Report on Form 10-QSB For the Quarter Ended September 30, 2007 INDEX Page ---- Part I. Financial Information Item 1. Financial Statements (unaudited)...................... 3 Balance Sheets.......................................4-5 Statements of Operations ............................6-7 Statement of Stockholders' Equity (Deficit)........... 8 Statements of Cash Flows............................9-10 Notes to the Financial Statements .................11-13 Item 2. Management's Discussion and Analysis or Plan of Operation .............................. 14 Item 3. Controls and Procedures ............................. 17 Part II. Other Information Item 1. Legal Proceedings ................................... 18 Item 2. Changes in Securities ............................... 18 Item 3. Defaults Upon Senior Securities ..................... 19 Item 4. Submission of Matters to a Vote of Security Holders . 19 Item 5. Other Information ................................... 19 Item 6. Exhibits and Reports on Form 8-K .................... 19 Signatures........................................... 20 Certifications 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. The accompanying balance sheets of Alphatrade.com at September 30, 2007 and December 31, 2006, and the related statements of operations, stockholders' equity (deficit) and cash flows for the three months and nine months ending September 30, 2007 and 2006, have been prepared by our management in conformity with United States generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the quarter ended September 30, 2007, are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2007. ALPHATRADE.COM FINANCIAL STATEMENTS September 30, 2007 and December 31, 2006 3 ALPHATRADE.COM Balance Sheets ASSETS ------ September 30, December 31, 2007 2006 ------------- ------------- (Unaudited) CURRENT ASSETS Cash $ 88,130 $ 147,323 Accounts receivable - trade, net 1,283 64,766 Prepaid expenses 3,000 7,148 ------------ ------------ Total Current Assets 92,413 219,237 ------------ ------------ PROPERTY AND EQUIPMENT, NET 50,936 37,550 ------------ ------------ OTHER ASSETS Investments 686,386 215,991 Related party investment 11,510 68,467 ------------ ------------ Total Other Assets 697,896 284,458 ------------ ------------ TOTAL ASSETS $ 841,245 $ 541,245 ============ ============ The accompanying condensed notes are an integral part of these interim financial statements. 4 ALPHATRADE.COM Balance Sheets (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) ---------------------------------------------- September 30, December 31, 2007 2006 ------------- ------------- (Unaudited) CURRENT LIABILITIES Accounts payable and accrued expenses $ 1,786,282 $ 547,139 Related party payables 1,953,367 714,295 Deferred revenue 248,382 241,332 ------------ ------------ Total Current Liabilities 3,988,031 1,502,766 ------------ ------------ Total Liabilities 3,988,031 1,502,766 ------------ ------------ STOCKHOLDERS' EQUITY (DEFICIT) Convertible preferred stock: par value $0.001 per share; 10,000,000 shares authorized, 4,000,000 Class A shares issued and outstanding 4,000 4,000 Common stock: $0.001 par value, 100,000,000 shares authorized: 45,481,900 and 40,425,027 shares issued and outstanding, respectively 45,482 40,425 Additional paid-in capital 31,816,172 30,853,661 Prepaid expenses-related parties - (30,000) Stock subscription payable 40,000 - Accumulated other comprehensive income (1,060,311) (717,859) Accumulated deficit (33,992,129) (31,111,748) ------------ ------------ Total Stockholders' Equity (Deficit) (3,146,786) (961,521) ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 841,245 $ 541,245 ============ ============ The accompanying condensed notes are an integral part of these interim financial statements. 4 ALPHATRADE.COM Statements of Operations For the Three Months Ended For the Nine Months Ended September 30, September 30, -------------------------- -------------------------- 2007 2006 2007 2006 ------------ ------------- ------------- ------------ REVENUE Subscription revenue $ 773,818 $ 701,526 $ 2,298,473 $ 2,080,760 E-Trax revenue 18,093 11,283 48,672 58,110 Advertising revenue 817,523 347,807 1,675,992 854,992 Other revenue 944 93 5,053 943 ----------- ------------ ------------ ----------- Total Revenue 1,610,378 1,060,709 4,028,190 2,994,805 ----------- ------------ ------------ ----------- COST OF SALES Financial content 364,973 468,975 1,262,087 1,313,071 Other cost of sales 1,082 1,815 3,875 3,851 ----------- ------------ ------------ ----------- Total Cost of Sales 366,055 470,790 1,265,962 1,316,922 ----------- ------------ ------------ ----------- Gross Profit 1,244,323 589,919 2,762,228 1,677,883 ----------- ------------ ------------ ----------- EXPENSES Management expense - 120,000 240,000 360,000 Professional fees 49,609 554,968 1,111,773 1,018,888 Research and development 139,971 103,390 327,840 342,320 Marketing expense 1,819,988 78,761 3,276,579 360,160 General and administrative expenses 268,242 148,946 638,067 755,467 ----------- ------------ ------------ ----------- Total Expenses 2,277,810 1,006,065 5,594,259 2,836,835 ----------- ------------ ------------ ----------- (LOSS) FROM OPERATIONS (1,033,487) (416,146) (2,832,031) (1,158,952) OTHER (EXPENSE) Realized loss on marketable securities - (14,782) (48,350) (14,782) ----------- ------------ ------------ ----------- (LOSS) BEFORE INCOME TAX EXPENSE (1,033,487) (430,928) (2,880,381) (1,173,734) INCOME TAX EXPENSE - - - - ----------- ------------ ------------ ----------- NET (LOSS) $(1,033,487) $ (430,928) $ (2,880,381) $(1,173,734) =========== ============ ============ =========== The accompanying condensed notes are an integral part of these interim financial statements. 6 ALPHATRADE.COM Statements of Operations (Continued) For the Three Months Ended For the Nine Months Ended September 30, September 30, -------------------------- -------------------------- 2007 2006 2007 2006 ------------ ------------- ------------- ------------ OTHER COMPREHENSIVE LOSS (114,771) - (342,452) - ----------- ------------ ------------ ----------- TOTAL COMPREHENSIVE (LOSS)$(1,148,258) $ (430,928) $ (3,222,833) $(1,173,734) =========== ============ ============ =========== BASIC AND DILUTED LOSS PER SHARE $ (0.02) $ (0.01) $ (0.07) $ (0.04) =========== ============ ============ =========== COMPREHENSIVE LOSS PER SHARE $ (0.03) $ (0.01) $ (0.07) $ (0.04) =========== ============ ============ =========== WEIGHTED AVERAGE NUMBER OF SHARES 44,613,473 32,725,986 43,029,594 31,270,687 =========== ============ ============ =========== The accompanying condensed notes are an integral part of these interim financial statements. 7 ALPHATRADE.COM Statements of Stockholders' Equity (Deficit) <TABLE> <S> <C> <C> <C> <C> <C> <C> <C> <C> Preferred Stock Common Stock Additional Net Other ---------------- ------------------ Paid-In Subscription Comprehensive Accumulated Shares Amount Shares Amount Capital (Receivable) Income Deficit --------- ------ ---------- ------- ----------- ----------- ------------- ------------- Balance, December 31, 2006 4,000,000 $4,000 40,566,950 $40,567 $30,853,519 $ (30,000) $ (717,859) $(31,111,748) Common stock issued for cash on exercise of warrants at $0.18 per share (unaudited) - - 55,000 55 9,945 - - - Common stock issued for services at an average price of $0.14 per share (unaudited) - - 2,369,400 2,369 305,985 30,000 - - Value of options issued under the 2007 stock option plan (unaudited) - - - - 93,350 - - - Value of stock purchase warrants granted (unaudited) - - - - 10,128 - - - Contributed capital (unaudited) - - - - 19,850 - - - Common stock issued for cash at $0.20 per share (unaudited) - - 705,000 705 140,295 40,000 - - Common stock issued for services at an average price of $0.22 per share (unaudited) - - 1,785,550 1,786 383,100 - - - Net loss for the nine months ended September 30, 2007 (unaudited) - - - - - - (342,452) (2,880,381) --------- ------ ---------- ------- ----------- ---------- ------------ ------------ Balance, September 30, 2007 (unaudited) 4,000,000 $4,000 45,481,900 $45,482 $31,816,172 $ 40,000 $ (1,060,311) $(33,992,129) ========= ====== ========== ======= =========== ========== ============ ============ </TABLE> The accompanying condensed notes are an integral part of these interim financial statements. 8 ALPHATRADE.COM Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, ---------------------------- 2007 2006 ------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (2,880,381) $ (1,173,734) Adjustments to reconcile net loss to net cash used by operating activities: Common stock issued for services and contributions 693,240 776,214 Value of options and warrants granted 103,478 337,436 Amortization of services prepaid by common stock 30,000 174,676 Depreciation expense 10,010 9,220 Investments received as payment for accounts receivable (862,139) (471,510) Realized loss on marketable securities 48,350 14,782 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable 63,483 (43,264) (Increase) decrease in prepaid expenses 4,148 12,847 Increase (decrease) in accounts payable and accrued expenses 1,239,143 71,194 Increase (decrease) in related party payables - 141,397 Increase in deferred revenue 7,050 7,979 ------------ ------------- Net Cash Used by Operating Activities (1,543,618) (142,763) ------------ ------------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales of marketable securities 57,899 23,325 Purchase of fixed assets (23,396) (3,285) ------------ ------------- Net Cash Used by Investing Activities 34,503 20,040 ------------ ------------- CASH FLOWS FROM FINANCING ACTIVITIES Related party advances 1,239,072 - Contributed capital 19,850 - Common stock issued for cash 191,000 28,750 ------------ ------------- Net Cash Provided by Financing Activities 1,449,922 28,750 ------------ ------------- NET CHANGE IN CASH (59,193) (93,973) CASH AT BEGINNING OF PERIOD 147,323 147,408 ------------ ------------- CASH AT END OF PERIOD $ 88,130 $ 53,435 ============ ============= The accompanying condensed notes are an integral part of these interim financial statements. 9 ALPHATRADE.COM Statements of Cash Flows (Continued) (Unaudited) For the Nine Months Ended September 30, ---------------------------- 2007 2006 ------------- -------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ - $ - Income taxes paid $ - $ - SCHEDULE OF NON-CASH FINANCING ACTIVITIES: Common stock issued for services and contributions $ 693,240 $ 776,214 Value of stock options and warrants granted $ 103,478 $ 337,436 The accompanying condensed notes are an integral part of these interim financial statements. 10 ALPHATRADE.COM Notes to the Financial Statements September 30, 2007 and December 31, 2006 NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION The accompanying unaudited financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed financial statements be read in conjunction with the Company's most recent audited financial statements and notes thereto included in its December 31, 2006 Annual Report on Form 10-KSB. Operating results for the nine months ended September 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007. NOTE 2 - GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has recorded significant losses from operations and has a deficit in its working capital as well as in its stockholders' equity which together raise substantial doubt about its ability to continue as a going concern. In order to continue as a going concern and achieve a profitable level of operations, the Company will need, among other things, to increase sales of its subscription services and to increase advertising sales. All marketing efforts are concentrated in the areas of developing a strong sales team, maximizing the investment with our sports partners through unique and innovative premium text promotions and building an advertising program that delivers proven results. In addition, the related party debt is a manageable situation as the terms and conditions are favorable to the company and the repayment terms are appropriate to the cash flow of the company. The payment terms if necessary, will be adjusted on a mutually agreed basis. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the aforementioned plan and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. 11 ALPHATRADE.COM Notes to the Financial Statements September 30, 2007 and December 31, 2006 NOTE 3 - SIGNIFICANT EVENTS During the nine months ended September 30, 2007, the Company issued 4,154,950 shares of common stock valued at an average price of $0.17 per share for consulting services for marketing the company's products. All issuances of common stock for services were valued at the closing price of the common stock on the dates of authorization. During the nine months ended September 30, 2007, the Company issued 55,000 shares of common stock for cash at $0.18 per share upon the exercise of options granted under its 2004 Incentive Stock Option Plan. During the nine months ended September 30, 2007, the Company issued 705,000 shares of common stock for cash at $0.20 per share. In April 2007, the Company entered into a Promissory Note and Security Agreement with its officers and directors whereby they agreed to fund the Company with $1,500,000 of operating funds. The Promissory Note bears interest at 20% per annum, is due on February 28, 2008, is secured by the Company's assets and is convertible into shares of the Company's common stock upon default. The Company has an unused credit facility of $260,928 as of September 30, 2007. On June 27, 2007, the Company declared a 1.1 for 1 forward stock split. The accompanying financial statements reflect the stock split on a retroactive basis. NOTE 4 - RELATED PARTY TRANSACTIONS The Company receives advances from several related parties on a regular basis. During the nine months ended September 30, 2007, related parties advanced $1,239,072 to the Company. Officer salaries of $240,000 for the nine months ended September 30, 2007 were paid to the contracting management companies. NOTE 5 - OPTIONS AND WARRANTS Under FASB Statement 123, the Company estimates the fair value of each stock award at the grant date by using the Black-Scholes option pricing model with the following weighted average assumptions used for grants, respectively; dividend yield of zero percent for all years; expected volatility of 79.43% and 111.88%; risk-free interest rates of 5.35, and 3.50 percent and expected lives of 1.0 and 1.0, for the nine months ended September 30, 2007 and 2006, respectively. In June 2007 the Company created the 2007 Stock Option Plan whereby it granted the option to purchase 6,000,000 shares of its common stock at $0.21 per share to certain directors, consultants and employees. The options were 25% vested at the date granted and additional vesting will be determined by the Board of Directors. Compensation cost for the Company's stock options granted was $103,478 and $337,436 during the nine months ended September 30, 2007 and 2006, respectively. 12 ALPHATRADE.COM Notes to the Financial Statements September 30, 2007 and December 31, 2006 NOTE 5 - OPTIONS AND WARRANTS (Continued) A summary of the status of the Company's stock options and warrants as of September 30, 2007 and changes during the nine months ended September 30, 2007 is presented below: Weighted Weighted Options Average Average and Exercise Grant Date Warrants Price Fair Value ----------- -------- ---------- Outstanding, December 31, 2006 39,822,997 $ 0.38 $ 0.38 Granted 200,000 0.15 0.15 Granted 6,000,000 0.21 0.21 Exercised (237,500) 0.90 0.90 ---------- -------- ---------- Outstanding, September 30, 2007 45,785,497 $ 0.36 $ 0.36 ========== ======== ========== Exercisable, September 30, 2007 30,140,500 $ 0.40 $ 0.40 ========== ======== ========== 13 Item 2. Management's Discussion and Analysis of Financial Condition or Plan of Operations The following information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Form 10-QSB. Forward-looking and Cautionary Statements This report contains certain forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks and uncertainties. These factors may cause our company's, or our industry's actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will" "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. These statements are only predictions. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Results of Operations. During the three months ended September 30, 2007, revenue significantly increased over the same period of 2006. Revenue for 2007 was $1,610,378, which is a 51% increase over fiscal 2006 sales of $1,060,709. The majority of the increase is directly attributable to the growth in advertising revenue. Advertising revenues grew to $817,523 in 2007 from $347,807 in 2006. Our partnerships with national and grassroots sports operations has increased our website traffic over 500% and we continue to see ongoing increased traffic. This has created a very effective advertising program which is giving us the opportunity to grow this part of our revenue at a very fast pace. Although we experienced some growth in the first half of 2007, we are definitely gaining traction during the final months of 2007. We expect this to continue to increase as our brand awareness becomes stronger. Our online advertising programs are a professional and targeted alternative to the typical advertising fare of unwanted spam and fax blasts. Additionally our E-Gate subscription revenues increased slightly to $773,818 in 2007 from $701,526 in 2006. Our free, delayed E-Gate service is experiencing an extremely large increase in numbers which is another reason our advertising program is so effective We believe the majority of our revenue growth for 2007 and beyond will be generated from our digital advertising programs and from our premium text messaging programs. Our database is growing exponentially as a direct result of our sports affiliations and these sports partnerships are also a strong conduit of new business for our text promotions. Our brand awareness has made tremendous strides in 2007 and that alone makes it possible for us to easily close larger advertising business. Our sports partnerships have proven to be a highly effective way of fast tracking the development of our brand - almost every day the name AlphaTrade.com is seen at some sporting event or on national television and it is associated with some of the largest brands in the world. As our brand continues to be more recognizable, our ability to achieve better results for our advertisers and 14 generate additional revenue from text promotions is greatly enhanced. Our advertising programs are unique and innovative and competition in this sector is virtually non-existent. The caliber of our site demographics is the main attraction as opposed to sheer numbers of site visitors - we attract the most favorable demographic due to the combination of our financial products with a strong sports presence. For the first time in our company history, our advertising revenue in this quarter now exceeds the revenue from our stock quotation business. Our mobile messaging business has become a proven commodity. We started this year in Madison Square Gardens with the Professional Bull Riders and our very first live text promotion. At this event we achieved 50% audience participation. Throughout the year we have conducted text promotions at the New York Mets stadium, for NFL Super Bowl tickets, at the NHRA drag races, at a NASCAR race in Phoenix and many others - in fact, so far this year we promoted and developed over 50 text promotions. This experience and our connections in the sporting industry are setting the stage for us to generate significant revenue from this sector of our business. Our database from our text promotions is growing rapidly and this alone will become extremely attractive from a marketing and advertising perspective. Our text clients include some of the largest brands in the world and some of the most dominant sports teams in the United States. Our cost of E-Gate sales is the cost of the financial content. Many of these costs are fixed monthly fees while others are on a per user basis. Our advertising and text message revenues do not have any such costs. These sales will have the highest profit margin of all of our sales so as our advertising and text message business grow, the company's profit margins will become greater. We realized a net loss of $1,033,487 for the three months ended September 30, 2007 compared to a net loss of $430,928 for the three months ended September 30, 2006 This is an increase in net loss of $602,559 and is exclusively due to the cash paid for our sports partnerships and the stock paid to consultants for marketing our products. We fully expect this expense to translate into strong revenue growth for the balance of 2007 and beyond. We see this revenue being derived from a combination of our innovative advertising programs and our text message promotions. We are building an advertising clientele that is prepared to pay a premium to have access to our demographic. We entered into these sports partnerships knowing the initial year would have substantial costs associated with it. We knew it was imperative to build our brand recognition so our advertising program could become effective. This is exactly what is happening and we anticipate continued strong growth for the balance of 2007 and beyond. The management contracts with our executive officers were amended in the second half of 2007 to eliminate any additional compensation for 2007. Accordingly, we realized related party compensation expense of $-0- and $120,000 for the three months ended 2007 and 2006, respectively. Our marketing expense increased to $1,819,988 in 2007 from $78,761 in 2006 which is understandable as we grow our advertising business and pay for our sports partnerships. We fully expect this to continue throughout the balance of 2007 as we have hired some very talented and senior sales people to execute our targeted marketing program. 15 We increased our research and development expense to $139,971 in 2007 from $103,390 in 2006. This is expected to increase as we build additional products with which to generate even more revenue. Historically, due to the nature of being a developmental stage company, many of our expenses are paid in shares of our common stock. The expenses are recorded at the fair value of the shares issued. Excluding these non-cash expenses we would have reported a loss of $648,601 for the three months ended September 30, 2007 instead of $1,033,487. During the nine months ended September 30, 2007, revenue showed a substantive increase over the same period of 2006. Revenue for 2007 was $4,028,190, which is a 35% increase over fiscal 2006 sales of $2,994,805. An increase in revenue was realized in all of our products and services but the highest growth is advertising revenues. Advertising revenues grew to $1,675,992 in 2007 from $854,992 in 2006. That growth shows an underlying trend for the company with respect to our potential for revenue. Prior to adding additional revenue streams, our growth was limited to the growth of the financial markets and our share of that marketplace. With advertising, our potential revenue is unlimited and restricted only by our own creativity. As our database grows and the success of our advertising programs becomes more widely known, we believe our advertising revenues will grow exponentially. In addition, our text message programs will show some strong growth in the later half of this year but most of the significant growth will show in early 2008. We believe our new corporate direction is validated with the success and growth trajectories of these new products. We do expect the growth of our E-gate financial products to remain steady. The most important aspect of all of our services is the highly desirable demographic we are accumulating and the high quality of the database from a purchasing point of view. This has given us the opportunity to build our highly effective and innovative advertising programs. We incurred a net loss of $2,880,381 for the nine months ended September 30, 2007 compared to $1,173,734 for the nine months ended September 30, 2006. This is an increase of $1,706,647 and directly related to payments for our sports marketing programs and increased marketing expenses. We are already experiencing strong revenue growth in our advertising programs from these partnerships and we expect the growth to escalate during the second half of this year. Stock options were issued under our 2007 Stock Option Plan. We realized related party compensation expense of $240,000 for both 2007 and 2006. Our marketing expense increased to $3,276,579 in 2007 from $360,160 due to a greatly expanded marketing program. We decreased our research and development expense to $327,840 in 2007 from $342,320 in 2006. Our professional fees expense increased to $1,111,773 in 2007 from $1,018,888 in 2006 mainly because of share issuances to consultants that were assisting in marketing our new products. Our general and administrative expense decreased to $638,067 for 2007 from $755,467 in 2006 due to the issuance of stock options under the 2006 stock option plan to our employees and directors in the prior year. Historically, many of our expenses are paid in shares of our common stock. The expenses are recorded at the fair value of the shares issued. Excluding these non cash expenses the loss for the nine months ended September 30, 2007 would have been $2,053,663. Excluding non cash expenses for 2006 we would have reported an income $114,592. 16 Liquidity and Capital Resources. We have consistently been financed through loans from related parties and from raising capital through private equity offerings. We used $1,543,618 and $142,763 of cash in our operating activities in the first nine months of 2007 and 2006, respectively. This increase of $1,400,855 was primarily due to the expanded marketing program. For the nine months ended September 30, 2007 and 2006 we received cash totaling $191,000 and $28,750 from the issuance of our common stock upon the exercise of options granted under the 2004 stock option plan. In 2007 we also received $1,239,072 from related party advances. We expect that in the next twelve months that the cash generated by our operations will be adequate to cover our cash flow. Given the right circumstances, we would entertain a secondary financing if it would expand our market penetration and bring extra revenue to us. We are actively seeking acquisition targets and may decide to use our stock as the compensation for any acquisition. Currently, we do not have any definitive plans for a secondary financing nor have we identified a specific acquisition target. We currently have no material commitments for capital requirements. At the present time we have no need to purchase new equipment or replace the equipment we are currently using. We believe that our capital infrastructure is adequate to handle the expected growth in 2008. We are not aware of any material trend, event or capital commitment, which would potentially adversely affect liquidity. In the event a material trend develops, we believe we will have sufficient funds available to satisfy working capital needs through debt or from funds received from equity sales. Dependence on Key Personnel We are dependent on the services of Penny Perfect, the Chief Executive Officer of the Company. The loss of Ms. Perfect or Gordon Muir, our CTO or other key executives and personnel, or the inability to attract and retain the additional highly skilled employees required for the expansion of our activities, may have a material adverse effect on our business or our future operations. We do not intend to maintain "Key-man" life insurance on any executive officers or other personnel at this time. Item 3. Controls and Procedures As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based upon that evaluation, our chief executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to cause the material information required to be disclosed by us in the reports that we file or submit under the Exchange Act to be recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. There have been no significant changes in our internal controls or in other factors which could significantly affect internal controls subsequent to the date we carried out our evaluation. 17 PART II - OTHER INFORMATION. Item 1. Legal Proceedings. AlphaTrade.com is the Defendant in litigation pending in the Supreme Court of British Columbia, Canada. This action was filed on December 23, 2003 and is between Zacks Investment Services, Inc. as Plaintiff and AlphaTrade.com as Defendant. The case number is 5036907. The Plaintiff alleges that it is owed the sum of $279,664 pursuant to a licensing Agreement executed by the Plaintiff and the Defendant in 1999. Alphatrade is agressively defending itself against this claim. During the year ending December 31, 2002, a company filed an action against AlphaTrade in the Supreme Court of British Columbia, Canada claiming unspecified damages. AlphaTrade filed a Statement of Defence in August, 2002. There has been no further developments in this action. AlphaTrade plans to vigorously defend itself. We are subject to potential liability under contractual and other matters and various claims and legal actions which may be asserted. These matters arise in the ordinary course and conduct of our business. While the outcome of the potential claims and legal actions against us cannot be forecast with certainty, we believe that such matters should not result in any liability which would have a material adverse effect on our business. Item 2. Changes in Securities. The following unregistered securities have been issued since January 1st, 2007: Valued Date No. of Shares Title At Reason Jan. 18/2007 266,580 Common $0.16 Services Feb. 20/2007 1,035,420 Common $0.135 Services Feb. 27/2007 175,000 Common $0.125 Services Mar. 15/2007 100,000 Common $0.12 Services Mar. 23/2007 115,000 Common $0.122 Services Mar. 29/2007 15,000 Common $0.135 Services Apr. 05/2007 22,500 Common $0.17 Services Apr. 12/2007 375,500 Common $0.17 Services May 15/2007 50,000 Common $0.17 Services July 2/2007 200,000 Common $0.21 Services July 5/2007 902,550 Common $0.21 Services July 17/2007 16,500 Common $0.28 Services July 18/2007 10,000 Common $0.25 Services July 24/2007 29,000 Common $0.23 Services July 31/2007 3,000 Common $0.26 Services Aug. 14/2007 300,000 Common $0.23 Services Aug. 27/2007 54,500 Common $0.24 Services Sep. 7/2007 270,000 Common $0.21 Services The above noted shares were issued in private, isolated transactions without registration under the Securities Act. The shares were issued in reliance on the exemption provided by Rule 506 and/or Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering to Consultants or to companies owned or controlled by Consultants or Officers of AlphaTrade. 18 Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 31.1 Certification of C.E.O. Pursuant to Section 302 of the Sarbanses-Oxley Act of 2002. Exhibit 31.2 Certification of Principal Accounting Officer Pursuant to Section 302 of the Sarbanses-Oxley Act of 2002. Exhibit 32.1 Certification of C.E.O. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit 32.2 Certification of Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Report on Form 8-K None 19 SIGNATURES In accordance with the requirements of the 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: 11/12/2007 / s / Penny Perfect ---------------------------- President / Director Date: 11/12/2007 / s / Katharine Johnston ---------------------------- Principal Accounting Officer 20 </TEXT> </DOCUMENT>