QUOTEMEDIA INC 10-K

ITEM 9A. CONTROLS AND PROCEDURES. Disclosure Controls and Procedures We have evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of December 31, 2024. Based on this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures are effective to ensure that we record, process, summarize, and report information required to be disclosed by us in our periodic reports filed under the Exchange Act within the time periods specified by the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. 20 Table of Contents Management’s Report on Internal Control over Financial Reporting The management of QuoteMedia, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed by, or under the supervision of our CEO and CFO, and affected by our Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management, with the participation and supervision of our Chairman of the Board and Chairman of the Audit Committee, Chief Executive Officer and Chief Financial Officer, have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) to the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2024, and concluded that our disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, our management identified the following material weaknesses in our internal control over financial reporting, as described below. Notwithstanding the material weaknesses described below our management has concluded that our consolidated financial statements for the periods covered by and included in this Quarterly Report are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and fairly present, in all material respects, our financial position, results of operations and cash flows for each of the periods presented herein. The following material weaknesses were identified during the preparation and review of the current period financial statements: · There is a lack of segregation of duties in financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. The management’s report was not subject to attestation by our registered public accounting firm pursuant to Sarbanes-Oxley Rule 404 (c). 21 Table of Contents Changes in Internal Control over Financial Reporting During the last quarter of the fiscal year covered by this report, there have not been any changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. After the date of their evaluation, there have not been any significant changes in our internal controls or in other factors that could significantly affect these controls, including any corrective action regarding significant deficiencies and material weaknesses. ITEM 9B. OTHER INFORMATION. Not applicable. ITEM 9C. DISCLOSURE REGARDING FORIEGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not applicable. 22 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE. The following table sets forth certain information regarding our directors and executive officers. Name Age Position Robert J. Thompson 82 Chairman of the Board Keith J. Randall 58 Chief Executive Officer and Chief Financial Officer, and Director David M. Shworan 57 President and Chief Executive Officer of QuoteMedia, Ltd., and Director Our listed directors will serve until the next annual meeting of stockholders or until their death, resignation, retirement, removal, disqualification, or until their successors have been duly elected and qualified. Vacancies in our existing Board of Directors are filled by majority vote of the remaining directors. Our officers serve at the will of our Board of Directors. There is no family relationship between any executive officer and director. Robert J. Thompson has served as our Chairman of the Board since February 2000. Mr. Thompson is also a director of several privately-owned corporations. Formerly, Mr. Thompson was Chairman of the Board of C.M. Oliver Inc., a Canadian regulated, publicly traded investment broker/dealer involved in investment banking activities throughout North America and in Europe. For almost 30 years prior, Mr. Thompson practiced as a Chartered Professional Accountant and Certified Management Consultant. He was a Partner of KPMG LLP (formerly Peat Marwick Mitchell & Co.), Woods Gordon/Clarkson Gordon (Arthur Young & Co.) and Ernst & Whinney. He withdrew from public practice after serving as the National Partner in Charge of the Senior Management Services Division of KPMG. Keith J. Randall has served as our Vice President, Treasurer, and Chief Financial Officer since September 1999 and Secretary since July 2000. Mr. Randall served as Vice President and Chief Financial Officer of Datawest Solutions, Inc. (formerly C.M. Oliver, Inc.) from August 1999 until March 2000. From August 1998 until August 1999, Mr. Randall served as Controller of C.M. Oliver & Company Ltd., a publicly held Canadian corporation offering brokerage/financial planning and investment banking services. Mr. Randall is a licensed Chartered Professional Accountant in Canada and a Certified Public Accountant in the United States. He received a Bachelor of Commerce degree with Honors from Queen's University in May 1991. Effective March 31, 2018, the Board appointed Mr. Randall as President, Chief Executive Officer, and Director. Mr. Randall retained his role as Treasurer and Chief Financial Officer. David M. Shworan has served as President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary of our company since December 2004. Mr. Shworan has served as a director of our company since November 2002. Mr. Shworan served as our President and Chief Executive Officer from November 2002 to December 2004. Mr. Shworan is a veteran of online marketing, technology, and business. Mr. Shworan is the founder of several technology companies and has been a consultant to a number of technology companies. 23 Table of Contents Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors, officers, and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. Directors, officers, and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely upon our review of the copies of such forms that we received during the fiscal year ended December 31, 2024, and written representations that no other reports were required, we believe that each person who at any time during the fiscal year was a director, officer, or beneficial owner of more than 10% of our common stock complied with all Section 16(a) filing requirements during such fiscal year. Code of Ethics Our Board of Directors has adopted Corporate Governance Guidelines; a Code of Business Conduct/Ethics, Code of Ethics for the CEO and Senior Financial Officers, and any amendments or waivers thereto; an Audit Committee Charter; and any other corporate governance materials contemplated by SEC or applicable regulations. We post these corporate governance materials on our Web site at www.quotemedia.com/qmci/investors.php. These documents are also available in print to any stockholder by contacting our corporate secretary at our executive offices. Information Relating to Our Audit Committee of the Board of Directors The purpose of the Audit Committee is to assist our Board of Directors in the oversight of the integrity of the consolidated financial statements of our company, our company’s compliance with legal and regulatory matters, the independent auditor’s qualifications and independence, and the performance of our company’s independent auditors. The primary responsibilities of the Audit Committee are set forth in its charter and include various matters with respect to the oversight of our company’s accounting and financial reporting process and audits of the consolidated financial statements of our company on behalf of our Board of Directors. The Audit Committee also selects the independent certified public accountants to conduct the annual audit of the consolidated financial statements of our company; reviews the proposed scope of such audit; reviews accounting and financial controls of our company with the independent public accountants and our financial accounting staff; and reviews and approves transactions between us and our directors, officers, and their affiliates. The Audit Committee currently consists solely of Robert J. Thompson. The Board of Directors has determined that Mr. Thompson qualifies as an “audit committee financial expert” in accordance with the applicable rules and regulations of the SEC. ITEM 11. EXECUTIVE COMPENSATION. Summary of Cash and Other Compensation The following table sets forth certain information concerning the compensation for the fiscal years ended December 31, 2024, and 2023 earned by our Chief Executive Officers and one other executive officer (collectively, the “Named Executive Officers”). None of our other executive officers’ cash salary and bonus exceeded $100,000 during fiscal 2024. 24 Table of Contents Summary Compensation Table Name and Principal Position Year Salary ($) Bonus ($) Option Awards ($) (1),(4),(5) All Other Compensation ($) (2) Total ($) Keith J. Randall (3) 2024 $ 230,000 - - - $ 230,000 Chief Executive Officer & 2023 $ 210,000 - - - $ 210,000 CFO, QuoteMedia, Inc. David M. Shworan (4) 2024 $ 450,000 - - - $ 450,000 Chief Executive Officer, 2023 $ 400,000 - - - $ 400,000 QuoteMedia, Ltd. (1) Options Awards represent the fair value of option awards granted, repriced, or otherwise modified, computed in accordance with FASB ASC 718, Stock Compensation. (2) The executive officers listed also received certain perquisites, the aggregate value of which did not exceed $10,000 for any year presented. (3) Mr. Randall is our Chief Financial Officer, and effective March 31, 2018, was also appointed Chief Executive Officer, and Director. Mr. Randall has retained his role as Chief Financial Officer and will serve as both “Principal Executive Officer” and “Principal Financial and Accounting Officer.” (4) Mr. Shworan is President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary of QuoteMedia, Inc. Outstanding Equity Awards at Fiscal Year End Number of Securities Underlying Unexercised Common Stock Options/Warrants Name Exercisable Unexercisable Option/Warrant Exercise Price ($) Option/Warrant Exercise Date David M. Shworan 200,000 - $ 0.036 15-May-2025 2,000,000 - $ 0.036 15-May-2025 3,000,000 - $ 0.036 15-May-2025 2,400,000 - $ 0.036 15-May-2025 4,000,000 - $ 0.100 28-Dec-2037 Keith J. Randall 100,000 - $ 0.036 15-May-2025 50,000 - $ 0.036 15-May-2025 50,000 - $ 0.036 15-May-2025 100,000 - $ 0.035 26-Oct-2027 Number of Securities Underlying Unexercised Preferred Stock Warrants Name Exercisable Unexercisable Option/Warrant Exercise Price ($) Option/Warrant Exercise Date David M. Shworan 1,250 - $ 1.00 28-Dec-2047 15,000 - $ 1.00 01-Jan-2048 15,000 - $ 1.00 01-Jan-2049 - 382,243 $ 1.00 28-Dec-2037 25 Table of Contents Employment Agreements David M. Shworan has served as President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary of QuoteMedia, Inc., since December 30, 2004. On December 28, 2017, the Company entered into a Compensation Agreement with Mr. Shworan pursuant to which, among other things, the Company will issue to Mr. Shworan the following: (a) warrants to purchase up to 1,250 shares of Series A Redeemable Convertible Preferred Stock at an exercise price equal to $1.00 per share (the “Preferred Stock Warrant”) (b) warrants to purchase up to 382,243 shares of Series A Redeemable Convertible Preferred Stock at an exercise price equal to $1.00 per share (the “Liquidity Preferred Stock Warrant”) (c) warrants to purchase up to 4,000,000 shares of common stock at an exercise price equal to $0.10 per share (which warrant has specific performance vesting thresholds) (the “Common Stock Warrant”) (d) provided that Mr. Shworan is employed by or otherwise providing services to the Company or its subsidiaries on each of January 1, 2018, and 2019, the Company will at that time issue to Mr. Shworan warrants to purchase up to 15,000 shares of Series A Preferred Stock at an exercise price equal to $1.00 per share in lieu of paying Mr. Shworan a cash salary. (e) provided that Mr. Shworan is employed by or otherwise providing services to the Company or its subsidiaries on January 1, 2020, the Company shall pay Mr. Shworan a base salary at the annual rate of $350,000 during the term of his employment or service with the Company and its subsidiaries. Other than for certain provisions in Mr. Shworan’s Compensation Agreement noted above, we have no compensatory plan or arrangement with respect to any executive officer where such plan or arrangement will result in payments to such officer upon or following his resignation, retirement, or other termination of employment with us and our subsidiaries, or as a result of a change in control of our company or a change in the executive officers’ responsibilities following a change in control. Director Compensation and Other Information The following table shows the amount of compensation earned by our independent director in 2024. We compensate our independent director with directors’ fees and stock options. Options Awards represent the fair value of option awards granted in 2024, computed in accordance with FASB ASC 718, Stock Compensation . Name Fees Earned or Paid in Cash ($) Option Awards ($) All Other Compensation ($) Total ($) Robert J. Thompson $ 150,000 - - $ 150,000 The Chairman of the Board, Robert J. Thompson, currently receives a monthly retainer of $12,500. Directors who are also employees do not receive additional cash compensation for service on our Board of Directors. All directors receive a grant of 200,000 options to purchase shares of common stock upon joining our Board of Directors, which are vested on the date of the grant. From time to time, we grant our directors options or warrants to purchase additional shares of common stock. 26 Table of Contents ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The following table sets forth certain information regarding the shares of our outstanding common stock beneficially owned as of March 19, 2025, by (i) each of our directors and executive officers, (ii) all directors and executive officers as a group, and (iii) each other person who is known by us to beneficially own or to exercise voting or dispositive control over more than 5% of our common stock. Name of Beneficial Owner (1) Number of Shares of Common Stock Owned (2) Percentage of Common Stock Beneficially Owned (2) Directors and Executive Officers David M. Shworan (3) 44,151,800 41.6 % Robert J. Thompson (4) 1,610,286 1.8 % Keith J. Randall (5) 793,976 0.9 % All directors and executive officers as a group 46,556,062 43.4 % 5% Stockholders (6) 8,956,735 9.9 % (1) Each person named in the table has sole voting and investment power with respect to all common stock beneficially owned by him or her, subject to applicable community property law, except as otherwise indicated. Except as otherwise indicated, each person may be reached through us at 17100 E. Shea Blvd., Suite 230, Fountain Hills, Arizona 85268. (2) The percentages shown are calculated based upon 90,477,798 shares of common stock outstanding on March 19, 2025. The numbers and percentages shown include the shares of common stock actually owned as of March 19, 2025, and the shares of common stock that the identified person or group had the right to acquire within 60 days of such date. In calculating the percentage of ownership, all shares of common stock that the identified person or group had the right to acquire within 60 days of March 19, 2025 upon the exercise of options are deemed to be outstanding for the purpose of computing the percentage of the shares of common stock owned by such person or group but are not deemed to be outstanding for the purpose of computing the percentage of the shares of common stock owned by any other person. (3) Represents the following: · 11,511,800 shares of common stock owned by Mr. Shworan and vested options and warrants to directly acquire 11,600,000 shares of common stock. · 17,002,500 shares owned by Mr. Shworan's wife. · 37,500 shares of common stock owned by Bravenet Web Services, Inc. and vested options and warrants to acquire 1,480,000 shares of common stock. Mr. Shworan is the control person of Bravenet Web Services, Inc. and Mr. Shworan disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein. · Vested options and warrants to acquire 2,520,000 shares of common stock owned by Harrison Avenue Holdings Ltd. Mr. Shworan is the control person of Harrison Avenue Holdings Ltd. and Mr. Shworan disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein. · See also Item 11, “Executive Compensation – Employment Agreements.” (4) Represents 807,483 shares of common stock and vested options and warrants to acquire 802,803 shares of common stock. (5) Represents 493,976 shares of common stock and vested options and warrants to acquire 300,000 shares of common stock. (6) Represents 8,956,735 shares of our common stock owned by Harland Group LLC. 27 Table of Contents Equity Compensation Plan Information The following table sets forth information with respect to our common stock that may be issued upon the exercise of outstanding options, warrants, and rights to purchase shares of our common stock as of December 31, 2024. Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Plan Category (a) (b) (c) Equity Compensation Plans approved by stockholders 4,720,000 $ 0.04 7,929,628 Equity Compensation Plans not approved by stockholders 21,052,803 $ 0.03 N/A Total 25,772,803 7,329,628 1999 Stock Option Plan During March 1999, we adopted, and our stockholders approved, the 1999 Stock Option Plan to advance the interests of our company by encouraging and enabling key employees to acquire a financial interest in our company and link their interests and efforts to the long-term interests of our stockholders. A total of 400,000 shares of common stock were initially reserved for issuance under the 1999 plan. In September 1999, this number was increased to 2,500,000. As of December 31, 2024, 1,144,817 shares of our common stock had been issued upon exercise of options granted under the 1999 plan, and there were outstanding options to acquire 1,355,183 shares of our common stock under the 1999 plan. The 1999 plan is administered by our Board of Directors, or a committee appointed by our board. Our board or the committee has the authority to grant options, determine the purchase price of shares of our common stock covered by each option, determine the persons who are eligible under the 1999 plan, interpret the 1999 plan, determine the terms and provisions of an option agreement, and make all other determinations deemed necessary for the administration of the 1999 plan. Options may be granted to any director, officer, key employee, or any advisory board member of our company. Incentive stock options may not be granted to a director, consultant, or advisory board member that is not an employee of our company. The price of any incentive stock options may not be less than 100% of the fair market value of our common stock on the date of grant. The price of any incentive stock options granted to a person who owns more than 10% of our common stock may not be less than 110% of the fair market value of our common stock on the date of grant. The option price for non-incentive stock options may not be less than 50% of the fair market value of our common stock on the date of grant. Options may be granted for terms of up to, but not exceeding, ten years from the date of grant; however, in the case of an incentive stock option granted to an individual who beneficially owns 10% more of the stock of our company, the exercise period shall not exceed five years from the date of grant. Our Board of Directors may accelerate the exercisability of any outstanding options at any time for any reason. 28 Table of Contents In the event of any change in the number of shares of our common stock, the number of shares of common stock covered by outstanding options and the price per share of such options will be adjusted accordingly to reflect any such changes. Similar changes will also be made if our company engages in any merger, consolidation, or reclassification in which it is the surviving entity. In the event that we are not the surviving entity, each option shall terminate provided that each holder will have the right to exercise during a ten-day period ending on the fifth day prior to such corporate transaction. In the event of a change of control, our board or the committee may terminate each option, provided that each holder receives the amount of cash equal to the difference between the exercise price of each option and the fair market value of each share of stock subject to such option. Our board may suspend, terminate, modify, or amend the 1999 plan provided that, in certain instances, the holders of much of our common stock issued and outstanding approve the amendment. 2003 Equity Incentive Compensation Plan Our Board of Directors has approved our 2003 Equity Incentive Compensation Plan, or the 2003 plan, approved by our stockholders at the annual meeting held on February 14, 2003. The purpose of the 2003 plan is to assist our company in attracting, motivating, retaining, and rewarding high-quality executives and other employees, directors, officers, and independent contractors by enabling such persons to acquire or increase a proprietary interest in our company in order to strengthen the mutuality of interests between such persons and our stockholders, and providing such persons with annual and long-term performance incentives to expend their maximum efforts in the creation of stockholder value. At December 31, 2024, there are 15,000,000 shares of common stock authorized for issuance pursuant to the 2003 plan. As of December 31, 2024, 2,350,372 shares of common stock had been issued upon exercise of options granted under the 2003 plan, and there were 4,720,000 options outstanding under the 2003 plan. Eligibility and Administration The persons eligible to receive awards under the 2003 plan are the officers, directors, employees, and independent contractors of our company. The 2003 plan is to be administered by a committee designated by our Board of Directors consisting of not less than two directors, each member of which must be a "nonemployee director" as defined under Rule 16b-3 under the Exchange Act and an "outside director" for purposes of Section 162(m) of the Code. However, except as otherwise required to comply with Rule 16b-3 of the Exchange Act, or Section 162(m) of the Code, our Board of Directors may exercise any power or authority granted to the committee. Subject to the terms of the 2003 plan, the committee or our Board of Directors is authorized to select eligible persons to receive awards, determine the type and number of awards to be granted and the number of shares of common stock to which awards will relate, specify times at which awards will be exercisable or settleable (including performance conditions that may be required as a condition thereof), set other terms and conditions of awards, prescribe forms of award agreements, interpret and specify rules and regulations relating to the 2003 plan, and make all other determinations that may be necessary or advisable for the administration of the 2003 plan. Stock Options and SARs The committee or our Board of Directors is authorized to grant stock options, including both incentive stock options, or ISOs, which can result in potentially favorable tax treatment to the participant, and nonqualified stock options, and SARs entitling the participant to receive the amount by which the fair market value of a share of common stock on the date of exercise (or defined "change in control price" following a change in control) exceeds the grant price of the SAR. The exercise price per share subject to an option and the grant price of a SAR are determined by the committee, but in the case of an ISO must not be less than the fair market value of a share of common stock on the date of grant. For purposes of the 2003 plan, the term "fair market value" means the fair market value of common stock, awards, or other property as determined by the committee or our Board of Directors or under procedures established by the committee or our Board of Directors. Unless otherwise determined by the committee or our Board of Directors, the fair market value of common stock as of any given date shall be the closing sales price per share of common stock as reported on the principal stock exchange or market on which common stock is traded on the date as of which such value is being determined or, if there is no sale on that date, then on the last previous day on which a sale was reported. The maximum term of each option or SAR, the times at which each option or SAR will be exercisable, and provisions requiring forfeiture of unexercised options or SARs at or following termination of employment generally are fixed by the committee or our Board of Directors, except that no option or SAR may have a term exceeding ten years. Options may be exercised by payment of the exercise price in cash, shares that have been held for at least six months, outstanding awards, or other property having a fair market value equal to the exercise price, as the committee or our Board of Directors may determine from time to time. Methods of exercise and settlement and other terms of the SARs are determined by the committee or our Board of Directors. SARs granted under the 2003 plan may include "limited SARs" exercisable for a stated period following a change in control of our company, as discussed below. 29 Table of Contents Restricted and Deferred Stock The committee or our Board of Directors is authorized to grant restricted stock and deferred stock. Restricted stock is a grant of shares of common stock that may not be sold or disposed of, and that may be forfeited in the event of certain terminations of employment, prior to the end of a restricted period specified by the committee or our Board of Directors. A participant granted restricted stock generally has all the rights of a stockholder of our company, unless otherwise determined by the committee or the Board. An award of deferred stock confers upon a participant the right to receive shares of common stock at the end of a specified deferral period, subject to possible forfeiture of the award in the event of certain terminations of employment prior to the end of a specified restricted period. Prior to settlement, an award of deferred stock carries no voting or dividend rights, or other rights associated with share ownership, although dividend equivalents may be granted, as discussed below. Bonus Stock and Awards in Lieu of Cash Obligations The committee or our Board of Directors is authorized to grant shares of common stock as a bonus free of restrictions, or to grant shares of common stock or other awards in lieu of company obligations to pay cash under the 2003 plan or other plans or compensatory arrangements, subject to such terms as the committee or our Board of Directors may specify. Acceleration of Vesting; Change in Control The committee or our Board of Directors may in the case of a "change of control" of our company, as defined in the 2003 plan, in its discretion, accelerate the exercisability, the lapsing of restrictions, or the expiration of deferral or vesting periods of any award (including the cash settlement of SARs and "limited SARs" which may be exercisable in the event of a change in control). In addition, the committee or our Board of Directors may provide in an award agreement that the performance goals relating to any performance-based award will be deemed met upon the occurrence of any "change in control." Upon the occurrence of a change in control, if so provided in the award agreement, stock options and limited SARs (and other SARs which so provide) may be cashed out based on a defined "change in control price," which will be the higher of · The cash and fair market value of property that is the highest price per share paid (including extraordinary dividends) in any reorganization, merger, consolidation, liquidation, dissolution, or sale of substantially all assets of our company; or · The highest fair market value per share (generally based on market prices) at any time during the 60 days before and 60 days after a change in control. For purposes of the 2003 plan, the term "change in control" generally means: · Approval by stockholders of any reorganization, merger, or consolidation or other transaction or series of transactions if persons who were shareholders immediately prior to such reorganization, merger, or consolidation or other transaction do not, immediately thereafter, own more than 50% of the combined voting power of the reorganized, merged, or consolidated company's then outstanding, voting securities, or a liquidation or dissolution of our company or the sale of all or substantially all of the assets of our company (unless the reorganization, merger, consolidation or other corporate transaction, liquidation, dissolution or sale is subsequently abandoned), · A change in the composition of our Board of Directors such that the persons constituting the Board of Directors on the date the award is granted, or the Incumbent Board, and subsequent directors approved by the Incumbent Board (or approved by such subsequent directors), cease to constitute at least a majority of our Board of Directors, or · The acquisition by any person, entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act, of more than 50% of either the then outstanding shares of our common stock or the combined voting power of our company's then outstanding voting securities entitled to vote generally in the election of directors excluding, for this purpose, any acquisitions by (1) our company, (2) any person, entity, or "group" that as of the date on which the award is granted owns beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of a controlling interest, or (3) any employee benefit plan of our company. 30 Table of Contents Amendment and Termination Our Board of Directors may amend, alter, suspend, discontinue, or terminate the 2003 plan or the committee's authority to grant awards without further stockholder approval, except stockholder approval must be obtained for any amendment or alteration if such approval is required by law or regulation or under the rules of any stock exchange or quotation system on which shares of common stock are then listed or quoted. Thus, stockholder approval may not necessarily be required for every amendment to the 2003 plan which might increase the cost of the 2003 plan or alter the eligibility of persons to receive awards. Stockholder approval will not be deemed to be required under laws or regulations, such as those relating to ISOs, that condition favorable treatment of participants on such approval, although our Board of Directors may, in its discretion, seek stockholder approval in any circumstance in which it deems such approval advisable. Unless earlier terminated by our Board of Directors, the 2003 plan will terminate at such time as no shares of common stock remain available for issuance under the 2003 plan and we have no further rights or obligations with respect to outstanding awards under the 2003 plan. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Certain Relationships and Related Parties The Company entered into a five-year office lease with 410734 B.C. Ltd. effective May 1, 2021 for approximately $6,000 per month. David M. Shworan, President and Chief Executive Officer of Quotemedia Ltd., is a control person of 410734 B.C. Ltd. At December 31, 2024 $13,367 was due to 410734 B.C. Ltd . At December 31, 2023, no amounts were due to 410734 B.C. Ltd. 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 December 31, 2024 and 2023, there was $28,483 and $12,000 due to Bravenet related to this agreement, respectively. David M. Shworan is a control person of Bravenet. At December 31, 2024 and 2023, there were $185,002 and $68,988 in unreimbursed expenses owed to Keith Randall, CEO of Quotemedia, Inc. All amounts due to related parties are included in accounts payable and accrued liabilities on the Company’s consolidated balance sheets. As a matter of policy all significant related party transactions are subject to review and approval by the Company’s Board of Directors. Director Independence Our Board of Directors has determined, after considering all the relevant facts and circumstances, that Mr. Thompson is an “independent” director as such term is defined by Nasdaq. 31 Table of Contents ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Aggregate fees billed to our company for the fiscal years ended December 31, 2024, and 2023 by MNP LLP, our principal accountants, are as follows: 2024 2023 Audit Fees $ 250,823 $ 241,264 Audit-Related Fees $ - $ - Tax Fees $ 7,990 $ - All Other Fees $ 12,506 $ 11,309 Audit Committee Pre-Approval Policies The duties and responsibilities of our Audit Committee include the pre-approval of all audit, audit-related, tax, and other services permitted by law or applicable SEC regulations (including fee and cost ranges) to be performed by our independent auditor. Any pre-approved services that will involve fees or costs exceeding pre-approved levels will also require specific pre-approval by the Audit Committee. Unless otherwise specified by the Audit Committee in pre-approving a service, the pre-approval will be effective for the 12-month period following pre-approval. The Audit Committee will not approve any non-audit services prohibited by applicable SEC regulations or any services in connection with a transaction initially recommended by the independent auditor, the purpose of which may be tax avoidance and the tax treatment of which will not be supported by the Internal Revenue Code and related regulations. To the extent deemed appropriate, the Audit Committee may delegate pre-approval authority to the Chairman of the Board or any one or more other members of the Audit Committee provided that any member of the Audit Committee who has exercised any such delegation must report any such pre-approval decision to the Audit Committee at its next scheduled meeting. The Audit Committee will not delegate the pre-approval of services to be performed by the independent auditor to management. All services provided by MNP LLP described above were approved by our Audit Committee. 32 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) The following documents are filed as a part of the report: (1) Financial Statements Financial Statements are listed in the Index to Consolidated Financial Statements of this report. (2) Financial Statement Schedules No financial statement schedules are included because such schedules are not applicable, are not required, or because required information is included in the consolidated financial statements or notes thereto. (3) Exhibits Exhibit Number Description of Exhibit 3.1 Second Amended and Restated Articles of Incorporation (1) 3.2 Amended and Restated Bylaws (1) 10.4 Amended 1999 Equity Incentive Compensation Plan (2) 10.7 2003 Equity Incentive Compensation Plan (1) 21 List of Subsidiaries 31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended. 31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended. 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. __________________ (1) Incorporated by reference to the Annual Report on Form 10-KSB filed with the Commission on March 27, 2003. (2) Incorporated by reference to the Quarterly Report on Form 10-QSB filed with the Commission on August 12, 2003. ITEM 16. FORM 10-K SUMMARY None. 33 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: April 15, 2025, QUOTEMEDIA, INC. By: /s/ Keith J. Randall Keith J. Randall Chief Executive Officer and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Robert J. Thompson Chairman of the Board April 15, 2025 Robert J. Thompson /s/ David M. Shworan Director April 15, 2025 David M. Shworan /s/ Keith J. Randall Chief Executive Officer and Chief Financial Officer and Director April 15, 2025 Keith J. Randall (Principal Executive and Financial and Accounting Officer) 34 Table of Contents QuoteMedia, Inc. Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm - MNP LLP PCAOB ID: 1930 F-2 – F-3 Consolidated Balance Sheets F-4 Consolidated Statements of Operations F-5 Consolidated Statements of Changes in Series A Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) F-6 Consolidated Statements of Cash Flows F-7 Notes to Consolidated Financial Statements F-8 – F-20 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of QuoteMedia Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of QuoteMedia Inc. (the “Company") as of December 31, 2024 and 2023, and the related consolidated statements of operations, changes in series A redeemable convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2024 and 2023, and the results of its consolidated operations and its consolidated cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate. Capitalized Internal-Use Software Development Costs As described in Note 1(f) and 6 to the consolidated financial statements, the Company capitalizes certain costs relating to the development of internal software. These costs may be related to new products as well as existing products when the costs will result in significant additional functionality. Management applied significant judgment in assessing whether the assets met the required criteria for initial capitalization, including the assessment of expected future benefits from the projects to be capitalized, technical feasibility and commercial viability. The value of development costs capitalized during the year ended December 31, 2024 was $3,399,893. F-2 Table of Contents The principal considerations for our determination that capitalized development costs is a critical audit matter was the significant judgment required by management in assessing whether the assets met the required criteria for initial capitalization, stage of development, and nature of costs that qualify for capitalization. This resulted in a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the audit evidence relating to management’s process of identifying projects and the stage of development and related development activities within those projects that qualify for capitalization, in accordance with the applicable accounting standards. We responded to this matter by performing procedures over capitalized software development costs. Our audit work in relation to this included, but was not restricted to, the following: · Obtained an understanding of the Company's process to identify development projects and development costs qualifying for capitalization; · Evaluated management's listing of active development projects by obtaining an understanding of the nature of the project and the nature of additions of the project, through discussions with development personnel to assess the reasonableness as to whether the activities were demonstrative of the capitalization criteria in accordance with the applicable accounting standard; · Obtained a schedule compiled by management to compute the capitalized costs by project and performed testing over the completeness and mathematical accuracy of the hours and payroll rates included within the schedule; · Tested a sample of the Company’s capitalized costs by validating the nature of the activities performed and time devoted to capitalizable activities through discussion with individual software developers and project managers; · Agreed the calculated amounts for capitalization to underlying payroll data to evaluate the reasonableness of hourly rates used for cost capitalization; and · Assessed the appropriateness of the disclosures in the notes to the consolidated financial statements. Chartered Professional Accountants Licensed Public Accountants We have served as the Company’s auditor since 2023. Mississauga, Canada April 15, 2025 F-3 Table of Contents QUOTEMEDIA, INC. CONSOLIDATED BALANCE SHEETS As of December 31, 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 585,319 $ 342,014 Accounts receivable, net 1,016,915 1,154,787 Prepaid expenses 175,703 133,478 Other current assets 162,653 104,931 Total current assets 1,940,590 1,735,210 Deposits 16,619 16,850 Property and equipment, net (see note 5) 212,727 302,224 Capitalized internal-use software development costs, net (see note 6) 5,041,544 4,552,910 Goodwill (see note 7) 110,000 110,000 Intangible assets (see note 7) 51,378 65,636 Operating lease right-of-use assets (see note 4) 188,663 393,472 Total assets $ 7,561,521 $ 7,176,302 LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accounts payable and accrued liabilities $ 3,564,546 $ 2,210,933 Deferred revenue (see note 2) 1,704,743 1,456,381 Current portion of operating lease liabilities (see note 4) 147,663 206,146 Total current liabilities 5,416,952 3,873,460 Long-term liabilities: Long-term portion of deferred revenue (see note 2) 696,736 375,568 Long-term portion of operating lease liabilities (see note 4) 32,245 191,735 Preferred stock warrant liability (see note 9) - 611,563 Total long-term liabilities 728,981 1,178,866 Mezzanine 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 December 31, 2023 (see note 9) - 2,983,857 Stockholders’ equity (deficit): 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 December 31, 2024 (see note 9) 2,983,857 - Common stock, $ 0.001 par value, 150,000,000 shares authorized, shares issued and outstanding: 90,477,798 at December 31, 2024 and December 31, 2023 90,479 90,479 Additional paid-in capital 19,529,131 18,910,482 Accumulated deficit ( 21,187,879 ) ( 19,860,842 ) Total stockholders’ equity (deficit) 1,415,588 ( 859,881 ) Total liabilities, mezzanine equity and stockholders’ equity (deficit) $ 7,561,521 $ 7,176,302 F-4 Table of Contents QUOTEMEDIA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the years ended December 31, 2024 2023 REVENUE (see note 2) $ 18,742,252 $ 18,907,725 COST OF REVENUE 9,868,830 9,263,073 GROSS PROFIT 8,873,422 9,644,652 OPERATING EXPENSES Sales and marketing 3,341,673 3,130,051 General and administrative 3,645,321 3,346,157 Software development 3,167,712 2,757,031 10,154,706 9,233,239 OPERATING (LOSS) INCOME ( 1,281,284 ) 411,413 OTHER INCOME (EXPENSES), NET Foreign exchange income (loss) 103,736 ( 45,017 ) Interest expense ( 2,508 ) ( 1,846 ) 101,228 ( 46,863 ) NET INCOME (LOSS) BEFORE INCOME TAXES ( 1,180,056 ) 364,550 Income tax expense (see note 8) ( 146,981 ) ( 2,966 ) NET (LOSS) INCOME $ ( 1,327,037 ) $ 361,584 EARNINGS PER SHARE (see note 10) Basic earnings (loss) per share $ ( 0.01 ) $ 0.00 Diluted earnings (loss) per share $ ( 0.01 ) $ 0.00 WEIGHTED AVERAGE SHARES OUTSTANDING (see note 10) Basic 90,477,798 90,477,798 Diluted 90,477,798 120,743,864 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents QUOTEMEDIA, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) For the year ended December 31, 2024 and 2023 Series A Redeemable Convertible Preferred Stock Common Stock Additional Total Stockholders’ Number of Shares Amount Number of Shares Amount Paid-in Capital Accumulated Deficit Equity (Deficit) Balance, December 31, 2023 - $ - 90,477,798 $ 90,479 $ 18,910,482 $ ( 19,860,842 ) $ ( 859,881 ) Reclassification of preferred stock warrants 611,563 611,563 Reclassification of series A redeemable convertible preferred stock 123,685 2,983,857 2,983,857 Stock-based compensation - - - - 7,086 - 7,086 Net loss - - - - - ( 1,327,037 ) ( 1,327,037 ) Balance, December 31, 2024 123,685 $ 2,983,857 90,477,798 $ 90,479 $ 19,529,131 $ ( 21,187,879 ) $ 1,415,588 Series A Redeemable Convertible Preferred Stock Common Stock Additional Total Stockholders’ Number of Shares Amount Number of Shares Amount Paid-in Capital Accumulated Deficit Equity (Deficit) Balance, December 31, 2022 123,685 $ 2,983,857 90,477,798 $ 90,479 $ 18,903,272 $ ( 20,222,426 ) $ ( 1,228,675 ) Stock-based compensation - - - - 7,210 - 7,210 Net income - - - - - 361,584 361,584 Balance, December 31, 2023 123,685 $ 2,983,857 90,477,798 $ 90,479 $ 18,910,482 $ ( 19,860,842 ) $ ( 859,881 ) The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents QUOTEMEDIA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For each of the years ended December 31, 2024 2023 OPERATING ACTIVITIES: Net (loss) income $ ( 1,327,037 ) $ 361,584 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,052,676 2,645,906 Allowance for doubtful accounts 330,000 225,000 Stock-based compensation expense – common stock warrants 7,086 7,210 Fair value adjustment - ( 17,812 ) Changes in assets and liabilities: Accounts receivable ( 192,128 ) ( 469,510 ) Prepaid expenses ( 42,225 ) 98,216 Other current assets ( 57,722 ) ( 75,839 ) Deposits 231 ( 1,848 ) Accounts payable, accrued and other liabilities 1,340,449 ( 289,127 ) Deferred revenue 569,530 665,101 Net cash provided by operating activities 3,680,860 3,148,881 INVESTING ACTIVITIES: Purchase of property and equipment ( 37,662 ) ( 81,809 ) Capitalized internal-use software development costs ( 3,399,893 ) ( 3,203,045 ) Net cash used in investing activities ( 3,437,555 ) ( 3,284,854 ) Net increase (decrease) in cash and cash equivalents 243,305 ( 135,973 ) Cash and cash equivalents, beginning of year 342,014 477,987 Cash and cash equivalents, end of year $ 585,319 $ 342,014 See supplementary information (Note 11) The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents QUOTEMEDIA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES a) Nature of operations Quotemedia, Inc. (the “Company”) is a software developer and distributor of financial market data and related services to a global marketplace. The Company specializes in the collection, aggregation, and delivery of both delayed and real-time financial data content via the Internet. The Company develops software components that deliver dynamic content to banks, brokerage firms, financial institutions, mutual fund companies, online information and financial portals, media outlets, public companies, and corporate intranets. b) Basis of consolidation The consolidated financial statements include the operations of QuoteMedia, Ltd., a wholly owned Canadian subsidiary of the Company. All intercompany transactions and balances have been eliminated. c) Foreign currency translation and transactions The U.S. dollar is the functional currency of all the Company's operations. Foreign currency asset and liability amounts are remeasured into U.S. dollars at end-of-period exchange rates, except for equipment and intangible assets, which are remeasured at historical rates. Foreign currency income and expenses are remeasured at average exchange rates in effect during the year, except for expenses related to balance sheet amounts remeasured at historical exchange rates. Because the U.S. dollar is the functional currency, exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in income in the period in which they occur. d) Cash and cash equivalents Cash equivalents include money market investments that have an original maturity of three months or less and are redeemable on demand. The Company maintains its accounts primarily at one financial institution. At times throughout the year, the Company’s cash and cash equivalents balances may exceed amounts insured by the Federal Deposit Insurance Corporation. e) Allowance for doubtful accounts 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 December 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 $ 330,000 and $ 225,000 at December 31, 2024 and 2023, respectively. Bad debt expense for the years ended December 31, 2024 and 2023 were $ 478,565 and $ 117,973 , respectively. f) Property and equipment and capitalized internal-use software development costs Property and equipment are recorded at cost less accumulated depreciation. Furniture and equipment are depreciated using the straight-line method over their estimated useful lives of five years. Leasehold improvements are amortized using the straight-line method over the terms of the respective leases or useful lives, whichever is shorter. Retirements, sales, and disposals of assets are recorded by removing the cost and accumulated depreciation from the asset and accumulated depreciation accounts with the resulting gain or loss reflected in income. There were no fixed assets retired during the years ended December 31, 2024 and 2023. Capitalized software development includes costs incurred in connection with the internal development of software. These costs relate to software used by subscribers to access, manage and analyze information in the Company’s databases. The majority of the capitalized costs relate to a portion of the salaries and other related costs for the Company’s software engineers. Costs related to new software development, or enhancements to existing software, are capitalized once the software is technologically and economically feasible. Capitalized costs associated with internally developed software are amortized over three years which is their estimated economic life. Amortization begins once the software is ready for its intended use. Depreciable and amortizable assets are evaluated for impairment upon a significant change in the operating environment. In these circumstances, if an evaluation of the undiscounted cash flows indicates impairment, the asset is written down to its estimated fair value, which is based on discounted future cash flows. Useful lives are periodically evaluated to determine whether events or circumstances have occurred which indicate the need for revision. There were no impairments recorded for the years ended December 31, 2024 and 2023. g) Earnings per share Basic earnings per share are computed by dividing income by the weighted average number of shares outstanding during the year. Diluted earnings per share considers shares outstanding (computed under basic earnings per share) and potentially dilutive common shares (such as stock options and redeemable convertible preferred stock outstanding). Anti-dilutive securities represent potentially dilutive securities which are excluded from the computation of diluted EPS as their impact would be anti-dilutive. Convertible instruments with non-market-price contingencies are excluded from diluted earnings per share until all the required non-market-price based contingencies are met. The effect of a stock split or reverse split is applied retroactively to preceding periods. F-8 Table of Contents QUOTEMEDIA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS h) Income taxes Income taxes are provided in accordance with Financial Accounting Standards Board (“FASB”) ASC 740, Income Taxes . A deferred tax asset or liability is recorded for all temporary differences between income for financial statement purposes and income for tax purposes as well as operating loss carry-forwards. Deferred tax expenses or recovery result from the net change during the year of deferred tax assets and liabilities. Any interest and penalties are recorded as part of income tax expense. Deferred tax assets are reduced by a valuation allowance, when, in the opinion of management, it is likely that some portion of the deferred tax asset will not be realized. Deferred taxes are adjusted for the effects of changes in tax laws and rates. Interest and penalties, if applicable, would be recorded in operations. The Company recorded income tax expense of $ 146,981 and $ 2,966 for the years ended December 31, 2024 and 2023, respectively (see Note 8). i) Use of estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities as of the year end and the reported amount of revenue and expenses during the year. Such estimates include (i) fair values used to test goodwill and capitalized development costs for impairment; (ii) the amount of allowance for doubtful accounts, (iii) the capitalization of software development costs, (iv) income taxes, (v) the incremental borrowing rate for operating leases, (vi) the useful life of property and equipment and intangible assets and (vii) stock-based compensation. Actual results and outcomes may differ from management’s estimates and assumptions. j) Software development expenses Software development expenses consist primarily of costs incurred to maintain the Company’s software applications. The Company expensed $ 3,167,712 and $ 2,757,031 in software development costs during the years ended December 31, 2024 and 2023, respectively. Software development costs are costs that did not meet the capitalization criteria for internal-use software development costs (see Note 6). k) Revenue 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: 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 1. Corporate Quotestream (Business-to-Business) o Web-delivered, embedded applications providing real-time, streaming market quotes and research information targeted to both professionals and non-professional users. o Revenue is typically earned based on customer usage. 2. Individual Quotestream (Business-to-Consumer) o Web-delivered, embedded applications providing real-time, streaming market quotes and research information targeted to non-professional users. o 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: · Identification of the contract, or contracts, with a customer · Identification of the performance obligations in the contract · Determination of the transaction price · Allocation of the transaction price to the performance obligations in the contract · Recognition of revenue when, or as, the Company satisfies a performance obligation 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. F-9 Table of Contents QUOTEMEDIA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 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 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. l) Financial instruments Financial instruments consist principally of cash and cash equivalents, accounts receivable and accounts payable and preferred stock warrant liability. The Company believes that the fair value of financial instruments approximates the recorded book value of those instruments due to the short-term nature of the instruments or stated interest rates that approximate market interest rates. m) Stock-Based Compensation Stock-based compensation awards are measured at their fair value on the date of grant with the expense recognized, net of estimated forfeitures, over the related service or performance period on a straight-line basis. The Company used the Black-Scholes valuation model to calculate the fair value of common stock options and warrants. n) Segment Reporting Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-makers ("CODM) in deciding how to allocate resources and assess performance. The Company's CODM are the Chief Executive Officers of Quotemedia, Inc. and Quotemedia Ltd., who review the Company's operations and manage its business as a single operating segment. o) Recent Accounting Pronouncements Recently 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 adoption of ASU 2023-07 did not have a significant impact on the Company’s consolidated financial statements. Not Yet Adopted In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The ASU requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses, including purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. Additionally, the amendment requires a qualitative description of the amounts remaining in the relevant expense captions that are not separately disaggregated quantitatively, and to disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. For public business entities, the new guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. An entity may apply the amendments prospectively for reporting periods after the effective date or retrospectively to any or all prior periods presented in the 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. 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 than the additional disclosures. 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. F-10 Table of Contents QUOTEMEDIA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. REVENUE Disaggregated Revenue The Company provides market data, financial web content solutions and cloud-based applications. The Company’s revenue by type of service consists of the following for the years ended December 31, 2024 2023 Portfolio Management Systems Corporate Quotestream $ 7,219,382 $ 7,275,615 Individual Quotestream 1,833,633 1,861,396 Interactive Content & Data APIs 9,689,237 9,770,714 Total revenue $ 18,742,252 $ 18,907,725 Deferred Revenue Changes in deferred revenue were as follows for the years ended December 31, 2024 2023 Beginning balance $ 1,831,949 $ 1,166,848 Revenue recognized during the year from the amounts in the beginning balance ( 1,480,421 ) ( 1,033,287 ) New deferrals, net of amounts recognized in the current period 2,020,828 1,695,447 Effects of foreign currency translation 29,123 2,941 Total deferred revenue $ 2,401,479 $ 1,831,949 Current portion of deferred revenue $ 1,704,743 $ 1,456,381 Long-term portion of deferred revenue 696,736 375,568 Total deferred revenue $ 2,401,479 $ 1,831,949 For contracts greater than one year in duration, revenue allocated to remaining performance obligations, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods, was $ 6.5 million as of December 31, 2024. We expect to recognize approximately 51 % of our total remaining performance obligation revenue over the next 12 months and the remainder thereafter. 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. 3. RELATED PARTIES The Company entered into a five-year office lease with 410734 B.C. Ltd. effective May 1, 2021 for approximately $ 6,000 per month. David M. Shworan, President and Chief Executive Officer of Quotemedia Ltd., is a control person of 410734 B.C. Ltd. At December 31, 2024 $ 13,367 was due to 410734 B.C. Ltd . At December 31, 2023, no amounts were due to 410734 B.C. Ltd. 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 December 31, 2024 and 2023, there was $ 28,483 and $ 12,000 due to Bravenet related to this agreement, respectively. David M. Shworan is a control person of Bravenet. At December 31, 2024 and 2023, there were $ 185,002 and $ 68,988 in unreimbursed expenses owed to Keith Randall, CEO of Quotemedia, Inc. All amounts due to related parties are included in accounts payable and accrued liabilities on the Company’s consolidated balance sheets. As a matter of policy all significant related party transactions are subject to review and approval by the Company’s Board of Directors. F-11 Table of Contents QUOTEMEDIA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. LEASES The Company has operating leases for corporate offices. The Company’s leases have remaining lease terms of 7 to 18 months . 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 Company’s consolidated balance sheets. Operating lease expenses are included in General and administrative expenses on the Company’s consolidated statements of operations. 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 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. 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 at December 31, was as follows: 2024 2023 Operating Leases Operating lease right-of-use assets, net $ 188,663 $ 393,472 Current portion of operating lease liability $ 147,663 $ 206,146 Long-term portion of operating lease liability 32,245 191,735 Total operating lease liability $ 179,908 $ 397,881 2024 2023 Weighted Average Remaining Lease Term Operating leases 1.1 years 1.9 years Weighted Average Discount Rate Operating leases 9.4 % 9.5 % Maturities of lease liabilities were as follows: Operating Leases 2025 $ 156,707 2026 32,932 Total lease payments 189,639 Less imputed interest ( 9,731 ) Total $ 179,908 The components of lease expenses for the years ended December 31, were as follows: 2024 2023 Operating lease costs: Operating lease costs $ 232,890 $ 235,459 Short-term lease costs 112,540 108,421 Total operating lease costs $ 345,430 $ 343,880 Supplemental cash flow information related to leases was as follows: F-12 Table of Contents QUOTEMEDIA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 228,365 $ 231,985 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ - $ 78,304 5. PROPERTY AND EQUIPMENT At December 31: 2024 2023 Computer equipment $ 1,613,176 $ 1,575,514 Office furniture and equipment 27,783 27,783 Leasehold improvements 13,573 13,573 Total property and equipment 1,654,532 1,616,870 Less: accumulated depreciation and amortization ( 1,441,805 ) ( 1,314,646 ) Property and equipment, net $ 212,727 $ 302,224 Property and Equipment are recorded at cost less accumulated depreciation. Depreciation and amortization is calculated on a straight-line basis over the assets’ estimated useful lives as follows: Computer equipment 5 years Office furniture and equipment 5 years Leasehold improvements Shorter of useful life or the term of lease Depreciation expense for equipment and leaseholds for the years ended December 31, 2024 and 2023 was $ 127,159 and $ 189,460 , respectively. 6. CAPITALIZED INTERNAL-USE DEVELOPMENT COSTS At December 31: 2024 2023 Capitalized internal-use software development costs $ 22,817,635 $ 19,417,742 Less: accumulated amortization ( 17,776,091 ) ( 14,864,832 ) Capitalized internal-use software development costs, net $ 5,041,544 $ 4,552,910 Changes in capitalized internal-use software development costs were as follows for the years ended December 31, 2024 2023 Opening balance $ 4,552,910 $ 3,798,375 Additions during the year 3,399,893 3,203,045 Amortization ( 2,911,259 ) ( 2,448,510 ) Ending balance $ 5,041,544 $ 4,552,910 Capitalized internal-use software development costs are recorded at cost less accumulated depreciation. Amortization is calculated on a straight-line basis over three years which is the capitalized internal-use software development costs estimated useful life. For the years ended December 31, 2024 and 2023, the Company capitalized $ 3,399,893 and $ 3,203,045 of costs, respectively, related to upgrades and enhancements made to existing software applications. Software applications are used by the Company’s subscribers to access, manage and analyze information in the Company’s databases. F-13 Table of Contents QUOTEMEDIA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The estimated amortization expense of capitalized internal-use software development costs is as follows: Year ending December 31, 2025 $ 2,709,125 2026 1,717,706 2027 614,712 Total $ 5,041,542 7. INTANGIBLE ASSETS AND GOODWILL At December 31: 2024 2023 Intangible assets: Software licenses & intellectual property $ 138,159 $ 138,159 Domain names 20,569 20,569 158,728 158,728 Less: accumulated amortization ( 107,350 ) ( 93,092 ) Total intangible assets, net $ 51,378 $ 65,636 Goodwill: Purchase of business unit $ 110,000 $ 110,000 Amortization for amortized intangible assets is calculated on a straight-line basis over the assets’ estimated useful lives. The useful life of the software licenses and domain names is estimated to be 20 years. The useful life of intellectual property is 5 years. Amortization expense for amortized intangible assets was $ 14,258 and $ 7,936 for the years ended December 31, 2024 and 2023, respectively. The estimated amortization expense of definite-lived intangible assets is as follows: Year ending December 31, 2025 10,383 2026 10,383 2027 8,480 2028 3,192 2029 3,192 Thereafter 15,748 Total $ 51,378 Goodwill is reported as an indefinite life intangible asset. The Company evaluates goodwill for impairment on an annual basis in accordance with FASB ASC 350-20, Goodwill . Through December 31, 2024 the Company has not identified any impairment indicators related to goodwill. 8. INCOME TAXES The Company accounts for income taxes according to the provisions of FASB ASC 740, Income Taxes, which prescribes an asset and liability approach for computing deferred income taxes. Reconciliations of income taxes computed at the statutory federal rate to income tax expense (benefit) for the years ended December 31, 2024 and 2023 are as follows: 2024 2023 Net (loss) income before income tax $ ( 1,180,056 ) $ 364,550 Tax provision (benefit) at the statutory rate of 21% ( 247,812 ) 75,297 State income taxes, net of federal income tax ( 21,243 ) 29,392 Stock-based compensation and other non-deductible expenses 2,055 ( 2,226 ) Change in intangibles 563,471 507,085 Change in other items ( 922,482 ) 40,044 Canadian income tax expense (benefit) 2,907 2,966 Change in valuation allowance 770,085 ( 649,592 ) Income tax expense (recovery) $ 146,981 $ 2,966 F-14 Table of Contents QUOTEMEDIA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In 2024, the Company recorded Arizona income tax expense of $ 144,074 and Canadian income tax expense of $ 2,907 . The Company does not have any material Canadian deferred tax assets or deferred tax liabilities. As of December 31, 2024, we had net operating loss carryforwards for federal income tax reporting purposes amounting to approximately $ 4,000,000 which expire in varying amounts through the year 2043 . The components of the Company’s deferred tax asset (liabilities) at December 31, 2024 and 2023 are as follows: 2024 2023 Tax effect of net operating loss carry-forward – U.S. $ 845,685 $ 1,742,266 Property & equipment ( 24,880 ) ( 28,085 ) Right-of-use asset ( 46,922 ) ( 133,860 ) Capital lease obligation 44,745 131,700 Intangibles 871,385 ( 734,020 ) Deferred Revenue 173,285 - Other ( 56,705 ) 58,507 Less valuation allowance ( 1,806,593 ) ( 1,036,508 ) Net deferred tax asset $ - $ - A valuation allowance has been recognized to offset the entire effect of the Company’s net deferred tax asset as the realization of this deferred tax benefit is uncertain. The valuation allowance increased $ 770,085 for the year ended December 31, 2024. The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years (2017-2024) in these jurisdictions. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on the Company’s financial condition, results of operations, or cash flows. Therefore, no reserves for uncertain income tax positions have been recorded. 9. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) a) Redeemable convertible preferred shares 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 December 31, 2024 and 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 years ended December 31, 2024 and 2023. Redemption Rights Holders of Series A redeemable convertible preferred stock shall have the right to convert their shares into shares of common stock at the rate of 83.33 shares of common stock for one share of Series A redeemable convertible preferred stock, at any time following the date the closing price of a share of common stock on a securities exchange or actively traded over-the-counter market has exceeded $ 0.30 for ninety (90) consecutive trading days. The conversion rights are subject to the availability of authorized but unissued shares of common stock. 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. F-15 Table of Contents QUOTEMEDIA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 statements of operations resulting from the amendment. b) Common stock No shares of common stock were issued during the years ended December 31, 2024 and 2023. c) Stock Options and Warrants 1999 Stock Option Plan During March 1999, the Company adopted, and the Company’s stockholders approved, the 1999 Stock Option Plan to advance the interests of the Company by encouraging and enabling key employees to acquire a financial interest in the Company and link their interests and efforts to the long-term interests of the Company’s stockholders. A total of 400,000 shares of common stock were initially reserved for issuance under the 1999 plan. In September 1999, this number was increased to 2,500,000 . As of December 31, 2024, 1,144,817 shares of the Company’s common stock had been issued upon exercise of options granted under the 1999 plan, and there were outstanding options to acquire 1,355,183 shares of the Company’s common stock under the 1999 plan. 2003 Equity Incentive Compensation Plan The Company’s Board of Directors has approved the 2003 Equity Incentive Compensation Plan, or the 2003 plan, approved by the Company’s stockholders at the annual meeting held on February 14, 2003. The purpose of the 2003 plan is to assist the Company in attracting, motivating, retaining, and rewarding high-quality executives and other employees, directors, officers, and independent contractors by enabling such persons to acquire or increase a proprietary interest in the Company in order to strengthen the mutuality of interests between such persons and the Company’s stockholders, and providing such persons with annual and long-term performance incentives to expend their maximum efforts in the creation of stockholder value. FASB ASC 718, Stock Compensation , requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense over the service period (generally the vesting period) in the consolidated financial statements based on their fair values. The impact of forfeitures that may occur prior to vesting is also estimated and considered in the amount recognized. At December 31, 2024, there were 15,000,000 shares of common stock authorized for issuance pursuant to the 2003 plan. As of December 31, 2024, 2,350,372 shares of common stock had been issued upon exercise of options granted under the 2003 plan, and there were 4,720,000 options outstanding under the 2003 plan. For the years ended December 31,2024 and 2023, estimated stock-based compensation expense (recovery) related to all the Company’s stock-based awards was comprised as follows: 2024 2023 Sales and marketing expense (recovery) $ 4,150 $ ( 17,602 ) General and administrative expense 2,536 7,000 Software development expenses 400 - Total stock-based compensation expense (recovery) $ 7,086 $ ( 10,602 ) F-16 Table of Contents QUOTEMEDIA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Common Stock Options and Warrants The following table summarizes the Company’s common stock option and warrant activity for the years ended December 31, 2024 and 2023: Common Stock Options and Warrants Weighted-Average Grant Date Exercise Price Outstanding at December 31, 2022 25,772,803 $ 0.06 Granted during the year 1,030,000 $ 0.04 Canceled during the year ( 1,030,000 ) $ 0.04 Outstanding at December 31, 2023 25,772,803 $ 0.06 Granted during the year 1,684,000 $ 0.03 Canceled during the year ( 1,684,000 ) $ 0.03 Outstanding at December 31, 2024 25,772,803 $ 0.06 The following table summarizes the weighted average remaining contractual life and exercise price of common stock options and warrants outstanding at December 31, 2024: Common Stock Options and Warrants Outstanding Common Stock Options and Warrants Exercisable Weighted Number Average Weighted Number Weighted Outstanding at Remaining Average Exercisable at Average December 31, Contractual Exercise December 31, Exercise 2024 Life (Years) Price 2024 Price $ 0.03 - 0.10 25,772,803 5.08 $ 0.06 25,772,803 $ 0.06 At December 31, 2024, there was no unrecognized compensation cost related to non-vested options 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: 2024 2023 Expected dividend yield - - Expected stock price volatility 73 % 97 % Risk-free interest rate 4 % 4 % Expected life of options (years) 2.50 1.96 Weighted average fair value of options and warrants granted $ 0.17 $ 0.21 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 December 31, 2024, the aggregate intrinsic value of options and warrants outstanding and exercisable was $ 2,116,926 . 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 Pursuant to the December 28, 2017 Compensation Agreement with David M. Shworan, the President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary of Quotemedia, Inc., the Company issued Mr. Shworan warrants to purchase shares of Series A Redeemable Convertible Preferred Stock (“Compensation Preferred Stock Warrants”) in lieu of a cash salary. From the period December 28, 2017 to December 31, 2019 the Company issued a total of 31,250 Compensation Preferred Stock Warrants at an exercise price equal to $ 1.00 per share. F-17 Table of Contents QUOTEMEDIA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Also pursuant to the Compensation Agreement with Mr. Shworan, on December 28, 2017 the Company issued Mr. Shworan warrants to purchase up to 382,243 shares of Series A Redeemable Convertible Preferred Stock at an exercise price equal to $ 1.00 per share (“Liquidity Preferred Stock Warrant”). The Liquidity Preferred Stock Warrants only vest and become exercisable on the consummation of a Liquidity Event as defined in the Company’s Certificate of Designation of Series A Redeemable Convertible Preferred Stock. The probability of the liquidity event performance condition is not currently determinable or probable; therefore, no compensation expense has been recognized as of December 31, 2024. The probability is re-evaluated each reporting period. As of December 31, 2024 and 2023, 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, the Company is also unable to determine the weighted-average period over which the unrecognized compensation cost will be recognized. As of December 31, 2024 and 2023, there were a total of 413,493 preferred stock warrants outstanding with a weighted average remaining contractual life of 23 years. As of December 31, 2024, 31,250 preferred stock warrants were exercisable. No preferred stock warrants were exercised for the years ended December 31, 2024 and 2023. Reclassification of Preferred Stock Warrant Liability resulting from Amendment to Redemption Rights As discussed in note 9 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 statements of operations resulting from the amendment. Fair Value Measurement of Compensation Preferred Stock Warrants The Company adheres to ASC 820, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances. ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). · Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company could access. · Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. · Level 3 inputs are unobservable inputs for the asset or liability, which is typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. 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. There was no Preferred Stock Warrant liability at December 31, 2024 as the preferred stock warrant liability was reclassified to additional paid-in capital in 2024. As of December 31, 2023, the fair value of the Preferred Stock Warrant Liability was $ 611,563 . The estimated fair value of the Preferred Stock Warrant liability is determined using Level 3 inputs. 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. Volatility was based on public peer companies, adjusted for size and leverage. Risk-free rate was selected based on term matched Treasury securities. Bond repayment depends on the Company’s timely access to the required cash and as such, is discounted at the Company’s assumed borrowing rate. 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 December 31, 2024 and 2023: Valuation Inputs 2024 2023 Expected Time to Expiration (years) N/A 25.05 Stock Price on Valuation Date N/A $ 0.21 Peer Volatility N/A 52.31 % Cash Flow Discount Rate N/A 12.93 % F-18 Table of Contents QUOTEMEDIA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2024 and 2023, 31,250 preferred stock warrants were exercisable. The following table sets forth a summary of the changes in the fair value of the Level 3 Preferred Stock Warrant Liability for the years ended December 31, 2024 and December 31,2023: Preferred Stock Warrant Liability Fair value as of December 31, 2022 $ 629,375 Change in fair value ( 17,812 ) Fair value as of December 31, 2023 $ 611,563 Change in fair value - Reclassification of preferred stock warrants on April 26, 2024 ( 611,563 ) Fair value as of December 31, 2024 $ - 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 Consolidated Statements of Operations. 10. EARNINGS PER SHARE Basic net income per share is computed by dividing net income during the year 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. Diluted net income per share is computed by dividing net income by the weighted-average number of dilutive common shares outstanding during the period. Diluted shares outstanding is calculated using the treasury stock method by adding to the weighted shares outstanding any potential shares of common stock from stock options and warrants that are in-the-money. For outstanding redeemable convertible preferred stock, potential common shares are determined using the if-converted method. The calculations for basic and diluted net income per share for the year ended December 31, 2024 and 2023 are as follows: 2024 2023 Net (loss) income $ ( 1,327,037 ) $ 361,584 Weighted average common shares used to calculate net income per share 90,477,798 Warrants to purchase redeemable convertible preferred stock - 2,499,900 Redeemable convertible preferred stock - 10,306,671 Stock options and warrants to purchase common stock - 17,745,988 Weighted average common shares used to calculate diluted net income per share 90,477,798 121,030,357 Net (loss) income per share – basic $ ( 0.01 ) $ 0.00 Net (loss) income per share – diluted $ ( 0.01 ) $ 0.00 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 years ended December 31, 2024 and 2023 are shown below: 2024 2023 Warrants to purchase redeemable convertible preferred stock $ 2,499,900 $ - Redeemable convertible preferred stock 10,306,671 - Stock options and warrants to purchase common stock 16,261,354 - Total potential common shares excluded $ 29,067,925 $ - F-19 Table of Contents QUOTEMEDIA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 11. SUPPLEMENTARY CASH FLOW INFORMATION 2024 2023 Cash paid for Interest $ 4,433 $ 4,371 The non-cash amounts related to right-of-use assets obtained in exchange for lease obligations are noted below for the years ended December 31,2024 and 2023: 2024 2023 Right-of-use assets obtained in exchange for lease obligations $ - $ 78,304 Cash and cash equivalents consists entirely of cash at December 31, 2024 and 2023. 12. REVENUE CONCENTRATION A significant portion of the Company’s revenue has historically been derived from customers outside of the United States, primarily in Canada. For the years ended December 31, 2024 and 2023, revenue from Canada accounted for approximately 39 % and 38 %, respectively, of total revenue. 13. SEGMENT REPORTING The Company operates in one operating segment and one reportable segment, distributor of financial market data. The Company specializes in the collection, aggregation, and delivery of both delayed and real-time financial data via the Internet. The Company develops software components that deliver dynamic content to banks, brokerage firms, financial institutions, mutual fund companies, online information and financial portals, media outlets, public companies, and corporate intranets. The company derives revenue primarily in North America and manages the business activities on a consolidated basis. The technology used in customer arrangements is based on a single software platform that is deployed to and implemented by customers in a similar manner. The service term for the software arrangements is variable, with the median term being approximately one year. The accounting policies of the financial market data segment are the same as those described in the summary of accounting policies. The CODM assesses performance and decides how to allocate resources based on consolidated net income (loss) that is also reported on the consolidated statements of operations and comprehensive income (loss) as consolidated net income (loss). The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets. The CODM also uses consolidated gross profit to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the financial market data segment or into other parts of the entity, such as for acquisitions. Consolidated gross profit is reported on the consolidated statements of operations and comprehensive income (loss) as gross profit. Consolidated net income (loss) and gross profit are used to monitor budget versus actual results. The monitoring of budgeted versus actual results is used in assessing performance of the segment and in establishing management’s compensation. All expense categories on the consolidated statements of operations and comprehensive income (loss) are significant and there are no other significant segment expenses that would require disclosure or are regularly provided to the CODM. Assets provided to the CODM are consistent with those reported on the consolidated balance sheets with particular emphasis on the Company’s available liquidity, including its cash and cash equivalents. 14. SUBSEQUENT EVENTS The Company has evaluated events up to the filing date of these consolidated financial statements and determined there are no other subsequent event activity required disclosure. F-20