What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-10 compared with 2022-08-22 · 72 added, 61 removed, 137 unchanged (49% of the section changed)

47 unchanged sentences

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.

In 2022, we finalized a contract with a large multinational financial institution that was effective January 1, 2022, and signed a statement of work with another large multinational financial institution to start services while their contract is being finalized.

Pursuant to the statement of work, we received a partial development fee payment of $300,000 in Q2 2022 which has been deferred until the start of the service component of the contract.

Once finalized, the service component of the contract is expected to start in Q4 2022.

Approximately 34% of our revenue and 35% of our expenses are denominated in Canadian dollars.

The Canadian dollar depreciated 4% and 3% when comparing average exchange rates for the three and nine months ended September 30, 2022 and 2021.

This decreased both Canadian dollar revenues and expenses once translated into U.S.

dollars for the three and nine months ended September 30, 2022 when compared to the same periods in 2021, but had a minimal impact on our net income.

In 2022, we finalized contracts with two large multinational financial institutions.

This first contract was effective January 1, 2022, but we did not start recognizing revenue until April 2022 when their services went live.

The second contract was finalized in October 2022 with services starting in November 2022.

Prior to finalizing the contract, we received a partial development fee payment of $218,000 in Q2 2022.

This amount was recorded as a customer deposit and included in accrued liabilities as of September 30, 2022.

The contracts are for a wide range of services that will be included in both portfolio management and interactive content and data API revenue.

Based on these new contracts and our other clients currently under contract, we expect revenue growth of 19% in fiscal 2022, and similar revenue growth in fiscal 2023.

We also expect to report a profit for fiscal 2022, and we except our net income to significantly improve in 2023.

In our June 30, 2022, Form 10-Q we stated that we expected 19% revenue growth for fiscal 2022.

We have lowered our revenue growth projection to 16% for fiscal 2022 due primarily to the depreciation of the Canadian dollar as it has depreciated approximately 7% versus the U.S.

dollar since Q2 2022, and the contracts discussed above are denominated in Canadian dollars.

We expect similar revenue growth in fiscal 2023, but we expect our 2023 net income to significantly improve.

This is mainly due to the new contracts mentioned above as they have significantly higher gross margins than our typical customer contracts have on average.

Plan of Operation

For the remainder of 2022 we plan to continue to expand our product lines and improve our infrastructure.

For the remainder of 2022 and for 2023 we plan to continue to expand our product lines and improve our infrastructure.

We plan to continue to add more features and data to our existing products and release newer versions with improved performance and flexibility for client integration.

This expansion is expected to result in both increased revenue and costs for fiscal 2022.

This expansion is expected to result in both increased revenue and costs for fiscal 2022 and 2023.

We will maintain our focus on marketing Quotestream for deployments by brokerage firms to their retail clients and continue our expansion into the investment professional market with Quotestream Professional.

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QMod is a major component of this strategy, given the broad demand for mobile-ready, SEO-friendly Web content.

Important development projects for the remainder of 2022 include broad expansion of data and news coverage, including the addition of a wide array of international exchange data and news, video feeds, expansion of fixed-income coverage, and the introduction of several new and upgraded market information products.

Important development projects for the remainder of 2022 and 2023 include broad expansion of data and news coverage, including the addition of a wide array of international exchange data and news, video feeds, expansion of fixed-income coverage, and the introduction of several new and upgraded market information products.

New deployments of our trade integration capabilities, which allow our Quotestream applications to interact with our brokerage clients’ back-end trade execution and reporting platforms (enabling on-the-fly trade execution and tracking of holdings) are underway and will continue to be a priority in the coming year.

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Results of Operations

Three-months ended June 30,

Three-months ended September 30,

Corporate Quotestream

3 unchanged sentences

Total subscription revenue

Six-months ended June 30,

Nine-months ended September 30,

Corporate Quotestream

3 unchanged sentences

Total subscription revenue

Total subscription revenue increased 12% and 15% when comparing the three and six-months ended June 30, 2022 and 2021.

Total Portfolio Management Systems revenue increased 2% and 7% for the three and six-months ended June 30, 2022 from the comparative periods in 2021.

Corporate Quotestream revenue increased 5% and 11% for the three and six-months ended June 30, 2022 from the comparative periods in 2021 due to new contracts signed since the comparative periods.

In particular, the increases were due to the new contract we recently signed with the two large multinational financial institutions discussed above in the “Business Environment and Trends” section.

Total subscription revenue increased 15% when comparing the three and nine-months ended September 30, 2022 and 2021.

Total Portfolio Management Systems revenue decreased 1% for the three months ended September 30, 2022 from the comparative period in 2021 and increased 4% for the nine-months ended September 30, 2022 from the comparative period in 2021.

Corporate Quotestream revenue increased 3% and 8% for the three and nine-months ended September 30, 2022 from the comparative periods in 2021 due to new contracts signed since the comparative periods.

In particular, the increases were due to the new contract we recently signed with the large multinational financial institutions discussed above in the “Business Environment and Trends” section.

The increase was also due to an increase in the number of subscribers for existing clients.

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These improvements have allowed us to attract larger customers and increase the average revenue for our existing 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 decreased 9% and 5% for the three and six-months ended June 30, 2022 from the comparative periods in 2021 due to a decrease in total subscribers.

Interactive Content and Data APIs revenue increased 27% and 26% when comparing the three and six-months ended June 30, 2022, attributable to an increase in the number of clients and an increase in the average revenue per client.

Individual Quotestream revenue decreased 10% and 7% for the three and nine-months ended September 30, 2022 from the comparative periods in 2021 due mainly to a decrease in total subscribers.

The depreciation of the Canadian dollar, discussed above in the “Business Environment and Trends” section, also significantly impacted Individual Quotestream revenue as approximately 50% of our Individual Quotestream revenue is earned in Canadian dollars.

Interactive Content and Data APIs revenue increased 37% and 30% when comparing the three and nine-months ended September 30, 2022, attributable to an increase in the number of clients and an increase 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.

In particular, the increase was due to the new contracts we recently signed with the two large multinational financial institution discussed above in the “Business Environment and Trends” section.

In particular, the increase was due to the new contract we recently signed with a large multinational financial institution discussed above in the “Business Environment and Trends” section.

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 capitalize the costs associated with developing new products during the application development stage.

As a result of a major growth initiative, which included investing in infrastructure, new product development, data collection, and the expansion of our global market coverage, our cost of revenue increased 3% and 6% for the three and six-months ended June 30, 2022 from the comparative periods in 2021.

As a result of a major growth initiative, which included investing in infrastructure, new product development, data collection, and the expansion of our global market coverage, our cost of revenue increased 3% and 5% for the three and nine-months ended September 30, 2022 from the comparative periods in 2021.

This was mainly due to increased amortization expenses associated with internally developed application software.

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 and six-months ended June 30, 2022 from 43% in the comparative 2021 periods.

As discussed above in the “Business Environment and Trends” section, we signed new contracts with two large multinational financial institution.

These contracts have higher gross margins than our other customer contracts typically have on average, resulting in a significant increase to our gross margin percentage.

Overall, the cost of revenue decreased as a percentage of sales, as evidenced by our gross margin percentage that increased to 52% and 49% for the three and nine-months ended September 30, 2022 from 47% and 44% in the comparative 2021 periods.

As discussed above in the “Business Environment and Trends” section, we signed a new contract with a large multinational financial institution.

This contract has higher gross margins than our other customer contracts typically have on average, resulting in a significant increase to our gross margin percentage.

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

4 unchanged sentences

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

Sales and marketing expenses increased by 20% and 19% for the three and six-months ended June 30, 2022 when compared to the same periods in 2021.

The increases are a result of additional sales personnel hired since the comparative periods to support our product growth initiatives.

Sales and marketing expenses increased 26% and 21% for the three and nine-months ended September 30, 2022 when compared to the same periods in 2021.

The increases are a result of additional sales personnel hired since the comparative periods to support our product growth initiatives and salary increases for existing personnel.

The increases were offset by the depreciation of the Canadian dollar from the comparative periods as most of our sales personnel are located in Canada as well as the $87,127 decrease in fair value during the quarter for our preferred stock warrant liability recorded as a decrease in marketing expense.

General and Administrative

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

General and administrative expenses increased 14% and 13% for the three and six-months ended June 30, 2022 when compared to the same periods in 2021.

General and administrative expenses increased 16% and 14% for the three and nine-months ended September 30, 2022 when compared to the same periods in 2021.

The increases are a result of additional personnel and other costs incurred to support our growth initiatives, and in particular the costs associated with obtaining SOC2 Type II certification.

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

Software development expenses increased 22% and 19% for the three and six-months ended June 30, 2022 when compared to the same periods in 2021, primarily due to new personnel hired since the comparative periods to improve our infrastructure, security, and business continuity management.

We capitalized $681,564 and $1,287,716 of development costs for the three and six-month periods ended June 30, 2022 compared to $489,306 and $1,048,943 in the same periods in 2021.

Software development expenses increased 32% and 23% for the three and nine-months ended September 30, 2022 when compared to the same periods in 2021, primarily due to new personnel hired since the comparative periods to improve our infrastructure, security, and business continuity management.

The increase in development personnel costs was offset by the depreciation of the Canadian dollar from the comparative periods as most of our development personnel are located in Canada.

We capitalized $735,169 and $2,022,885 of development costs for the three and nine-month periods ended September 30, 2022 compared to $572,795 and $1,621,738 in the same periods in 2021.

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)

Interest expense

Total other income (expenses), net

Six-months ended June 30,

Three-months ended September 30,

Foreign exchange gain

Interest expense

Interest income (expense), net

Total other income, net

Nine-months ended September 30,

Foreign exchange gain (loss)

Interest income (expense), net

Total other income (expense), net

Foreign Exchange Gain

We incurred foreign exchange losses of $135,226 and $117,636 for the three and six-month periods ended June 30, 2022 compared to foreign exchange gains of $19,880 and $22,328 in the comparative 2021 periods, respectively.

We incurred a foreign exchange gain of $102,327 for the three-month period ended September 30, 2022 and a foreign exchange loss of $15,309 for the nine-month period ended September 30, 2022, compared to foreign exchange gains of $55,278 and $77,606 in the comparative 2021 periods, respectively.

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

dollars and from exchange rate fluctuations between transaction and settlement dates for foreign currency denominated transactions.

Interest Expense

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

Interest expense of $507 and $1,731was incurred for the three and six-month periods ended June 30, 2022, compared to $451 and $1,459 incurred in the same 2021 periods.

There was no other income for the three and six-months ended June 30, 2022.

Interest Income (Expense), Net

Interest expense related primarily to our finance leases is netted against interest earned on cash balances.

Net interest income (expenses) of $10 and ($1,721) were incurred for the three and nine-month periods ended September 30, 2022, compared to ($101) and ($1,560) incurred in the same 2021 periods.

There was no other income for the three and nine-months ended September 30, 2022.

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

The PPP loan was forgiven in its entirety on February 19, 2021 and was recognized as other income in the six-months ended June, 2021 comparative period.

The PPP loan was forgiven in its entirety on February 19, 2021 and was recognized as other income in the nine-months ended September, 2021 comparative period.

See Financial Statement Note 9 “ Paycheck Protection Program ”.

Provision for Income Taxes

For the three and six-month periods ended June 30, 2022, the Company recorded Canadian income tax expense of $780 and $1,570 compared to $817 and $1,613 in the comparative periods in 2021.

Net Loss for the Period

As a result of the foregoing, our net loss for the three and six-month periods ended June 30, 2022 was $163,080 and $14,039, respectively.

We incurred net losses of $79,625 and $56,538 for the three and six-month periods ended June 30, 2021.

Basic and diluted loss share were $(0.00) for the three and six-months periods ended June 30, 2022, respectively.

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

For the three and nine-month periods ended September 30, 2022, the Company recorded $751 and $2,321 in Canadian income tax expense compared to $790 and $2,403 in the comparative periods in 2021.

Net Income for the Period

As a result of the foregoing, our net income for the three and nine-month periods ended September 30, 2022 was $309,543 and $295,504, respectively.

Our net income for the comparative three and nine-month periods ended September 30, 2021 was $154,931 and $98,393, respectively.

Basic and diluted earnings per share were $0.00 for the three and nine-months periods ended September 30, 2022, respectively.

Basic and diluted losses per share were $0.00 for the three and nine-month periods ended September 30, 2021, respectively.

Liquidity and Capital Resources

Our cash totaled $890,292 at June 30, 2022, as compared with $258,705 at December 31, 2021, an increase of $631,587.

Net cash of $2,017,350 was provided by operations for the six-months ended June 30, 2022, primarily due to adjustment for non-cash charges and the increases in deferred revenue and accounts payable, offset by an increase in accounts receivable.

Net cash used in investing activities for the six-months ended June 30, 2022 was $1,384,379, primarily due to capitalized application software costs and the purchases of fixed assets.

Cash used in financing activities for the six-months ended June 30, 2022 was $1,384 related to the repayment of finance leases.

Our cash totaled $303,674 at September 30, 2022, as compared with $258,705 at December 31, 2021, an increase of $44,969.

Net cash of $2,191,890 was provided by operations for the nine-months ended September 30, 2022, primarily due to adjustments for non-cash charges and the increase in deferred revenue.

Net cash used in investing activities for the nine-months ended September 30, 2022 was $2,144,827, primarily due to capitalized application software costs and the purchases of fixed assets.

Cash used in financing activities for the nine-months ended September 30, 2022 was $2,094 related to the repayment of finance leases.

We typically operate with a working capital deficit.

As of June 30, 2022, our working capital deficit is $2,324,203, however current liabilities include $1,482,540 in deferred revenue and a $233,000 nonrefundable customer deposit.

As of September 30, 2022, our working capital deficit is $2,337,632, however current liabilities include $1,088,109 in deferred revenue and a $218,000 nonrefundable customer deposit.

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 August 2023.

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

Additional financings may come from future equity or debt offerings that could result in dilution to our stockholders.

However, implementing our business plan may require additional financing.

Additional financing may come from future equity or debt offerings that could result in dilution to our stockholders.

Further, current adverse capital and credit market conditions could limit our access to capital.

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Preferred Stock Redemption Rights

At June 30, 2022, 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, 2022, 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 7 a) “ Preferred shares ”.

Foreign Exchange Risk

Approximately 32% of our consolidated revenue and 36% percent of our consolidated expenses are denominated in Canadian dollars;

therefore, our consolidated cashflow may be impacted by foreign exchange fluctuations.

Currently, approximately 34% of our consolidated revenue and 35% percent of our consolidated expenses are denominated in Canadian dollars.

Since currently our Canadian dollar revenue and expenses are closely matched, our consolidated cashflows are not significantly impacted by foreign exchange fluctuations.

Looking forward however, based on the new contracts discussed above in the “Business Environment and Trends” section, we expect our Canadian dollar revenue to exceed expenses therefore our consolidated cashflows may be impacted by foreign exchange fluctuations.

Off-Balance Sheet Arrangements

At June 30, 2022 and December 31, 2021, we did not have any unconsolidated entities or financial partnerships, or other off-balance sheet arrangements.

At September 30, 2022 and December 31, 2021, 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