developing the
first GPS charting systems for the Marine Industry that relied on optical
imaging instead of expensive and cumbersome computers. He has over fifteen years
experience in senior level management in a variety of business mainly in the
automotive and industrial industries.
PENNY PERFECT has served as Chief Executive Officer, President and a Director of
AlphaTrade since October 21, 1999. Previously Ms. Perfect was the President of
her own firm which was involved in providing Public Relations and Investment
Banking services for early stage development companies. Prior to establishing
her own firm, Ms. Perfect was a stockbroker for over five years with a firm
specializing in venture capital and capital pool financings. She was also
involved in many aspects of tax advantaged investment products from structuring
to actually raising the capital for the project. These projects involved
restaurants, hotel operations, franchises, apartment blocks, mining companies,
wineries, medical companies and many others. Ms. Perfect has a Bachelor of
Education from the University of Alberta, Canada. She has ten years of study in
the field of Neuro-Linquistic Programming.
VICTOR D. CARDENAS has served as a Director since December 23, 1998 and served
as President from December 23, 1998 to October 21, 1999. For over thirty 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. He is
currently a 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 education courses at Harvard University and Cambridge University, UK.
J. MICHAEL PINKNEY has served as a Director and Secretary/Treasurer since
December 23, 1998. Mr. Pinkney earned a Bachelor's degree in Commerce from the
University of Alberta, Canada. He was employed with the Alberta Government for
over twenty years as a Senior Administrator. Since 1996 he has been working as
an independent contractor specializing with large corporate clients.
LISA MCVEIGH has served as a Director since January 21, 2000. Ms. McVeigh has
held the position of Financial Officer with British Columbia Film for ten years.
RALPH DREWITT has served as a Director since January 21, 2000. Mr. Drewitt has
been a businessman for over 40 years specializing in investment banking
<PAGE> 39
and mortgage financing. He has worked in several diverse industries such as
trucking, clothing and manufacturing in the capacity of owner or senior
officer.
DIRECTOR COMPENSATION
Directors of the Company receive no cash compensation for their services as
directors, other than reimbursement for certain expenses in connection with
attendance at board meetings. In 1999 J. Michael Pinkney was reimbursed travel
and miscellaneous expenses of $12,000. In 1999 the Directors were issued the
following stock options, none of which have been exercised to date.
<TABLE>
<CAPTION>
Date Name Exercise Price Number of Options
- ------------- ------------- -------------- -----------------
<S> <C> <C> <C>
January 6/99 Penny Perfect $1.00 350,000
January 6/99 Gordon Muir $1.00 350,000
January 6/99 J. Michael Pinkney $1.00 50,000
Sept. 1, 1999 J. Michael Pinkney $3.50 25,000
Sept. 1, 1999 Victor Cardenas $3.50 25,000
Sept. 1, 1999 Ralph Drewitt $3.50 25,000
Sept. 1, 1999 Lisa McVeigh $3.50 25,000
</TABLE>
All options expire ten years after the grant date. The exercise price
represents the fair market value of the common stock on the date the stock
option was granted.
FAMILY RELATIONSHIPS
Gordon Muir and Penny Perfect are married. There are no other family
relationships between any other Directors or executive Officers of the Company.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
To the knowledge of management, during the past five years, no present or
former director or an executive officer of the Company:
1) Filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer
appointed by a court for the business or property of such person, or any
partnership in which he was a general partner at or within two years
before the time of such filing, or any corporation or business association
of which he was an executive officer at or within two years before the
time of such filing;
2) Was convicted in a criminal proceeding or named subject of a pending
criminal proceeding (excluding traffic violations and other minor
offences);
<PAGE> 40
3) Was the subject of any order, judgement or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him or her from or otherwise limiting
his involvement in any type of business, securities or banking activities
(except as previously noted);
4) Was found by a court of competent jurisdiction in a civil action by the
Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated any federal or state securities law, and the
judgement in such civil action or finding by the Securities and Exchange
Commission has not been subsequently reversed, suspended, or vacated.
ITEM 10. EXECUTIVE COMPENSATION
The following table shows compensation earned during fiscal 1998 and 1999 by the
Chairman of the Board, Chief Executive Officer, Vice-President, Marketing and
the Chief Technical Officer. Titles shown on the table are titles held at
December 31, 1999 with the exception of Rafael deNoyo who is no longer with the
Company. The information in the table includes salaries, bonuses, stock options
granted, restricted stock awards granted and other miscellaneous compensation.
We have no long term compensation benefits other than stock options. No
executive officer held office in 1997 and therefore did not receive annual
compensation in fiscal 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term and Other
Annual Compensation Compensation
------------------------- ---------------------------
Number of
Securities All Other
Name and 1999 Fiscal Other Annual Underlying Compensation
Principal Positions Year Salary Bonus Compensation(1) Options ($)
- ------------------- ------ ------ ----- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Penny Perfect 1998 -- -- -- -- --
President and
Chief Executive Officer 1999 $120,000 -- $25,000 350,000 --
Gordon J. Muir 1998 -- -- -- -- --
</TABLE>
<PAGE> 41
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Chairman 1999 $120,000 -- $25,000 350,000 --
Dean Fox 1998 -- -- -- -- --
Vice-President,
Marketing 1999 $ 16,500(2) $5,000 -- 100,000 --
Rafael DeNoyo 1998 $ 6,670 -- -- -- --
Chief Technical
Officer 1999 $ 44,330 $20,000 -- -- --
</TABLE>
1) Other annual compensation is the value of the 25,000 restricted stock
awards granted and earned in 1999 by either of Penny Perfect and Gordon Muir.
Bonuses and Deferred Compensation
None of the Directors or executive officers received a bonus or deferred
compensation other than as noted above.
Compensation Pursuant to Plans - None
Pension Table - None - not applicable
Other Compensation
None of the Directors receive a fee for serving as Directors of
the Company. Directors are reimbursed for direct
out-of-pocket expenses for attendance at meetings of the
Board of Directors and for expenses incurred for and on
behalf of the Company.
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT.
The following table sets forth the names of each person who, at any time
during the fiscal year ended December 31, 1999, was a director,
executive officer, or beneficial owner of more than ten percent of the
Common Stock ("Reporting Person"), and failed to file on a timely
basis reports required by Section 16(a) of the Securities Exchange Act
of 1934 (the "Exchange Act"), during such fiscal year or prior fiscal
years:
<TABLE>
<CAPTION>
Known failure
Number of Number of Transactions Not to file a
Name Late Reports Reported on a Timely Basis Required Report
- ------ ------------ -------------------------- ---------------
<S> <C> <C> <C>
</TABLE>
<PAGE> 42
None
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the stock
ownership as of December 31, 1999, of: (i) each person who is known to the
Company to be the beneficial owner of more than 5 percent of the Company's
common stock; and (ii) directly or indirectly by each director, by each person
who was an executive officer during the fiscal year ending December 31, 1999
and by directors and executive officers of the Company as a group:
(i) Larger than 5% shareholders
<TABLE>
<CAPTION>
Title of Class Beneficial Owner of Share Of Class
- -------------- -------------------------- ------------ ----------
<S> <C> <C> <C>
Common Penny Perfect - CEO/Pres 925,000 8%
Common Gordon J. Muir - Chairman 910,000 8%
Common Unicorn Trade & Commerce (1) 4,000,000 33%
Common Emerald Marketing Ltd. (2) 700,000 6%
</TABLE>
(1) Subsequent to December 31, 1999, the shares of Unicorn were acquired by
Sandy Coastline Investments Ltd., a company in which Penny Perfect and Gordon
Muir have a beneficial interest. A Pooling Agreement dated January 6, 1999
governs the resale of these securities. On March 15, 2000 the Company received
an unsubstantiated claim for 1,600,000 of the shares beneficially owned by
Rafael DeNoyo.
(2) Subsequent to December 31, 1999, Emerald Marketing Ltd. acquired a further
100,000 common shares through the exercise of a Warrant.
(ii)Shareholdings of Directors and Executive Officers
<TABLE>
<CAPTION>
Number Percentage
Title of Class Beneficial Owner of Share Of Class
- -------------- -------------------------- ------------ ----------
<S> <C> <C> <C>
Common Penny Perfect - CEO/Pres 925,000
Director 8%
Common Gordon J. Muir - Chairman 910,000
Director 8%
</TABLE>
<PAGE> 43
<TABLE>
<S> <C> <C> <C>
Common Victor Cardenas - Director 50,000 .04%
Common J. Michael Pinkney - Director 330,000 3%
Common All executive officers and
directors as a group (four
persons) 2,215,000 18%
Class A All executive officers and
Preferred directors As a group (two 2,000,000 100%
persons)
</TABLE>
Subsequent to December 31, 1999, two companies in which Penny Perfect and
Gordon Muir have a beneficial interest completed a private placement of 175,000
shares at $5.75 per share for total proceeds of $1,006,250.
1999 STOCK INCENTIVE PLAN
A Stock Incentive Plan was adopted in 1999 authorizing the issuance of the
following shares to Directors, Executive Officers, Employees and Consultants of
which the unexercised balances are as follows:
<TABLE>
<CAPTION>
Exercise Number Number
Price Authorized Outstanding
-------- ---------- -----------
<S> <C> <C> <C>
1999 Plan $1.00 1,200,000 1,194,000
1999 Plan $3.50 800,000 800,000
</TABLE>
PREFERRED SHARES
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:
o Each share is convertible into five shares of common stock at a
conversion price of $0.05 per share;
o Each share is accorded five votes on any matter submitted to the
stockholders of the Company;
o There shares are assignable, subject to compliance with any
applicable securities laws, rules and regulations;
<PAGE> 44
o Ownership of these shares vests on issuance, and they are not
subject to cancellation.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transaction with Management and Others
During the past two years, there have been no material transactions, series of
similar transactions or currently proposed transactions, to which the Company or
any of its subsidiaries was or is to be a party, in which the amount involved
exceeds $60,000 and in which any director or executive officer, or any security
holder who is known to the Company to own of record or beneficially more than
five percent of the Company's common stock, or any member of the immediate
family of any of the foregoing persons, had a material interest.
Certain Business Relationships
During the past two years, there have been no material transactions, series of
similar transactions, currently proposed transactions, or series of similar
transactions, currently proposed transactions, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be a
party, in which the amount involved exceeds $60,000 an in which any promoter or
founder, or any member of the immediate family of any of the foregoing persons,
had a material interest.
Indebtedness of Management
During the past two years, there have been no material transactions, series of
similar transactions or currently proposed transactions, to which the Company or
any of its subsidiaries was or is to be a party, in which the amount involved
exceeds $60,000 and in which any director or executive officer, or any security
holder who is known to the Company to own of record or beneficially more than
five percent of the Company's common stock, or any member of the immediate
family of any of the foregoing persons, had a material interest.
Parents of the Issuer
Except and to the extent that Gordon Muir and Penny Perfect may be deemed to be
a parent of the company by virtue of their substantial stock ownership, the
Company has no parents.
<PAGE> 45
Transactions with Promoters
During the past two years, there have been no material transactions, series of
similar transactions, currently proposed transactions, or series of similar
transactions, currently proposed transactions, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be a
party, in which the amount involved exceeds $60,000 an in which any promoter or
founder, or any member of the immediate family of any of the foregoing persons,
had a material interest.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
Exhibit
Number Description of Exhibits
- -------- -------------------------------------------
Exhibits incorporated herein by reference.
3.1 Initial Articles of Incorporation dated June 6, 1995 (1)
3.2 By-laws (1)
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) (1)
3.4 Certificate of Amendment changing the name of the Company to
"Honor One Corporation" (10/29/98) (1)
3.5 Certificate of Amendment effecting a three for one forward split
of the outstanding common stock (12/18/98) (1)
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; and changed its name
from "Honor One Corporation" to "Alphatrade.com" (1/5/99) (1).
10.1 Asset Purchase Agreement between the Company and
Unicorn, dated January 6, 1999 (1)
<PAGE> 46
10.2 1999 Stock Incentive Plan (2)
10.3 Licensing Agreement with PhantomFilm.com (1)
8-K Current Report dated was filed by the Company with the Securities and
Exchange Commission on June 25, 1999, respecting a Complaint filed in the
District Court, Clark, County Nevada (see item 3 - Legal Proceedings), and is
incorporated herein by reference.
8-K Current Report dated was filed by the Company with the Securities and
Exchange Commission on February 8, 2000, respecting a financing, and is
incorporated herein by reference.
_____________________________
(1) Incorporated by reference from the Company's Form 10-SB/A-2 filed
on November 23, 1999.
(2) Incorporated by reference from the Company's Form S-8 filed
December 20, 1999.
<PAGE> 47
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ALPHATRADE.COM
Dated: March 28, 2000 By: /s/Penny Perfect
Penny Perfect
President and CEO
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed by the following persons on behalf of the Registrant, in the
capacities, and on the dates, indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Gordon Muir Director March 28, 2000
- -----------------------
Gordon J. Muir
/s/ Penny Perfect Director March 28, 2000
- -----------------------
Penny Perfect
/s/ J. Michael Pinkney Director March 28, 2000
- -----------------------
J. Michael Pinkney
/s/ Victor Cardenas Director March 28, 2000
- -----------------------
Victor Cardenas
/s/ Lisa McVeigh Director March 28, 2000
- -----------------------
Lisa McVeigh
/s/ Ralph Drewitt Director March 28, 2000
- -----------------------
Ralph Drewitt
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> DEC-31-1998
<PERIOD-END> DEC-31-1999
<CASH> 92,993
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,962
<PP&E> 155,923
<DEPRECIATION> (20,144)
<TOTAL-ASSETS> 261,741
<CURRENT-LIABILITIES> 528,197
<BONDS> 0
0
2,000
<COMMON> 11,851
<OTHER-SE> (280,307)
<TOTAL-LIABILITY-AND-EQUITY> 261,741
<SALES> 0
<TOTAL-REVENUES> 165,687
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,313,606
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,159,674)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,259,674)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,259,674)
<EPS-BASIC> (.19)
<EPS-DILUTED> (.19)
</TABLE>
