What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-10 compared with 2021-08-12 · 52 added, 49 removed, 137 unchanged (42% of the section changed)

38 unchanged sentences

Business Environment and Trends

The global financial markets experienced extreme volatility and disruption over the past year due to COVID-19 pandemic.

While global financial markets are recovering, risk still exists therefore we will continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our business, including how it will impact team members, customers, suppliers, and global markets.

The global financial markets experienced extreme volatility and disruption over the past year due to the COVID-19 pandemic.

While global financial markets are recovering, risk still exists;

therefore we will continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our business, including how it will impact team members, customers, suppliers, and global markets.

Most of our employees, particularly in Canada, continue to work remotely.

While our licensed-based revenue is generally more recurring in nature, the uncertainty caused by the COVID-19 pandemic had led some clients to delay purchasing decisions, product and service implementations or cancel or reduce spending with in 2020.

While our licensed-based revenue is generally more recurring in nature, the uncertainty caused by the COVID-19 pandemic led some clients to delay purchasing decisions, product and service implementations or cancel or reduce spending with us in 2020.

While the impact of COVID-19 appears to be diminishing, we are focused on maintaining a strong balance sheet and liquidity position and will continue to closely monitor the potential impact of COVID-19 and adjust our response going forward as circumstances dictate.

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See Financial Statement Note 8 – Paycheck Protection Program.

Our revenue grew 27% and 24% when comparing the three and six-month periods ended June 30, 2021 to the comparative 2020 periods.

Our revenue grew 22% and 23% when comparing the three and nine-month periods ended September 30, 2021 to the comparative 2020 periods.

Based on clients currently under contract, we expect to maintain similar revenue growth for the remainder of 2021.

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such as a continuation of market uncertainty and evolving industry needs and preferences, as well as the level of competition and our ability to continue to successfully market our products and technology.

There can be no assurance that we will be able to successfully implement our marketing strategy, continue our revenue growth, or achieve profitable operations.

There can be no assurance that we will be able to successfully implement our marketing strategy, continue our revenue growth, or maintain profitable operations.

Critical Accounting Policies and Estimates

In the 2020 Annual Report, we disclose our critical accounting policies and estimates upon which our financial statements are derived.

There have been no material changes to these policies since December 31, 2020 that are not included in Note 3 of the accompanying consolidated financial statements for the three and six-months ended June 30, 2021.

Readers are encouraged to read the 2020 Annual Report in conjunction.

Results of Operations

Three-months ended June 30,

Three-months ended September 30,

Corporate Quotestream

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Total subscription revenue

Six-months ended June 30,

Nine-months ended September 30,

Corporate Quotestream

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Total subscription revenue

Total revenue increased 27% and 24% when comparing the three and six-month periods ended June 30, 2021 and 2020.

Our total Portfolio Management System revenue increased by 48% and 45% when comparing the three and six-month periods ended June 30, 2021 from the comparative periods, due to increases in both Corporate Quotestream and Individual Quotestream revenue.

Corporate Quotestream revenue increased 55% and 52% for the three and six-month periods ended June 30, 2021 from the comparative periods in 2020 primarily due to new contracts signed since the comparative periods and increases in the number of subscribers for existing clients.

The increases are attributable in part to improvements and upgrades made to our Portfolio Management products as the additional data offerings and improved functionality have contributed to increases in our average revenue per customer.

We have also been able to take advantage of new opportunities arising from the economic downturn related to COVID-19 as financial sector firms are looking for more efficient and cost-effective solutions to their data and technology needs.

We also believe there has been an increase in the need for our services for customers working remotely during the pandemic, a trend we expect to continue for the foreseeable future.

Individual Quotestream revenue increased 30% and 29% for the three and six-month periods ended June 30, 2021 from the comparative periods in 2020.

Total revenue increased 22% and 23% when comparing the three and nine-month periods ended September 30, 2021 and 2020.

Our total Portfolio Management System revenue increased by 39% and 43% when comparing the three and nine-month periods ended September 30, 2021 from the comparative periods, due to increases in both Corporate Quotestream and Individual Quotestream revenue.

Corporate Quotestream revenue increased 48% and 51% for the three and nine-month periods ended September 30, 2021 from the comparative periods in 2020 primarily due to new contracts signed since the comparative periods and increases in the number of subscribers for existing clients.

The increases are due to new products added over the past couple years that are continuing to gain traction in the market, as well as improvements and upgrades made to our existing Portfolio Management products as we continue to improve functionality and add new data offerings.

The increases are also due to stock exchange fee price increases passed on to our customers.

Finally, we believe there has been an increase in the need for our services for customers working remotely during the pandemic, a trend we expect to continue for the foreseeable future.

Individual Quotestream revenue increased 18% and 25% for the three and nine-month periods ended September 30, 2021 from the comparative periods in 2020.

There were increases in total users and average revenue per user, which can be attributed to new marketing efforts initiated since the comparative periods and more customers working remotely due to COVID-19.

Interactive Content and Data Application revenue increased 6% and 4% when comparing the three and six-month periods ended June 30, 2021 and 2020, mainly attributable to increases in the average revenue per client.

The launch of new products and the expansion of our data coverage have allowed us to attract new, larger clients to replace some of our smaller clients lost due to the economic hardship related to COVID-19.

Interactive Content and Data Application revenue increased 4% when comparing the three and nine-month periods ended September 30, 2021 and 2020, mainly attributable to an increase in new customers.

The success of new products introduced over the past couple years such as QMod TM and the expansion of our data coverage have allowed us to attract new clients.

Cost of Revenue and Gross Profit Summary

Three-months ended June 30,

Three-months ended September 30,

Cost of revenue

Gross margin %

Six-months ended June 30,

Nine-months ended September 30,

Cost of revenue

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We launched a major growth initiative in early 2020, investing in infrastructure, new product development, data collection, and the expansion of our global market coverage.

As a result, our cost of revenue increased 38% for the three and six-month periods ended June 30, 2021 from the comparative periods in 2020.

As a result, our cost of revenue increased 19% and 31% for the three and nine-month periods ended September 30, 2021 from the comparative periods in 2020, respectively.

We incurred increased stock exchange fees related to increased usage and new market data added since the comparative periods, and increased amortization expenses associated with internally developed application software.

Overall, the cost of revenue increased as a percentage of sales, as evidenced by our gross margin percentage that decreased to 43% for the three and six-month periods ended June 30, 2021 from 48% in the comparative periods.

Our gross margins have also been impacted by our revenue mix, as our Portfolio Management System revenue has been growing at a higher rate than our Interactive Content revenue which typically has higher gross margins.

Overall, the cost of revenue decreased as a percentage of sales, as evidenced by our gross margin percentage that increased to 47% for the three months ended September 30, 2021 from 46% in the comparative period.

The gross margin percentage decreased to 44% for the nine months ended September 30, 2021 from 48% in the comparative period.

There were non-recurring credits to our cost of revenue that resulted in an increase in gross margin percentage for the quarter, but year to date our gross margins have decreased due to the change in our revenue mix, as our Portfolio Management System revenue has been growing at a higher rate than our Interactive Content revenue which typically has higher gross margins.

Operating Expenses Summary

Three-months ended June 30,

Three-months ended September 30,

Sales and marketing

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Total operating expenses

Six-months ended June 30,

Nine-months ended September 30,

Sales and marketing

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Sales and marketing consist primarily of sales and customer service salaries, investor relations, travel and advertising expenses.

Sales and marketing expenses increased by 17% and 20% when comparing the three and six-month periods ended June 30, 2021 from the comparative periods in 2020.

Sales and marketing expenses increased by 13% and 17% when comparing the three and nine-month periods ended September 30, 2021 from the comparative periods in 2020.

The increases are a result of additional sales personnel hired to support our growth initiative.

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General and administrative expenses consist primarily of salaries expense, office rent, insurance premiums, and professional fees.

General and administrative expenses remained relatively unchanged from the comparative periods, increasing 12% and 2% when comparing the three and six-month periods ended June 30, 2021 to the same periods in 2020.

The 12% increase for the three months ended June 30, 2021 was due to a large bad debt incurred during the quarter.

General and administrative expenses increased 17% and 7% when comparing the three and nine-month periods ended September 30, 2021 to the same periods in 2020.

The increases were due to some significant non-recurring professional fees incurred during the third quarter of 2021.

Software Development

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Software development expenses also include costs incurred to maintain our software applications.

Software development expenses remained relatively unchanged from the comparative periods, increasing 6% and 1% for the three and six-month periods ended June 30, 2021 when compared to the same periods in 2020, The 6% increase for the three month period ended June 31, 2021 was due to hiring additional development personnel during the quarter.

We capitalized $489,306 and $1.048,943 of development costs for the three and six-month periods ended June 30, 2021 compared to $429,683 and $765,232 in the same periods in 2020.

Software development expenses remained relatively unchanged from the comparative periods, increasing 1% for the three and nine-month periods ended September 30, 2021 due to additional development personnel hired since the comparative 2020 periods, offset by an increase in development costs capitalized during 2021.

Hiring new development personnel was required to expand our product lines and improve our infrastructure in 2021.

We capitalized $572,795 and $1,621,738 of development costs for the three and nine-month periods ended September 30, 2021, compared to $460,666 and $1,225,898 in the same periods in 2020.

These costs relate to the development of application software used by subscribers to access, manage, and analyze information in our databases.

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Other Income and (Expense) Summary

Three-months ended June 30,

Foreign exchange gain (loss)

Three-months ended September 30,

Foreign exchange gain

Interest expense

Total other income (expenses), net

Six-months ended June 30,

Total other income, net

Nine-months ended September 30,

Foreign exchange gain

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Total other income, net

Foreign Exchange Gain (Loss)

We incurred foreign exchange gains of $19,880 and $22,328 for the three and six-month periods ended June 30, 2021 compared to foreign exchange loss of $5,249 and gain of $5,957 in the comparative 2020 periods, respectively.

Foreign Exchange Gain

We incurred foreign exchange gains of $55,278 and $77,606 for the three and nine-month periods ended September 30, 2021 compared to foreign exchange gains of $5,930 and $11,887 in the comparative 2020 periods, respectively.

Foreign exchange gains and losses arise from the re-measurement of Canadian dollar monetary assets and liabilities into U.S.

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Interest expense relates primarily to the interest expense associated with our finance leases and was relatively unchanged from the comparative periods.

Interest expense of $451 and $1,459 was incurred for the three and six-month periods ended June 30, 2021, compared to $1,191 and $2,718 incurred in the same 2020 periods.

Other income was $133,257 for the three and six-month periods ended June 30, 2021.

Interest expense of $101 and $1,560 was incurred for the three and nine-month periods ended September 30, 2021, compared to $701 and $3,419 incurred in the same 2020 periods.

Other income was $133,257 for the nine-month period ended September 30, 2021.

On May 4, 2020, the Company received a $133,257 loan under the Paycheck Protection Program (“PPP”).

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Provision for Income Taxes

For the three and six-month periods ended June 30, 2021, the Company recorded Canadian income tax expense of $817 and $1,613 compared to $721 and $1,465 in the comparative periods in 2020.

Net Loss for the Period

As a result of the foregoing, our net losses for the three and six-month periods ended June 30, 2021 were $79,625 and $56,538 compared to net losses of $127,098 and $244,423 for the three and six-month periods ended June 30, 2020.

Basic and diluted losses per share were $(0.00) for the three and six-month periods ended June 30, 2021, and $(0.00) for the three and six-month periods ended June 30, 2020.

For the three and nine-month periods ended September 30, 2021, the Company recorded Canadian income tax expense of $790 and $2,403 compared to $751 and $2,216 in the comparative periods in 2020.

Net Income (Loss) for the Period

As a result of the foregoing, our net income for the three and nine-month periods ended September 30, 2021 were $154,931 and $98,393 compared to net losses of $75,305 and $319,728 for the three and nine-month periods ended September 30, 2020.

Basic and diluted income per share was $0.00 for the three and nine-month periods ended September 30, 2021, compared to a basic and diluted loss per share of $(0.00) for the three and nine-month periods ended September 30, 2020.

Liquidity and Capital Resources

Our cash totaled $627,229 at June 30, 2021, as compared with $417,910 at December 31, 2020, an increase of $209,319.

Net cash of $1,314,529 was provided by operations for the six-month period ended June 30, 2021, primarily due to the net income during the period adjusted for non-cash charges and the increase in accounts payable.

Net cash used in investing activities for the six-month period ended June 30, 2021 was $1,094,570 resulting primarily from capitalized application software costs.

Cash used in financing activities for the six-month period ended June 30, 2021 was $10,640 related to the repayment of capital lease financing.

Our cash totaled $271,696 at September 30, 2021, as compared with $417,910 at December 31, 2020, a decrease of $146,214.

Net cash of $1,586,447 was provided by operations for the nine-month period ended September 30, 2021, primarily due to the net income during the period adjusted for non-cash charges and the increase in accounts payable and deferred revenue.

Net cash used in investing activities for the nine-month period ended September 30, 2021 was $1,721,364 resulting primarily from capitalized application software costs.

Cash used in financing activities for the nine-month period ended September 30, 2021 was $11,297 related to the repayment of capital lease financing.

We typically operate with a working capital deficit.

As of June 30, 2021 our working capital deficit is $1,990,292, however current liabilities include $739,272 in deferred revenue and the expected costs necessary to realize the deferred revenue are minimal.

As of September 30, 2021 our working capital deficit is $2,063,727, however current liabilities include $753,409 in deferred revenue and the expected costs necessary to realize the deferred revenue are minimal.

If circumstances dictate, we have the flexibility to reduce development spending to maintain a strong liquidity position.

Based on the factors discussed above, we believe that our cash on hand and cash generated from operations will be sufficient to fund our current operations for at least the next 12 months through May 2022.

However, to implement our business plan may require additional financing.

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Preferred Stock Redemption Rights

At June 30, 2021, 123,685 shares of Series A Redeemable Convertible Preferred Stock were outstanding and 1,000 shares may be redeemed at the holder’s option at the liquidation value of $25 per share if the cash balance of the Company as reported at the end of each fiscal quarter exceeds $400,000.

At September 30, 2021, 123,685 shares of Series A Redeemable Convertible Preferred Stock were outstanding and 1,000 shares may be redeemed at the holder’s option at the liquidation value of $25 per share if the cash balance of the Company as reported at the end of each fiscal quarter exceeds $400,000.

See Financial Statement Note 6 a) “ Preferred shares ”.

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Off-Balance Sheet Arrangements

At June 30, 2021 and December 31, 2020, we did not have any unconsolidated entities or financial partnerships, or other off-balance sheet arrangements.

At September 30, 2021 and December 31, 2020, we did not have any unconsolidated entities or financial partnerships, or other off-balance sheet arrangements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis