What changed in this filing

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Item 1. Financial Statements

2022-05-13 compared with 2021-11-10 · 85 added, 146 removed, 245 unchanged (49% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current assets:

14 unchanged sentences

Total current liabilities

Paycheck Protection Program loan (Note 8)

Long-term portion of operating lease liabilities

Long-term portion of finance lease liabilities

Mezzanine equity:

Series A Redeemable Convertible Preferred stock, $ 0.001 par value,

550,000 shares designated;

Preferred stock, 10,000,000 shares authorized:

Series A Redeemable Convertible Preferred stock, $ 0.001 par value, 550,000 shares designated;

Shares issued and outstanding:

123,685 at September 30, 2021 and December 31, 2020

123,685 at March 31, 2022 and December 31, 2021

Stockholders’ deficit:

Common stock, $ 0.001 par value, 150,000,000 shares authorized, shares issued and

90,477,798 at September 30, 2021 and December 31, 2020

Common stock, $ 0.001 par value, 150,000,000 shares authorized, shares issued and outstanding:

90,477,798 at March 31, 2022 and December 31, 2021

Additional paid-in capital

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three-months ended September 30,

Nine-months ended September 30,

Three months ended March 31,

COST OF REVENUE

3 unchanged sentences

Software development

OPERATING INCOME (LOSS)

OPERATING PROFIT (LOSS)

OTHER INCOME (EXPENSES)

2 unchanged sentences

Other income (Note 8)

NET INCOME (LOSS) BEFORE INCOME TAXES

INCOME BEFORE INCOME TAXES

Income tax expense

NET INCOME (LOSS)

$ ( 319,728 )

EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share

Diluted earnings (loss) per share

EARNINGS PER SHARE

Basic earnings per share

Diluted earnings per share

WEIGHTED AVERAGE SHARES OUTSTANDING

2 unchanged sentences

PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

Series A Redeemable Convertible

Preferred Stock

Total Stockholders’

Three-months ended September 30, 2021:

Number of Shares

Accumulated Deficit

Balance, June 30, 2021

$ ( 21,172,056 )

$ ( 1,461,816 )

Stock-based compensation

Balance, September 30, 2021

$ ( 21,017,125 )

$ ( 1,299,946 )

Series A Redeemable Convertible

Series A Redeemable

Preferred Stock

Total Stockholders’

Nine-months ended September 30, 2021:

Number of Shares

Three months ended March 31, 2022:

Accumulated Deficit

3 unchanged sentences

Stock-based compensation

Balance, September 30, 2021

Balance, March 31, 2022

$ ( 20,698,480 )

$ ( 966,003 )

Series A Redeemable Convertible

Series A Redeemable

Preferred Stock

Stockholders’

Three-months ended September 30, 2020:

Number of Shares

Accumulated Deficit

Balance, June 30, 2020

$ ( 20,713,617 )

$ ( 1,031,133 )

Stock-based compensation

Balance, September 30, 2020

$ ( 20,788,922 )

$ ( 1,099,499 )

Series A Redeemable Convertible

Preferred Stock

Total Stockholders’

Nine-months ended September 30, 2020:

Number of Shares

Accumulated Deficit

Three months ended March 31, 2021:

Balance, December 31, 2020

2 unchanged sentences

Stock-based compensation

Balance, September 30, 2020

Balance, March 31, 2021

$ ( 21,092,431 )

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine-months ended September 30,

Three months ended March 31,

OPERATING ACTIVITIES:

Net income (loss)

$ ( 319,728 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

12 unchanged sentences

Capitalized application software

( 1,621,738 )

( 1,225,899 )

Net cash used in investing activities

( 1,721,364 )

( 1,354,086 )

FINANCING ACTIVITIES:

Paycheck Protection Program loan

Repayment of finance lease obligations

Net cash provided by (used) in financing activities

Net decrease in cash

Net cash used in financing activities

Net increase in cash

Cash and equivalents, beginning of period

7 unchanged sentences

Operating results for any quarter are not necessarily indicative of the results for any other quarter or for a full year.

In connection with the preparation of the condensed consolidated financial statements the Company evaluated subsequent events after the balance sheet date of September 30, 2021 through the filing of this report.

As of September 30, 2021, the Company has a working capital deficit of $ 2,063,727 .

In connection with the preparation of the condensed consolidated financial statements, the Company evaluated subsequent events after the balance sheet date of March 31, 2022 through the filing of this report.

As of March 31, 2022, the Company has a working capital deficit of $ 2,049,647 .

Our current liabilities include deferred revenue of $ 953,168 .

6 unchanged sentences

Risks and Uncertainties

We are continuing 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.

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

Recent events in the Ukraine and Russia have caused disruptions in the global financial markets.

While we do not have any operations or customers in the Ukraine or Russia, we will continue to monitor the situation as a prolonged conflict could impact our business.

SIGNIFICANT ACCOUNTING POLICIES

10 unchanged sentences

dollars at end-of-period exchange rates, except for equipment and intangible assets, which are remeasured at historical rates.

Foreign currency income and expenses are remeasured at average exchange rates in effect during the period, except for expenses related to balance sheet amounts remeasured at historical exchange rates.

Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in earnings in the period in which they occur.

Foreign currency income and expenses are remeasured at average exchange rates in effect during the year, except for expenses related to balance sheet amounts remeasured at historical exchange rates.

Because the U.S.

dollar is the functional currency, exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in income in the period in which they occur.

d) Allowances for doubtful accounts

3 unchanged sentences

If the financial condition of our customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required.

The allowance for doubtful accounts was $ 175,000 as of September 30, 2021 and December 31, 2020.

Bad debt expense was $ 9,866 and $ 25,664 for the three-months ended September 30, 2021 and 2020, respectively.

Bad debt expense was $ 88,210 and $ 120,509 for the nine-months ended September 30, 2021 and 2020, respectively.

The allowance for doubtful accounts was $ 150,000 as of March 31, 2022 and December 31, 2021.

Bad debt expense was $ 5,558 and $ 19,822 for the three months ended March 31, 2022 and 2021, respectively.

QUOTEMEDIA, INC.

2 unchanged sentences

Recently Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes.

The standard removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

The new standard will be effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted.

We adopted this Topic 740 on January 1, 2021.

The adoption of the new tax standard did not have a material effect on our consolidated financial statements.

There are no new recently adopted accounting pronouncements for the three months ended March 31, 2022.

Not Yet Adopted

3 unchanged sentences

The Company is currently assessing the timing and impact of adopting ASU 2016-13 on the Company’s consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”).

ASU 2020-06 simplifies the complexity associated with applying U.S.

GAAP for certain financial instruments with characteristics of liabilities and equity.

More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity’s own equity.

The new standard is effective for the Company for fiscal years beginning after December 15, 2023.

The Company is currently assessing the timing and impact of adopting ASU 2020-06 on the Company’s consolidated financial statements.

Other accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.

2 unchanged sentences

Our revenue by type of service consists of the following:

Three-months ended September 30,

Nine-months ended September 30,

Three months ended March 31,

Portfolio Management Systems:

1 unchanged sentence

Individual Quotestream

Interactive Content & Data Application

Interactive Content and Data APIs

Total revenue

5 unchanged sentences

Effects of foreign currency translation

Balance at September 30, 2021

Balance at March 31, 2022

Practical Expedients

6 unchanged sentences

Shworan is a control person of 410734 B.C.

At September 30, 2021 and December 31, 2020, there were no amounts due to 410734 B.C.

At March 31, 2022 and December 31, 2021, there were no amounts due to 410734 B.C.

The Company entered into a marketing agreement with Bravenet Web Services, Inc.

1 unchanged sentence

Shworan is a control person of Bravenet.

At September 30, 2021 and December 31,2020, there was $ 7,500 due to Bravenet related to this agreement.

At March 31, 2022 and December 31, 2021, there was $ 12,383 and $ 11,970 , respectively, due to Bravenet related to this agreement.

As a matter of policy all related party transactions are subject to review and approval by the Company’s Board of Directors.

11 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

September 30,

Operating Leases

10 unchanged sentences

Total finance lease liability

September 30,

Weighted Average Remaining Lease Term

7 unchanged sentences

Maturities of lease liabilities were as follows:

2021 (excluding the nine-months ended September 30, 2021)

Year ending December 31,

2022 (excluding the three months ended March 31, 2022)

Total lease payments

Less imputed interest

The components of lease expense for the three and nine-month periods ended September 30, 2021 and 2020 were as follows:

Three-months ended September 30,

Nine-months ended September 30,

The components of lease expense for the three months ended March 31, 2022 and 2021 were as follows:

Operating lease costs:

3 unchanged sentences

Finance lease costs:

Total finance lease costs

Supplemental cash flow information for the nine-month period ended September 30, 2021 and 2020 related to leases was as follows:

Total finance lease cost

Supplemental cash flow information for the three months ended March 31, 2022 and 2021 related to leases was as follows:

Cash paid for amounts included in the measurement of lease liabilities:

1 unchanged sentence

Operating cash flows from finance leases

Right-of-use assets obtained in exchange for lease obligations:

Operating leases

Financing cash flows from finance leases

There were no additional right of use assets obtained in exchange for lease obligations for the three months ended March 31, 2022 and 2021.

REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

2 unchanged sentences

A total of 550,000 shares of the Company’s Preferred Stock are designated as “Series A Redeemable Convertible Preferred Stock.” The Series A Redeemable Convertible Preferred Stock has no dividend or voting rights.

At September 30, 2021, 123,685 shares of Series A Redeemable Convertible Preferred Stock were outstanding.

No shares of Series A Redeemable Convertible Preferred Stock were issued or redeemed during the three and nine-months ended September 30, 2021 and 2020.

At March 31, 2022, 123,685 shares of Series A Redeemable Convertible Preferred Stock were outstanding.

No shares of Series A Redeemable Convertible Preferred Stock were issued or redeemed during the three months ended March 31, 2022 and 2021.

Redemption Rights

1 unchanged sentence

The conversion rights are subject to the availability of authorized but unissued shares of common stock.

In addition, 1,000 Series A Redeemable Convertible Preferred Stock 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 .

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In accordance with ASC 480-10-S99, because a limited number of Series A Redeemable Convertible Preferred Stock may be redeemed at the holder’s option if the above criteria are met, it was classified as mezzanine equity and not permanent equity.

1 unchanged sentence

b) Common stock

No shares of common stock were issued during the three and nine-months ended September 30, 2021 and 2020.

No shares of common stock were issued during the three months ended March 31, 2022 and 2021.

c) Stock Options and Warrants

1 unchanged sentence

The impact of forfeitures that may occur prior to vesting is also estimated and considered in the amount recognized.

Total stock-based compensation expense, related to all of the Company’s stock-based awards, recognized for the three and nine-month periods ended September 30, 2021 and 2020 was comprised as follows:

Three-months ended September 30,

Nine-months ended September 30,

Total stock-based compensation expense, related to all of the Company’s stock-based awards, recognized for the three months ended March 31, 2022 and 2021 was comprised as follows:

Three months ended March 31,

Sales and marketing

General and administrative

Stock-based compensation expense

Total stock-based compensation expense

Common Stock Options and Warrants

The following table summarizes our common stock option and warrant activity for the nine-months ended September 30, 2021:

Common Stock Options

Weighted-Average Grant Date Exercise Price

Outstanding at January 1, 2021

Forfeited during the period

Outstanding at September 30, 2021

The following table summarizes our non-vested common stock option and warrant activity for the nine-months ended September 30, 2021:

Common Stock Options

Weighted-Average Grant Date Exercise Price

There were 25,772,803 common stock warrants and options outstanding at March 31, 2022 at a weighted-average grant date exercise price of $ 0.06 .

No stock options or warrants to purchase common stock were granted or exercised during the three months ended March 31, 2022 and 2021.

The following table summarizes our non-vested common stock option and warrant activity for the three months ended March 31, 2022:

Average Grant

Date Exercise

Non-vested at January 1, 2022

Vested during the period

Non-vested at September 30, 2021

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the weighted average remaining contractual life and exercise price of common stock options and warrants outstanding at September 30, 2021:

Non-vested at March 31, 2022

The following table summarizes the weighted average remaining contractual life and exercise price of common stock options and warrants outstanding at March 31, 2022:

Common Stock Options and Warrants Outstanding

Common Stock Options

and Warrants Exercisable

Common Stock Options and Warrants Exercisable

$ 0.03 - 0.11

At September 30, 2021, there was $ 6,939 of unrecognized compensation cost related to non-vested options and warrants granted to purchase common stock which is expected to be recognized over a weighted-average period of 1.1 years.

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At March 31, 2022, there was $ 11,274 of unrecognized compensation cost related to non-vested options and warrants granted to purchase common stock which is expected to be recognized over a weighted-average period of 0.7 years.

All stock options and warrants to purchase common stock have been granted with exercise prices equal to or greater than the market value of the underlying common shares on the date of grant.

At September 30, 2021, the aggregate intrinsic value of options and warrants outstanding was $ 3,405,566 .

At March 31, 2022, the aggregate intrinsic value of options and warrants outstanding was 4,178,750 .

The aggregate intrinsic value of options and warrants exercisable was $ 3,998,750 .

10 unchanged sentences

The probability of the liquidity event performance condition is not currently determinable or probable;

therefore, no compensation expense has been recognized as of September 30, 2021.

therefore, no compensation expense has been recognized as of March 31, 2022.

The probability is re-evaluated each reporting period.

As of September 30, 2021, there was $ 9,173,832 in unrecognized stock-based compensation expense related to these Liquidity Preferred Stock Warrants.

As of March 31, 2022, there was $ 9,173,832 in unrecognized stock-based compensation expense related to these Liquidity Preferred Stock Warrants.

Since the Liquidity Preferred Stock Warrants only vest and become exercisable on the consummation of a Liquidity Event which is currently determined not to be probable, we are also unable to determine the weighted-average period over which the unrecognized compensation cost will be recognized.

As of September 30, 2021, there were a total of 382,243 preferred stock warrants outstanding with a weighted average remaining contractual life of 24 years.

As of September 30, 2021, 31,250 preferred stock warrants were exercisable.

No preferred stock warrants were exercised for the three and nine-month periods ended September 30, 2021 and 2020.

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

INCOME (LOSS) PER SHARE

As of March 31, 2022, there were a total of 413,493 preferred stock warrants outstanding with a weighted average remaining contractual life of 25.8 years.

As of March 31, 2022, 31,250 preferred stock warrants were exercisable.

No preferred stock warrants were granted or exercised for the three months ended March 31, 2022 and 2021.

EARNINGS PER SHARE

Basic net income per share is computed by dividing net income during the period by the weighted-average number of common shares outstanding, excluding the dilutive effects of common stock equivalents.

4 unchanged sentences

Therefore, in periods when a loss is reported, the calculation of basic and dilutive loss per share results in the same value.

The calculations for basic and diluted loss per share for the three and nine-month periods ended September 30, 2021 and 2020 are as follows:

Three-months ended September 30,

Nine-months ended September 30,

Net income (loss)

$ ( 319,728 )

Weighted average shares outstanding - basic and diluted

Stock options and warrants to purchase common stock

The calculations for basic and diluted net income per share for the three months ended March 31, 2022 and 2021 are as follows:

Three months ended March 31,

Weighted average common shares used to calculate net income per share

Warrants to purchase redeemable convertible preferred stock

Redeemable convertible preferred stock

Weighted average shares outstanding - basic and diluted

Net income (loss) per share – basic

Net income (loss) per share – diluted

The number of shares of potentially dilutive common stock related to options, warrants and redeemable convertible preferred stock that were excluded from the calculation of dilutive shares since the inclusion of such shares would be anti-dilutive for the three and nine-month periods ended September 30, 2021 and 2020 are shown below:

Three-months ended September 30,

Nine-months ended September 30,

Stock options and warrants to purchase

Warrants to purchase redeemable

convertible preferred stock

Redeemable convertible preferred stock

Total potential common shares excluded

Stock options and warrants to purchase common stock

Weighted average common shares used to calculate diluted net income per share

Net income per share – basic

Net income per share – diluted

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PAYCHECK PROTECTION PROGRAM

3 unchanged sentences

The PPP loan was forgiven in its entirety on February 19, 2021.

In accordance with ASC 470, Debt, the forgiveness of the loan was recognized as other income on our consolidated statements of operations.

In accordance with ASC 470, Debt, the forgiveness of the loan was recognized as other income on our consolidated statements of operations in the comparative 2021 period.

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 1. Financial Statements