U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended March 31, 2000
--------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 0-25631
-------
ALPHATRADE.COM
--------------
(Name of Small Business Issuer in its Charter)
NEVADA Applied For
------ -----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
Suite 400, 1111 West Georgia Street
Vancouver, British Columbia, Canada V6E 4M3
-------------------------------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (604) 689-5377
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's
classes of common equity, as of the latest practicable date:
March 31, 2000
Common - 12,158,787 shares
DOCUMENTS INCORPORATED BY REFERENCE
NONE.
Transitional Small Business Issuer Format Yes X No
--- ---
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Consolidated Financial Statements of the Company required
to be filed with this 10-QSB Quarterly Report were prepared by management and
reviewed by the Company's independent auditors, HJ & Associates LLC (formerly
known as "Jones, Jensen & Company") and commence on the following page,
together with related Notes. In the opinion of management, the Consolidated
Financial Statements fairly present the financial condition of the Company.
<PAGE>
ALPHATRADE.COM
FINANCIAL STATEMENTS
March 31, 2000 and December 31, 1999
<PAGE>
C O N T E N T S
Independent Accountants' Review Report . . . . . . . . . . . . . . . . 3
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . 6
Statements of Stockholders' Equity (Deficit) . . . . . . . . . . . . . 7
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . .9
Notes to the Financial Statements. . . . . . . . . . . . . . . . . . . 10
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Stockholders of
AlphaTrade.com
Vancouver, B.C. Canada
We have reviewed the accompanying balance sheet of AlphaTrade.com as of March
31, 2000 and the related statements of operations, stockholders' equity and
cash flows for the periods ended March 31, 2000 and 1999. These financial
statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which will
be performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements referred to above for
them to be in conformity with accounting principles generally accepted in the
United States.
We have previously audited, in accordance with auditing standards generally
accepted in the United States, the balance sheet of AlphaTrade.com as of
December 31, 1999, and the related statements of operations, stockholders'
equity, and cash flows for the year then ended (not presented herein) and in
our report dated February 3, 2000, we expressed an unqualified opinion on
those consolidated financial statements.
HJ & Associates, LLC
Salt Lake City, Utah
May 10, 2000
<PAGE>
ALPHATRADE.COM
Balance Sheets
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
2000 1999
<S> <C> <C>
CURRENT ASSETS
Cash $ 54,316 $ 92,993
Prepaid expenses 163,395 7,969
Total Current Assets 217,711 100,962
FIXED ASSETS
Computer equipment 124,290 108,790
Office equipment 13,853 11,803
Software 54,997 35,330
Accumulated depreciation (29,273) (20,144)
Total Fixed Assets 163,867 135,779
OTHER ASSETS
Investment (Note 8) 75,000 25,000
Technology (Note 4) - -
Total Other Assets 75,000 25,000
TOTAL ASSETS $ 456,578 $ 261,741
</TABLE>
<PAGE>
ALPHATRADE.COM
Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 391,855 $ 239,422
Deferred revenue (Note 1) 96,258 288,775
Total Current Liabilities 488,113 528,197
Total Liabilities 488,113 528,197
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 2,000
Common stock: $0.001 par value 100,000,000
shares authorized; 12,158,787 and 11,850,830 shares
issued and outstanding, respectively 12,159 11,851
Additional paid-in capital 3,305,675
2,243,554
Common stock subscriptions receivable (58,171) (250,000)
Other comprehensive loss (50,000) (100,000)
Accumulated deficit (3,243,198) (2,173,861)
Total Stockholders' Equity (Deficit) (31,535) (266,456)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 456,578 $ 261,741
</TABLE>
<PAGE>
ALPHATRADE.COM
Statements of Operations
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
2000 1999
<S> <C> <C>
REVENUE
Subscription revenue $ 192,764 $ -
License fee revenue -
-
Total Revenue 192,764 -
EXPENSES
Depreciation expense 9,129 2,077
Rent expense 24,532 9,926
General and administrative expenses 1,228,440 555,547
Total Expenses 1,262,101 567,550
LOSS FROM OPERATIONS (1,069,337) (567,550)
INCOME TAX (BENEFIT) - -
NET LOSS (1,069,337) (567,550)
OTHER COMPREHENSIVE GAIN
Gain on valuation of investment 50,000 -
Total Other Comprehensive Gain 50,000 -
NET COMPREHENSIVE LOSS $ (1,019,337) $ (567,550)
NET LOSS PER SHARE $ (0.09) $ (0.05)
</TABLE>
<PAGE>
ALPHATRADE.COM
Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
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
Common stock issued for
services at $0.50 per share - - 100,000 100
Common stock issued for
cash at $1.00 per share - - 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 - -
Receipt of stock subscription - - - -
Loss on valuation of
investment - - - -
Common stock issued for
cash at $1.25 per share - - 200,000 200
Balance Forward 2,000,000 $ 2,000 11,400,000 $ 11,400
</TABLE>
<TABLE>
<CAPTION>
Additional Other
Paid-in Subscriptions Comprehensive Accumulated
Capitol Receivable Loss Deficit
<S> <C> <C> <C> <C>
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) - - -
Common stock issued for
services at $0.50 per share 49,900 - - -
Common stock issued for
cash at $1.00 per share 999,000 - - -
Stock issued to founders
recorded at $0.001 which
approximates predecessor
cost, January 8, 1999 - - - -
Receipt of stock subscription - 50,000 - -
Loss on valuation of
investment - - (100,000) -
Common stock issued for
cash at $1.25 per share 249,800 (250,000) - -
Balance Forward $1,341,100 $ (250,000)$ (100,000)$ (14,187)
</TABLE>
<PAGE>
ALPHATRADE.COM
Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Balance Forward 2,000,000 $ 2,000 11,400,000 $ 11,400
Common stock issued for
cash at $3.50 per share - - 830 1
Common stock issued for
cash and services at $2.00
per share - - 450,000 450
Net loss for the year ended
December 31, 1999 - - - -
Balance, December 31, 1999 2,000,000 2,000 11,850,830 11,851
Stock issued on exercise of
warrants at $1.25 per share - - 100,000 100
Stock issued on for services at
$6.25 per share - - 50,000 50
Stock issued on exercise of
options and for services at
$1.00 per share - - 60,000 60
Stock issued for prepaid
expenses at $6.50 per
share - - 27,500 28
Stock issued for services
at $6.50 per share - - 2,500 2
Balance Forward 2,000,000 $ 2,000 12,090,830 $ 12,091
</TABLE>
<TABLE>
<CAPTION>
Additional Other
Paid-in Subscriptions Comprehensive Accumulated
Capitol Receivable Loss Deficit
<S> <C> <C> <C> <C>
Balance Forward $ 1,341,100 $ (250,000)$ (100,000)$ (14,187)
Common stock issued for
cash at $3.50 per share 2,904 - - -
Common stock issued for
cash and services at $2.00
per share 899,550 - - -
Net loss for the year ended
December 31, 1999 - - - (2,159,674)
Balance, December 31, 1999 2,243,554 (250,000) (100,000) (2,173,861)
Stock issued on exercise of
warrants at $1.25 per share 124,900 (125,000) - -
Stock issued on for services
at $6.25 per share 312,450 - - -
Stock issued on exercise of
options and for services at
$1.00 per share 59,940 - - -
Stock issued for prepaid
expenses at $6.50 per share 178,722 - - -
Stock issued for services
at $6.50 per share 16,248 - - -
Balance Forward $ 2,935,814$ (375,000)$ (100,000)$(2,173,861)
</TABLE>
<PAGE>
ALPHATRADE.COM
Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Balance Forward 2,000,000 $ 2,000 12,090,830 $ 12,091
Common stock issued for
cash at $5.75 per share - - 51,521 52
Common stock issued for
services at $5.75 per share - - 10,436 10
Compensation on warrants
issued below market value
at $8.25 per share - - - -
Stock issued on exercise of
options at $1.00 per share - - 4,000 4
Stock issued on exercise of
options at $1.00 per share - - 2,000 2
Receipt of stock subscription - - - -
Gain on valuation of investment - - - -
Net loss for the three months
ended March 31, 2000 - - - -
Balance, March 31, 2000 2,000,000 $ 2,000 12,158,787 $ 12,159
</TABLE>
<TABLE>
<CAPTION>
Additional Other
Paid-in Subscriptions Comprehensive Accumulated
Capitol Receivable Loss Deficit
<S> <C> <C> <C> <C>
Balance Forward $ 2,935,814 $ (375,000)$ (100,000)$(2,173,861)
Common stock issued for
cash at $5.75 per share 296,193 (8,245) - -
Common stock issued for
services at $5.75 per share 59,990 - - -
Compensation on warrants
issued below market value
at $8.25 per share 7,684 - - -
Stock issued on exercise of
options at $1.00 per share 3,996 (4,000) - -
Stock issued on exercise of
options at $1.00 per share 1,998 (2,000) - -
Receipt of stock subscription - 331,074 - -
Gain on valuation of investment - - 50,000 -
Net loss for the three months
ended March 31, 2000 - - - (1,069,357)
Balance, March 31, 2000 $ 3,305,675 $ (58,171)$ (50,000)$(3,243,198)
</TABLE>
<PAGE>
ALPHATRADE.COM
Statements of Cash Flows
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,069,337) $ (567,550)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Common stock issued for services 448,750 50,000
Compensation on warrants issued below
market value 7,684 -
Preferred stock issued for services - 2,000
Depreciation expense 9,129 2,077
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses 23,324 (205)
Increase (decrease) in accounts payable 179,597 86,436
Increase (decrease) in accounts payable
- related party (27,164) 126,913
Increase (decrease) in deferred revenue (192,517) -
Net Cash Used by Operating
Activities (620,534) (300,329)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (37,217) (68,100)
Net Cash Used by Investing
Activities (37,217) (68,100)
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash 288,000 368,429
Receipt of stock subscription 331,074 -
Net Cash Provided by Financing
Activities 619,074 368,429
NET CHANGE IN CASH (38,677) -
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 92,993 -
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 54,316 $ -
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $ - $ -
Income taxes paid $ - $ -
SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
Common stock issued for services $ 448,750 $ -
Preferred stock issued for services $ - $ 2,000
Common stock issued for subscription
receivable $ 6,000 $ -
Warrants issued below market value $ 7,684 $ -
</TABLE>
<PAGE>
ALPHATRADE.COM
Notes to the Financial Statements
March 31, 2000 and December 31, 1999
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.
<PAGE>
ALPHATRADE.COM
Notes to the Financial Statements
March 31, 2000 and December 31, 1999
NOTE 1-NATURE OF ORGANIZATION (Continued)
f. Basic Loss Per Share (Continued)
For the Three Months Ended
March 31, 2000
Loss Shares Per Share
(Numerator)(Denominator) Amount
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net loss $ (1,069,337) 12,078,432 $ (0.09)
For the Three Months Ended
March 31, 1999
Loss Shares Per Share
(Numerator)(Denominator) Amount
Net loss $ (567,550) 10,897,802 $ (0.05)
</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 $3,330,000 at March 31, 2000 expire in
2020. 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, or on a monthly basis, as billed. At March 31,
2000, the Company had deferred revenue of $96,258 which relates to
subscriptions to the Company quotation services which were received in
November and December 1999. No subscriptions had been received prior
to November 1999.
<PAGE>
ALPHATRADE.COM
Notes to the Financial Statements
March 31, 2000 and December 31, 1999
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 March 31, 2000 consisted of the following:
March 31,
2000
Computer equipment $ 124,290
Office equipment 13,853
Software 54,997
Less accumulated depreciation (29,273)
$ 163,867
Depreciation expense for the three months ended March 31, 2000 and 1999
was $9,129 and $2,077, respectively.
NOTE 3-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.
<PAGE>
ALPHATRADE.COM
Notes to the Financial Statements
March 31, 2000 and December 31, 1999
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 March 31, 2000, the Company had authorized the following options
pursuant to the 1999 stock option plan:
<TABLE>
<CAPTION>
Exercise Number Number Number
Price Authorized Exercised Outstanding
<C> <C> <C> <C>
$ 1.00 1,200,000 - 1,134,000
$ 3.50 800,000 - 800,000
2,000,000 1,934,000
</TABLE>
At March 31, 2000, the Company had granted the following stock options:
<TABLE>
<CAPTION>
Grant Exercise Vesting Number Number
Date Price Dates Granted Outstanding
<C> <C> <C> <C> <C>
1/6/99 $ 1.00 20% each year 80,000 74,000
2000-2004
1/6/99 $ 1.00 Immediately 700,000 700,000
1/6/99 $ 1.00 Immediately 60,000 -
9/1/99 $ 3.50 20% each year 660,000 660,000
2000-2004
Total 1,500,000 ,434,000
</TABLE>
NOTE 6-WARRANTS
The Company had the following warrants outstanding at March 31, 2000:
<TABLE>
<CAPTION>
Number of Number of
Grant Exercise Shares Shares Total Expiration
Date Price Granted Exercised Remaining Date
<C> <C> <C> <C> <C> <C>
1/7/1999 $ 1.25 1,000,000 300,000 700,000 1/7/2001
6/7/1999 $ 2.50 500,000 - 500,000 6/7/2001
10/19/1999 $ 4.875 600,000 - 600,000 10/19/2001
11/16/1999 $ 6.25 5,000 - 5,000 11/10/2002
11/11/99 $ 7.00 150,000 - 150,000 11/11/2004
2/7/2000 $ 8.25 123,914 - 123,914 2/7/2005
</TABLE>
<PAGE>
ALPHATRADE.COM
Notes to the Financial Statements
March 31, 2000 and December 31, 1999
NOTE 6-WARRANTS
All warrants granted through December 31, 1999 were issued at prices
equal to or exceeding the trading value of the stock on the date of
grant.
The warrants issued on February 7, 2000 were issued at a price below
the trading value of the stock on that date. Accordingly, compensation
expense of $7,684 has been recorded on the difference between the
trading price of $8.31 per share and the exercise price of $8.25 per
share.
NOTE 7-STOCK SUBSCRIPTION RECEIVABLE
The Company has issued 100,000 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. At March 31, 2000, the balance due
on the subscription was $55,426.
The Company has issued 4,000 shares of its common stock pursuant to a
subscription. The subscription price is $1.00 per share. At March 31,
2000, the balance due on the subscription was $4,000.
The Company has received funds of $11,500 pursuant to an anticipated
subscription agreement. The subscription was approved by the Company
on April 20, 2000 for 5,750 shares at a price of $2.00 per share.
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 was recorded as an other
comprehensive loss for the year ended December 31, 1999. The
PhantomFilm.com stock is classified as available for sale. At March
31, 2000, the stock was worth $0.30 per share. Accordingly, a gain on
valuation of investment for $50,000 has been recorded as an other
comprehensive gain for the three months ended March 31, 2000.
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 related expense for the three months
ended March 31, 2000 and 1999 was $24,532 and $9,926, respectively.
<PAGE>
ALPHATRADE.COM
Notes to the Financial Statements
March 31, 2000 and December 31, 1999
NOTE 9-COMMITMENTS AND CONTINGENCIES (Continued)
Consulting Agreement
On December 20, 1999, the Company signed a consulting agreement with
Renmark Financial Communications (Renmark) for an initial period of 3
months beginning January 1, 2000, renewable for a further 12 month
period. Renmark will provide investor relations and communications
services to the Company. Terms of the agreement are as follows:
1) a monthly fee of $5,000:
2) Renmark will be granted an option to purchase a total of 150,000
shares of the Corporation at an exercise price of $7.00 per share,
according to the following vesting schedule:
a) 50,000 shares upon execution of this agreement;
b) 25,000 shares at March 31, 2000; 25,000 at June 30, 2000;
25,000 at September 30, 2000 and 25,000 at December 31, 2000.
This agreement was canceled in January 2000. Accordingly, all options
granted to Renmark under this agreement were canceled effective January
31, 2000.
NOTE 10-SUBSEQUENT EVENTS
On April 20, 2000, the Company accepted subscription agreements from
various related parties. The subscription agreements call for the
Company to issue 325,000 shares for $650,000 at a price of $2.00 per
share. Each share has two warrants attached, for a total of 650,000
warrants, at a price of $2.25 per share.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operation.
- ------------------
During the quarter ended March 31, 2000, the Company did not charge
for any subscriptions for E-gate products. We were in the process of
upgrading our network equipment to ensure the highest possible performance for
subscribers with all types of computers and internet connections and felt that
we could not charge for a service that was not 100% reliable. In addition,
the Company continued to upgrade all of the E-gate financial applications it
developed and to improve the transfer speed of the data. All of the current
applications are now running on new state-of-the-art Sun servers combined with
Cisco local directors. The new equipment upgrades allow users much faster
access and gives the Company unlimited scalability.
Enhanced Java code design and optimization tools were implemented in
the development environment to further improve the efficiencies of the
programming staff. Many improvements to the back end of the client services
were implemented to increase the speed of data requests made by clients, as
well as to increase the scalability of the E-gate products, allowing a larger
client base to access the system simultaneously. The Quote Grid was optimized
to improve performance when displaying larger stock portfolios, reducing any
painting errors. Many of the Company's subscribers have computer monitors
with lower resolutions (800 x 600 pixels), so a scroll bar was added to the
Quote Grid and the News was combined with the symbol on the portfolio manager,
thereby maximizing the amount of data that can be seen on these smaller
monitors.
Also during the quarter we implemented comprehensive security
capabilities to maintain the necessary privacy for our users via the use of
proven firewall technology.
Results of Operation.
- ---------------------
As at March 31, 2000, the Company had $217,711 in cash and prepaid
expenses, $456,578 in assets and $650,000 in Promissory Notes to be retired
prior to year end. Liabilities totaled $488,113, comprised of current accounts
payable
of $391,855 and deferred revenue of $96,258. The Company realized revenues of
$192,764 for the quarter ended March 31, 2000, and incurred net losses from
operations of $1,069,337, with total net comprehensive losses to date of
$1,019,337.
Operating costs for the quarter ended March 31, 2000, increased over
the same period last year due to increased labor costs, addition of more
equipment, increasing the data feed providers and increased marketing costs.
In preparation for expansion into the European market, which we
believe
to be a tremendous market opportunity, the Company engaged the services of a
consultant to facilitate potential joint venture opportunities, strategic
alliances and establish contacts with some of the key players in the European
market.
Liquidity.
- ----------
At March 31, 2000, the Company had cash on hand of $54,316, with
accounts payable totaling $391,855.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
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 supposedly 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. Further, Web Data has not been able to produce any technology or
documentation on its alleged technology to substantiate its claim. Thus,
AlphaTrade believes Web Data has no trade secrets or proprietary technology and
therefore AlphaTrade did not deprive WebData of any corporate opportunity.
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, regarding this proceeding, and is
incorporated herein by reference.
In August, 1999, the Plaintiffs filed a Motion for a preliminary
injunction against the Company. Prior to the hearing before the Courts for
the preliminary injunction in October, 1999, Plaintiff's lawyers notified the
Company's lawyers that they did not wish to proceed with the injunction and it
was removed from the court calendar.
Item 2. Changes in Securities.
During the quarter ended March 31, 2000, the Company issued to following
shares:
The Company issued "unregistered" and "restricted" shares pursuant to a
private placement of 61,957 shares at $5.75 per share.
In addition, the Company issued 105,000 shares for services; 100,000
shares pursuant to the exercise of a warrant and 6,000 shares pursuant to the
exercise of stock options.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None; not applicable.
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Management Agreement attached.
(b) Reports on Form 8-K.
Current Report on Form 8-K, dated June 16, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
ALPHATRADE.COM
Date: 5-19-00 By /s/ Penny Perfect
---------- ---------------------------
Penny Perfect
President/CEO and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this Report has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated:
ALPHATRADE.COM
Date: 5-19-00 By /s/ Penny Perfect
----------- --------------------------
Penny Perfect
President/CEO and Director
Date: 5-19-00 By /s/ Gordon Muir
----------- --------------------------
Gordon Muir
Director
Date: 5-19-00 By /s/ J. Michael Pinkney
----------- --------------------------
J. Michael Pinkney
Secretary/Treasurer and Director
Date: 5-19-00 By /s/ Victor Cardenas
----------- --------------------------
Victor Cardenas
Director
Date: 5-22-00 By /s/ Ralph Drewitt
----------- --------------------------
Ralph Drewitt
Director
Date: 5-19-00 By /s/ Lisa McVeigh
----------- --------------------------
Lisa McVeigh
Director
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