What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-14 compared with 2024-05-13 · 55 added, 43 removed, 120 unchanged (45% of the section changed)

32 unchanged sentences

Quotestream Mobile is a true companion product to the Quotestream desktop products (Quotestream and Quotestream Professional) – any changes made to portfolios in either the desktop or mobile application are automatically reflected in the other.

Table of Contnts

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

7 unchanged sentences

While we do not have any operations or customers in Ukraine or Russia, we will continue to monitor the situation as a prolonged conflict could impact our business.

Approximately 40% of our revenue and 41% of our expenses are denominated in Canadian dollars.

Approximately 39% of our revenue and expenses are denominated in Canadian dollars.

The Canadian dollar remained relatively unchanged against the U.S.

dollar when comparing the average exchange rate for the three-months ended March 31,2024 versus the comparative 2023 period.

dollar when comparing the average exchange rate for the six-months ended June 30, 2024 versus the comparative 2023 period.

Because our Canadian dollar revenue and expenses are evenly matched, exchange rate fluctuations have minimal impact on our net income and cash flows.

Our revenue decreased 1% for the three-months ended March 31, 2024 versus the comparative 2023 period.

Based on revenue already under contract, we expect positive revenue growth and net income for fiscal 2024.

Our revenue decreased 1% for the six-months ended June 30, 2024 versus the comparative 2023 period.

Based on revenue already under contract, we expect revenue growth to improve for the remainder of fiscal 2024.

Plan of Operation

16 unchanged sentences

There can be no assurance that we will be able to successfully implement our marketing strategy, continue our revenue growth, or maintain profitable operations.

Table of Contnts

Critical Accounting Policies and Estimates

4 unchanged sentences

Results of Operations

Three-months ended March 31,

Three-months ended June 30,

Corporate Quotestream

3 unchanged sentences

Total subscription revenue

Total licensing revenue decreased 1% when comparing the three-months ended March 31, 2024 and 2023.

Total Portfolio Management Systems revenue decreased 3%.

Corporate Quotestream revenue decreased 2% for the three-months ended March 31, 2024 from the comparative period in 2023 due to a decrease in the number of customers, offset by an increase in average revenue per customer since the comparative period.

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

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

Individual Quotestream revenue decreased 4% for the three-months ended March 31, 2024 from the comparative period in 2023 due to a decrease in total subscribers, offset by an increase in average revenue per subscriber.

Interactive Content and Data APIs revenue was relatively unchanged for the three-months ended March 31, 2024 from the comparative period in 2023.

The decrease in the number of customers was offset by an increase in average revenue per customer since the comparative period.

Six-months ended June 30,

Corporate Quotestream

Individual Quotestream

Total Portfolio Management Systems

Interactive Content and Data APIs

Total subscription revenue

Total licensing revenue decreased 1% when comparing the three and six-months ended June 30, 2024 and 2023.

Total Portfolio Management Systems revenue decreased 4% for the three and six-months ended June 30, 2024 and 2023.

Corporate Quotestream revenue decreased 5% and 4% for the three and six-months ended June 30, 2024 from the comparative periods in 2023 due to decreases in average revenue per customer since the comparative periods.

This decrease in average revenue per customer was due mainly to a decrease in usage for one of our larger Corporate Quotestream customers since the comparative periods in 2023.

Individual Quotestream revenue decreased 2% and 3% for the three and six-months ended June 30, 2024 from the comparative periods in 2023 due to decreases in total subscribers, offset by increases in average revenue per subscriber.

Interactive Content and Data APIs revenue increased 3% and 1% for the three and six-months ended June 30, 2024 from the comparative periods in 2023.

Increases in average revenue per customer were offset by decreases in the number of customers since the comparative periods.

The launch of new products and the expansion of our data coverage have allowed us to attract larger clients, increasing our average revenue per customer.

Cost of Revenue and Gross Profit Summary

Three-months ended March 31,

Three-months ended June 30,

Cost of revenue

Gross margin %

Six-months ended June 30,

Cost of revenue

Gross margin %

Our cost of revenue consists of fixed and variable stock exchange fees and data feed provisioning costs.

1 unchanged sentence

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

Our cost of revenue increased 1% for the three-months ended March 31, 2024 from the comparative period in 2023.

Our cost of revenue increased 5% and 3% for the three and six-months ended June 30, 2024 from the comparative periods in 2023.

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

Overall, the cost of revenue increased as a percentage of sales, as evidenced by our gross margin percentage that decreased slightly to 50% for the three-months ended March 31, 2024 from 51% in the comparative 2023 period.

Table of Contnts

Overall, the cost of revenue increased as a percentage of sales, as evidenced by our gross margin percentage that decreased to 48% and 49% for the three and six-months ended June 30, 2024 from 51% in the comparative 2023 periods.

Operating Expenses Summary

Three-months ended March 31,

Three-months ended June 30,

Sales and marketing

2 unchanged sentences

Total operating expenses

Six-months ended June 30,

Sales and marketing

General and administrative

Software development

Total operating expenses

Sales and Marketing

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

Sales and marketing expenses decreased 6% for the three-months ended March 31, 2024 when compared to the same period in 2023.

The decrease is due to $78,125 in stock-based compensation expense incurred in the comparative 2023 period related to the fair value adjustment to our preferred stock warrant liability.

This was offset by additional sales personnel hired since the comparative period to support our product growth initiatives and salary increases for existing personnel.

Sales and marketing expenses were relatively flat when comparing periods, increasing 3% and decreasing 1% for the three and six-months ended June 30, 2024 when compared to the same periods in 2023.

Personnel costs increased for the three and six-months ended June 30, 2024 due to additional sales personnel hired since the comparative periods to support our product growth initiatives and salary increases for existing personnel.

The increases in personnel costs were offset by decreases in stock-based compensation expenses as $78,125 and $59,688 in stock-based compensation expenses were incurred in March and June 2023, respectively, related to the fair value adjustment to our preferred stock warrant liability.

General and Administrative

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

General and administrative expenses decreased 5% for the three-months ended March 31, 2024, when compared to the same period in 2023.

The decrease is mainly a result of additional professional fees incurred in the comparative 2023 period resulting from the change of principal accountants in January 2023.

General and administrative expenses increased 12% and 3% for the three and six-months ended June 30, 2024, when compared to the same periods in 2023.

The increases are due to increases in bad debt expenses, offset by decreases in professional fees as we incurred additional professional fees in the comparative 2023 periods resulting from the change of principal accountants in January 2023.

Software Development

1 unchanged sentence

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

Software development expenses increased 27% for the three-months ended March 31, 2024 when compared to the same period in 2023, primarily due to new personnel hired since the comparative period to improve our infrastructure, security, and business continuity management.

The increase in software development expenses was also due to a decrease in the percentage of total development costs capitalized during the three-month period ending March 31, 2024, when compared to the same period in 2023.

We capitalized $815,315 of development costs for the three-month period ended March 31, 2024 compared to $766,515 in the same period in 2023.

Software development expenses increased 15% and 21% for the three and six-months ended June 30, 2024 when compared to the same periods in 2023, primarily due to new personnel hired since the comparative periods to improve our infrastructure, security, and business continuity management.

The increase in software development expenses was also due to a decrease in the percentage of total development costs capitalized during the three and six-month periods ending June 30, 2024, when compared to the same periods in 2023.

We capitalized $867,400 and $1,682,715 of development costs for the three and six-month periods ended June 30, 2024 compared to $808,832 and $1,575,346 in the same periods in 2023.

These costs relate to the development of application software used by subscribers to access, manage, and analyze information in our databases.

1 unchanged sentence

Other Income and (Expense) Summary

Three-months ended March 31,

Three-months ended June 30,

Foreign exchange gain (loss)

1 unchanged sentence

Total other income (expense), net

Six-months ended June 30,

Foreign exchange gain (loss)

Interest expense, net

Total other income (expenses), net

Foreign Exchange Gain

We incurred a foreign exchange gain of $25,307 for the three-month period ended March 31, 2024, compared to a foreign exchange loss of $8,001 in the comparative 2023 period.

We incurred foreign exchange gains of $10,415 and $35,722 for the three and six-months periods ended June 30, 2024, compared to foreign exchange losses of $30,073 and $38,074 in the comparative 2023 periods.

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

2 unchanged sentences

Interest expense is netted against interest earned on cash balances.

Net interest expense of $953 was incurred for the three-month period ended March 31, 2024, compared to $1,452 incurred in the same 2023 period.

Table of Contnts

Net interest expenses of $953 and $1,372 were incurred for the three and six-months periods ended June 30, 2024, compared to $1,452 and $1,856 incurred in the same 2023 periods.

Provision for Income Taxes

For the three-month period ended March 31, 2024, the Company recorded $738 in Canadian income tax expense compared to $730 in the comparative period in 2023.

For the three and six-months periods ended June 30, 2024, the Company recorded $730 and $1,468 in Canadian income tax expenses compared to $752 and $1,482 in the comparative periods in 2023.

Net Income (Loss) for the Period

As a result of the foregoing, our net loss for the three-month period ended March 31, 2024 was $28,176 compared to a net income of $113,290 in the comparative period in 2023.

The basic and diluted loss share was $(0.00) for the three-month period ended March 31, 2024, compared to the basic and diluted earnings per share of $0.00 for the three-month period ended March 31, 2023.

As a result of the foregoing, our net losses for the three and six-months periods ended June 30, 2024 were $251,173 and $279,349 compared to net income of $71,036 and $186,326 in the comparative periods in 2023.

The basic and diluted loss per share was $(0.00) for the three and six-months periods ended June 30, 2024, compared to the basic and diluted earnings per share of $0.00 for the three and six-months periods ended June 30, 2023.

Liquidity and Capital Resources

Our cash totaled $244,277 at March 31, 2024, as compared with $342,014 at December 31, 2023, a decrease of $97,737.

Net cash of $727,667 was provided by operations for the three-months ended March 31, 2024, primarily due to adjustments for non-cash charges and the increase in accounts payable and accrued liabilities, offset by an increase in accounts receivable.

Net cash used in investing activities for the three-months ended March 31, 2024 was $825,404, due to capitalized application software costs and purchases of computer equipment.

Our cash totaled $232,735 at June 30, 2024, as compared with $342,014 at December 31, 2023, a decrease of $109,279.

Net cash of $1,602,091 was provided by operations for the six-months ended June 30, 2024, primarily due to adjustments for non-cash charges and the increase in accounts payable and accrued liabilities, offset by an increase in accounts receivable.

Net cash used in investing activities for the six-months ended June 30, 2024 was $1,711,370, due to capitalized application software costs and purchases of computer equipment.

We typically operate with a working capital deficit.

As of March 31, 2024, our working capital deficit was $2,365,763, however current liabilities include $1,505,807 in deferred revenue.

As of June 30, 2024, our working capital deficit was $2,768,316, however current liabilities include $1,865,332 in deferred revenue.

The expected costs necessary to realize the deferred revenue are minimal.

If circumstances dictate, we have the flexibility to reduce development spending to maintain a strong liquidity position.

Based on the factors discussed above, we believe that our cash on hand and cash generated from operations will be sufficient to fund our current operations for at least the next 12 months through April 2025.

However, implementing our business plan may require additional financing.

6 unchanged sentences

Foreign Exchange Risk

Currently, approximately 40% of our consolidated revenue and 41% percent of our consolidated expenses are denominated in Canadian dollars.

Currently, approximately 39% of our consolidated revenue and expenses are denominated in Canadian dollars.

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

Off-Balance Sheet Arrangements

At March 31, 2024 and December 31, 2023, we did not have any unconsolidated entities or financial partnerships, or other off-balance sheet arrangements.

Table of Contnts

At June 30, 2024 and December 31, 2023, we did not have any unconsolidated entities or financial partnerships, or other off-balance sheet arrangements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis