What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-13 compared with 2023-11-13 · 144 added, 176 removed, 249 unchanged (56% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current assets:

5 unchanged sentences

Property and equipment, net

Capitalized internal-use software development costs, net

Intangible assets

3 unchanged sentences

Accounts payable and accrued liabilities

Current portion of deferred revenue (see note 4)

Current portion of operating lease liabilities (see note 6)

Deferred revenue (see note 3)

Operating lease liabilities (see note 5)

Total current liabilities

Long-term portion of deferred revenue (see note 4)

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

Long-term liabilities:

Deferred revenue (see note 3)

Operating lease liabilities (see note 5)

Preferred stock warrant liability (see note 6)

Total long-term liabilities

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 September 30, 2023 and December 31, 2022 (see note 7)

123,685 at March 31, 2024 and December 31, 2023 (see note 6)

Stockholders’ deficit:

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

90,477,798 at September 30, 2023 and December 31, 2022

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

90,477,798 at March 31, 2024 and December 31, 2023

Additional paid-in capital

3 unchanged sentences

Total stockholders’ deficit

( 1,228,675 )

Total liabilities, mezzanine equity and stockholders’ deficit

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

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

Table of Contnts

QUOTEMEDIA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three-months ended September 30,

Nine-months ended September 30,

Three-months ended March 31,

REVENUE (see note 3)

4 unchanged sentences

Software development

OPERATING INCOME

OTHER INCOME (EXPENSES)

OPERATING (LOSS) INCOME

OTHER INCOME (EXPENSES), NET

Foreign exchange gain (loss)

Interest income (expense), net

NET INCOME BEFORE INCOME TAXES

Interest expense

NET (LOSS) INCOME BEFORE INCOME TAXES

Income tax expense

EARNINGS PER SHARE (see note 8)

Basic earnings per share

Diluted earnings per share

NET (LOSS) INCOME

EARNINGS (LOSS) PER SHARE (see note 7)

Basic (loss) earnings per share

Diluted (loss) earnings per share

WEIGHTED AVERAGE SHARES OUTSTANDING (see note 7)

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

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

Table of Contnts

QUOTEMEDIA, INC.

1 unchanged sentence

PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

Series A Redeemable Convertible

Preferred Stock

Three-months ended September 30, 2023:

Number of Shares

Paid-in Capital

Accumulated Deficit

Stockholders’ Deficit

Balance, June 30, 2023

( 20,036,100 )

$ ( 1,042,349 )

Balance, September 30, 2023

$ ( 19,910,064 )

$ ( 916,313 )

Series A Redeemable Convertible

Preferred Stock

Three-months ended September 30, 2022:

Number of Shares

Paid-in Capital

Accumulated Deficit

Stockholders’ 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

Series A Redeemable

Preferred Stock

Nine-months ended September 30, 2023:

Number of Shares

Paid-in Capital

Accumulated Deficit

Stockholders’ Deficit

Stockholders’

Balance, December 31, 2023

1 unchanged sentence

$ ( 859,881 )

Balance, September 30, 2023

Balance, March 31, 2024

$ ( 19,889,018 )

$ ( 888,057 )

Series A Redeemable Convertible

Series A Redeemable

Preferred Stock

Nine-months ended September 30, 2022:

Total Stockholders’

Number of Shares

Paid-in Capital

Accumulated Deficit

Stockholders’ 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 )

$ ( 1,115,385 )

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

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

Table of Contnts

QUOTEMEDIA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine-months ended September 30,

Three-months ended March 31,

OPERATING ACTIVITIES:

Net (loss) income

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

Depreciation and amortization

Stock-based compensation expense – common stock warrants

Allowance for doubtful accounts

Stock-based compensation expense – preferred stock warrants

7 unchanged sentences

INVESTING ACTIVITIES:

Purchase of fixed assets

Purchase of intangible assets

Purchase of property and equipment

Capitalized application software

( 2,387,774 )

( 2,022,885 )

Net cash used in investing activities

( 2,459,023 )

( 2,144,827 )

FINANCING ACTIVITIES:

Repayment of finance lease obligations

Net cash used in financing activities

Net increase in cash

Net (decrease) 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 consolidated financial statements.

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

Table of Contnts

QUOTEMEDIA, INC.

5 unchanged sentences

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

In connection with the preparation of the condensed consolidated financial statements, management evaluated subsequent events after the balance sheet date of September 30, 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.

In connection with the preparation of the condensed consolidated financial statements, management evaluated subsequent events after the balance sheet date of March 31, 2024 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, 2023 contained in the Form 10-K filed with the Securities and Exchange Commission dated April 8, 2024.

Risks and Uncertainties

18 unchanged sentences

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

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.

The allowance for doubtful accounts was $ 275,000 and $ 200,000 as of September 30, 2023 and December 31, 2022, respectively.

Bad debt expenses were $ 155,980 and $ 19,745 for the three-months ended September 30, 2023 and 2022, respectively.

Bad debt expenses were $ 117,739 and $ 55,936 for the nine-months ended September 30, 2023 and 2022, respectively.

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company believes that the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables held at March 31, 2024, because the composition of the trade receivables at that date is consistent with that used in developing the historical credit-loss percentages (i.e., the similar risk characteristics of its customers and its credit practices have not changed significantly over time).

The allowance for doubtful accounts was $ 225,000 as of March 31, 2024 and December 31, 2023, respectively.

Bad debt expenses were $ 13,329 and ($ 64,093 ) for the three ended March 31, 2024 and 2023, respectively.

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

1 unchanged sentence

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

Table of Contnts

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Interactive Content and Data Applications

17 unchanged sentences

Contract Balances

The Company’s corporate customers are invoiced based on fee schedules that are agreed upon in each customer contract.

Individual Quotestream customers are charged a subscription fee based on their subscription agreement.

The Company recognizes revenue when performance obligations have been satisfied, which is the date the customer has access to the contracted market data.

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.

Upfront set-up or development fees are deferred and recognized evenly from the date performance obligations have been met to the end of 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 not recognized until collection becomes reasonably assured, which is generally upon receipt of cash.

Cost of revenue

1 unchanged sentence

f) Accounting Pronouncements

Not Yet Adopted

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) :

Recently Adopted

On January 1, 2024, the Company adopted Accounting Standards Update (“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”).

2 unchanged sentences

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

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

The Company does not expect that the adoption of ASU 2020-06 will have a significant impact on the Company’s consolidated financial statements.

The adoption of ASU 2020-06 had no impact on the Company’s consolidated financial statements.

Table of Contnts

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Not Yet Adopted

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

This standard improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendments in ASU 2023-07 will be applied retrospectively to all prior periods presented in the consolidated financial statements.

The Company does not expect that the adoption of ASU 2023-07 will have a significant impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosure (“ASU 2023-09”) .

This standard provides transparency to income tax disclosures related to the rate reconciliation and income taxes paid information.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 for public entities with early adoption permitted.

The amendments in ASU 2023-09 will be applied prospectively in the consolidated financial statements.

The Company does not expect that the adoption of ASU 2023-09 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.

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” ).

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 , resulting in the following revisions in the Company’s comparative consolidated financial statements:

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 .

Accumulated Deficit was reduced by $ 236,250 .

Disaggregated Revenue

1 unchanged sentence

Revenue by type of service consists of the following:

Three-months ended September 30,

Nine-months ended September 30,

Three-months ended March 31,

Portfolio Management Systems

4 unchanged sentences

Deferred Revenue

Changes in deferred revenue for the nine-months ended September 30, 2023 and 2022 were as follows:

September 30, 2023

September 30, 2022

Deferred revenue at beginning of period

Changes in deferred revenue were as follows for the periods ending March 31,

Beginning balance at Jan 1,

Revenue recognized in the current period from the amounts in the beginning balance

1 unchanged sentence

Effects of foreign currency translation

Deferred revenue at end of period

Total deferred revenue

Current portion of deferred revenue

2 unchanged sentences

Practical Expedients

The Company applies a practical expedient and does not disclose the value of the remaining performance obligations for contracts that are less than one year in duration, which represent a substantial majority of its revenue.

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.

Table of Contnts

QUOTEMEDIA, INC.

3 unchanged sentences

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

Shworan, President & CEO of QuoteMedia Ltd., is a control person of 410734 B.C.

At September 30, 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.

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 September 30, 2023 and December 31, 2022, there was $ 7,000 and $ 12,500 due to Bravenet related to this agreement, respectively.

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

There were no amounts due to 410734 B.C.

at March 31, 2024 and December 31, 2023.

The Company pays a monthly marketing service fee of $ 3,000 to Bravenet Web Services, Inc.

(“Bravenet”).

At March 31, 2024 and December 31, 2023, there was $ 21,000 and $ 12,500 due to Bravenet related to this agreement, respectively.

Shworan is a control person of Bravenet.

At September 30, 2023 and December 31, 2022, there were $ 48,628 and $ 70,100 in unreimbursed expenses owed to Keith Randall, CEO of QuoteMedia, Inc., respectively.

At March 31, 2024 and December 31, 2023, there were $ 162,880 and $ 68,988 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.

The Company has operating leases for corporate offices.

The Company’s leases have remaining lease terms of 1 year to 3 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 assets and liabilities are included in operating lease right-of-use assets and operating lease liabilities, respectively, on the Company’s consolidated balance sheets.

Finance lease assets and liabilities are included in property and equipment and finance lease liabilities, respectively, on the Company’s 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 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.

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

The Company 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, the Company 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.

1 unchanged sentence

Supplemental balance sheet information related to leases was as follows:

September 30,

Operating Leases

1 unchanged sentence

Current portion of operating lease liability

Long-term portion of operating lease liability

Total operating lease liability

September 30,

Weighted Average Remaining Lease Term

3 unchanged sentences

Maturities of lease liabilities were as follows:

2023 (excluding the nine-months ended September 30, 2023)

2026 and thereafter

Year ending December 31,

2024 (excluding the three-months ended March 31, 2024)

Total lease payments

Less imputed interest

Table of Contnts

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The components of lease expense for the three and nine-months ended September 30, 2023 and 2022 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, 2024 and 2023 were as follows:

Three-months ended March 31,

Operating lease costs:

2 unchanged sentences

Total operating lease costs

Finance lease costs:

Total finance lease costs

Supplemental cash flow information for the nine-months ended September 30, 2023 and 2022 related to leases was as follows:

Supplemental cash flow information for the three-months ended March 31, 2024 and 2023 related to leases was as follows:

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

Operating cash flows used in operating leases

Operating cash flows used in finance leases

Financing cash flows used in finance leases

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

Operating leases

Operating cash flows from operating leases

There was no additional right of use assets obtained in exchange for lease obligations for the three-months ended March 31, 2024 and 2023.

REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

2 unchanged sentences

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

At September 30, 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 and nine-months ended September 30, 2023 and 2022.

At March 31, 2024 and December 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, 2024 and 2023.

Redemption Rights

3 unchanged sentences

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

In the event of any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, before any distribution or payment is made to any holders of any shares of common stock, the holders of shares of Series A Redeemable Convertible Preferred Stock shall be entitled to be paid first out of the assets of the Corporation available for distribution to holders of the Company’s capital stock whether such assets are capital, surplus, or earnings, an amount equal to $25.00 per share of Series A Redeemable Convertible Preferred Stock.

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In the event of any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, before any distribution or payment is made to any holders of any shares of common stock, the holders of shares of Series A redeemable convertible preferred stock shall be entitled to be paid first out of the assets of the Company available for distribution to holders of the Company’s capital stock whether such assets are capital, surplus, or earnings, an amount equal to $25.00 per share of Series A redeemable convertible preferred stock.

b) Common stock

No shares of common stock were issued during the three and nine-months ended September 30, 2023 and 2022.

No shares of common stock were issued during the three-months ended March 31, 2024 and 2023.

c) Stock Options and Warrants

1 unchanged sentence

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

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

Three-months ended September 30,

Nine-months ended September 30,

Table of Contnts

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-months ended March 31, 2024 and 2023 was comprised as follows:

Three-months ended March 31,

Sales and marketing

1 unchanged sentence

Common Stock Options and Warrants

There were 25,772,803 fully vested common stock warrants and options outstanding at September 30, 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 and nine-months ended September 30, 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 September 30, 2023:

At September 30, 2023, there was no unrecognized compensation cost related to non-vested options and warrants granted to purchase common stock.

There were 25,772,803 fully vested common stock warrants and options outstanding at March 31, 2024 and December 31, 2023 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, 2024 and 2023.

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, 2024:

$ 0.03 - 0.11

At March 31, 2024, there was no unrecognized compensation cost related to non-vested options and warrants granted to purchase common stock.

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

At March 31, 2024, the aggregate intrinsic value of options and warrants outstanding and exercisable was $ 3,921,022 .

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.

9 unchanged sentences

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

therefore, no compensation expense has been recognized as of September 30, 2023.

therefore, no compensation expense has been recognized as of March 31, 2024.

The probability is re-evaluated each reporting period.

As of September 30, 2023, there was $ 7,185,430 in unrecognized stock-based compensation expense related to these Liquidity Preferred Stock Warrants.

As of March 31, 2024, 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, 2024, there were a total of 413,493 preferred stock warrants outstanding with a weighted average remaining contractual life of 23.8 years.

As of March 31, 2024, 31,250 preferred stock warrants were exercisable.

No preferred stock warrants were granted or exercised for the three-months ended March 31, 2024 and 2023.

Table of Contnts

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2023, there were a total of 413,493 preferred stock warrants outstanding with a weighted average remaining contractual life of 24.3 years.

As of September 30, 2023, 31,250 preferred stock warrants were exercisable.

No preferred stock warrants were granted or exercised for the three and nine-months ended September 30, 2023 and 2022.

Fair Value Measurement of Compensation Preferred Stock Warrants

12 unchanged sentences

The estimated fair value of the preferred stock warrant liability is determined using Level 3 inputs.

As of September 30, 2023 and December 31, 2022, the fair value of the Preferred Stock Warrant Liability was $ 710,000 and $ 629,375 , respectively.

As of March 31, 2024 and December 31, 2023, the fair value of the preferred stock warrant liability was $ 611,563 .

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.

3 unchanged sentences

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, 2023 and December 31, 2022:

The key inputs for the framework were as follows as of March 31, 2024 and December 31, 2023:

Valuation Inputs

September 30, 2023

December 31, 2022

Expected Time to Expiration (years)

2 unchanged sentences

Cash Flow Discount Rate

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 and 2024:

Fair value as of December 31, 2023 and 2022, respectively

Change in fair value

Fair value as of March 31, 2024 and 2024, respectively

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 three-months ended March 31, 2024 and 2023 statements of operations.

Table of Contnts

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, 2023:

Preferred Stock Warrant Liability

Fair value as of December 31, 2022

Change in fair value

Fair value as of June 30, 2023

Change in fair value

Fair value as of September 30, 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.

EARNINGS PER SHARE

EARNINGS (LOSS) PER SHARE

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

4 unchanged sentences

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

The calculations for basic and diluted net income per share for the three and nine-months ended September 30, 2023 and 2022 are as follows:

Three-months ended September 30,

Nine-months ended September 30,

Weighted average common shares used to calculate net income per share - basic

The calculations for basic and diluted net income per share for the three-months ended March 31, 2024 and 2023 are as follows:

Three-months ended March 31,

Net (loss) income

Weighted average common shares used to calculate net income per share

Warrants to purchase redeemable convertible preferred stock

1 unchanged sentence

Stock options and warrants to purchase common stock

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

Net income per share – basic

Net income per share – diluted

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

Net (loss) income per share – basic

Net (loss) income per share – diluted

The number of shares of potentially dilutive common stock related to options and warrants that were excluded from the calculation of dilutive shares since the inclusion of such shares would be anti-dilutive for the three-months ended March 31, 2024 and 2023 are shown below:

Three-months ended March 31,

Warrants to purchase redeemable convertible preferred stock

Redeemable convertible preferred stock

Stock options and warrants to purchase common stock

Total potential common shares excluded

Table of Contnts

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