What changed in this filing

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Item 1. Financial Statements

2023-05-12 compared with 2022-11-10 · 154 added, 208 removed, 236 unchanged (61% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2022

December 31, 2021

Current assets:

6 unchanged sentences

Intangible assets

Operating lease right-of-use assets

Operating lease right-of-use assets (see note 6)

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ DEFICIT

1 unchanged sentence

Accounts payable and accrued liabilities

Deferred revenue

Current portion of operating lease liabilities

Current portion of finance lease liabilities

Current portion of deferred revenue (see note 4)

Current portion of operating lease liabilities (see note 6)

Total current liabilities

Long-term portion of operating lease liabilities

Preferred stock warrant liability

Long-term portion of deferred revenue

Long-term portion of operating lease liabilities (see note 6)

Preferred stock warrant liability (see note 7)

Mezzanine equity:

3 unchanged sentences

shares issued and outstanding:

123,685 at September 30, 2022 and December 31, 2021

123,685 at March 31, 2023 and December 31, 2022 (see note 7)

Stockholders’ deficit:

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

90,477,798 at September 30, 2022 and December 31, 2021

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

90,477,798 at March 31, 2023 and December 31, 2022

Additional paid-in capital

5 unchanged sentences

( 1,228,675 )

Total liabilities and stockholders’ deficit

Total liabilities, mezzanine equity and stockholders’ deficit

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

QUOTEMEDIA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three-months ended September 30,

Nine-months ended September 30,

Three-months ended

REVENUE (see note 4)

COST OF REVENUE

3 unchanged sentences

Software development

OPERATING INCOME (LOSS)

OTHER INCOME (EXPENSES)

Foreign exchange gain (loss)

Interest income (expense), net

Other income (Note 9)

NET INCOME BEFORE INCOME TAXES

OPERATING INCOME

OTHER INCOME (EXPENSES), NET

Foreign exchange (loss) gain

Interest expense

INCOME BEFORE INCOME TAXES

Income tax expense

EARNINGS PER SHARE

EARNINGS PER SHARE (see note 8)

Basic earnings per share

Diluted earnings per share

WEIGHTED AVERAGE SHARES OUTSTANDING

QUOTEMEDIA, INC.

CONDENSED STATEMENTS OF CHANGES IN SERIES A REDEEMABLE CONVERTIBLE

PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

Series A Redeemable Convertible

Preferred Stock

Total Stockholders’

Three-months ended September 30, 2022:

Number of Shares

Accumulated Deficit

Balance, June 30, 2022

$ ( 20,680,935 )

$ ( 1,694,219 )

Stock-based compensation

Balance, September 30, 2022

$ ( 20,371,392 )

$ ( 1,380,437 )

Series A Redeemable Convertible

Preferred Stock

Total Stockholders’

Three-months ended September 30, 2021:

Number of Shares

Accumulated Deficit

Balance, June 30, 2021

$ ( 20,935,806 )

$ ( 1,975,566 )

Stock-based compensation

Balance, September 30, 2021

$ ( 20,780,875 )

$ ( 1,813,696 )

WEIGHTED AVERAGE SHARES OUTSTANDING (see note 8)

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

QUOTEMEDIA, INC.

3 unchanged sentences

Preferred Stock

Total Stockholders’

Nine-months ended September 30, 2022:

Three-months ended March 31, 2023:

Number of Shares

Accumulated Deficit

Stockholders’

Equity (Deficit)

Balance, December 31, 2022

1 unchanged sentence

$ ( 1,228,675 )

Stock-based compensation

Balance, September 30, 2022

Balance, March 31, 2023

$ ( 20,109,136 )

2 unchanged sentences

Preferred Stock

Total Stockholders’

Nine-months ended September 30, 2021:

Three-months ended March 31, 2022:

Number of Shares

Accumulated Deficit

Balance, December 31, 2020

Stockholders’ Equity (Deficit)

Balance, December 31, 2021 (restated)

$ ( 20,666,896 )

1 unchanged sentence

Stock-based compensation

Balance, September 30, 2021

Balance, March 31, 2022 (restated)

$ ( 20,517,855 )

$ ( 1,535,378 )

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

QUOTEMEDIA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine-months ended September 30,

Three-months ended

2022 (restated)

OPERATING ACTIVITIES:

1 unchanged sentence

Depreciation and amortization

Stock-based compensation expense

Gain on forgiveness of PPP loan (Note 9)

Stock-based compensation expense – common stock warrants

Stock-based compensation expense – preferred stock warrants

Changes in assets and liabilities:

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Purchase of fixed assets

Purchase of intangible assets

Capitalized application software

( 2,022,885 )

( 1,621,738 )

Net cash used in investing activities

( 2,144,827 )

( 1,721,364 )

FINANCING ACTIVITIES:

1 unchanged sentence

Net cash used in financing activities

Net increase (decrease) in cash

Net increase in cash

Cash and equivalents, beginning of period

Cash and equivalents, end of period

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

QUOTEMEDIA, INC.

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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, 2022 through the filing of this report.

As of September 30, 2022, the Company has a working capital deficit of $ 2,337,632 .

Our current liabilities include deferred revenue of $ 1,088,109 and a $ 218,000 nonrefundable customer deposit.

The costs expected to be incurred to realize the deferred revenue in the next 12 months are minimal.

The Company has a plan in place for the next 12 months to ensure ongoing expenditures are balanced with the expected growth rate and believes cash on hand and cash generated will be sufficient to fund operations for the next 12 months.

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.

No assurance can be given that additional financing will be available or that, if it is available, it will be on terms acceptable to us.

These financial statements should be read in conjunction with our financial statements and the notes thereto for the fiscal year ended December 31, 2021 contained in our Form 10-K filed with the Securities and Exchange Commission dated March 30, 2022.

In connection with the preparation of the condensed consolidated financial statements, management evaluated subsequent events after the balance sheet date of March 31, 2023 through the filing of this report.

These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto for the fiscal year ended December 31, 2022 contained in the Form 10-K filed with the Securities and Exchange Commission dated March 31, 2023.

Risks and Uncertainties

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.

Adverse macroeconomic conditions, including inflation, slower growth or recession, and higher interest rates could materially adversely affect demand for the Company’s services.

SIGNIFICANT ACCOUNTING POLICIES

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 and license 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 and license 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 subsidiary of QuoteMedia, Inc.

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

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 of the Company's operations.

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

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d) Allowances 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 was $ 150,000 as of September 30, 2022 and December 31, 2021.

Bad debt expenses were $ 19,745 and $ 9,866 for the three ended September 30, 2022 and 2021, respectively.

Bad debt expenses were $ 55,936 and $ 88,210 for the nine-months ended September 30, 2022 and 2021, respectively.

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 $ 125,000 and $ 200,000 as of March 31, 2023 and December 31, 2022, respectively.

Bad debt expenses were ($ 64,093 ) and $ 5,558 for the three ended March 31, 2023 and 2022, respectively.

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

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:

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

Contract Balances

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

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:

customer creditworthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms.

If these factors do not indicate collection is reasonably assured, revenue is deferred until collection becomes reasonably assured, which is generally upon receipt of cash.

Cost of revenue

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.

f) Accounting Pronouncements

Recently Adopted

There are no new recently adopted accounting pronouncements for the three-month period ended September 30, 2022.

On January 1, 2023, the Company adopted 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 adoption of ASU 2016-13 had no impact on the Company’s consolidated financial statements.

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Not Yet Adopted

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 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) :

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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.

PRIOR PERIOD ERROR

Subsequent to the filing of its Quarterly Report for the quarterly period ended March 31, 2022, the Company reassessed its classification of warrants to purchase shares of Series A Redeemable Convertible Preferred Stock (“Compensation Preferred Stock Warrants” – see Financial Statement Note 7 “ Redeemable Convertible Preferred Stock and S tockholders ’ Deficit” ).

The Company concluded that its original classification of the Preferred Stock Warrants as equity was incorrect and that the Preferred Stock Warrants should have been classified as a liability in accordance with Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities From Equity .

The error was not material and resulted in the following revision for the comparative December 31, 2021 Balance Sheet:

PRIOR PERIOD RESTATEMENTS

Subsequent to the filing of its Quarterly Report for the quarterly period ended March 31, 2022, the Company reassessed its classification of warrants to purchase shares of Series A Redeemable Convertible Preferred Stock (“Compensation Preferred Stock Warrants” – see Financial Statement Note 9 “ Redeemable Convertible Preferred Stock and Stockholders’ Deficit” ).

Statement of Operations for the three-months ended March 31, 2022:

Sales and marketing expenses were increased by $ 55,625 .

Net income decreased by $ 55,625 .

Statement of Cash Flows for the three-months ended March 31, 2022:

Net income decreased by $55,625.

Stock-based compensation expense – preferred stock warrants increased by $55,625.

Statement of Changes in Series A Redeemable Convertible Preferred Stock and Stockholders’ Deficit as of December 31, 2021:

Additional Paid-in Capital was reduced by $ 750,000 .

Preferred Stock Warrant Liability was increased by $ 513,750

Accumulated Deficit was reduced by $ 236,250 .

In addition, Additional Paid-in Capital was reduced by $ 750,000 and Accumulated Deficit was reduced by $ 513,750 for the comparative stockholders’ equity balances as of December 31, 2020, June 30, 2021, and September 30, 2021.

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Statement of Changes in Series A Redeemable Convertible Preferred Stock and Stockholders’ Deficit as of March 31, 2022:

Additional Paid-in Capital was reduced by $ 750,000 .

Accumulated Deficit was reduced by $ 180,625 .

Disaggregated Revenue

The Company provides market data, financial web content solutions and cloud-based applications.

Our revenue by type of service consists of the following:

Three-months ended September 30,

Nine-months ended September 30,

Revenue by type of service consists of the following:

Three-months ended

Portfolio Management Systems

3 unchanged sentences

Total revenue

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Deferred Revenue

4 unchanged sentences

Effects of foreign currency translation

Balance at September 30, 2022

Balance at March 31, 2023

Current portion of deferred revenue

Long-term portion of deferred revenue

Total deferred revenue

Practical Expedients

As permitted under ASU 2014-09 (and related ASUs), unsatisfied performance obligations are not disclosed, as the original expected duration of substantially all of our contracts is one year or less.

As permitted under ASU 2014-09 (and related ASUs), unsatisfied performance obligations are not disclosed, as the original expected duration of substantially of the Company’s contracts is one year or less.

RELATED PARTIES

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effective May 1, 2021 for approximately $ 6,500 per month.

Shworan is a control person of 410734 B.C.

At September 30, 2022 and December 31, 2021, there were no amounts due to 410734 B.C.

Shworan, CEO of Quotemedia Ltd., is a control person of 410734 B.C.

At March 31, 2023, 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.

(“Bravenet”) effective November 28, 2019 for approximately $ 2,500 per month.

(“Bravenet”) effective November 28, 2019.

The Company agreed to pay Bravenet an upfront setup fee of $ 7,000 upon signing the agreement and a monthly service fee of $ 2,500 starting February 2020.

At March 31, 2023 and 2022, there was $ 7,500 and $ 12,500 due to Bravenet related to this agreement, respectively.

Shworan is a control person of Bravenet.

At September 30, 2022 and December 31, 2021, there was $ 7,500 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.

We have operating leases for corporate offices and finance leases for certain equipment.

Our leases have remaining lease terms of 1 year to 5 years .

We determine if an arrangement is a lease at inception.

Operating lease assets and liabilities are included in operating lease right-of-use assets and operating lease liabilities, respectively, on our consolidated balance sheets.

Finance lease assets and liabilities are included in property and equipment and finance lease liabilities, respectively, on our consolidated balance sheets.

At March 31, 2023 and December 31, 2022, there were $ 134,102 and $ 70,100 in unreimbursed expenses owed to Keith Randall, CEO of Quotemedia, Inc., respectively.

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

The Company has operating leases for corporate offices and finance leases for certain equipment.

The leases have remaining lease terms of 1 year to 5 years .

Management determines if an arrangement is a lease at inception.

Operating lease assets and liabilities are included in operating lease right-of-use assets and operating lease liabilities, respectively, on the consolidated balance sheets.

Finance lease assets and liabilities are included in property and equipment and finance lease liabilities, respectively, on the consolidated balance sheets.

Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

We elected the short-term lease exception and therefore only recognize right-of-use assets and lease liabilities for leases with a term greater than one year.

When determining lease terms, we factor in options to extend or terminate leases when it is reasonably certain that we will exercise that option.

We have lease agreements with lease and non-lease components, which are generally accounted for separately.

For certain leases we account for the lease and non-lease components as a single lease component.

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As most of the leases do not provide an implicit rate, an incremental borrowing rate based on the information available at commencement date in determining the present value of future payments is used.

Management elected the short-term lease exception and therefore only recognize right-of-use assets and lease liabilities for leases with a term greater than one year.

When determining lease terms, management factors in options to extend or terminate leases when it is reasonably certain that the Company will exercise that option.

The Company has lease agreements with lease and non-lease components, which are generally accounted for separately.

For certain leases the Company accounts for the lease and non-lease components as a single lease component.

Supplemental balance sheet information related to leases was as follows:

September 30,

Operating Leases

3 unchanged sentences

Total operating lease liability

Finance Leases

Computer equipment on financing lease

accumulated depreciation

Property and equipment, net

Current portion of finance lease liability

Total finance lease liability

September 30,

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Weighted Average Remaining Lease Term

Operating leases

Finance leases

Weighted Average Discount Rate

Operating leases

Finance leases

Maturities of lease liabilities were as follows:

Year ending December 31,

2022 (excluding the nine-months ended September 30, 2022)

2023 (excluding the three-months ended March 31, 2023)

2026 and thereafter

1 unchanged sentence

Less imputed interest

The components of lease expense for the three and nine-months ended September 30, 2022 and 2021 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, 2023 and 2022 were as follows:

Three-months ended

Operating lease costs:

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Total finance lease costs

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental cash flow information for the nine-months ended September 30, 2022 and 2021 related to leases was as follows:

Supplemental cash flow information for the three-months ended March 31, 2023 and 2022 related to leases was as follows:

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

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Financing cash flows from finance leases

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

Operating leases

There was no additional right of use assets obtained in exchange for lease obligations for the three-months ended March 31, 2023 and 2022.

REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

a) Redeemable Convertible Preferred Stock

We are authorized to issue up to 10,000,000 non-designated preferred shares at the Board of Directors’ discretion.

The Company is authorized to issue up to 10,000,000 non-designated preferred shares at the Board of Directors’ discretion.

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, 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 and nine-months ended September 30, 2022 and 2021.

At March 31, 2023, 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, 2023 and 2022.

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Redemption Rights

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b) Common stock

No shares of common stock were issued during the three and nine-months ended September 30, 2022 and 2021.

No shares of common stock were issued during the three-months ended March 31, 2023 and 2022.

c) Stock Options and Warrants

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

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Total stock-based compensation expense, related to all of the Company’s stock-based awards, recognized for the three and nine-months ended September 30, 2022 and 2021 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, 2023 and 2022 was comprised as follows:

Three-months ended

Sales and marketing

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Common Stock Options and Warrants

There were 25,772,803 common stock warrants and options outstanding at September 30, 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 nine-months ended September 30, 2022 and 2021.

In the comparative nine-month period ending September 30, 2021, 600,000 stock options were forfeited.

The following table summarizes our non-vested common stock option and warrant activity for the nine-months ended September 30, 2022:

There were 25,772,803 fully vested common stock warrants and options outstanding at March 31, 2023 and December 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, 2023 and 2022.

The following table summarizes the weighted average remaining contractual life and exercise price of common stock options and warrants outstanding and exercisable at March 31, 2023:

At March 31, 2023, there was no unrecognized compensation cost related to non-vested options and warrants granted to purchase common stock.

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Common Stock Options

Weighted-Average Grant Date Exercise Price

Non-vested at January 1, 2022

Vested during the period

Non-vested at September 30, 2022

The following table summarizes the weighted average remaining contractual life and exercise price of common stock options and warrants outstanding at September 30, 2022:

Common Stock Options and Warrants Outstanding

Common Stock Options

and Warrants Exercisable

At September 30, 2022, there was $ 2,796 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 0.2 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, 2022, the aggregate intrinsic value of options and warrants outstanding was $ 3,147,838 .

The aggregate intrinsic value of options and warrants exercisable was $ 3,027,838 .

The intrinsic value of stock options and warrants are calculated as the amount by which the market price of our common stock exceeds the exercise price of the option or warrant.

At March 31, 2023, the aggregate intrinsic value of options and warrants outstanding and exercisable was $ 5,725,118 .

The intrinsic value of stock options and warrants are calculated as the amount by which the market price of the Company’s common stock exceeds the exercise price of the option or warrant.

Preferred Stock Warrants

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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, 2022.

therefore, no compensation expense has been recognized as of March 31, 2023.

The probability is re-evaluated each reporting period.

As of September 30, 2022, there was $ 7,185,430 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.

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2022, there were a total of 413,493 preferred stock warrants outstanding with a weighted average remaining contractual life of 25.3 years.

As of September 30, 2022, 31,250 preferred stock warrants were exercisable.

No preferred stock warrants were granted or exercised for the three and nine-months ended September 30, 2022 and 2021.

As of March 31, 2023, there was $ 7,185,430 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, management is also unable to determine the weighted-average period over which the unrecognized compensation cost will be recognized.

As of March 31, 2023, there were a total of 413,493 preferred stock warrants outstanding with a weighted average remaining contractual life of 24.8 years.

As of March 31, 2023, 31,250 preferred stock warrants were exercisable.

No preferred stock warrants were granted or exercised for the three-months ended March 31, 2023 and 2022.

Fair Value Measurement of Compensation Preferred Stock Warrants

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The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The estimated fair value of the Preferred Stock Warrant liability is determined using Level 3 inputs.

As of September 30, 2022 and December 31, 2021, the fair value of the Preferred Stock Warrant Liability was $ 500,313 and $ 513,750 , respectively.

As of March 31, 2023 and December 31, 2022, the fair value of the Preferred Stock Warrant Liability was $ 707,125 and $ 629,375 , respectively.

The Preferred Stock Warrants were valued using a bond plus option framework reflecting the cash flow of the Preferred Stock Warrants and used a probability weighted sum of the value in each potential year before expiration to estimate the fair value of the Preferred Stock Warrants.

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This model was run based on the Management's expected term and probabilities of a liquidity event.

The key inputs for the framework were as follows as of September 30, 2022 and December 31, 2021:

The key inputs for the framework were as follows as of March 31, 2023 and December 31, 2022:

Valuation Inputs

September 30, 2022

December 31, 2021

Expected Time to Expiration (years)

2 unchanged sentences

Cash Flow Discount Rate

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth a summary of the changes in the fair value of the Level 3 Preferred Stock Warrant Liability for the three and nine-months ended September 30, 2022:

The following table sets forth a summary of the changes in the fair value of the Level 3 Preferred Stock Warrant Liability for the three-months ended March 31, 2023:

Preferred Stock Warrant Liability

1 unchanged sentence

Change in fair value

Fair value as of June 30, 2022

Change in fair value

Fair value as of September 30, 2022

Fair value as of March 31, 2023

The changes in fair value attributable to the Preferred Stock Warrants are recorded as an adjustment to stock compensation expense and reported in Sales and Marketing expense on the Statements of Operations.

The changes in fair value for the Preferred Stock Warrant Liability in the comparative three and nine-months periods ended September 30, 2021 were insignificant.

EARNINGS PER SHARE

5 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 net income per share for the three and nine-months ended September 30, 2022 and 2021 are as follows:

Three-months ended September 30,

Nine-months ended September 30,

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, 2023 and 2022 are as follows:

Three-months ended

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

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

PAYCHECK PROTECTION PROGRAM

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

The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides qualifying businesses with these proceeds for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business.

The proceeds and accrued interest are forgivable after twenty-four weeks, known as the covered period, as long as the borrower uses the proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels.

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 the comparative nine-months ended September 30, 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