QUOTEMEDIA INC 10-Q

ITEM 2. Management’s Discussion and Analysis The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this report. We caution readers regarding certain forward looking statements in the following discussion, elsewhere in this report, and in any other statements, made by, or on behalf of our company, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, our company. Uncertainties and contingencies that might cause such differences include those risk factors disclosed in our annual report on Form 10-K for the year ended December 31, 2024 and other reports filed from time to time with the SEC. We disclaim any obligation to update forward-looking statements. All references to “we”, “our”, “us”, or “QuoteMedia” refer to QuoteMedia, Inc., and its predecessors, operating divisions, and subsidiaries. This report should be read in conjunction with our Form 10-K for the fiscal year ended December 31, 2024 filed with the Securities and Exchange Commission. Overview We are a developer of financial software and a distributor of market data and research information to online brokerages, clearing firms, banks, media properties, public companies, and financial service corporations worldwide. Through the aggregation of information from many direct data, news, and research sources, we offer a comprehensive range of solutions for all market-related information provisioning requirements. We have three general product lines: Interactive Content and Data APIs, Data Feed Services, and Portfolio Management Systems. For financial reporting purposes, our product categories share similar economic characteristics and share costs; therefore, they are combined into one reporting segment. Our Interactive Content and Data APIs consist of a suite of software applications that provide publicly traded company and market information to corporate clients via the Internet. Products include stock market quotes, fundamentals, historical and interactive charts, company news, filings, option chains, insider transactions, corporate financials, corporate profiles, screeners, market research information, investor relations provisions, level II, watch lists, and real-time quotes. All our content solutions are completely customizable and embedded directly into client Web pages for seamless integration with existing content. We are continuing to develop and launch new modules of QMod TM , our new proprietary Web delivery system. QMod was created for secure market data provisioning as well as ease of integration and unlimited customization. Additionally, QMod delivers search engine optimized (SEO) ready responsive content designed to adapt on the fly when rendered on mobile devices or standard Web pages – automatically resizing and reformatting to fit the device on which it is displayed. Our Data Feed Services consist of raw streaming real-time market data delivered over the Internet or via dedicated telecommunication lines. We provide supplemental fundamental, historical, and analytical data, keyed to the same symbology, which provides a complete market data solution offered to our customers. Currently, QuoteMedia’s Data Feed services include complete coverage of North American exchanges and over 70 exchanges worldwide. For financial reporting purposes, Data Feed Services revenue is included in the Interactive Content and Data APIs revenue totals. Our Portfolio Management Systems consist of Quotestream, Quotestream Mobile, Quotestream Professional, and our Web Portfolio Management systems. Quotestream Desktop is an Internet-based streaming online portfolio management system that delivers real-time and delayed market data to both consumer and corporate markets. Quotestream has been designed for syndication and private branding by brokerage, banking, and Web portal companies. Quotestream’s enhanced features and functionality – most notably tick-by-tick true streaming data, significantly enhanced charting features, and a broad range of additional research and analytical content and functionality – offer a professional-level experience to nonprofessional users. Quotestream Professional is specifically designed for use by financial services professionals, offering exceptional coverage and functionality at extremely aggressive pricing. Quotestream Professional features broad market coverage, reliability, complete flexibility, ultra-low-latency tick-by-tick data, as well as completely customizable screens, advanced charting, comprehensive technical analysis, news, and research data. Quotestream Mobile is a true companion product to the Quotestream desktop products (Quotestream and Quotestream Professional) – any changes made to portfolios in either the desktop or mobile application are automatically reflected in the other. 17 Table of Contents A key feature of QuoteMedia’s business model is that all our product lines generate recurring monthly licensing revenue from each client. Contracts to license Quotestream to our corporate clients, for example, typically have a term of one to five years and are automatically renewed unless notice is given at least 90 days prior to the expiration of the current license term. We also generate Quotestream revenue through individual end-user licenses on a monthly or annual subscription fee basis. Interactive Content and Data APIs and Market Data Feeds are licensed for a monthly, quarterly, annual, or semi-annual subscription fee. Contracts to license our Financial Data Products and Data Feeds typically have a term of one to five years and are automatically renewed unless notice is given 90 days prior to the expiration of the contract term. Business Environment and Trends While our licensed-based revenue is generally recurring in nature, the uncertainty caused by the recent market downturn and rising inflation may result in some clients delaying purchasing decisions, product and service implementations or cancel or reduce spending with us. New tariffs enacted and proposed by the U.S. government could lead to a general slowdown in economic activity, which could negatively impact our business. Events in Ukraine and Russia have continued to cause disruptions in the global financial markets. While we do not have any operations or customers in Ukraine or Russia, we will continue to monitor the situation as a prolonged conflict could impact our business. Approximately 36% of our revenue and 39% of our expenses are denominated in Canadian dollars. The Canadian dollar depreciated slightly against the U.S. dollar when comparing the average exchange rate for the nine-months ended September 30, 2025 versus the comparative 2024 period. This decreased both Canadian dollar revenues and expenses once translated into U.S. dollars, but because our Canadian dollar revenue and expenses are evenly matched, the exchange rate fluctuation had minimal impact on our net income and cash flows. Our revenue increased 10% and 6% for the three and nine-month periods ending September 30, 2025 versus comparative periods and on an FX-neutral basis our three and nine-month revenue growth was 10% and 7%, respectively. The FX-neutral results are calculated by translating Canadian dollar denominated revenue into U.S. dollars using the comparative period’s average exchange rate. Based on revenue already under contract we expect our revenue growth to continue to improve for the remainder of fiscal 2025. We reduced the number of development staff in late 2024 as some of our major development projects are near completion. However, our development cost expense significantly increased this quarter due to a higher percentage of development salaries being expensed rather than capitalized, as more development time was spent on system maintenance and other development activities that did not meet the criteria for capitalization. While this had no impact on our cashflow, it had a negative impact on our earnings as we are expensing development costs in the current period related to past capitalized development. We expect this trend to continue for the remainder of 2025 and in 2026, although its impact will dimmish over that time. Plan of Operation For the remainder of 2025 and for the 2026 fiscal year we plan to continue to expand our product lines and improve our infrastructure. We plan to continue to add more features and data to our existing products and release newer versions with improved performance and flexibility for client integration. We plan to leverage artificial intelligence (AI) tools, where possible, to automate this process. This expansion is expected to result in both increased revenue and costs for the remainder of 2025 and for the 2026 fiscal year. We will maintain our focus on marketing Quotestream for deployments by brokerage firms to their retail clients and continue our expansion into the investment professional market with Quotestream Professional. We also plan to continue the growth of our Data Feed Services client base, particularly through the addition of major new international data feed coverage, as well as new data delivery products. QuoteMedia will continue to focus on increasing the sales of its Interactive Content and Data APIs, particularly in the context of large-scale enterprise deployments encompassing solutions ranging across several product lines. QMod is a major component of this strategy, given the broad demand for mobile-ready, SEO-friendly Web content. Important development projects for the remainder of 2025 and for 2026 include broad expansion of data and news coverage, including the addition of a wide array of international exchange data and news, video feeds, expansion of fixed-income coverage, and the introduction of several new and upgraded market information products. New deployments of our trade integration capabilities, which allow our Quotestream applications to interact with our brokerage clients’ back-end trade execution and reporting platforms (enabling on-the-fly trade execution and tracking of holdings) are underway and will continue to be a priority for the remainder of 2025 and for 2026. 18 Table of Contents We are also creating new proprietary data sets, analytics, and scoring mechanisms. We are now aggregating data direct from the sources to produce data sets that are proprietary to QuoteMedia. This allows us to offer our clients new data products and lower our product cost structure as we replace some of our existing data providers with our own lower cost data. Opportunistically, efforts will be made to evaluate and pursue the development of additional new products that may eventually be commercialized by our company. Although not currently anticipated, we may require additional capital to execute our proposed plan of operation. There can be no assurance that such additional capital will be available to our company on commercially reasonable terms or at all. Our future performance will be subject to a number of business factors, including those beyond our control, such as a continuation of market uncertainty and evolving industry needs and preferences, as well as the level of competition and our ability to continue to successfully market our products and technology. There can be no assurance that we will be able to successfully implement our marketing strategy, continue our revenue growth, or maintain profitable operations. Critical Accounting Policies and Estimates In the 2024 Annual Report, we disclose our critical accounting policies and estimates upon which our consolidated financial statements are derived. There have been no material changes to these policies since December 31, 2024. Readers are encouraged to read the 2024 Annual Report in conjunction. Results of Operations Revenue Three-months ended September 30, 2025 2024 Change ($) Change (%) Corporate Quotestream $ 2,113,628 $ 1,792,966 $ 320,662 18 % Individual Quotestream 458,747 452,489 6,258 1 % Total Portfolio Management Systems 2,572,375 2,245,455 326,920 15 % Interactive Content and Data APIs 2,582,180 2,450,390 131,790 5 % Total subscription revenue $ 5,154,555 $ 4,695,845 $ 458,710 10 % Nine-months ended September 30, 2025 2024 Change ($) Change (%) Corporate Quotestream $ 6,110,920 $ 5,357,477 $ 753,443 14 % Individual Quotestream 1,377,804 1,388,189 (10,385 ) (1 )% Total Portfolio Management Systems 7,488,724 6,745,666 743,058 11 % Interactive Content and Data APIs 7,419,398 7,305,325 114,073 2 % Total subscription revenue $ 14,908,122 $ 14,050,991 $ 857,131 6 % Total licensing revenue increased 10% and 6% for the three and nine-months ended September 30, 2025 from the comparative 2024 periods. Our revenue growth has been driven by the increase in average revenue per customer, as we continue to attract larger customers and cross-sell additional products to existing customers. Total Portfolio Management Systems revenue increased 15% and 11% for the three and nine-months ended September 30, 2025 from the comparative 2024 periods. Corporate Quotestream revenue increased 18% and 14% from the comparative 2024 periods. The increases were due to increases in the average revenue per customer from the comparative periods. Individual Quotestream revenue was relatively flat for the three and nine-months ended September 30, 2025, increasing 1% for the three-months ended September 30, 2025 and decreasing 1% for the nine-months ended September 30, 2025 from the comparative 2024 periods. Interactive Content and Data APIs revenue increased 5% and 2% for the three and nine-months ended September 30, 2025 from the comparative periods in 2024 due to increases in the average revenue per customer. 19 Table of Contents Cost of Revenue and Gross Profit Summary Three-months ended September 30, 2025 2024 Change ($) Change (%) Cost of revenue $ 2,656,171 $ 2,515,081 $ 141,090 6 % Gross profit $ 2,498,384 $ 2,180,764 $ 317,620 15 % Gross margin % 48 % 46 % Nine-months ended September 30, 2025 2024 Change ($) Change (%) Cost of revenue $ 8,018,122 $ 7,288,655 $ 729,467 10 % Gross profit $ 6,890,000 $ 6,762,336 $ 127,664 2 % Gross margin % 46% 48 % Our cost of revenue consists of fixed and variable stock exchange fees and data feed provisioning costs. Cost of revenue also includes amortization of capitalized internal-use software costs. We capitalize the costs associated with developing new products during the application development stage. Our cost of revenue increased 6% and 10% for the three and nine-months ended September 30, 2025 from the comparative periods in 2024. The increases were mainly due to increased variable stock exchange fees related to our increase in revenue, as well as price increases for fixed stock exchange fees from the comparative periods. Our gross margin percentage increased to 48% for the three -months ended September 30, 2025 from 46% in the comparative period in 2024 as the cost of revenue decreased as a percentage of sales. This was due to an increase in revenue, as well as a decrease in amortization expense related to capitalized development costs Our gross margin percentage decreased to 46% for the nine-months ended September 30, 2025 from 48% in the comparative 2024 period. Our revenue growth percentage improved each quarter of 2025, however for the nine-month period ended September 30, 2025 our cost of revenue has increased as a percentage of sales resulting in a decrease in gross margin. Operating Expenses Summary Three-months ended September 30, 2025 2024 Change ($) Change (%) Sales and marketing $ 827,596 $ 875,303 $ (47,707 ) (5 )% General and administrative 704,939 942,598 (237,659 ) (25 )% Software development 1,340,225 771,261 568,964 74 % Total operating expenses $ 2,872,760 $ 2,589,162 $ 283,598 11 % Nine-months ended September 30, 2025 2024 Change ($) Change (%) Sales and marketing $ 2,528,029 $ 2,510,029 $ 18,000 0 % General and administrative 2,250,648 2,611,279 (360,631 ) (14 )% Software development 3,652,501 2,361,657 1,290,844 55 % Total operating expenses $ 8,431,178 $ 7,482,965 $ 948,213 13 % Sales and Marketing Sales and marketing consist primarily of sales and customer service salaries, investor relations, travel and advertising expenses. Sales and marketing expenses decreased 5% for the three-month period ended September 30, 2025 versus the comparative 2024 period due to a decrease in sales and marketing salary expenses from the comparative period in 2024. Sales and marketing expenses were flat for the nine-month period ended September 30, 2025 versus the comparative 2024 period, as an increase in stock-based compensation expense related to extension of options and warrants in May 2025 offset a decrease in sales and marketing salary expenses. 20 Table of Contents General and Administrative General and administrative expenses consist primarily of salaries expense, office rent, insurance premiums, and professional fees. General and administrative expenses decreased 25% and 14% for the three and nine-months ended September 30, 2025, when compared to the same periods in 2024. The decreases are mainly due to decreases in bad debt expense. The decrease for the three-months ended September 30, 2025 was also due to a decrease in office rent expense as we downsized our office space in Vancouver, Canada effective September 1, 2025 when our existing lease terminated, as our development staff now primarily work remotely. Software Development Software development expenses consist primarily of costs associated with the design, programming, and testing of our software applications during the preliminary project stage. Software development expenses also include costs incurred to maintain our software applications. Software development expenses increased 74% and 55% for the three and nine-months ended September 30, 2025 when compared to the same periods in 2024. This was due to a decrease in the percentage of development salaries capitalized versus the comparative periods as we capitalized 4% of development salaries this quarter versus 26% the comparative quarter, and 8% year to date compared to 25% in the comparative year to date period. This increase was offset by the reduction in the number of development personnel as discussed in the Business Environment and Trends section above. We capitalized $255,631 and $1,093,748 of development costs for the three and nine-month periods ended September 30, 2025. We capitalized $909,035 and $2,591,750 of development costs for the three and nine-month periods ended September 30, 2024, The costs relate to the development of application software used by subscribers to access, manage, and analyze information in our databases. Capitalized costs associated with application software are amortized over their estimated economic life of three years. Other Income and (Expense) Summary Three-months ended September 30, 2025 2024 Foreign exchange gain (loss) $ 25,449 $ (31,881 ) Interest expense, net (18,222 ) 76 Total other income (expense), net $ 7,227 $ (31,805 ) Nine-months ended September 30, 2025 2024 Foreign exchange gain (loss) $ (76,454 ) $ 3,841 Interest expense, net (33,989 ) (1,296 ) Total other income (expenses), net $ (110,443 ) $ 2,545 Foreign Exchange Gain We incurred foreign exchange gain of $25,449 and a loss of $76,454 for the three and nine-months ended September 30, 2025. We incurred foreign exchange loss of $31,881 and a gain of $3,841 for the three and nine-months periods ended September 30, 2024. Foreign exchange gains and losses arise from the re-measurement of Canadian dollar monetary assets and liabilities into U.S. dollars and from exchange rate fluctuations between transaction and settlement dates for foreign currency denominated transactions. Interest Expense, Net Interest expense is netted against interest earned on cash balances. Net interest expense of $18,222 and net income of $76 were incurred for the three-months periods ended September 30, 2025 and 2024, respectively. Net interest expenses of $33,989 and $1,296 were incurred for the nine-months ended September 30, 2025 and 2024, respectively Provision for Income Taxes For the three-months ended September 30, 2025 and 2024, the Company recorded $43 and $738 in Canadian income tax expenses. For the nine-months ended September 30, 2025 and 2024, the Company recorded $68,964 and $2,206 in Canadian income tax expenses. Net Loss for the Period As a result of the foregoing, our net losses for the three-months ended September 30, 2025 and 2024 were $367,192 and $440,941. For the nine-months periods ended September 30, 2025 and 2024 our net losses were $1,720,585 and $720,290. The basic and diluted loss per share was $(0.00) for the three-months ended September 30, 2025 and 2024. The basic and diluted loss per share was $(0.02) and $(0.00) for the nine-months ended September 30, 2025 and 2024, respectively. 21 Table of Contents Liquidity and Capital Resources Our cash totaled $281,143 at September 30, 2025, as compared with $585,319 at December 31, 2024, a decrease of $304,176. Net cash of $832,155 was provided by operations for the nine-months ended September 30, 2025, primarily due to adjustments for non-cash charges and the increase in accounts payable and accrued liabilities, offset by our net loss and an increase in accounts receivable and a decrease in deferred revenue. Net cash used in investing activities for the nine-months ended September 30, 2025 was $1,136,331, due to capitalized application software costs and purchases of computer equipment. We typically operate with a working capital deficit. As of September 30, 2025, our working capital deficit was $ 4,405,332 however current liabilities include $ 2,153,243 in deferred revenue. The expected costs necessary to realize the deferred revenue are minimal. If circumstances dictate, we have the flexibility to reduce development spending to maintain a strong liquidity position. Based on the factors discussed above, we believe that our cash on hand and cash generated from operations will be sufficient to fund our current operations for at least the next 12 months through September 2026. However, implementing our business plan may require additional financing. Additional financing may come from future equity or debt offerings that could result in dilution to our stockholders. Further, current adverse capital and credit market conditions could limit our access to capital. We may be unable to raise capital or bear an unattractive cost of capital that could reduce our financial flexibility. Our long-term liquidity requirements will depend on many factors, including the rate at which we expand our business and whether we do so internally or through acquisitions. To the extent that the funds generated from operations are insufficient to fund our activities in the long term, we may be required to raise additional funds through public or private financing. No assurance can be given that additional financing will be available or that, if it is available, it will be on terms acceptable to us. Foreign Exchange Risk Currently, approximately 36% of our consolidated revenue and 39% of our consolidated expenses are denominated in Canadian dollars. Since currently our Canadian dollar revenue and expenses are closely matched, our consolidated cashflows are not significantly impacted by foreign exchange fluctuations. Stock Exchange Reporting Risk The company is subject to periodic examinations by the stock exchanges. These periodic examinations, which are conducted to confirm that our reporting obligations to the stock exchanges have been met, could result in monetary assessments. Off-Balance Sheet Arrangements At September 30, 2025 and December 31, 2024, we did not have any unconsolidated entities or financial partnerships, or other off-balance sheet arrangements.