What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2023-03-31 compared with 2022-03-30 · 357 added, 261 removed, 834 unchanged (43% of the section changed)

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All of our content solutions are completely customizable and embed directly into client Web pages for seamless integration with existing content.

We are continuing to develop and launch new modules of QMod TM , our new proprietary Web delivery system.

We are continuing to develop and launch new modules of QModTM, our new proprietary Web delivery system.

QMod was created for secure market data provisioning as well as ease of integration and unlimited customization.

Additionally, QMod delivers search engine optimized (SEO) ready responsive content designed to adapt on the fly when rendered on mobile devices or standard Web pages – automatically resizing and reformatting to fit the device on which it is displayed.

Our Data Feed Services consist of raw streaming real-time market data delivered over the Internet or via dedicated telecommunication lines, and supplemental fundamental, historical, and analytical data, keyed to the same symbology, which provides a complete market data solution offered to our customers.

Our Data Feed Services consist of raw streaming real-time market data delivered over the Internet or via dedicated telecommunication lines.

We provide supplemental fundamental, historical, and analytical data, keyed to the same symbology, which provides a complete market data solution offered to our customers.

Currently, QuoteMedia’s Data Feed services include complete coverage of North American exchanges and over 70 exchanges worldwide.

For financial reporting purposes, Data Feed Services revenue is included in the Interactive Content and Data APIs revenue totals.

Our Portfolio Management Systems consist of Quotestream TM , Quotestream Mobile, Quotestream Professional, and our Web Portfolio Management systems.

Our Portfolio Management Systems consist of QuotestreamTM, Quotestream Mobile, Quotestream Professional, and our Web Portfolio Management systems.

Quotestream Desktop is an Internet-based streaming online portfolio management system that delivers real-time and delayed market data to both consumer and corporate markets.

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A key feature of QuoteMedia’s business model is that all of our product lines generate recurring monthly licensing revenue from each client.

Contracts to license Quotestream to our corporate clients, for example, typically have a term of one to three years and are automatically renewed unless notice is given at least 90 days prior to the expiration of the current license term.

Contracts to license Quotestream to our corporate clients, for example, typically have a term of one to five years and are automatically renewed unless notice is given at least 90 days prior to the expiration of the current license term.

We also generate Quotestream revenue through individual end-user licenses on a monthly or annual subscription fee basis.

Interactive Content and Data APIs and Market Data Feeds are licensed for a monthly, quarterly, annual, or semi-annual subscription fee.

Contracts to license our Financial Data Products and Data Feeds typically have a term of one to three years and are automatically renewed unless notice is given 90 days prior to the expiration of the contract term.

Contracts to license our Financial Data Products and Data Feeds typically have a term of one to five years and are automatically renewed unless notice is given 90 days prior to the expiration of the contract term.

Business Environment and Trends

The global financial markets experienced extreme volatility and disruption over the past couple years 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 led some clients to delay purchasing decisions, product and service implementations or cancel or reduce spending with us in the early stages of the pandemic.

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.

While our licensed-based revenue is generally more recurring in nature, the uncertainty caused by the recent market downturn and rising inflation may result in 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 also 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.

In the first quarter of 2022 we signed statements of work with two large multinational financial institutions to start services while their contracts are being finalized.

Based on those new contracts and our other clients currently under contract, we expect comparable revenue growth in fiscal 2022 to the 22% revenue growth we achieved in 2021.

We expect to significantly improve upon the $212,372 net income figure reported in 2021, however, as we are anticipating higher gross margins in 2022.

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

The Canadian dollar depreciated 4% against the U.S.

dollar when comparing the average exchange rate for 2022 versus 2021.

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

dollars but had a minimal impact on our net income.

We finalized contracts with two large multinational financial institutions in 2022, with revenue recognized starting in April 2022 and November 2022, respectively.

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

Our revenue increased 16% in 2022.

We expect similar revenue growth in fiscal 2023 and we expect our 2023 net income to continue to grow.

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

In 2022 we plan to continue to expand our product lines and improve our infrastructure.

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 in 2022.

This expansion is expected to result in both increased revenue and costs for fiscal 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 2022 include broad expansion of data and news coverage, including the addition of a wide array of international exchange data and news and video feeds, expansion of fixed-income coverage, and the introduction of several new and upgraded market information products.

Important development projects for 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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For the years ended December 31, 2022 and 2021, the Company capitalized $2,739,589 and $2,201,222 of costs, respectively, related to upgrades and enhancements made to existing software applications.

Software applications are used by our subscribers to access, manage and analyze information in our databases.

For the years ended December 31, 2022 and 2021, amortization expenses associated with the internally developed application software was $1,943,292 and $1,462,039, respectively.

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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 year ended December 31, 2022.

Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which changes the impairment model for most financial assets, including accounts receivable, and replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326) , which changes the impairment model for most financial assets, including accounts receivable, and replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses.

The guidance is effective for the Company for interim and annual periods beginning after December 15, 2022.

Early adoption is permitted.

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

The Company does not expect that the adoption of ASU 2016-13 will have a significant impact 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.

ASU 2020-06 simplifies the complexity associated with applying Generally Accepted Accounting Principles in the United States of America (“US 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 fiscal years beginning after December 15, 2021.

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

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

The Company does not expect that the adoption of ASU 2020-06 will have a significant impact 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.

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The increase is a result of a 4% increase in revenue from licensing our Portfolio Management Systems and 31% increase in revenue from our Interactive Content and Data APIs.

Total Portfolio Management System revenue increased by 36% when comparing the years ended December 31, 2021 and 2020, due to increases in both Corporate Quotestream and Individual Quotestream revenue.

Corporate Quotestream revenue increased 42% for the year ended December 31, 2021 from the comparative period in 2020 due to new contracts signed since the comparative period and an increase in the number of subscribers for existing clients.

The increase is 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 increase is 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 22% for the year ended December 31, 2021 from the comparative period 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 APIs revenue increased 8% for the year ended December 31, 2021 from the comparative period in 2020 due 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.

Total Portfolio Management System revenue increased by 4% when comparing the years ended December 31, 2022 and 2021, due to an 8% increase in Corporate Quotestream offset by an 8% decrease in Individual Quotestream revenue.

Corporate Quotestream revenue increased 8% for the year ended December 31, 2022 from the comparative period 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.

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

These improvements have allowed us to attract larger customers and increase the average revenue for our existing customers.

Individual Quotestream revenue decreased 8% for the year ended December 31, 2022 from the comparative period 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 31% for the year ended December 31, 2022 from the comparative period in 2021.

The increase is 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 large multinational financial institutions discussed above in the “Business Environment and Trends” section.

Cost of Revenue and Gross Profit Summary

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

We launched a major growth initiative starting 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 26% for the year ended December 31, 2021 from the comparative period in 2020.

We incurred increased stock exchange fees related to increased usage and new market data added in 2021, and a $336,121 increase in amortization expense 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 44% in 2021 from 46% in 2020.

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 and Data APIs revenue which has more fixed costs and higher gross margins.

Our cost of revenue increased 6% for the year ended December 31, 2022 from the comparative period in 2021.

This was mainly due to increased amortization expenses associated with internally developed application software resulting from our major growth initiative, which included investing in infrastructure, new product development, data collection, and the expansion of our global market coverage.

Overall, the cost of revenue decreased as a percentage of sales, as evidenced by our gross margin percentage that increased to 49% in 2022 from 44% in 2021.

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

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.

Operating Expenses Summary

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

Sales and marketing expenses increased 13% when comparing the years ended December 31, 2021 and 2020 mainly due to an increase in salaries from personnel added during the year to support our growth initiative.

Sales and marketing expenses increased 18% when comparing the years ended December 31, 2022 and 2021.

The increase is a result of additional sales personnel hired since the comparative period to support our product growth initiatives and salary increases and bonuses for existing personnel.

The increase is also due to a $115,625 increase in fair value during the year for our preferred stock warrant liability which is recorded as stock-based compensation and included in marketing expense.

The increase was offset by the 4% depreciation of the Canadian dollar from the comparative period as most of our sales personnel are located in Canada.

General and Administrative

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General and administrative increased 19% when comparing the years ended December 31, 2022 and 2021.

Increase was mainly due to an increase in professional fees offset by a decrease in bad debts as we experienced unusually high bad debts in 2020 due to COVID-19.

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

SOC2 certification provides independent assurance that an organization maintains a high level of information security, data integrity and business resiliency.

We achieved SOC2 Type II certification in November 2022.

Software Development

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

Software development expenses increased 4% for the year ended December 31, 2021 when compared to fiscal 2020.

This increase was mainly due to hiring additional development personnel required to expand our product lines and improve our infrastructure.

Software development expenses increased 22% for the year ended December 31, 2022 when compared to fiscal 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 4% depreciation of the Canadian dollar from the comparative periods as most of our development personnel are located in Canada.

We capitalized $2,739,590 of development costs for the year ended December 31, 2022, compared to $2,201,222 in 2021.

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Foreign Exchange Gain (Loss)

We incurred a foreign exchange gain of $107,382 for the year ended December 31, 2021 compared to foreign exchange loss of $3,791 for the year ended December 31, 2020.

We incurred a foreign exchange loss of $40,307 for the year ended December 31, 2022 compared to foreign exchange gain of $107,382 for the year ended December 31, 2021.

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 of $2,818 was incurred for the year ended December 31, 2022, compared to $2,641 incurred for the year ended December 31, 2021.

Other income was $133,257 for the year ended December 31, 2021.

There was no other income for the year ended December 31, 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.

No other income was recognized in the comparative 2020 period.

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

See Financial Statement Note 12 “Paycheck Protection Program”.

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In 2022, the Company recorded Canadian income tax expense of $3,056 compared to a Canadian income tax expense of $3,184 in 2021.

Net Income (loss) for the Period

As a result of the foregoing, net income for the year ended December 31, 2021 was $212,372 compared to net loss of $646,324 for the year ended December 31, 2020.

Basic earnings (loss) per share was $0.00 and $(0.01) for the years ended December 31, 2021 and 2020, respectively.

Diluted earnings per share was $0.00 and $(0.01) for the years ended December 31, 2021 and 2020, respectively.

Net Income for the Period

As a result of the foregoing, net income for the year ended December 31, 2022 was $444,470 compared to net income of $212,372 for the year ended December 31, 2021.

Basic and diluted earnings per share was $0.00 for the years ended December 31, 2022 and 2021, respectively.

Liquidity and Capital Resources

Our cash totaled $258,705 at December 31, 2021, as compared with $417,910 at December 31, 2020, a decrease of $159,205.

Our cash totaled $477,987 at December 31, 2022, as compared with $258,705 at December 31, 2021, an increase of $219,282.

Net cash of $3,141,500 was provided by operations for the year ended December 31, 2022, primarily due to the net income during the period adjusted for non-cash charges, an increase in accounts payable, and a decrease in prepaid expenses.

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As of December 31, 2022 our working capital deficit is $2,204,801 however current liabilities include $1,166,848 in deferred revenue and the expected costs necessary to realize the deferred revenue are minimal.

As discussed above in the “Business Environment and Trends” section, in the first quarter of 2022 we signed statements of work with two large multinational financial institutions.

Pursuant to those contracts, to date we have received upfront development payments totaling $400,000 in 2022.

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.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021.

In making this assessment, management used the criteria set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on our assessment, we believe that, as of December 31, 2021, the Company’s internal control over financial reporting was effective based on those criteria.

Our management, with the participation and supervision of our Chairman of the Board and Chairman of the Audit Committee, Chief Executive Officer and Chief Financial Officer, have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) to the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2022, and concluded that our disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on that evaluation, our management identified the following material weaknesses in our internal control over financial reporting, as described below.

Notwithstanding the material weaknesses described below our management has concluded that our consolidated financial statements for the periods covered by and included in this Quarterly Report are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and fairly present, in all material respects, our financial position, results of operations and cash flows for each of the periods presented herein.

The following material weaknesses were identified during the preparation and review of the current period financial statements:

There is a lack of segregation of duties in financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.

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Shworan is President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary of QuoteMedia, Inc.

Shworan was paid a base salary of $350,000 and was awarded a bonus of $50,000 which was accrued as of December 31, 2020 and paid in 2021.

Shworan was paid a base salary of $416,667 and was awarded a bonus of $133,333 which was accrued as of December 31, 2022, and remains unpaid as of March 21, 2023.

Outstanding Equity Awards at Fiscal Year End

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Option/Warrant Exercise Date

Number of Securities Underlying Unexercised Preferred Stock Warrants

Number of Securities Underlying

Unexercised Preferred Stock Warrants

Unexercisable

Option/Warrant Exercise Price ($)

Option/Warrant Exercise Date

Option/Warrant

Exercise Price ($)

Option/Warrant

Exercise Date

Employment Agreements

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Options Awards represent the fair value of option awards granted in 2022, computed in accordance with FASB ASC 718, Stock Compensation .

Fees Earned or

Paid in Cash ($)

Fees Earned or Paid in Cash ($)

Option Awards ($)

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Represents 493,976 shares of common stock and vested options and warrants to acquire 300,000 shares of common stock.

Represents 6,478,027 shares of our common stock owned by Sue Guelpa.

Equity Compensation Plan Information

The following table sets forth information with respect to our common stock that may be issued upon the exercise of outstanding options, warrants, and rights to purchase shares of our common stock as of December 31, 2022.

Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights

Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))

Number of Securities to

be Issued Upon Exercise

of Outstanding Options, Warrants, and Rights

Weighted Average

Exercise Price of Outstanding Options, Warrants, and Rights

Number of Securities Remaining Available for Future Issuance Under Equity Compensation

Plans (Excluding

Securities Reflected in Column (a))

Plan Category

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Shworan is a control person of 410734 B.C.

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

At December 31, 2022, there was $13,343 due to 410734 B.C.

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

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Shworan is a control person of Bravenet.

At December 31, 2022, there were $70,100 in unreimbursed expenses owed to Keith Randall, CEO of Quotemedia, Inc.

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

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PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Aggregate fees billed to our company for the fiscal years ended December 31, 2021 and 2020 by Moss Adams LLP, our principal accountants, are as follows:

On September 27, 2022, Quotemedia, Inc.

(the “Company”) received notification from its independent registered public accounting firm, Moss Adams LLP (“Moss Adams”), that Moss Adams was resigning as the Company’s independent registered public accounting firm upon completion of the review of the Company’s unaudited financial statements for the quarter ended September 30, 2022.

On January 17, 2023, the Audit Committee of our Board of Directors engaged MNP, LLP as our new independent registered public accounting firm.

Aggregate fees billed to our company for the fiscal years ended December 31, 2022 and 2021 by MNP, LLP, our principal accountants, are as follows:

Audit-Related Fees

All Other Fees

Aggregate fees billed to our company for the fiscal years ended December 31, 2022 and 2021 by Moss Adams LLP, our former principal accountants, are as follows:

Audit-Related Fees

All Other Fees

Audit Committee Pre-Approval Policies

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The Audit Committee will not delegate the pre-approval of services to be performed by the independent auditor to management.

All services provided by Moss Adams LLP described above under the captions “Audit Fees” were approved by our Audit Committee.

All services provided by MNP, LLP and Moss Adams LLP described above under the captions “Audit Fees” were approved by our Audit Committee.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

The following documents are filed as a part of the report:

(a) The following documents are filed as a part of the report:

(1) Financial Statements

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Consent of Moss Adams LLP, Independent Registered Public Accounting Firm

Consent of MNP, LLP, Independent Registered Public Accounting Firm

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.

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Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

March 30, 2022 QUOTEMEDIA, INC.

March 31, 2023

QUOTEMEDIA, INC.

Chief Executive Officer and Chief Financial Officer

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March 31, 2023

Chief Executive Officer and Chief Financial Officer and

Chief Executive Officer and Chief Financial Officer and Director (Principal Executive and Financial and Accounting Officer)

March 31, 2023

Director (Principal Executive and Financial and Accounting Officer)

QuoteMedia, Inc.

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Report of Independent Registered Public Accounting Firm ( Moss Adams LLP , Phoenix, AZ , PCAOB ID:

Report of Independent Registered Public Accounting Firm - MNP, LLP PCAOB ID:

Consolidated Balance Sheets

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors

To the Shareholders and the Board of Directors of

Quotemedia, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Quotemedia, Inc.

(the “Company”) as of December 31, 2021, the related consolidated statements of operations, changes in series A redeemable convertible preferred stock and stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively, referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2021, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Moss Adams LLP

Phoenix, Arizona

March 30, 2022, except for Note 2, as to which the date is March 31, 2023.

We have served as the Company’s auditor from 2017 to 2022.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of QuoteMedia Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of QuoteMedia Inc.

(the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in series A redeemable convertible preferred stock and stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively, referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2021 and 2020, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

(the “Company”) as of December 31, 2022, and the related consolidated statements of operations, changes in series A redeemable convertible preferred stock and stockholders’ equity, and cash flows for the year ended December 31, 2022, and the related notes to the consolidated financial statements.

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022, and the results of its consolidated operations and its consolidated cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

The consolidated financial statements for the year ended December 31, 2021 were audited by other auditors whose report dated March 31, 2023 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

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Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the [consolidated] financial statements.

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Capitalized Software Development Costs

As described in Note 6 to the consolidated financial statements, the Company capitalizes certain development costs that relate to internal-use software incurred during the application development stage.

These costs may be related to new products as well as existing products when those costs will result in significant additional functionality.

The Company’s capitalized internal-use software asset, net of accumulated amortization, was $3.0 million as of December 31, 2021.

The Company capitalized $2.2 million of internal-use software development costs during the year ended December 31, 2021.

The principal consideration for our determination that capitalized internal-use software development costs is a critical audit matter is the degree of subjectivity involved in management’s assessment of which projects met the capitalization criteria, stage of development, and nature of costs that qualify for capitalization.

This in turn led to a high degree of auditor subjectivity and effort in performing procedures and evaluating evidence relating to management’s process of identifying projects and the stage of development and related development activities within those projects that qualify for capitalization in accordance with the applicable accounting standards.

The primary procedures we performed to address this critical audit matter included:

Obtaining an understanding of the Company’s process to identify development projects and development costs qualifying for capitalization,

Evaluating management’s listing of active development projects by review of project reports and discussions with development personnel to assess the reasonableness as to whether the activities were demonstrative of the capitalization criteria in accordance with the applicable accounting guidance,

Obtaining a schedule compiled by management to compute the capitalized costs by project and performing testing over the completeness and mathematical accuracy of the hours and payroll rates included within the schedule,

Testing a sample of the Company’s capitalized costs by validating the nature of the activities performed and time devoted to capitalizable activities through discussion with individual software developers and project managers, and

Agreeing the calculated amounts for capitalization to underlying payroll data to evaluate the reasonableness of hourly rates used for cost capitalization.

/s/ Moss Adams LLP

Phoenix, Arizona

March 30, 2022

As described in Note 1(f) and 6 to the consolidated financial statements, the Company capitalizes certain costs relating to the development of internal software.

These costs may be related to new products as well as existing products when the costs will result in significant additional functionality.

Management applied significant judgment in assessing whether the assets met the required criteria for initial capitalization, including the assessment of expected future benefits from the projects to be capitalized, technical feasibility and commercial viability.

The value of development costs capitalized during the year ended December 31, 2022 was $2.7 million.

The principal considerations for our determination that capitalized development costs is a critical audit matter was the significant judgement required by management in assessing whether the assets met the required criteria for initial capitalization, stage of development, and nature of costs that qualify for capitalization.

This resulted in a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the audit evidence relating to managements process of identifying projects and the stage of development and related development activities within those projects that qualify for capitalization, in accordance with the applicable accounting standards.

We responded to this matter by performing procedures over capitalized software development costs.

Our audit work in relation to this included, but was not restricted to, the following:

Obtained an understanding of the Company’s process to identify development projects and development costs qualifying for capitalization;

Evaluated management’s listing of active development projects by review of project reports and discussions with development personnel to assess the reasonableness as to whether the activities were demonstrative of the capitalization criteria in accordance with the applicable accounting standard;

Obtained a schedule compiled by management to compute the capitalized costs by project and performed testing over the completeness and mathematical accuracy of the hours and payroll rates included within the schedule;

Tested a sample of the Company’s capitalized costs by validating the nature of the activities performed and time devoted to capitalizable activities through discussion with individual software developers and project managers;

Agreed the calculated amounts for capitalization to underlying payroll data to evaluate the reasonableness of hourly rates used for cost capitalization.

Chartered Professional Accountants

Licensed Public Accountants

We have served as the Company’s auditor since 2023

Mississauga, Canada

March 31, 2023

QUOTEMEDIA, INC.

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15,002 16,005

Property and equipment, net

Property and equipment, net (see note 6)

4,208,250 3,417,977

Goodwill (see note 6)

110,000 110,000

Intangible assets

Intangible assets (see note 7)

73,572 64,856

Operating lease right-of-use assets

Operating lease right-of-use assets (see note 5)

506,219 829,960

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$ 2,512,837 $ 2,434,389

Deferred revenue

Deferred revenue (see note 3)

1,166,848 622,497

Current portion of operating lease liabilities

Current portion of operating lease liabilities (see note 5)

174,166 180,544

Current portion of finance lease liabilities

Current portion of finance lease liabilities (see note 5)

Total current liabilities

3,853,851 3,239,524

Paycheck Protection Program loan (Note 12)

Long-term portion of operating lease liabilities

Long-term portion of operating lease liabilities (see note 5)

323,685 532,782

Long-term portion of finance lease liabilities

Preferred stock warrant liability (see note 9)

629,375 513,750

Mezzanine equity:

Preferred stock, 10,000,000 shares authorized:

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

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

550,000 shares designated;

shares issued and outstanding:

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

123,685 at December 31, 2022 and December 31, 2021 (see note 9)

2,983,857 2,983,857

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For each of the years ended December 31,

REVENUE (see note 3)

COST OF REVENUE

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Software development

OPERATING LOSS

OPERATING INCOME (LOSS)

OTHER INCOME (EXPENSES), NET

Foreign exchange gain (loss)

Foreign exchange (loss) gain

Interest expense

INCOME (LOSS) BEFORE INCOME TAXES

Income tax expense

NET INCOME (LOSS)

$ ( 646,324 )

EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share

Diluted earnings (loss) per share

WEIGHTED AVERAGE SHARES OUTSTANDING

INCOME BEFORE INCOME TAXES

Income tax expense (see note 8)

EARNINGS PER SHARE (see note 10)

Basic earnings per share

Diluted earnings per share

WEIGHTED AVERAGE SHARES OUTSTANDING (see note 10)

The accompanying notes are an integral part of these consolidated financial statements.

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For the years ended December 31, 2022 and 2021

Series A Redeemable

Convertible Preferred Stock

Total Stockholders’

Balance, January 1, 2020

Preferred Stock

Additional Paid- Accumulated Total Stockholders ’

Number of Shares

Numberof Shares

Equity (Deficit)

Balance, December 31, 2020 (restated)

123,685 $ 2,983,857 90,477,798 $ 90,479 $ 18,855,883 $ ( 20,879,268 )

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Stock-based compensation

Balance, December 31, 2020

- - - - 31,876 - 31,876

- - - - - 212,372 212,372

Balance, December 31, 2021 (restated)

123,685 $ 2,983,857 90,477,798 $ 90,479 $ 18,887,759 $ ( 20,666,896 )

$ ( 1,688,658 )

Stock-based compensation

- - - - 15,513 - 15,513

- - - - - 444,470 444,470

Balance, December 31, 2022

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OPERATING ACTIVITIES:

Net income (loss)

$ ( 646,324 )

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

Stock-based compensation expense

Stock-based compensation expense – common stock warrants

Stock-based compensation expense – preferred stock warrants

Gain on forgiveness of PPP loan (Note 12)

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FINANCING ACTIVITIES:

Proceeds from Paycheck Protection Program loan

Repayment of finance lease obligations

Net cash provided by (used in) financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Net cash provided used in financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

See supplementary information (Note 14)

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a) Nature of operations

We are a software developer and distributor of financial market data and related services to a global marketplace.

We specialize in the collection, aggregation, and delivery of both delayed and real-time financial data content via the Internet.

We develop software components that deliver dynamic content to banks, brokerage firms, financial institutions, mutual fund companies, online information and financial portals, media outlets, public companies, and corporate intranets.

Quotemedia, Inc.

(the “Company”) is a software developer and distributor of financial market data and related services to a global marketplace.

The Company specializes in the collection, aggregation, and delivery of both delayed and real-time financial data content via the Internet.

The Company develops software components that deliver dynamic content to banks, brokerage firms, financial institutions, mutual fund companies, online information and financial portals, media outlets, public companies, and corporate intranets.

b) Basis of consolidation

The consolidated financial statements include the operations of QuoteMedia, Ltd., a wholly owned Canadian subsidiary of QuoteMedia, Inc.

The consolidated financial statements include the operations of QuoteMedia, Ltd., a wholly owned Canadian subsidiary of the Company.

All intercompany transactions and balances have been eliminated.

c) Foreign currency translation and transactions

dollar is the functional currency of all our company’s operations.

dollar is the functional currency of all the Company’s operations.

Foreign currency asset and liability amounts are remeasured into U.S.

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Cash equivalents include money market investments that have an original maturity of three months or less and are redeemable on demand.

We maintain our accounts primarily at one financial institution.

At times throughout the year, our cash and cash equivalents balances may exceed amounts insured by the Federal Deposit Insurance Corporation.

The Company maintains its accounts primarily at one financial institution.

At times throughout the year, the Company’s cash and cash equivalents balances may exceed amounts insured by the Federal Deposit Insurance Corporation.

e) Allowance for doubtful accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments.

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments.

The Company determines the allowance by reviewing the age of the receivables and assessing the anticipated ability of customers to pay.

No collateral is required for any of the receivables and the Company does not usually apply financing charges to outstanding accounts receivable balances.

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 and related bad debt expense decreased in the year ended December 31, 2021 due to de-escalation of risk related to COVID as some customers altered their payment pattern during the pandemic and are recovering.

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

The allowance for doubtful accounts was $ 200,000 and $ 150,000 at December 31, 2022 and 2021, respectively.

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f) Property and equipment

Fixed assets are recorded at cost less accumulated depreciation.

Property and equipment are recorded at cost less accumulated depreciation.

Furniture and equipment are depreciated using the straight-line method over their estimated useful lives of five years.

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There were no fixed assets retired during the years ended December 31, 2022 and 2021.

Capitalized software development include costs incurred in connection with the internal development of software.

Capitalized software development includes costs incurred in connection with the internal development of software.

These costs relate to software used by subscribers to access, manage and analyze information in the Company’s databases.

The majority of the capitalized costs relate to a portion of the salaries and other related costs for our software engineers.

The majority of the capitalized costs relate to a portion of the salaries and other related costs for the Company’s software engineers.

Capitalized costs associated with internally developed software are amortized over three years which is their estimated economic life.

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Income taxes are provided in accordance with Financial Accounting Standards Board (“FASB”) ASC 740, Income Taxes .

A deferred tax asset or liability is recorded for all temporary differences between income for financial statement purposes and income for tax purposes as well as operating loss carryforwards.

A deferred tax asset or liability is recorded for all temporary differences between income for financial statement purposes and income for tax purposes as well as operating loss carry-forward.

Deferred tax expenses or recovery result from the net change during the year of deferred tax assets and liabilities.

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Such estimates include (i) fair values used to test goodwill and capitalized development costs for impairment;

(ii) the amount of allowance for doubtful accounts, (iii) the capitalization of software development costs, (iv) income taxes, and (v) stock-based compensation.

(ii) the amount of allowance for doubtful accounts, (iii) the capitalization of software development costs, (iv) income taxes, (v) the incremental borrowing rate for operating leases, (vi) the useful life of property and equipment, and (vii) stock-based compensation.

Actual results and outcomes may differ from management’s estimates and assumptions.

j) Software development expenses

Software development expenses consist primarily of costs associated with the design, programming, and testing of our software applications during the preliminary project stage.

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

Software development expenses consist primarily of costs incurred to maintain the Company’s software applications.

The Company expensed $ 2,096,404 and $ 1,712,558 in software development costs during the years ended December 31, 2022 and 2021, respectively (see Note 6).

The Company generates substantially all of its revenue from subscriptions for access to its software products and related support.

We license financial market data information on a monthly, quarterly, or annual basis.

Our products and services are divided into two main categories:

Interactive Content and Data Applications and Portfolio Management and Real-Time Quote Systems.

Subscriptions are sold for a fixed fee and revenue is recognized ratably over the term of the subscription.

The Company does not provide the customer with the right to take possession of its software products at any time.

The Company licenses financial market data information on a monthly, quarterly, or annual basis.

The Company’s products and services are divided into two main categories:

Interactive Content and Data Applications

Proprietary financial software applications and streaming market data feeds

Subscriptions are typically sold for a fixed fee and revenue is recognized ratably over the term of the subscription.

Portfolio Management and Real-Time Quote Systems

Corporate Quotestream (Business-to-Business)

Web-delivered, embedded applications providing real-time, streaming market quotes and research information targeted to both professionals and non-professional users.

Revenue is typically earned based on customer usage.

Individual Quotestream (Business-to-Consumer)

Web-delivered, embedded applications providing real-time, streaming market quotes and research information targeted to non-professional users.

Subscriptions are typically sold for a fixed fee and revenue is recognized ratably over the term of the subscription.

The Company does not provide its customers with the right to take possession of its software products at any time.

The Company determines revenue recognition through the following steps:

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The Company executes a signed contract with the customer that specifies services to be provided, the payment amounts and terms, and the period of service, among other terms.

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Contract Balances

Timing of revenue recognition may differ from the timing of invoicing to customers.

We record a receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing.

Upfront set-up or development fees are deferred and recognized over the term of the contract, as set-up and development fees are not distinct from the market data service contracts to which they relate.

The Company records a receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing.

Upfront set-up or development fees are deferred and recognized over the service term of the contract, as set-up and development fees are not distinct from the market data service contracts to which they relate.

The Company considers the following factors when determining if collection of a fee is reasonably assured:

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Cost of revenue primarily consists of customer support personnel-related compensation expenses, including salaries, bonuses, benefits, payroll taxes, and stock-based compensation expense, as well as expenses related to third-party hosting costs, software license fees, amortization of capitalized software development costs, amortization of acquired technology intangible assets, and allocated overhead.

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

l) Financial instruments

Financial instruments consist principally of cash, accounts receivable, accounts payable and notes payable.

We believe that the fair value of financial instruments approximates the recorded book value of those instruments due to the short-term nature of the instruments, or stated interest rates that approximate market interest rates.

Financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable and notes payable.

The Company believes that the fair value of financial instruments approximates the recorded book value of those instruments due to the short-term nature of the instruments or stated interest rates that approximate market interest rates.

m) Stock-Based Compensation

Stock-based compensation awards are measured at their fair value on the date of grant with the expense recognized, net of estimated forfeitures, over the related service or performance period on a straight-line basis .

We used the Black-Scholes valuation model to calculate the fair value of common stock options and warrants.

The Company used the Black-Scholes valuation model to calculate the fair value of common stock options and warrants.

n) Recent Accounting Pronouncements

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 year ended December 31, 2022.

Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) , which changes the impairment model for most financial assets, including accounts receivable, and replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses.