What changed in this filing

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Item 1. Financial Statements

2024-08-14 compared with 2024-05-13 · 154 added, 93 removed, 300 unchanged (45% of the section changed)

12 unchanged sentences

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

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ DEFICIT

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

12 unchanged sentences

shares issued and outstanding:

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

Stockholders’ deficit:

123,685 at June 30, 2024 and December 31, 2023 (see note 6)

Stockholders’ equity:

Preferred stock, 10,000,000 shares authorized:

Series A redeemable convertible preferred stock, $ 0.001 par value, 550,000 shares designated;

shares issued and outstanding:

123,685 at June 30, 2024 and December 31, 2023 (see note 6)

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

90,477,798 at June 30, 2024 and December 31, 2023

Additional paid-in capital

2 unchanged sentences

( 19,860,842 )

Total stockholders’ deficit

Total liabilities, mezzanine equity and stockholders’ deficit

Total stockholders’ equity (deficit)

Total liabilities, mezzanine equity and stockholders’ equity (deficit)

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 March 31,

Three-months ended June 30,

Six-months ended June 30,

REVENUE (see note 3)

4 unchanged sentences

Software development

OPERATING (LOSS) INCOME

OTHER INCOME (EXPENSES), NET

OPERATING INCOME (LOSS)

OTHER INCOME (EXPENSES)

Foreign exchange gain (loss)

Interest expense

NET (LOSS) INCOME BEFORE INCOME TAXES

NET INCOME (LOSS) BEFORE INCOME TAXES

Income tax expense

NET (LOSS) INCOME

NET INCOME (LOSS)

$ ( 251,173 )

$ ( 279,349 )

EARNINGS (LOSS) PER SHARE (see note 7)

Basic (loss) earnings per share

Diluted (loss) earnings per share

Basic earnings (loss) per share

Diluted earnings (loss) per share

WEIGHTED AVERAGE SHARES OUTSTANDING (see note 7)

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

Table of Contnts

QUOTEMEDIA, INC.

CONDENSED STATEMENTS OF CHANGES IN SERIES A REDEEMABLE CONVERTIBLE

PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

Series A Redeemable

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Series A Redeemable Convertible

Preferred Stock

Number of Shares

Stockholders’

Three-months ended June 30, 2024:

Accumulated Deficit

Total Stockholders’ Equity (Deficit)

Balance, March 31, 2024

$ ( 19,889,018 )

$ ( 888,057 )

Reclassification of preferred stock warrants

Reclassification of series A redeemable convertible preferred stock

Stock-based compensation

Balance, June 30, 2024

$ ( 20,140,191 )

Series A Redeemable Convertible

Preferred Stock

Six-months ended June 30, 2024:

Accumulated Deficit

Total Stockholders’ Equity (Deficit)

Balance, December 31, 2023

1 unchanged sentence

$ ( 859,881 )

Reclassification of preferred stock warrants

Reclassification of series A redeemable convertible preferred stock

Stock-based compensation

Balance, June 30, 2024

$ ( 20,140,191 )

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

QUOTEMEDIA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SERIES A REDEEMABLE CONVERTIBLE

PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

Series A Redeemable Convertible

Preferred Stock

Three-months ended June 30, 2023:

Accumulated Deficit

Total Stockholders’ Deficit

Balance, March 31, 2023

1 unchanged sentence

$ ( 1,115,385 )

Series A Redeemable

Balance, June 30, 2023

$ ( 20,036,100 )

$ ( 1,042,349 )

Series A Redeemable Convertible

Preferred Stock

Total Stockholders’

Number of Shares

Six-months ended June 30, 2023:

Accumulated Deficit

Total Stockholders’ Deficit

Balance, December 31, 2022

1 unchanged sentence

$ ( 1,228,675 )

Balance, March 31, 2023

Balance, June 30, 2023

$ ( 20,036,100 )

1 unchanged sentence

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

Table of Contnts

QUOTEMEDIA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three-months ended March 31,

Six-months ended June 30,

OPERATING ACTIVITIES:

Net (loss) income

$ ( 279,349 )

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

1 unchanged sentence

Allowance for doubtful accounts

Stock-based compensation expense – common stock warrants

Stock-based compensation expense – preferred stock warrants

9 unchanged sentences

Capitalized application software

( 1,682,715 )

( 1,575,346 )

Net cash used in investing activities

( 1,711,370 )

( 1,612,466 )

Net (decrease) increase in cash

2 unchanged sentences

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 March 31, 2024 through the filing of this report.

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

19 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 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 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 June 30, 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 $ 350,000 and $ 225,000 as of June 30, 2024 and December 31, 2023, respectively.

Bad debt expenses were $127,650 and $ 25,852 for the three-months ended June 30, 2024 and 2023, respectively.

Bad debt expenses (recovery) were $ 140,979 and ($ 38,241 ) for the six-months ended June 30, 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.

28 unchanged sentences

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.

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Cost of revenue

1 unchanged sentence

f) Accounting Pronouncements

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”).

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

Generally Accepted Accounting Principles (“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 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

17 unchanged sentences

Revenue by type of service consists of the following:

Three-months ended March 31,

Three-months ended June 30,

Six-months ended June 30,

Portfolio Management Systems

3 unchanged sentences

Total revenue

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Deferred Revenue

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

Changes in deferred revenue were as follows for the periods ending June 30,

Beginning balance at Jan 1,

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

( 1,105,335 )

New deferrals, net of amounts recognized in the current period

6 unchanged sentences

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.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

RELATED PARTIES

3 unchanged sentences

There were no amounts due to 410734 B.C.

at March 31, 2024 and December 31, 2023.

at June 30, 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.

At June 30, 2024 and December 31, 2023, there was $ 15,000 and $ 12,500 due to Bravenet related to this agreement, respectively.

Shworan is a control person of Bravenet.

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.

At June 30, 2024 and December 31, 2023, there were $ 185,498 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.

10 unchanged sentences

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

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental balance sheet information related to leases was as follows:

10 unchanged sentences

Year ending December 31,

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

2024 (excluding the six-months ended June 30, 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-months ended March 31, 2024 and 2023 were as follows:

Three-months ended March 31,

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

Three-months ended June 30,

Six-months ended June 30,

Operating lease costs:

2 unchanged sentences

Total operating lease costs

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

Supplemental cash flow information for the six-months ended June 30, 2024 and 2023 related to leases was as follows:

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

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.

There was no additional right of use assets obtained in exchange for lease obligations for the six-months ended June 30, 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 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.

At June 30, 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 and six-months ended June 30, 2024 and 2023.

Redemption Rights

1 unchanged sentence

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

In addition, 1,000 Series A Redeemable Convertible Preferred Stock may be redeemed at the holder’s option at the liquidation value of $ 25 per share if the cash balance of the Company as reported at the end of each fiscal quarter exceeds $ 400,000 .

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 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.

Reclassification of Redeemable Convertible Preferred Stock resulting from Amendment to Redemption Rights

Prior to April 26, 2024, 1,000 Series A redeemable convertible preferred stock could be redeemed at the holder’s option at the liquidation value of $ 25 per share if the cash balance of the Company as reported at the end of each fiscal quarter exceeds $ 400,000 .

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

On April 26, 2024, the Certificate of Designation of the Series A Redeemable Convertible Preferred Stock was amended removing the above redemption right, at no cost to the Company, resulting in a change in the classification of Series A redeemable preferred stock from mezzanine equity to permanent equity.

In addition, the amendment resulted in a change to the classification of warrants to purchase shares of Series A redeemable convertible preferred stock (“preferred stock warrants”) from preferred stock warrant liability to additional paid-in capital.

There was no impact on the consolidated statement of operations resulting from the amendment.

b) Common stock

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

No shares of common stock were issued during the three and six-months ended June 30, 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.

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,

Total stock-based compensation expense, related to all of the Company’s stock-based awards, recognized for the three and six-months ended June 30, 2024 and 2023 was comprised as follows:

Three-months ended June 30,

Six-months ended June 30,

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 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:

The following table summarizes the Company’s common stock option and warrant activity for the six-months ended June 30, 2024:

Common Stock Options

Weighted-Average Grant Date Exercise Price

Outstanding at December 31, 2023

Granted during the period

Forfeited during the period

Outstanding at June 30, 2024

The following table summarizes the weighted average remaining contractual life and exercise price of common stock options and warrants outstanding and exercisable at June 30, 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.

At June 30, 2024, there was no unrecognized compensation cost related to non-vested options and warrants granted to purchase common stock.

Management calculates the fair value of stock options and warrants granted to purchase common stock under the provisions of FASB ASC 718 using the Black-Scholes valuation model with the following assumptions:

Three-months ended June 30,

Six-months ended June 30,

Expected dividend yield

Expected stock price volatility

Risk-free interest rate

Expected life of options (years)

Weighted average fair value of options and warrants granted

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

At June 30, 2024, the aggregate intrinsic value of options and warrants outstanding and exercisable was $ 3,147,838 .

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.

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Preferred Stock Warrants

8 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 March 31, 2024.

therefore, no compensation expense has been recognized as of June 30, 2024.

The probability is re-evaluated each reporting period.

As of March 31, 2024, there was $ 7,185,430 in unrecognized stock-based compensation expense related to these liquidity preferred stock warrants.

As of June 30, 2024, there was $ 7,480,496 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 June 30, 2024, there were a total of 413,493 preferred stock warrants outstanding with a weighted average remaining contractual life of 23.5 years.

As of June 30, 2024, 31,250 preferred stock warrants were exercisable.

No preferred stock warrants were granted or exercised for the six-months ended June 30, 2024 and 2023.

Reclassification of Preferred Stock Warrant Liability resulting from Amendment to Redemption Rights

As discussed in note 6 a), the amendment to the redemption rights for the Series A redeemable convertible preferred stock resulted in a change to the classification of preferred stock warrants on April 26, 2024.

The preferred stock warrant liability of $ 611,563 was reclassified to additional paid-in capital.

There was no impact on the consolidated statement of operations resulting from the amendment.

Fair Value Measurement of Compensation Preferred Stock Warrants

11 unchanged sentences

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 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 March 31, 2024 and December 31, 2023:

The key inputs for the framework were as follows:

Valuation Inputs

3 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:

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 six-months ended June 30, 2024 and 2023:

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

1 unchanged sentence

Fair value as of March 31, 2024 and 2023, 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

Change in fair value

Reclassification of preferred stock warrants on April 26, 2024

Fair value as of June 30, 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 and six-months ended June 30, 2024 and 2023 statements of operations.

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.

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

Common stock equivalents include redeemable convertible preferred stock, stock options and warrants.

3 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-months ended March 31, 2024 and 2023 are as follows:

Three-months ended March 31,

Net (loss) income

The calculations for basic and diluted net income per share for the three and six-months ended June 30, 2024 and 2023 are as follows:

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three-months ended June 30,

Six-months ended June 30,

Net income (loss)

$ ( 251,173 )

$ ( 279,349 )

Weighted average common shares used to calculate net income per share

3 unchanged sentences

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,

Net income (loss) per share – basic

Net income (loss) 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 and six-months ended June 30, 2024 and 2023 are shown below:

Three-months ended June 30,

Six-months ended June 30,

Warrants to purchase redeemable convertible preferred stock

2 unchanged sentences

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