UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

 (Mark

(Mark one)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period _________ to _________

Commission File Number: 0-28599

QUOTEMEDIA, INC.
 (Exact name of registrant as specified in its charter)

Nevada91-2008633

QUOTEMEDIA, INC.

(Exact name of registrant as specified in its charter)

Nevada

91-2008633

(State or Other Jurisdiction of

Incorporation or Organization)

(IRS Employer

Identification Number)

17100 East Shea Boulevard, Suite 230, Fountain Hills, AZ 85268

(Address of Principal Executive Offices)

(480) 905-7311

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Name of exchange on which registered

Common stock, par value $.001 per share

OTCQB tier of the OTC Markets

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section15(d) of the Act. Yes ☐ No ☑ 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer”, "smaller“smaller reporting company"company” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ☐

Accelerated filer

Non-accelerated filer Filer

(Do

Smaller reporting company

(Do not check if a smaller reporting company)

Smaller reporting company ☑ 

Emerging growth company

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of March 8, 2021,2022, there were outstanding 90,477,798 shares of the issuer'sissuer’s common stock, par value $.001 per share and 123,685 shares of Series A Redeemable Convertible Preferred Stock, par value $.001 per share.

The aggregate market value of common stock held by non-affiliates of the issuer (60,624,539 shares) based on the closing price of the issuer'sissuer’s common stock as quoted on the OTCQB tier of the OTC Markets as of the last business day of the issuer’s most recently completed second fiscal quarter, June 30, 2020,2021, was $6,668,699.$10,306,172. For purposes of this computation, all executive officers, directors, and 10% beneficial owners of the issuer are deemed to be affiliates. Such determination should not be deemed an admission that such officers, directors, or 10% beneficial owners are, in fact, affiliates of the issuer.

Documents incorporated by reference: None


QUOTEMEDIA, INC.

ANNUAL REPORT ON FORM 10-KFISCAL10-K

FISCAL YEAR ENDED DECEMBER 31, 2020

TABLE OF CONTENTS


Page

PART I

BUSINESS

2

4

RISK FACTORS

8

10

UNRESOLVED STAFF COMMENTS

11

13

PROPERTIES

11

13

LEGAL PROCEEDINGS

11

13

MINE SAFETY DISCLOSURES

11

13

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.

12

14

12

12

14

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

19

21

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

19

21

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

21


ITEM 8A.

19

CONTROLS AND PROCEDURES

22

CONTROL AND PROCEDURES

OTHER INFORMATION

21

22

ITEM 10.9.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

21

23

EXECUTIVE COMPENSATION

24

ITEM 11.

22

 25

27



CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

29

31

PRINCIPAL ACCOUNTANT FEES AND SERVICES

30

32

ITEM 15.14.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

31

33

32

34

33

35

2

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Statement Regarding Forward-Looking Statements

The statements contained in this report on Form 10-K that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding our "expectations," "anticipation," "intentions," "beliefs,"“expectations,” “anticipation,” “intentions,” “beliefs,” or "strategies"“strategies” regarding the future. Our actual results could differ materially from those in the forward-looking statements. Among the factors that could cause actual results to differ materially are the factors discussed in Item 1A. "Risk“Risk Factors."

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PART I

ITEM 1.

BUSINESS.
BUSINESS.

General

QuoteMedia, Inc. (OTCQB: QMCI) is a leading provider of financial data, news feeds, market research information , analytics, news feeds, and financial software solutions to online brokerages, banks, clearing firms, banks, financial service companies, media portals, and public corporations. We are a single source for a wide array of market information and services, including streaming stock market data feeds, research and analysis information, content applications, portfolio management systems, software products, corporate investor relations provisioning, news services, wireless applications,mobile apps, and custom development. Our portfolio management products are provided on a “softwareSaaS (software as a service” basis,service) model, as are our other interactive content and data applications.

APIs.

We have created a scalable system that aggregates, manages, and streams information from the stock exchanges and from other information and content feeds across both the Web and dedicated telecommunication lines. Because QuoteMedia is a comprehensive single-source market data provider, our clients are not required to deal with multiple data vendors, many of which continue to employ outdated infrastructures and delivery technologies. This allows our clients to license comprehensive financial information applications and raw data feeds more efficiently and cost-effectively.

QuoteMedia offers clients the advantages of a single source for a broad range of data, information, and services, including:

●           Streaming Real-time Data Feeds
●           Wireless Solutions
●           News Feed Aggregation and Delivery
●           Streaming Dynamic Content
●           Complete Portfolio Management
●           Corporate Investor Relations Solutions
●           Internet Data and Content Provisioning
●           Custom Software Application Development
●           Research Information Supply

·

Streaming Real-time Data Feeds

·

Dynamic Content Web Displays

·

Data APIs, XML and JSON Data

·

News Feed Aggregation and Delivery

·

Mobile App Solutions

·

Complete Portfolio Management

·

Corporate Investor Relations Solutions

·

Research Information Supply

·

Custom Software Application Development

Our data delivery solutions are fast, lightweight, reliable, and easy to implement across all platforms. Our products are technologically advanced, providing a framework for quick implementation, seamless client integration and complete customization.

We are a United States reporting public company that was incorporated in the State of Nevada in 1999. Our shares are quoted on the OTCQB tier of the OTC Markets under the trading symbol QMCI. Our corporate head office is located at 17100 East Shea Boulevard, Suite 230, Fountain Hills, Arizona 85268, and our telephone number is (480) 905-7311. All references to our business operations in this report include the operations of QuoteMedia, Inc. and our operating divisions and subsidiaries.

Our Web site is located at www.quotemedia.com. Through our Web site we make available free of charge the following company information: our annual reports on Form 10-K; our quarterly reports on Form 10-Q; our current reports on Form 8-K; our proxy statements; and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. These reports are available as soon as reasonably practical after we electronically file these reports with the SEC. We also post on our Web site the charter of our Audit Committee; our Corporate Governance Guidelines; our Code of Business Conduct/Ethics and Code of Ethics for the CEO and Senior Financial Officers, and any amendments or waivers thereto; and any other corporate governance materials contemplated by SEC or applicable regulations. These documents are also available in print to any stockholder requesting a copy from our corporate secretary at our principal executive offices.



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Products and Services

QuoteMedia has developed a full range of financial data and market information solutions which are licensed to our clients on a monthly, quarterly, or annual basis. Our products and services are divided into three main categories: Data Feed Services; Interactive Web Content and Data Applications;APIs; and Portfolio Management and Real-Time Quote Systems.

Data Feed Services

QuoteMedia offers comprehensive, ultra low latency, tick-by-tick enterprise level streaming market data feeds delivered over the Internet or via dedicated telecommunication lines, as well as supplemental fundamental, historical, and analytical data, keyed to the same symbology which provides a complete market data solution to our customers. Currently, QuoteMedia’s Data Feed services include complete coverage of North American exchanges and over 70 exchanges worldwide. Data Feeds coverage includes equities, options, futures, commodities, currencies, mutual funds, ETFs, and indices. The data is normalized for ease of use and is provided in a wide range of formats and delivery methods. Data is available in real-time, delayed, and end-of-day format.

format, as well as Level 1 and Level 2 (Market Depth).

QuoteMedia has also created Quotestream ConnectTM, a hybrid of our existing Data Feed Services, and our Portfolio Management Systems. It is a new method of delivering real-time data feeds to individual users to power 3rd party applications. In most cases, this allows QuoteMedia to retain Vendor of Record status with the exchanges - resulting in significant savings for our clients in resources and exchange fees.

Interactive Content and Data Applications

APIs

QuoteMedia’s proprietary financial software applications and widgets (QModTM) comprise a unique suite of custom Web technologies that combine the power and depth of established financial databases with the flexibility and efficiency of the Web to deliver customized high-quality content to clients around the world. QuoteMedia financial data delivery application products and components comprise an extensive product line that spans the spectrum of Quote Modules, Charts, Market Movers, News, Watch Lists, Tickers, Market Summaries, Option Chains, SEC Filings, Investor Relations Solutions, Component Fundamentals, Screeners and much more. Our lightweight and fast-loading applications provide an extensive array of information in a variety of delivery vehicles. All of our content solutions are completely customizable, embed directly into client Web pages for seamless integration with existing content, and are licensed to our Clients on a recurring subscription basis. Our Interactive Content and Data ApplicationsAPIs include the following:

Quote Modules - allow users to enter information and look up various data points on equities, funds, rates, currencies and the markets. Our Quote Modules provide complete market data and supplemental data coverage. This comprehensive coverage consists of fundamental data (EPS, P/E ratio, dividends, yield, shares outstanding, market cap, etc.), analytical statistics (52 week high/low, moving averages, average volumes, moving performance numbers), historical EOD data (fully adjusted and keyed historical data), market updates, North American indices, market movers, actives, gainers, losers, company information (business description, address, phone, fax, auditors, officers, etc.), classification codes (sector, industry, NAICS, SIC, CIK, etc.), share statistics (shares outstanding, float, holdings, profitability, management effectiveness, short interest, short interest ratio), as well as broader market information such as bank rates and currency values. The data returned is compact, customizable, and incorporates comprehensive information, including charts, news, historical stock prices, market depth, SEC filings, insiders, financials, and other information.

Real-Time Snap Quotes - Cost-effective, customizable, instant real-time quotes and market data, real-time charts, real-time level II, and real-time options. The real-time snap quote service features client-controlled entitlements, comprehensive online tracking, detailed reporting capabilities, and North American exchange fee capping. These features are unique to our company and result in greater efficiency and cost savings for our clients.

Market Indices - At-a-glance display of market conditions, fed directly from the major North American and international exchanges and index providers.



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Charts - Markets and equity charting are available in a variety of formats. Static thumbnails or dynamic interactive charting is available to allow full market charting or individual stock performance displays, including comparisons to other equities or indices, as well as the ability to plot a wide range of technical studies.

Stock Tickers – Fully customizable vertical or horizontally scrolling tickers supply instant market information.

Stock Screeners - Allow users to filter stocks based on a wide variety of selection criteria, including sector/industry, share price, market cap, exchange, EPS, P/E ratio, etc.

Fund Screeners - Allow users to filter US or Canadian mutual funds based on an array of different characteristics, including fund types, performance metrics, fee structures, etc.

News - Topic-based, sector-based and equity-based lookup of news stories and commentary relating to the markets, individual companies, or specific areas of interest.

Watch Lists - Display current values and trends for a group of user-defined equities and indices.

Market Statistics - Top gainers and losers on the day for a variety of exchanges and detailed statistical analysis of most actively traded stocks. A variety of economic indicators are also provided.

Heat Maps – Provide an "at-a-glance" visual representation of how the markets are performing. Display any of the major indexes, arranging the constituent companies by color according to their share performance, or show the performance of individual securities in different sectors or a heat map of the stocks in individual portfolios.

Financial Calendars - Including Corporate Events Calendars, Economic Calendars, Stock Market Holiday and Trading Calendars etc.

Wallboards - Deliver updating market data and news headlines in Real-Time for display to power the wall board for trade floors, classrooms or other wall displays. Ideal for displaying Indices, Commodities Prices (such as Gold, Silver, Oil and Gas), Currencies, Rates, News Headlines and Commentary, and can even incorporate a client'sclient’s own content or advertising.

Finance Calculators - Examples include: Bond Yield, Cost Basis, Future Asset Value, Loan Payment, Investment Calculator, Monthly Mortgage Payment, Present Asset Value, Rate of Return, Total Return, Currency Converter, etc.

Investor Relations - Information on current value, historical data, charting and news, and other data related to individual public companies for investor relations information provisioning. These products provide a turnkey and self-updating investor relations solution for corporate Web sites and their investors.

QModTM –- QuoteMedia’s proprietary web delivery system, called QMod, was created for secure market data provisioning as well as ease of integration and unlimited customization and responsiveness. QMod is an extensible market data component JavaScript library used to deliver market data content to Web platforms powered by JSON back-ends. With extensibility in mind, QMod can be utilized to build custom applications on demand for clients as well as continue to improve existing and new components with ease. The resulting widgets are mobile-ready because they automatically re-size and optimize based on the type of device they are viewed on - whether a laptop, tablet, or any model of mobile phone. And, unlike competitive products, QMod is SEO friendly, providing self-generating, automatically updating content that is optimized for search engine indexing - whereas the content and associated links delivered through most competitors’ widgets are essentially invisible to search engine web crawlers.

Portfolio Management Systems

QuoteMedia offers three leading edge portfolio managements systems: Quotestream™ Desktop and Mobile; Quotestream™ Professional; and a Web Portfolio Management product. Each of these systems can be implemented independently, or they can be employed in conjunction with each other to provide a complete portfolio management solution for both nonprofessionals and professionals.


Quotestream™ Desktop (Download), Web (Browser) and Mobile

Apps

QuoteMedia’s proprietary software, Quotestream, is our unique, Web-delivered, embedded application providing real-time, tick-by-tick, streaming market quotes and research information. Quotestream is the next generation portfolio management system for nonprofessional users, with enhanced features and functionality compared to our original Quotestream product - most notably tick-by-tick true streaming data, significantly enhanced charting features, and a broad range of additional research and analytical content and custom functionality. Quotestream is geared towards providing a professional-level experience to nonprofessionalnon-professional users. Coverage includes North American and LSE real-time data, NASDAQ, TSX, TSXV and LSE Level 2 data (market depth), market indices, dynamic and interactive charts, options, news and research information, and end-of-day quote data for over 35 international exchanges, in an easy-to-use and highly configurable interface.

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Quotestream Web is the latest HTML5, browser-based version of Quotestream. No downloads or installations are required with this quick, lightweight and robust application. It is a sophisticated streaming portfolio management solution that can readily be embedded in any Web environment,only requires a browser, allowing users to track investments and access research data with ease.

The Quotestream Suite of products has been designed specifically for syndication and private branding by brokerage, banking, and other corporate clients. It can be fully integrated into existing user registration databases, portfolio systems and on-line trading systems, thus enabling any brokerage, clearing firm, bank or other corporation to seamlessly complement their existing product offerings and differentiate themselves from their competition.

QuoteMedia corporate clients purchase volume licenses for their customers, gaining significant increases in customer attraction, retention and activity, and increased revenues as a result.

Quotestream offersWeb and Desktop offer the user tencustom portfolios and watchlists, market summaries, NASDAQLevel 1 and Level 2 data, a last-ten-tradetrade trend meter, volume leaders, top gainers and losers, company news, insider activity, SEC filings, research, analysis and opinions, earnings forecasts, news, index/stock ticker, intraday through twenty-yearand historical charting, interactive charting, desktop pop-up alerts, and email alerts. Users may fully customize their workspaces to suit their needs. The design also offers a very simple point-and-click and drag-and-drop navigation with little or no typing involved. Quotestream displays in full screen mode, providing a comprehensive professional trade terminal-style interface.

QuoteMedia’s Quotestream Mobile is a revolutionary mobile companion to the desktopDesktop and Web product that allows users to access financial data, news, and charting in real-time or delayed modes, from many different handheld devices. Users are able to access and manage their Quotestream portfolios wirelessly through a cellular telephone or other mobile devices. Quotestream Mobile offers an extensive array of featuresallows users to manage their portfolios and advanced functionality,watchlists, and access market research on phones and tablets. Quotestream Mobile supports a large selection of mobile devices, including iPhone™,iOS™ and Android™, BlackBerry™, and several other handheld devices.

.

Quotestream Mobile can be integrated with any brokerage/clearing firm'sfirm’s existing on-line trading platform without the installation of expensive business enterprise servers. Additionally, the application is designed to allow private branding by brokerage, banking, and other corporate clients.

Quotestream Mobile, Quotestream Desktop, and Quotestream DesktopWeb are true companion products as any changes made to portfolios in either application are automatically reflected in the other.

Quotestream™ Professional

Quotestream Professional is designed specifically for use by financial services professionals and their key support personnel, 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 Professional was created with the latest technology, making QuoteMedia’s professional application one of the most sophisticated, user-friendly and dependable market data and technical analysis solutions available to market professionalsprofessionals today. It provides true thin client access as there is no software to download, no upgrades to install, and no technical staff required. Quotestream Professional is accessed via the Internet, avoiding expensive server and circuit infrastructure requirements.



Quotestream Professional also features wirelessmobile access to the same portfolios and market data entitlements through mobile devices. The desktop and mobile applications work in a companion relationship, where any changes made on one device immediately transfer to the other.

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Web Portfolio Manager

The Web Portfolio Manager is a user-friendly yet powerful solution allowing users to track their holdings, conduct in-depth research and analyze performance for all stocks, mutual funds and indices listed on any of the major global exchanges.

The Web Portfolio Manager provides immediate Web access to detailed Quote Data, Market and Company News, Charting, Depth / Level II, Filings, Historical Data, Snap Quotes and more. The Web Portfolio Manager is an efficient and economical solution for both the new and experienced investor.

The Web Portfolio Manager offers corporate clients such as banks, wealth management companies, brokerages, clearing firms and Web portals an ideal opportunity to cost-effectively provide premium online portfolio management services for their investor customers.

The Web Portfolio Manager can be integrated with the Quotestream products so that changes in any one platform, including real-time data entitlements, are reflected across the other systems.

Quotestream ConnectTM

As discussed previously,

Quotestream ConnectTM is a hybrid of our existing Data Feed Services, and our Portfolio Management Systems. It is a new method of delivering real-time data feeds to individual users to power third party applications. In most cases, this allows QuoteMedia to retain Vendor of Record status with the exchanges - resulting in significant savings for our clients in resources and exchange fees.

Products Competitive Advantage

Our products attract a broad market base, targeting corporate clients worldwide and providing comprehensive financial data services in a wide selection of custom packages. Markets for our services include:

·

Online brokerages

·

Mutual fund companies 

·

Full-service brokerage firms

·

Internet service providers 

·

Banks and other financial institutions

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Media companies 

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Financial Web sites

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Publishers and Data firms 

·

Web portals

Public companies
Investor relations firms

Corporate financial intranets and extranets
Mutual fund companies
Internet service providers
Media companies
Publishers

·

Wealth management companies

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Public companies

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Individual traders and investors

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Investor relations firms

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Securities exchanges

Our financial data services provide a sensible solution to the high up-front cost of in-house developed software. We leverage our technical talent and innovative infrastructure across multiple client platforms, thus creating an economical, efficient and scalable system that can manage and deliver information application capabilities to an unlimited number of entities from data centers and content feeds across the worldwide WebInternet and over telecommunicationsdedicated lines. Our data feeds have among the lowest latency of any available in the market and are developed and delivered using technology that is more current than that used by many major competitors in this market. Our marketing strategy is based on the following key competitive advantages:



Superior Products - Our goal has always been to create the best products on the market. We develop all of our products in-house and take pride in creating quality applications. Our products stand out for their superior design, user-friendliness, ease of implementation, customizability, reliability, data speed, accuracy and comprehensiveness.

Custom Development - QuoteMedia’s ability to provide complete custom design and development services differentiates us from our competitors. We can create custom market data applications and software engineered precisely to our clients’ specifications, and the speed with which we are able to take a product from concept to deliverable truly sets us apart.

Data Speed and Quality - Our connections to the world’s exchanges for equities and derivatives have most sources of latency removed allowing us to deliver extremely fast, accurate, and reliable data.

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Single Source Provider - Clients are eager to acquire premium market data feeds, financial applications, streaming solutions, and news and research information from a single source provider. Rather than having to license applications, information and market data from multiple sources, our clients enjoy the benefits of dealing with a single comprehensive market data supplier.

Cutting Edge Data Delivery Technology - We use state-of-the-art hardware and software systems for maximum speed and efficiency. This provides us with a distinct advantage over our competitors, most of whom use outdated data delivery technologies based on legacy style data networks.

Effective Marketing - We have implemented a marketing strategy that focuses on multiple markets for our products and services, from individual nonprofessional end users to corporate and institutional clients and their customers.

Low Infrastructure Costs - Because of the unique technological advancements in data delivery developed by our company, our distribution model, and the strategic partnerships that are in place, we have maintained very low corporate overhead. All of our development is completed in-house, resulting in significant cost efficiencies. This allows us to focus our resources on data management, data acquisition, customer satisfaction, and business development activities. Our low-cost base of development and operation also allows us to maintain very competitive pricing.

Competition

Many companies provide financial market data and related information. Companies such as Bloomberg and Thomson ReutersRifinitiv and Factset are some of the data providers in this highly competitive marketplace.

While there are many financial data providers, what mainly differentiates us from others is that we offer clients a comprehensive solution for stock market-related information provisioning with more advanced technologies than employed by most of our competitors. Our diversity of technical expertise, agile responsiveness to custom corporate requirements and development needs, and proven commitment to superior delivery technologies have established QuoteMedia as a frontrunner in the financial market data industry.

QuoteMedia's

QuoteMedia’s array of products benefit clients with an exceptional number of strong technical differentiators in embedded, fully private-labeled and seamlessly integrated environments which combine to offer strong market differentiation.

Trademarks, Domain Names and Intellectual Property

We own the trademarks for “QuoteMedia”, “Quotestream” and “QMod”, the domain names www.quotemedia.com; www.quotestream.com; and www.quotestream.ca. We will continue to own and protect these key assets into the future.

We protect our other intellectual property by a combination of copyrights, trademarks and confidentiality agreements with our employees, customers and other agents.



Regulatory Issues

We are not subject to any special governmental regulation concerning our supplying of products and services to the marketplace, and we believe we are in compliance in all material respects with all existing regulations governing other aspects of our businesses.

Employees

We currently have a total of 8594 full-time employees, with 710 located in the United States and 7884 located in Canada. Our employees are not members of any union, nor have we entered into any collective bargaining agreements. We believe that we have a good relationship with our employees. With the successful implementation of our business plan, we may hire additional employees during fiscal 20212022 to handle anticipated growth in the areas of administration, programming, sales, marketing, and customer care.

RISKRISK FACTORS.

You should carefully consider the following factors, in addition to those discussed elsewhere in this report, in evaluating our company and our business.

Catastrophic events outside of our control may impact our business. The U.S. and global markets have, from time to time, experienced periods of disruptions due to a natural disaster, such as a tsunami, power shortage, or flood; public health crises, such as a pandemic or epidemic; political crises, such as terrorism, war, or other conflict; or other events outside of our control that may occur and adversely impact our business and operating results. The outbreak of the COVID-19 pandemic and the resulting response by governments and individuals around the world has caused contractioninstability in global economies. The conflict in Ukraine has also caused instability in global economies. We arewill closely monitoringmonitor the impact of the COVID-19 pandemic and the conflict in the Ukraine on all aspects of our business, including how it will impact team members, customers, suppliers, and global markets. The extent to which COVID-19 and the Ukraine conflict may impact our business will depend on future developments, which are highly uncertain and cannot be predicted.

Declining activity levels in the securities markets or the failure of market participants, could lower demand for our services. Our business is dependent upon the health of the financial markets as well as the financial health of the participants in those markets. The recent uncertainty in the global financial markets has resultedcould result in lower activity levels, including lower trading volumes and a substantial reduction in the number of issuances of new securities. It hascould also ledlead to the collapse of some market participants. Some of the demand for financial market data is dependent upon activity levels in the securities markets, while other demand is static and is not dependent on activity levels. In the event that a downturn in the global financial markets results in a prolonged, significant decline in activity levels or continues to have an adverse impact on the financial condition of our customers, our revenue could be materially adversely affected.

The impact of cost-cutting pressures across the industries we serve could lower demand for our services.During 20202021 we saw customers continue their focus on containing or reducing costs as a result of the more challenging market conditions, and this trend may continue into 2021.2022. Customers within the financial services industry that strive to reduce their operating costs may continue to reduce their spending on financial market data and related services. If customers elect to reduce their spending with us, our results of operations could be materially adversely affected. Alternatively, customers may use other strategies to reduce their overall spending on financial market data services by consolidating their spending with fewer vendors, by selecting vendors with lower-cost offerings or by self-sourcing their need for financial market data. If customers elect to consolidate their spending on financial market data services with other vendors instead of us, if we cannot price our services as aggressively as the competition, or if customers elect to self-source their needs, our results of operations could be materially adversely affected.

Consolidation of financial services within and across industries, or the failure of financial services firms could lower demand for our services. The recent recession hasin 2020 resulted in consolidation among some participants in the financial markets and the collapse of others. We continue to deliver services to a number of customers currently involved in the process of a merger or acquisition. As consolidation occurs and synergies are achieved, there may be fewer potential customers for our services. There are two types of consolidations: consolidations within an industry, such as banking; and across industries, such as consolidations of insurance, banking and brokerage companies. When two companies that separately subscribe to or use our services combine, they may terminate or reduce duplicative subscriptions for our services, or if they are billed on a usage basis, usage may decline due to synergies created by the business combination. A large number of cancellations, or lower utilization on an absolute dollar basis resulting from consolidations, could have a material adverse effect on our revenue. In addition, if financial services firms accounting for a material percentage of our revenues or profit cease operations as a result of bankruptcy and the assets of such customers are not acquired by successor entities, such events could have a material adverse effect on our results of operations.



Adverse capital and credit market conditions could limit our access to capital.The capital and credit markets have been experiencing extreme volatility and disruption for the past few years. Disruptions, uncertainty or volatility in the capital and credit markets may limit our access to capital required to operate and grow our business. As such, we may be unable to raise capital or bear an unattractive cost of capital which could reduce our financial flexibility.

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If we are unable to maintain relationships with key suppliers and providers of market data, we would not be able to provide our services to our customers. We depend on key suppliers for the data we provide to our customers. Some of this data is exclusive to particular suppliers, such as national stock exchanges, and cannot be obtained from other suppliers. In other cases, although the data may be available from secondary sources, the secondary source may not be as adequate or reliable as the primary or preferred source, or we may not be able to obtain replacement data from an alternative supplier without undue cost and expense, if at all. We generally obtain data via license agreements. The disruption of any license agreement with a major data supplier could disrupt our operations and lead to an adverse impact on our results of operations.

A prolonged outage at one of our data centers that we share could result in reduced revenue and the loss of customers. Our customers rely on us for time-sensitive, up-to-date data that is reliably delivered. Our business is dependent on our ability to rapidly and efficiently process substantial quantities of data and transactions on our computer-based networks and systems. Our computer operations and those of our suppliers and customers are vulnerable to interruption by fire, natural disaster, power loss, telecommunications failure, terrorist attacks, acts of war, internet failures, computer viruses and other events beyond our reasonable control. We maintain multiple redundant data centers to minimize the risk that any such event will disrupt operations. In addition, we maintain insurance for such events. However, the business interruption insurance we carry may not be sufficient to compensate us fully for losses or damages that may occur as a result of such events. Any such losses or damages incurred by us could have a material adverse effect on our business. Although we seek to minimize these risks through security measures, controls and redundant data centers, there can be no assurance that such efforts will be successful or effective.

We compete against companies with greater financial resources. We operate in highly competitive markets in which we compete with other distributors of financial and business information and related services. We expect competition to continue to be rigorous. Some of our competitors and potential competitors have significantly greater financial, technical and marketing resources than we have. These competitors may be able to expand product offerings and data content more effectively, and to respond more rapidly than us to new or emerging technologies, changes in the industry or changes in customer needs. They may also be in a position to devote greater resources to the development, promotion and sale of their products. Increased competition in the future could limit our ability to maintain or increase our market share or maintain our margins and could have a material adverse effect on our business, financial condition or operating results.

New product offerings by competitors or new technologies could cause our services to become obsolete. We operate in an industry that is characterized by rapid and significant technological change, frequent new services, data content and coverage enhancements, and evolving industry standards. Without the timely introduction of new services and data content and coverage enhancements, our services could become technologically obsolete or inadequate over time, in which case our revenue and operating results would suffer. We expect our competitors to continue to improve the performance of their current services, to enhance data content and coverage and to introduce new services and technologies. These competitors may adapt more quickly to new technologies, changes in the industry and changes in customers’ requirements than we can. If we fail to adequately anticipate customers’ needs and technological trends accurately, we will be unable to introduce new services into the market and our ability to compete would be materially adversely impacted. Further, if we are unsuccessful at developing and introducing new services that are appealing to customers, with acceptable prices and terms, or if any such new services are not made available in a timely manner, our ability to compete would be materially adversely impacted. In both cases our ability to generate revenue could suffer and our business and operating results could be materially adversely affected. We will need to successfully enhance or add to current services in order to effectively expand into new geographic areas. In addition, new services, data content and coverage that we may develop and introduce may not achieve market acceptance and would result in lower revenue.



We may need additional capital with which to implement our business plan and there is no agreement with any third party to provide such capital. Implementing our business plan may require additional equity or debt financing. If we require additional funding or determine it appropriate to raise additional funding in the future, there is no assurance that adequate funding, whether through additional equity financing, debt financing, or other sources, will be available when needed or on terms acceptable to us. Further, any such funding may result in significant dilution to existing stockholders. The inability to obtain sufficient funds from operations and external sources when needed may have a material adverse effect on our business, results of operations, and financial condition.

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We depend on key personnel and expect to hire additional personnel.Our performance substantially depends on the services of David M. Shworan, President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary of our company. The loss of Mr. Shworan, or our other key employees, could have a material adverse effect on our business. Our future success will also depend in large part upon our ability to attract and retain highly skilled management, technical engineers, sales and marketing personnel, and finance and technical personnel. Competition for such personnel is intense and there can be no assurance that we will be able to attract and retain such personnel. The loss of the services of any key personnel, the inability to attract or retain qualified personnel in the future, or any delays in hiring required personnel, particularly technical engineers and sales personnel, could have a material adverse effect on our business, results of operations, and financial condition.

We may need to spend significant amounts of money to protect against security breaches. A party who is able to circumvent our security measures could misappropriate proprietary information or cause interruptions in our Internet operations. We may be required to expend significant capital and resources to protect against the threat of such security breaches or to alleviate problems caused by such breaches. Consumer concern over Internet security has been, and could continue to be, a barrier to commercial activities requiring consumers to send their credit card information over the Internet. Computer viruses, break-ins, or other security problems could lead to misappropriation of proprietary information and interruptions, delays, or cessation in service to our customers. Moreover, until more comprehensive security technologies are developed, the security and privacy concerns of existing and potential customers may inhibit the growth of the Internet as a merchandising medium. Were these risks to occur, our business, results of operations, and financial condition could be materially adversely affected.

The success of our anticipated future growth depends upon our ability to successfully manage the growth of our proposed operations. We expect to experience significant growth in our number of employees and scope of operations. Our future success will depend upon our ability to successfully manage the expansion of our operations. Our ability to manage and support our growth effectively will depend on our ability to implement adequate improvements to financial and management controls, reporting, order entry systems, and other procedures and hire sufficient numbers of financial, accounting, administrative, and management personnel. Our expansion and the resulting growth in the number of our employees will result in increased responsibility for both existing and new management personnel. There can be no assurance that we will be able to identify, attract, and retain experienced accounting and financial personnel. Our future operating results will depend on the ability of our management and other key employees to implement and improve our systems for operations, financial control, and information management and to recruit, train, and manage our employee base. There can be no assurance that we will be able to achieve or manage any such growth successfully or to implement and maintain adequate financial and management controls and procedures. Any inability to do so may have a material adverse effect on our business, results of operations, and financial condition. Our future success depends upon our ability to address potential market opportunities while managing our expenses to match our ability to finance operations. This need to manage our expenses may place a significant strain on our management and operational resources. If we are unable to manage our expenses effectively, our business, results of operations, and financial condition may be adversely affected.



Penny stock rules may make buying or selling our common stock difficult. Our common stock in the past has been, and from time to time in the future may be, subject to the "penny stock"“penny stock” rules as promulgated under the Securities Exchange Act of 1934. In the event that no exclusion from the definition of a "penny stock"“penny stock” under the Exchange Act is available, then any broker engaging in a transaction in our common stock will be required to provide each customer with:

A risk disclosure document;
Disclosure of market quotations, if any;
Disclosure of the compensation of the broker-dealer and its salesperson in the transaction; and
Monthly account statements showing the market values of our securities held in the customer's accounts.

·

A risk disclosure document;

·

Disclosure of market quotations, if any;

·

Disclosure of the compensation of the broker-dealer and its salesperson in the transaction; and

·

Monthly account statements showing the market values of our securities held in the customer’s accounts.

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The bid and offer quotation and compensation information must be provided prior to effecting the transaction and must be contained on the customer'scustomer’s confirmation. Certain brokers are less willing to engage in transactions involving "penny stocks"“penny stocks” as a result of the additional disclosure requirements described above, which may make it more difficult for holders of our common stock to dispose of their shares.

Investors should not expect to receive a dividend in the future.We have never paid any cash dividends on our common stock and do not currently anticipate that we will pay dividends in the foreseeable future. Instead, we intend to apply earnings to the expansion and development of our business.

ITEM 1B.

UNRESOLVEDUNRESOLVED STAFF COMMENTS.

None.

ITEM 2.

PROPERTIES.
PROPERTIES.

We lease executive office space in Fountain Hills, Arizona. The term of this lease expires June 30, 2023.

We lease office space for technical staff in Vancouver, British Columbia, Canada. The term of this lease expires July 31, 2025. We lease office space for sales and customer support staff in Parksville, British Columbia, Canada. The term of this lease expires April 30, 2021.

2026.

We believe that our current leased space is sufficient to meet our needs for the next 12 months and that the property is currently in acceptable condition. Beyond that, we anticipate the need to expand our lease facilities in all locations as our company grows. We have no other properties and have no agreements to acquire any properties.

ITEM 3.

LEGAL LEGAL PROCEEDINGS.

None.

ITEM 4.

MINE MINE SAFETY DISCLOSURES.

None.


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PART II

ITEM 5.

MARKETMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock is quoted on the OTCQB tier of the OTC Markets under the symbol "QMCI."“QMCI.” As of March 8, 2020,2022, there were approximately 161155 holders of record of our common stock. As of March 8, 2021,2022, the closing price for our common stock was $0.19.

$0.16.

As of March 8, 2021,2022, there were 125,885 shares outstanding of Series A Redeemable Convertible Preferred Stock, par value $0.001 per share. The Series A Redeemable Convertible Preferred Stock have a redeemable value of $25 and is convertible into 83.33 shares of our common stock if the common stock trades above $0.30 for 90 consecutive trading days.

Dividend Policy

We have never paid any cash dividends to holders of our common stock, and for the foreseeable future we intend to retain any earnings to finance our operations and do not anticipate paying cash dividends with respect to our common stock. Subject to the preferences that may be applicable to any then-outstanding preferred stock, the holders of our common stock will be entitled to receive such dividends, if any, as may be declared by our Board of Directors, from time to time, out of legally available funds. Payments of any cash dividends in the future will depend on our financial condition, results of operations, and capital requirements as well as other factors deemed relevant by our Board of Directors.

Issuer Purchases of Equity Securities

During the fourth quarter of 2020,2021, no shares of our common stock were repurchased, and no Series A Redeemable Convertible Preferred Stock were redeemed.

ITEM 6.

SELECTED FINANCIAL DATA.
Not required.
ITEM 7. 
MANAGEMENT’S DISCUSSION AND ANALYSISManagement’s Discussion and Analysis OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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 Applications,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 ApplicationsAPIs 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 of our content solutions are completely customizable and embed directly into client Web pages for seamless integration with existing content. We are continuing to develop and launch new modules of QModTM,QModTM, 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, and 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 ApplicationsAPIs revenue totals.

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Our Portfolio Management Systems consist of QuotestreamTM,QuotestreamTM, 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.

A key feature of QuoteMedia’s business model is that all of 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 three 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 ApplicationsAPIs 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 three years and are automatically renewed unless notice is given 90 days prior to the expiration of the contract term.

Business Environment and Trends

The global financial markets have experienced extreme volatility and disruption in recent months. The outbreak ofover the past couple years due to the COVID-19 pandemic and the resulting response by governments and individuals around the world has caused contraction inpandemic. While global economies. Wefinancial markets are recovering, risk still exists; therefore, we will continue to closely monitoringmonitor the impact of the COVID-19 pandemic on all aspects of our business, including how it will impact team members, customers, suppliers, and global markets.

Our operations also have been affected by a range of external factors related to the COVID-19 pandemic that are not within our control. For example, many jurisdictions imposed a wide range of restrictions on the physical movement Most of our employees, and vendors to limit the spread of COVID-19. We have taken numerous steps, and willparticularly in Canada, continue to take further actions, in our approach to addressing the COVID-19 pandemic. To protect the health and safety of our team members, we successfully transitioned our workforce to remote work environments. We are also working closely with our clients to support them as they implement their own contingency plans, helping them access our products and services remotely.
While our licensed-based revenue is generally more recurring in nature, the uncertainty caused by the COVID-19 pandemic has led some clients to delay purchasing decisions, product and service implementations or cancel or reduce spending with us. Weus in the early stages of the pandemic. While the impact of COVID-19 appears to be diminishing, we are focused on maintaining a strong balance sheet and liquidity position and have been actively evaluatingwill continue to closely monitor the potential impact of COVID-19. We have implemented certain cost control efforts to help us mitigate the impact that COVID-19 has had on our financial position and operating results. As much uncertainty still exists, and we will continue to adjust our COVID-19 response going forward as circumstances dictate.


On April 24, 2020,

Recent events in the Company received an $8,000 grantUkraine and Russia have also caused disruptions in the global financial markets. While we do not have any operations or customers in the Ukraine or Russia, we will continue to monitor the situation as parta prolonged conflict could impact our business.

In the first quarter of the Economic Injury Disaster Loan (“EIDL”) program through the Small Business Administration (“SBA”). The SBA grant was recorded as other income on our consolidated2022 we signed statements of operations in 2020. On May 4, 2020, the Company received a $133,257 loan under the Paycheck Protection Program (“PPP”). On February 19, 2021, the Company received forgiveness from the SBA for its PPP loan in its entirety. The Company will recognize the forgiveness of the loan as other income on our consolidated statements of operations in 2021. See Financial Statement Note 12 – Paycheck Protection Program and Note 14 – Subsequent Events.

The Canadian dollar depreciated 1% when comparing average exchange rates for the year ended December 31, 2020 and 2019. The exchange rate fluctuation decreased both Canadian dollar revenues and expenses once translated into U.S. dollars for the year ended December 31, 2020 when comparedwork with two large multinational financial institutions to the same period in 2019 but had a minimal impact on our net income. In recent months, the Canadian dollar has appreciated versus the U.S. dollar, which will have a minimal impact on our net income but could have a negative impact on cashflow.
Our revenue grew 5% when comparing the year ended December 31, 2020 to the comparative 2019 period.start services while their contracts are being finalized. Based on those new contracts and our other clients currently under contract, and new contracts signed subsequent to 2020, we expect acceleratedcomparable revenue growth forin fiscal 2022 to the 22% revenue growth we achieved in 2021. We expect to significantly improve upon the $212,372 net income figure reported in 2021, despite current market conditions related to COVID-19.
however, as we are anticipating higher gross margins in 2022.

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Plan of Operation

For 2021

In 2022 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.

This expansion is expected to result in both increased revenue and costs in 2022.

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 Applications,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 20212022 include broad expansion of data and news coverage, including the addition of a wide array of international exchange data and news and 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 in the coming year.

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 costs 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;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 achievemaintain profitable operations.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis discusses our financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet date and reported amounts of revenue and expenses during the reporting period. On an ongoing basis we evaluate our estimates and judgments. We base our estimates and judgments on historical experience and on various other factors that are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.

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Revenue recognition

In accordance with Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), we recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services by applying the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

We exercise judgment in assessing the creditworthiness of our customers and therefore in our determination of whether collectability is reasonably assured. Should changes in conditions cause us to determine that these criteria are not met for future transactions, revenue recognized in future reporting periods could be adversely affected.

Capitalized Application Software

Capitalized software costs include 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. Capitalized costs associated with internally developed software are amortized over three years which is their estimated economic life. We exercise significant judgment in determining that capitalized application software costs meet the criteria established in Financial Accounting Standards Board (“FASB”) ASC 350-40, Internal-Use Software.

The most significant estimates are the allocation of our development personnel’s time working on capitalized internally developed software .

For the years ended December 31, 20202021 and 2019,2020, the Company capitalized $1,673,689$2,201,224 and $1,351,922$1,673,689 of costs, respectively, related to upgrades and enhancements made to existing software applications. For the years ended December 31, 20202021 and 2019,2020, amortization expenses associated with the internally developed application software was $1,125,918$1,462,039 and $918,902,$1,125,918, respectively. At December 31, 2020,2021, the remaining book value of the capitalized application software was $2,262,893

$3,002,078.

Recent Accounting Pronouncements

Recently Adopted

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies the accounting for goodwill by eliminating step 2 from the goodwill impairment test. Under the new ASU, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized for the amount by which the carrying amount exceeds its fair value. The Company adopted the new standard on January 1, 2020. There was no impact upon adoption to our consolidated financial statements and related disclosures.



In August 2018,December 2019, the FASB issued ASU 2018-13, Fair Value Measurement2019-12, Income Taxes (Topic 820),740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. The standard removes modifiescertain exceptions to the general principles in Topic 740 and adds various disclosure requirements around the topic in orderalso clarifies and amends existing guidance to clarify and improve the cost-benefit nature of disclosures. For example, disclosures around transfers between fair value hierarchy Levelsconsistent application. The new standard will be removedeffective for interim and further detail around changes in unrealized gains and losses for the period and unobservable inputs determining Level 3 fair value measurements will be added. The Companyannual periods beginning after December 15, 2020, with early adoption permitted. We adopted the new standardthis Topic 740 on January 1, 2020. There was no impact upon2021. The adoption toof the new tax standard did not have a material effect on our consolidated financial statements and related disclosures.
In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Topic 350, "Intangibles - Goodwill and Other" to determine which implementation costs to capitalize as assets or expense as incurred. The Company adopted the new standard on January 1, 2020. There was no impact upon adoption to our consolidated financial statements and related disclosures.
statements.

Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13:2016-13, Financial Instruments-Credit Losses (Topic 326), which changes the impairment model for most financial assets, including accounts receivable, and replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. The guidance is effective for the Company for interim and annual periods beginning after December 15, 2022. Early adoption is permitted. The Company is currently assessing the timing and impact of adopting ASU 2016-13 on the Company’s consolidated financial statements.

Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies the complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity’s own equity. The new standard is effective for fiscal years beginning after December 15, 2021. The Company is currently assessing the timing and impact of adopting ASU 2020-06 on the Company’s consolidated financial statements.

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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.

Results of Operations

Revenue

 
 
Years ended December 31
 
 
 
 
 
 
 
 
 
2020
 
 
2019
 
 
Change ($)
 
 
Change (%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Corporate Quotestream
 $4,520,099 
 $3,841,722 
 $678,377 
  18%
   Individual Quotestream
  1,871,728 
  1,829,149 
  42,579 
  2%
Total Portfolio Management Systems
  6,391,827 
  5,670,871 
  720,956 
  13%
Interactive Content and Data Applications
  6,010,397 
  6,122,860 
  (112,463)
  (2%)
Total Licensing Revenue
 $12,402,224 
 $11,793,731 
 $608,493 
  5%

 

 

Years ended December 31

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change ($)

 

 

Change (%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Corporate Quotestream

 

$6,399,618

 

 

$4,520,099

 

 

$1,879,519

 

 

 

42%

 Individual Quotestream

 

 

2,281,966

 

 

 

1,871,728

 

 

 

410,238

 

 

 

22%

Total Portfolio Management Systems

 

 

8,681,584

 

 

 

6,391,827

 

 

 

2,289,757

 

 

 

36%

Interactive Content and Data APIs

 

 

6,492,788

 

 

 

6,010,397

 

 

 

482,391

 

 

 

8%

Total Licensing Revenue

 

$15,174,372

 

 

$12,402,224

 

 

$2,772,148

 

 

 

22%

Total licensing revenue increased 5%22% when comparing the years ended December 31, 20202021 and 2019.2020. The increase is a result of a 13%36% increase in revenue from licensing our Portfolio Management Systems partially offset by a 2% decreaseand 8% increase in revenue from our Interactive Content and Data Applications.


APIs.

Total Portfolio Management System revenue increased by 13%36% when comparing the years ended December 31, 20202021 and 2019,2020, due to increases in both Corporate Quotestream and Individual Quotestream revenue.

Corporate Quotestream revenue increased 42% for the year ended December 31, 2021 from the comparative period in 2020 due to new contracts signed since the comparative period and an increase in the number of subscribers for existing clients. The increasesincrease is due to new products added over the past couple years that are attributablecontinuing to gain traction in part tothe market, as well as improvements and upgrades made to our existing Portfolio Management products. We haveproducts as we continue to improve functionality and add new data offerings. The increase is also been abledue to take advantage of new opportunities arising from the economic downturn relatedstock exchange fee price increases passed on to COVID-19 as financial sector firms are looking for more efficient and cost-effective solutions to their data and technology needs. We alsoour customers. Finally, we believe there has been an increase in the need for our services for customers working remotely during the pandemic, a trend we expect to be permanent.

Corporatecontinue for the foreseeable future.

Individual Quotestream revenue increased 18%22% for the year ended December 31, 20202021 from the comparative period in 2019 due2020. There were increases in total users and average revenue per user, which can be attributed to new contracts signedmarketing efforts initiated since the comparative periodperiods and an increase in the number of subscribers for existing clients.

Individual Quotestreammore customers working remotely due to COVID-19.

Interactive Content and Data APIs revenue increased 2%8% for the year ended December 31, 20202021 from the comparative period in 2019. The increase is2020 due to an increase in users.

Interactive Contentnew customers. The success of new products introduced over the past couple years such as QModTM and Data Application revenue decreased 2% for the year ended December 31, 2020 from the comparative period in 2019 due to an increase in cancellations and temporary suspensions driven by the economic hardship on someexpansion of our smaller customers relateddata coverage have allowed us to COVID-19.
attract new clients.

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Cost of Revenue and Gross Profit Summary

 
 
Years ended December 31
 
 
 
 
 
 
 
 
 
2020
 
 
2019
 
 
Change ($)
 
 
Change (%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue
 $6,702,321 
 $5,781,756 
 $920,565 
  16%
 
    
    
    
    
Gross profit
 $5,699,903 
 $6,011,975 
 $(312,072)
  (5%)
 
    
    
    
    
Gross margin %
  46%
  51%
    
    

 

 

Years ended December 31

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change ($)

 

 

Change (%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$8,438,658

 

 

$6,702,321

 

 

$1,736,337

 

 

 

26%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$6,735,714

 

 

$5,699,903

 

 

$1,035,811

 

 

 

18%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin %

 

 

44%

 

 

46%

 

 

 

 

 

 

 

 

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.

We launched a major growth initiative starting in early 2020, investing in infrastructure, new product development, data collection, and the expansion of our global market coverage. As a result, our cost of revenue increased 16%26% for the year ended December 31, 20202021 from the comparative period in 2019.2020. We incurred increased stock exchange fees related to increased usage and new market data added in 2020,2021, and a $207,016$336,121 increase in amortization expense associated with internally developed application software.

Overall, the cost of revenue increased as a percentage of sales, as evidenced by our gross margin percentage that decreased to 44% in 2021 from 46% in 2020 from 51% in 2019.2020. Our gross margins have also been impacted by our revenue mix, as our Portfolio Management System revenue has been growing at a higher rate than our Interactive Content and Data APIs revenue which typically has more fixed costs and higher gross margins.

Operating Expenses Summary

 
 
Years ended December 31
 
 
 
 
 
 
 
 
 
2020
 
 
2019
 
 
Change ($)
 
 
Change (%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales and marketing
 $2,214,815 
 $1,879,404 
 $335,411 
  18%
General and administrative
  2,479,037 
  2,279,861 
  199,176 
  9%
Software development
  1,649,765 
  1,253,055 
  396,711 
  32%
Total operating expenses
 $6,343,617 
 $5,412,320 
 $931,297 
  17%

 

 

Years ended December 31

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change ($)

 

 

Change (%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

$2,507,169

 

 

$2,214,815

 

 

$292,354

 

 

 

13%

General and administrative

 

 

2,538,429

 

 

 

2,479,037

 

 

 

59,392

 

 

 

2%

Software development

 

 

1,712,558

 

 

 

1,649,765

 

 

 

62,793

 

 

 

4%

Total operating expenses

 

$6,758,156

 

 

$6,343,617

 

 

$414,539

 

 

 

7%

Sales and Marketing

Sales and marketing expenses consist primarily of sales and customer service salaries, investor relations, travel and advertising expenses. Sales and marketing expenses increased 18%13% when comparing the years ended December 31, 20202021 and 20192020 mainly due to an increase in salaries from personnel added during the period.

year to support our growth initiative.

General and Administrative

General and administrative expenses consist primarily of salaries expense, office rent, insurance premiums, and professional fees. General and administrative increased 9%2% when comparing the years ended December 31, 20202021 and 2019.2020. Increase was mainly due to increases in salary and health benefits as we added new personnel in 2020, and an increase in professional fees offset by a decrease in bad debts primarilyas we experienced unusually high bad debts in 2020 due to the impacts of COVID-19.


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.

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Software development expenses increased 32%4% for the year ended December 31, 20202021 when compared to fiscal 2019.2020. This increase was mainly due to hiring additional development personnel required to expand our product lines and improve our infrastructure.

We capitalized $1,673,688$2,201,222 of development costs for the year ended December 31, 2020,2021, compared to $1,351,922$1,673,689 in 2019.2020. These 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

 
 
Years ended December 31,
 
 
 
2020
 
 
2019
 
 
 
 
 
 
 
 
Foreign exchange loss
 $(3,791)
 $(31,385)
Interest expense
  (4,582)
  (6,259)
Other income
  8,000 
  - 
Total other income and (expenses)
 $(373)
 $(37,644)

 

 

Years ended December 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Foreign exchange gain (loss)

 

$107,382

 

 

$(3,791)

Interest expense

 

 

(2,641)

 

 

(4,582)

Other income

 

 

133,257

 

 

 

8,000

 

Total other income and (expenses)

 

$237,998

 

 

$(373)

Foreign Exchange Gain (Loss)

We incurred a foreign exchange gain of $107,382 for the year ended December 31, 2021 compared to foreign exchange loss of $3,791 for the year ended December 31, 2020.

Foreign exchange gains and losses arise from the re-measurement of Canadian dollar monetary assets and liabilities into U.S. dollars. We have a net Canadian dollar liability; therefore, we incur a foreign exchange gain when the Canadian dollar depreciates from the period beginning date, and a loss when the Canadian dollar appreciates. Gains and losses arising from exchange rate fluctuations between transaction and settlement dates for foreign currency denominated transactions are also included in foreign exchange gains and losses.

We incurred a foreign exchange loss of $3,791 for the year ended December 31, 2020 mainly attributable to the re-measurement of Canadian dollar monetary assets and liabilities into U.S. dollars, as the Canadian dollar appreciated 2% versus the U.S. dollar when comparing the foreign exchange rates at December 31, 2020 to the rate at December 31, 2019.

Interest Expense

Interest expense relates primarily to the interest expense associated with our finance leases and was relatively unchanged from the comparative periods. Interest expense of $4,582$2,641 was incurred for the year ended December 31, 2020,2021, compared to $6,259$4,582 incurred for the year ended December 31, 2019.


2020.

Other Income

Other income was $133,257 for the year ended December 31, 2021. On May 4, 2020, the Company received a $133,257 loan under the Paycheck Protection Program (“PPP”). The PPP loan was forgiven in its entirety on February 19, 2021 and was recognized as other income. No other income was recognized in the comparative 2020 period. See Financial Statement Note 12 “Paycheck Protection Program”.

Provision for Income Taxes

In 2020,2021, the Company recorded Canadian income tax expense of $2,237,$3,184, compared to a Canadian income tax expense of $3,014$2,237 in 2019.

2020.

Net Income (loss) for the Period

As a result of the foregoing, net lossincome for the year ended December 31, 20202021 was $646,324$212,372 compared to net incomeloss of $558,997$646,324 for the year ended December 31, 2019. The loss in 2020 was a result of the increased spending due to our expansion initiatives and the impact of COVID-19 which slowed our revenue growth.2020. Basic earnings (loss) per share was $(0.01)$0.00 and $0.01$(0.01) for the years ended December 31, 20202021 and 2019,2020, respectively. Diluted earnings per share was $(0.01)$0.00 and $0.00$(0.01) for the years ended December 31, 2021 and 2020, and 2019, respectively.

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Liquidity and Capital Resources

Our cash totaled $258,705 at December 31, 2021, as compared with $417,910 at December 31, 2020, as compared with $815,487 at December 31, 2019, a decrease of $397,577.$159,205. Net cash of $1,327,979$2,158,387 was provided by operations for the year ended December 31, 2020,2021, primarily due to the net lossincome during the period adjusted for non-cash charges, and an increase in accounts payable.payable, and a decrease in prepaid expenses. Net cash used in investing activities for the year ended December 31, 20202021 was $1,825,009$2,305,627 resulting primarily from capitalized application software costs. Cash provided by financing activities for the year ended December 31, 2020 was $99,453 due to the Paycheck Protection Program loan.

Our current liabilities include $544,902 in deferred revenue. The expected costs necessary to realize the deferred revenue in 2021 are minimal. Our long-term liabilities include our $133,257 Paycheck Protection Program loan which was forgiven on February 19, 2021. Also, ifIf circumstances dictate, however, we have the flexibility to reduce development spending to maintain a strong liquidity position.
Cash used in financing activities for the year ended December 31, 2021 was $11,965 from repayment of finance lease obligations.

We typically operate with a working capital deficit. As of December 31, 2021 our working capital deficit is $2,097,067, however current liabilities include $622,497 in deferred revenue and the expected costs necessary to realize the deferred revenue are minimal.

As discussed above in the “Business Environment and Trends” section, in the first quarter of 2022 we signed statements of work with two large multinational financial institutions. Pursuant to those contracts, to date we have received upfront development payments totaling $400,000 in 2022.

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. However, to implement our business plan may require additional financing. Additional financings 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.

ITEM 7A. 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
6A. Quantitative and qualitative disclosures about market risk.

Not required.

ITEM 8.

FINANCIAL7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Reference is made to the Financial Statements, the Notes thereto, and the Report of Independent Public Accountants thereon commencing at page F-1 of this Report, which Financial Statements, Notes, and report are incorporated herein by reference.

ITEM 9. 

CHANGES8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.


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Table of Contents

ITEM 9A. 

CONTROLS8A. 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, 2020.2021. 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'sCommission’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.

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.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020.2021. In making this assessment, management used the criteria set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our assessment, we believe that, as of December 31, 2020,2021, the Company’s internal control over financial reporting was effective based on those criteria.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to Sarbanes-Oxley Rule 404 (c).

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.

Subsequent to 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 with regard to significant deficiencies and material weaknesses.


ITEM 9B.   

OTHER8B. OTHER INFORMATION.

Not applicable.

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Table of Contents

PART III

ITEM 10. 

DIRECTORS,9. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The following table sets forth certain information regarding our directors and executive officers.

Name

Age

Age

Position

Robert J. Thompson

78

79

Chairman of the Board

Keith J. Randall

54

55

Chief Executive Officer and Chief Financial Officer, and Director

David M. Shworan

53

54

President and Chief Executive Officer of QuoteMedia, Ltd., and Director

Our listed directors will serve until the next annual meeting of stockholdersor 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'sQueen’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.


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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, 2020, 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.     

EXECUTIVE10. 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, 20202021 and 20192020 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 2020.

2021.

Summary Compensation Table

Name and Principal Position
 
Year
 
 
Salary ($)
 
 
Bonus ($)
 
 
Option Awards ($) (1),(4),(5)
 
 
All Other Compensation ($) (2)
 
 
Total ($)
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Keith J. Randall (3)2020
 $185,000 
  - 
  - 
  - 
 $185,000 
Chief Executive Officer & CFO,
2019
 $162,000 
  - 
  - 
  - 
 $162,000 
QuoteMedia, Inc. 
    
    
    
    
    
 
    
    
    
    
    
David M. Shworan (4)2020
 $350,000 
 $50,000 
  - 
  - 
 $400,000 
Chief Executive Officer,2019
  - 
  - 
 $360,000 
  - 
 $360,000 
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. On December 28, 2017, the Company entered into a Compensation Agreement with Mr. Shworan, pursuant to which, among other things, Mr. Shworan acknowledged and agreed that he has received from the Company all compensation to which he is entitled for services provided to the Company through the December 28, 2017 transaction date. Also pursuant to the Compensation Agreement, Mr. Shworan is granted 1,250 warrants per month to purchase shares of Series A Preferred Stock at an exercise price equal to $1.00 per share in lieu of a cash salary. A total of $360,000 of stock-based compensation expense was recognized in 2019. See Financial Statement Note 9 (c). Effective January 1, 2020, Mr. Shworan was paid a base salary of $350,000 and was awarded a bonus of $50,000 in December 2020 which was accrued but unpaid as of December 31, 2020.

Name and Principal Position

 

Year

 

Salary ($)

 

 

Bonus ($)

 

 

Option Awards ($) (1),(4),(5)

 

 

All Other Compensation ($) (2)

 

 

Total ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Keith J. Randall (3)

 

2021

 

$185,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

$185,000

 

Chief Executive Officer &

 

2020

 

$185,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

$185,000

 

CFO, QuoteMedia, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David M. Shworan (4)

 

2021

 

$400,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

$400,000

 

Chief Executive Officer,

 

2020

 

$350,000

 

 

$50,000

 

 

 

-

 

 

 

-

 

 

$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. In 2020 Mr. Shworan was paid a base salary of $350,000 and was awarded a bonus of $50,000 which was accrued as of December 31, 2020 and paid in 2021.

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Table of Contents

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
 
  1,250,000 
  2,750,000 
 $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

 

 

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

 

 

 

 

2,500,000

 

 

 

1,500,000

 

 

$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

 

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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 2020.2021. We compensate our independent director with directors’ fees and stock options. Options Awards represent the fair value of option awards granted in 2020,2021, 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
 $120,000 
  - 
  - 
 $120,000 

Name

 

Fees Earned or

Paid in Cash ($)

 

 

Option Awards ($)

 

 

All Other Compensation ($)

 

 

Total ($)

 

Robert J. Thompson

 

$120,000

 

 

 

-

 

 

 

-

 

 

$120,000

 

The Chairman of the Board, Robert J. Thompson, currently receives a monthly retainer of $10,000. 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 grant. From time to time, we grant to our directors options or warrants to purchase additional shares of common stock.


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ITEM 12. 

SECURITY11. 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 8, 2021 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)
  41,401,800 
  40.1%
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
  43,806,062 
  41.9%
 
    
    
5% Stockholders (6)
  12,247,400 
  13.5%
 (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 8, 2021. The numbers and percentages shown include the shares of common stock actually owned as of March 8, 2021 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 8, 2021 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:
   10,511,800 shares of common stock owned by Mr. Shworan and vested options and warrants to acquire directly 8,850,000 shares of common stock
   17,002,500 shares owned by Mr. Shworan's wife
   1,037,500 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 a 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 a 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 200,000 shares of common stock.
(6) 
Represents 5,959,373 shares of our common stock owned by CMG Family Irrevocable Trust and 6,288,027 shares of our common stock owned by Sue E. Guelpa Trust.

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)

 

 

41,401,800

 

 

 

40.8%

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

 

 

43,806,062

 

 

 

42.6%

 

 

 

 

 

 

 

 

 

5% Stockholders (6)

 

 

6,478,027

 

 

 

7.2%

(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 8, 2021. The numbers and percentages shown include the shares of common stock actually owned as of March 8, 2021 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 8, 2021 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:

·

10,511,800 shares of common stock owned by Mr. Shworan and vested options and warrants to acquire directly 8,850,000 shares of common stock

·

17,002,500 shares owned by Mr. Shworan’s wife

·

1,037,500 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 a 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 a 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 6,478,027 shares of our common stock owned by Sue Guelpa.

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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, 2020.

 
 
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
  5,320,000 
 $0.04 
  7,329,628 
 
    
    
    
Equity Compensation Plans not approved by stockholders
  21,052,803 
 $0.03 
  N/A 
Total
  26,372,803 
    
  7,329,628 
2021.

 

 

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, 2020,2021, 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 nonincentive 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 exerciseability of any outstanding options at any time for any reason.


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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 a majority 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, 2020,2021, there are 15,000,000 shares of common stock authorized for issuance pursuant to the 2003 plan. As of December 31, 2020,2021, 2,350,372 shares of common stock had been issued upon exercise of options granted under the 2003 plan, and there were 5,320,0004,720,000 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"“nonemployee director” as defined under Rule 16b-3 under the Exchange Act and an "outside director"“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“change in control price"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“fair market value"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"“limited SARs” exercisable for a stated period of time following a change in control of our company, as discussed below.


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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 of 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“change of control"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"“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“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“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.

·

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“change in control"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.

·

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.

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Amendment and Termination

Our Board of Directors may amend, alter, suspend, discontinue, or terminate the 2003 plan or the committee'scommittee’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. 

CERTAIN12. 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, 20162021 for approximately $7,365$6,500 per month. David M. Shworan is a control person of 410734 B.C. Ltd. At December 31, 2020,2021, there were no amounts 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. AtFor the years ended December 31, 2021 and 2020, there was $11,970 and $7,500 due to Bravenet related to this agreement.agreement, respectively. David M. Shworan is a control person of Bravenet. 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.


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ITEM 14.       

PRINCIPAL13. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Aggregate fees billed to our company for the fiscal years ended December 31, 20202021 and 20192020 by Moss Adams LLP, our principal accountants, are as follows:

 
 
2020
 
 
2019
 
 
 
 
 
 
 
 
Audit Fees
 $104,515 
 $106,550 
Audit-Related Fees
 $- 
 $- 
Tax Fees
 $- 
 $- 
All Other Fees
 $- 
 $- 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Audit Fees

 

$108,985

 

 

$104,515

 

Audit-Related Fees

 

$-

 

 

$-

 

Tax Fees

 

$-

 

 

$-

 

All Other Fees

 

$-

 

 

$-

 

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 Moss Adams LLP described above under the captions “Audit Fees” were approved by our Audit Committee.


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PART IV

ITEM 15.       

EXHIBITS14. 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

(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

Second Amended and Restated Articles of Incorporation (1)

Amended and Restated Bylaws (1)

Amended 1999 Equity Incentive Compensation Plan (2)

2003 Equity Incentive Compensation Plan (1)

List of Subsidiaries

Consent of Moss Adams LLP, Independent Registered Public Accounting Firm

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.

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.

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.

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.

__________________
(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.

SIGNATURES

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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: March 30, 2022QUOTEMEDIA, INC.
    
Date: March 26, 2021By:/s/ Keith J. Randall

Keith J. Randall 
  Keith J. RandallChief Executive Officer and Chief Financial Officer 
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/

 /s/ Robert J. Thompson                          

Robert J. Thompson

Chairman of the Board

March 26, 202130, 2022

Robert J. Thompson 

/s/ David M. Shworan                              

Director

March 30, 2022

David M. Shworan

Director

March 26, 2021

/s/

 /s/ Keith J. Randall

Keith J. Randall

Chief Executive Officer and Chief Financial Officer and

March 30, 2022

Keith J. Randall 

Director (Principal Executive and Financial and Accounting Officer)

March 26, 2021

34

Table of Contents

QuoteMedia, Inc.

Index

Index to Consolidated Financial Statements

F-1 – F-2

F-3

F-4

F-5

F-6

F-7 – F-17

35

Table of Contents


Report

qmci_10kimg1.jpg

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors

Quotemedia, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidatedbalance sheets of Quotemedia, Inc. (the “Company”) as of December 31, 20202021 and 2019,2020, the related consolidated statements of operations, changes in series A redeemable convertible preferred stock and stockholders'stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively, referred to as the “consolidatedfinancial statements”). In our opinion, the consolidatedfinancial statements present fairly, in all material respects, the consolidatedfinancial position of the Company as of December 31, 20202021 and 2019,2020, and the consolidated results of its operations and its cash flows for the years then ended, 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 consolidatedfinancial statements, whether due to error or fraud, and performing procedures to 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.

F-1

F-1

Table of Contents

Critical Audit Matters

The critical audit matter communicated below is a 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 (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters 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 a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Capitalized Software Development Costs

As described in Note 6 to the consolidated financial statements, the Company capitalizes certain development costs that relate to internal-use software incurred during the application development stage. These costs may be related to new products as well as existing products when those costs will result in significant additional functionality. The Company’s capitalized internal-use software asset, net of accumulated amortization, was $2.3$3.0 million as of December 31, 2020.2021. The Company capitalized $1.7$2.2 million of internal-use software development costs during the year ended December 31, 2020.

2021.

The principal consideration for our determination that capitalized internal-use software development costs is a critical audit matter is the degree of subjectivity involved in management’s assessment of which projects met the capitalization criteria, stage of development, and nature of costs that qualify for capitalization. This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating 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.

The primary procedures we performed to address this critical audit matter included:

Obtaining an understanding of the Company’s process to identify development projects and development costs qualifying for capitalization
Evaluating management’s listing of active development projects by reviewing project reports and discussions with development personnel
Sampling the Company’s capitalized costs and validating the nature of the activities performed and time devoted to capitalizable activities with individual software developers and project managers
Inspecting underlying payroll data to evaluate the hourly rates used for cost capitalization

·

Obtaining an understanding of the Company’s process to identify development projects and development costs qualifying for capitalization,

·

Evaluating management’s listing of active development projects by review of project reports and 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 guidance,

·

Obtaining a schedule compiled by management to compute the capitalized costs by project and performing testing over the completeness and mathematical accuracy of the hours and payroll rates included within the schedule,

·

Testing 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, and

·

Agreeing the calculated amounts for capitalization to underlying payroll data to evaluate the reasonableness of hourly rates used for cost capitalization.

/s/ Moss Adams LLP


Phoenix, Arizona

March 26, 2021

30, 2022

We have served as the Company’s auditor since 2017.


F-2

F-2

Table of Contents

QUOTEMEDIA, INC.

CONSOLIDATED BALANCE SHEETS

As of December 31,

 
 
2020
 
 
2019
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
    Cash and cash equivalents
 $417,910 
 $815,487 
    Accounts receivable, net
  698,334 
  680,759 
    Prepaid expenses
  108,477 
  103,093 
    Other current assets
  113,826 
  47,793 
    Total current assets
  1,338,547 
  1,647,132 
 
    
    
    Deposits
  15,886 
  16,084 
    Property and equipment, net
  2,755,537 
  2,273,087 
    Goodwill
  110,000 
  110,000 
    Intangible assets
  61,914 
  51,265 
    Operating lease right-of-use assets
  671,402 
  328,676 
 
    
    
        Total assets
 $4,953,286 
 $4,426,244 
 
    
    
LIABILITIES AND STOCKHOLDERS’ DEFICIT
    
    
 
    
    
Current liabilities:
    
    
    Accounts payable and accrued liabilities
 $2,026,741 
 $1,286,340 
    Deferred revenue
  544,902 
  579,343 
    Current portion of operating lease liabilities
  164,843 
  172,049 
    Current portion of finance lease liabilities
  11,951 
  33,914 
        Total current liabilities
  2,748,437 
  2,071,646 
 
    
    
Paycheck Protection Program loan (Note 12)
  133,257 
  - 
Long-term portion of operating lease liabilities
  504,783 
  167,496 
Long-term portion of finance lease liabilities
  2,108 
  13,949 
 
    
    
Mezzanine equity:
    
    
    Series A Redeemable Convertible Preferred stock, $0.001 par value,
    
    
    550,000 shares designated; Shares issued and outstanding:
    
    
    123,685 at December 31, 2020 and December 31, 2019
  2,983,857 
  2,983,857 
 
    
    
Stockholders’ deficit:
    
    
    Preferred stock, 10,000,000 shares authorized, 550,000 shares designated
  - 
  - 
    Common stock, $0.001 par value, 150,000,000 shares authorized, shares issued and
    
    
    outstanding: 90,477,798 at December 31, 2020 and December 31, 2019, respectively
  90,479 
  90,479 
    Additional paid-in capital
  19,605,883 
  19,568,011 
    Accumulated deficit
  (21,115,518)
  (20,469,194)
        Total stockholders’ deficit
  (1,419,156)
  (810,704)
 
    
    
        Total liabilities and stockholders’ deficit
 $4,953,286 
 $4,426,244 

2021

2020

ASSETS

Current assets:

Cash and cash equivalents

$258,705$417,910

Accounts receivable, net

624,127698,334

Prepaid expenses

220,399108,477

Other current assets

39,226113,826

Total current assets

1,142,4571,338,547

Deposits

16,00515,886

Property and equipment, net

3,417,9772,755,537

Goodwill

110,000110,000

Intangible assets

64,85661,914

Operating lease right-of-use assets

829,960671,402

Total assets

$5,581,255$4,953,286

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ DEFICIT

Current liabilities:

Accounts payable and accrued liabilities

$2,434,389$2,026,741

Deferred revenue

622,497544,902

Current portion of operating lease liabilities

180,544164,843

Current portion of finance lease liabilities

2,09411,951

Total current liabilities

3,239,5242,748,437

Paycheck Protection Program loan (Note 12)

0133,257

Long-term portion of operating lease liabilities

532,782504,783

Long-term portion of finance lease liabilities

02,108

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, 2021 and December 31, 2020

2,983,8572,983,857

Stockholders’ deficit:

Common stock, $0.001 par value, 150,000,000 shares authorized, shares issued and outstanding: 90,477,798 at December 31, 2021 and December 31, 2020

90,47990,479

Additional paid-in capital

19,637,75919,605,883

Accumulated deficit

(20,903,146)(21,115,518)

Total stockholders’ deficit

(1,174,908)(1,419,156)

Total liabilities and stockholders’ deficit

$5,581,255$4,953,286

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

F-3

F-3

Table of Contents

QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For each of the years ended December 31,

 
 
2020
 
 
2019
 
 
 
 
 
 
 
 
REVENUE
 $12,402,224 
 $11,793,731 
 
    
    
COST OF REVENUE
  6,702,321 
  5,781,756 
 
    
    
GROSS PROFIT
  5,699,903 
  6,011,975 
 
    
    
OPERATING EXPENSES
    
    
 
    
    
Sales and marketing
  2,214,815 
  1,879,404 
General and administrative
  2,479,037 
  2,279,861 
Software development
  1,649,765 
  1,253,055 
 
  6,343,617 
  5,412,320 
 
    
    
OPERATING PROFIT (LOSS)
  (643,714)
  599,655 
 
    
    
OTHER INCOME (EXPENSES), NET
    
    
 
    
    
Foreign exchange loss
  (3,791)
  (31,385)
Interest expense
  (4,582)
  (6,259)
Other income
  8,000 
  - 
 
  (373)
  (37,644)
 
    
    
INCOME (LOSS) BEFORE INCOME TAXES
  (644,087)
  562,011 
 
    
    
Income tax expense
  (2,237)
  (3,014)
 
    
    
NET INCOME (LOSS)
 $(646,324)
 $558,997 
 
    
    
EARNINGS (LOSS) PER SHARE
    
    
 
    
    
Basic earnings (loss) per share
 $(0.01)
 $0.01 
Diluted earnings (loss) per share
 $(0.01)
 $0.00 
 
    
    
WEIGHTED AVERAGE SHARES OUTSTANDING
    
    
 
    
    
Basic
  90,477,798 
  90,477,798 
Diluted
  90,477,798 
  118,745,576 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

REVENUE

 

$15,174,372

 

 

$12,402,224

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE

 

 

8,438,658

 

 

 

6,702,321

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

6,735,714

 

 

 

5,699,903

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

2,507,169

 

 

 

2,214,815

 

General and administrative

 

 

2,538,429

 

 

 

2,479,037

 

Software development

 

 

1,712,558

 

 

 

1,649,765

 

 

 

 

6,758,156

 

 

 

6,343,617

 

 

 

 

 

 

 

 

 

 

OPERATING LOSS

 

 

(22,442)

 

 

(643,714)

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSES), NET

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange gain (loss)

 

 

107,382

 

 

 

(3,791)

Interest expense

 

 

(2,641)

 

 

(4,582)

Other income

 

 

133,257

 

 

 

8,000

 

 

 

 

237,998

 

 

 

(373)

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

 

 

215,556

 

 

 

(644,087)

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

(3,184)

 

 

(2,237)

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$212,372

 

 

$(646,324)

 

 

 

 

 

 

 

 

 

EARNINGS (LOSS) PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share

 

$0.00

 

 

$(0.01)

Diluted earnings (loss) per share

 

$0.00

 

 

$(0.01)

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

90,477,798

 

 

 

90,477,798

 

Diluted

 

 

119,313,662

 

 

 

90,477,798

 

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

F-4

F-4

Table of Contents

QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SERIES A REDEEMABLE CONVERTIBLE

PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

For the years ended December 31, 20202021 and 2019

 
 
Series A Redeemable Convertible
 Preferred Stock
 
 

Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
Number of Shares
 
 
Amount
 
 
Number of
Shares
 
 
Amount
 
 
Additional Paid-in Capital
 
 
Accumulated Deficit
 
 
Total Stockholders’ Equity (Deficit)
 
Balance, January 1, 2019
  125,885 
 $3,037,952 
  90,477,798 
 $90,479 
 $19,157,202 
 $(21,028,191)
 $(1,780,510)
 
    
    
    
    
    
    
    
Preferred shares issued (redeemed)
  (2,200)
  (54,095)
    
    
  (905)
    
  (905)
 
    
    
    
    
    
    
    
Stock-based compensation
    
    
    
    
  411,714 
    
  411,714 
 
    
    
    
    
    
    
    
Net income
    
    
    
    
    
  558,997 
  558,997 
 
    
    
    
    
    
    
    
Balance, December 31, 2019
  123,685 
  2,983,857 
  90,477,798 
  90,479 
  19,568,011 
  (20,469,194)
  (810,704)
 
    
    
    
    
    
    
    
Stock-based compensation
    
    
    
    
  37,872 
    
  37,872 
 
    
    
    
    
    
    
    
Net loss
    
    
    
    
    
  (646,324)
  (646,324)
 
    
    
    
    
    
    
    
Balance, December 31, 2020
  123,685 
 $2,983,857 
  90,477,798 
 $90,479 
 $19,605,883 
 $(21,115,518)
 $(1,419,156)
2020

 

 

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, January 1, 2020

 

 

123,685

 

 

$2,983,857

 

 

 

90,477,798

 

 

$90,479

 

 

$19,568,011

 

 

$(20,469,194)

 

$(810,704)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

37,872

 

 

 

 

 

 

 

37,872

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(646,324)

 

 

(646,324)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2020

 

 

123,685

 

 

 

2,983,857

 

 

 

90,477,798

 

 

 

90,479

 

 

 

19,605,883

 

 

 

(21,115,518)

 

 

(1,419,156)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31,876

 

 

 

 

 

 

 

31,876

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

212,372

 

 

 

212,372

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2021

 

 

123,685

 

 

$2,983,857

 

 

 

90,477,798

 

 

$90,479

 

 

$19,637,759

 

 

$

(20,903,146)

 

 

$

(1,174,908)

 

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

F-5

F-5

Table of Contents

QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For each of the years ended December 31,

 
 
2020
 
 
2019
 
OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 $(646,324)
 $558,997 
 
    
    
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
    
    
    Depreciation and amortization
  1,331,910 
  1,113,129 
    Stock-based compensation expense
  37,872 
  411,714 
Changes in assets and liabilities:
    
    
    Accounts receivable
  (17,575)
  (142,678)
    Prepaid expenses
  (5,384)
  29,263 
    Other current assets
  (66,033)
  123,121 
    Deposits
  198 
  (745)
    Accounts payable, accrued and other liabilities
  727,756 
  (197,855)
    Deferred revenue
  (34,441)
  (128,537)
Net cash provided by operating activities
  1,327,979 
  1,766,409 
 
    
    
INVESTING ACTIVITIES:
    
    
 
    
    
    Purchase of fixed assets
  (134,193)
  (325,655)
    Purchase of intangible assets
  (17,127)
  - 
    Capitalized application software
  (1,673,689)
  (1,351,922)
Net cash used in investing activities
  (1,825,009)
  (1,677,577)
 
    
    
FINANCING ACTIVITIES:
    
    
 
    
    
    Proceeds from Paycheck Protection Program loan
  133,257 
  - 
    Repayment of finance lease obligations
  (33,804)
  (28,677)
    Redemption of preferred stock
  - 
  (55,000)
Net cash provided by (used in) financing activities
  99,453 
  (83,677)
 
    
    
Net increase (decrease) in cash and cash equivalents
  (397,577)
  5,155 
 
    
    
Cash and cash equivalents, beginning of period
  815,487 
  810,332 
 
    
    
Cash and cash equivalents, end of period
 $417,910 
 $815,487 
 
    
    
See supplementary information (Note 11)
    
    

 

 

2021

 

 

2020

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$212,372

 

 

$(646,324)

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,640,245

 

 

 

1,331,910

 

Stock-based compensation expense

 

 

31,876

 

 

 

37,872

 

Gain on forgiveness of PPP loan (Note 12)

 

 

(133,257)

 

 

0

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

74,207

 

 

 

(17,575)

Prepaid expenses

 

 

(111,922)

 

 

(5,384)

Other current assets

 

 

74,600

 

 

 

(66,033)

Deposits

 

 

(119)

 

 

198

 

Accounts payable, accrued and other liabilities

 

 

292,790

 

 

 

727,756

 

Deferred revenue

 

 

77,595

 

 

 

(34,441)

Net cash provided by operating activities

 

 

2,158,387

 

 

 

1,327,979

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of fixed assets

 

 

(94,406)

 

 

(134,193)

Purchase of intangible assets

 

 

(9,999)

 

 

(17,127)

Capitalized application software

 

 

(2,201,222)

 

 

(1,673,689)

Net cash used in investing activities

 

 

(2,305,627)

 

 

(1,825,009)

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from Paycheck Protection Program loan

 

 

-

 

 

 

133,257

 

Repayment of finance lease obligations

 

 

(11,965)

 

 

(33,804)

Net cash provided by (used in) financing activities

 

 

(11,965)

 

 

99,453

 

 

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(159,205)

 

 

(397,577)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

 

417,910

 

 

 

815,487

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$258,705

 

 

$417,910

 

See supplementary information (Note 11)                 

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

F-6

F-6

Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.SIGNIFICANTSIGNIFICANT ACCOUNTING POLICIES

a) Nature of operations

We are a software developer and distributor of financial market data and related services to a global marketplace. We specialize in the collection, aggregation, and delivery of both delayed and real-time financial data content via the Internet. We develop 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 QuoteMedia, Inc. All intercompany transactions and balances have been eliminated.

c) Foreign currency translation and transactions

The U.S. dollar is the functional currency of all our company'scompany’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. We maintain our accounts primarily at one financial institution. At times throughout the year, our cash and cash equivalents balances may exceed amounts insured by the Federal Deposit Insurance Corporation.

e) Allowance for doubtful accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. The Company determines the allowance by reviewing the age of the receivables and assessing the anticipated ability of customers to pay. No collateral is required for any of the receivables and the Company does not usually apply financing charges to outstanding accounts receivable balances. If the financial condition of our customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. The allowance for doubtful accounts and related bad debt expense increaseddecreased in the year ended December 31, 20202021 due to increasedde-escalation of risk of the impact ofrelated to COVID as some customers altered their payment pattern during the pandemic.pandemic and are recovering. The allowance for doubtful accounts was $175,000$150,000 and $80,000$175,000 at December 31, 20202021 and 2019,2020, respectively. Bad debt expense for the years ended December 31, 2021 and 2020 were $38,061 and 2019 were $203,257, and $43,689, respectively.

f) Property and equipment

Fixed assets 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 yearyears ended December 31, 2020. We retired fixed assets with original costs totaling $199,021 during the year ended December 31, 2019. The Company received no proceeds for the fixed assets retired during the year ended December 31, 2019. The fixed assets retired were fully depreciated therefore no gains or losses were recognized.

2021 and 2021.

Capitalized software development include 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 our software engineers. Capitalized costs associated with internally developed software are amortized over three years which is their estimated economic life.

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, 20202021 and 2019.

2020.

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). The effect of a stock split or reverse split is applied retroactively to preceding periods.

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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 carryforwards. 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 Canadian income tax expense of $2,237$3,184 and $3,014$2,237 for the years ended December 31, 20202021 and 2019,2020, respectively (see Note 8).

i) Use of estimates

The preparation of 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, and (v) 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 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. The Company expensed $1,649,765$1,712,558 and $1,253,055$1,649,765 in software development costs during the years ended December 31, 20202021 and 2019,2020, respectively (see Note 6).

k) Revenue

The Company generates substantially all of its revenue from subscriptions for access to its software products and related support. We license financial market data information on a monthly, quarterly, or annual basis. Our products and services are divided into two main categories: Interactive Content and Data Applications and Portfolio Management and Real-Time Quote Systems.

Subscriptions are sold for a fixed fee and revenue is recognized ratably over the term of the subscription. The Company does not provide the customer 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

Contract Balances

Timing of revenue recognition may differ from the timing of invoicing to customers. We record a receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. Upfront set-up or development fees are deferred and recognized over the 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 deferred 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.

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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

l) Financial instruments

Financial instruments consist principally of cash, accounts receivable, accounts payable and notes payable. We believe 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.period on a straight-line basis . We used the Black-Scholes valuation model to calculate the fair value of common stock options and warrants.

F-8
QUOTEMEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

n) Recent Accounting Pronouncements

Recently Adopted

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies the accounting for goodwill by eliminating step 2 from the goodwill impairment test. Under the new ASU, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized for the amount by which the carrying amount exceeds its fair value. The Company adopted the new standard on January 1, 2020. There was no impact upon adoption to our consolidated financial statements and related disclosures.

In August 2018,December 2019, the FASB issued ASU 2018-13,Fair Value Measurement2019-12, Income Taxes (Topic 820),740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. The standard removes modifiescertain exceptions to the general principles in Topic 740 and adds various disclosure requirements around the topic in orderalso clarifies and amends existing guidance to clarify and improve the cost-benefit nature of disclosures. For example, disclosures around transfers between fair value hierarchy Levelsconsistent application. The new standard will be removedeffective for interim and further detail around changes in unrealized gains and losses for the period and unobservable inputs determining Level 3 fair value measurements will be added. The Companyannual periods beginning after December 15, 2020, with early adoption permitted. We adopted the new standardthis Topic 740 on January 1, 2020. There was no impact upon2021. The adoption toof the new tax standard did not have a material effect on our consolidated financial statements and related disclosures.
In August 2018, the FASB issued ASU 2018-15,Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Topic 350, "Intangibles - Goodwill and Other" to determine which implementation costs to capitalize as assets or expense as incurred. The Company adopted the new standard on January 1, 2020. There was no impact upon adoption to our consolidated financial statements and related disclosures.
statements.

Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13,Financial Instruments-Credit Losses (Topic 326), which changes the impairment model for most financial assets, including accounts receivable, and replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. The guidance is effective for the Company for interim and annual periods beginning after December 15, 2022. Early adoption is permitted. The Company is currently assessing the timing and impact of adopting ASU 2016-13 on the Company’s consolidated financial statements.

Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies the complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity’s own equity. The new standard is effective for the Company for fiscal years beginning after December 15, 2023. The Company is currently assessing the timing and impact of adopting ASU 2020-06 on the Company’s consolidated financial statements.

Other accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.

2.LIQUIDITY

The Company had a net lossincome of $646,324$212,372 for the year ended December 31, 20202021 and net cash of $1,327,979$2,158,387 was provided by operating activities, and although we have a working capital deficit of $1,409,890$2,097,067 as of December 31, 2020,2021, current liabilities include $544,902$622,497 in deferred revenue and the expected costs necessary to realize the deferred revenue in 20202021 are minimal. Long-term liabilities also include our Paycheck Protection Program loan (see Notes 12) that was forgiven on February 19, 2021 (see Note 14).

Implementation of our business plan may require additional financing. Additional financings may come from future equity or debt offerings that could result in dilution to our stockholders. Based on the factors discussed above, management believes that our cash on hand and cash generated from operations will be sufficient to fund operations for a period of one year after issuance of these consolidated financial statements.

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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.REVENUE

Disaggregated Revenue

The Company provides market data, financial web content solutions and cloud-based applications. Our revenue by type of service consists of the following for the years ended December 31,:

 
 
2020
 
 
2019
 
 
 
 
 
 
 
 
Portfolio Management Systems
 
 
 
 
 
 
   Corporate Quotestream
 $4,520,099 
 $3,841,722 
   Individual Quotestream
  1,871,728 
  1,829,149 
Interactive Content & Data Applications
  6,010,397 
  6,122,860 
Total revenue
 $12,402,224 
 $11,793,731 
F-9
QUOTEMEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Portfolio Management Systems

 

 

 

 

 

 

Corporate Quotestream

 

$6,399,618

 

 

$4,520,099

 

Individual Quotestream

 

 

2,281,966

 

 

 

1,871,728

 

Interactive Content & Data APIs

 

 

6,492,788

 

 

 

6,010,397

 

Total revenue

 

$15,174,372

 

 

$12,402,224

 

Deferred Revenue

Changes in deferred revenue for the period were as follows:

Balance at December 31, 2019
$579,343
Revenue recognized in the current period from the amounts in the beginning balance
(467,066)
New deferrals, net of amounts recognized in the current period
423,561
Effects of foreign currency translation
9,064
Balance at December 31, 2020
$544,902

Balance at December 31, 2020

 

$544,902

 

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

 

 

(422,118)

New deferrals, net of amounts recognized in the current period

 

 

500,936

 

Effects of foreign currency translation

 

 

(1,223)

Balance at December 31, 2021

 

$622,497

 

4.RELATED PARTIES

The Company entered into a five-year office lease with 410734 B.C. Ltd. effective May 1, 20162021 for approximately $7,365$6,500 per month. David M. Shworan is a control person of 410734 B.C. Ltd. At December 31, 2020,2021, there were no amounts 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. AtFor the years ended December 31, 2021 and 2020, there was $11,970 and $7,500 due to Bravenet related to this agreement.agreement, respectively. David M. Shworan is a control person of Bravenet. As a matter of policy all significant related party transactions are subject to review and approval by the Company’s Board of Directors.

5.LEASES

We have operating leases for corporate offices and finance leases for certain equipment. Our leases have remaining lease terms of 1 year to 5 years. We determine 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 our consolidated balance sheets. Finance lease assets and liabilities are included in property and equipment and finance lease liabilities, respectively, on our consolidated balance sheets. The Company renewed its lease for office space in Parksville, Canada as of May 1, 2021 for an additional 5 years resulting in a right of use asset and an offsetting lease liability of $233,978. The Company renewed its lease for office space in Vancouver, Canada as of August 1, 2020 for an additional 5 years resulting in a right of use asset and an offsetting lease liability of $507,753.

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 our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. We 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, we factor in options to extend or terminate leases when it is reasonably certain that we will exercise that option. We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain leases we account for the lease and non-lease components as a single lease component.

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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental balance sheet information related to leases at December 31, was as follows:

 
 
2020
 
 
2019
 
 
 
 
 
 
 
 
Operating Leases
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating lease right-of-use assets
 $671,402 
 $328,676 
 
    
    
Current portion of operating lease liability
 $164,843 
 $172,049 
Long-term portion of operating lease liability
  504,783 
  167,496 
Total operating lease liability
 $669,626 
 $339,545 
 
    
    
Finance Leases
    
    
 
    
    
Computer equipment on financing lease
 $101,049 
 $101,049 
Less: accumulated depreciation
  85,936 
  52,888 
Computer equipment on financing lease, net
 $15,113 
 $48,161 
 
    
    
Current portion of finance lease liability
  11,951 
  33,914 
Long-term portion of finance lease liability
  2,108 
  13,949 
Total finance lease liability
 $14,059 
 $47,863 
F-10
QUOTEMEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
2020
 
 
2019
 
 
 
 
 
 
 
 
Weighted Average Remaining Lease Term
 
 
 
 
 
 
    Operating leases
 
4.1 years
 
 
2.9 years
 
    Finance leases
 
0.9 years
 
 
1.5 years
 
 
 
 
 
 
 
 
Weighted Average Discount Rate
 
 
 
 
 
 
    Operating leases
  9.7%
  9.3%
    Finance leases
  8.8%
  8.9%

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Operating Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease right-of-use assets, net

 

$829,960

 

 

$671,402

 

 

 

 

 

 

 

 

 

 

Current portion of operating lease liability

 

$180,544

 

 

$164,843

 

Long-term portion of operating lease liability

 

 

532,782

 

 

 

504,783

 

Total operating lease liability

 

$713,326

 

 

$669,626

 

 

 

 

 

 

 

 

 

 

Finance Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Computer equipment on financing lease

 

$11,929

 

 

$101,049

 

Less: accumulated depreciation

 

 

11,929

 

 

 

85,936

 

Computer equipment on financing lease, net

 

$0

 

 

$15,113

 

 

 

 

 

 

 

 

 

 

Current portion of finance lease liability

 

 

2,094

 

 

 

11,951

 

Long-term portion of finance lease liability

 

 

0

 

 

 

2,108

 

Total finance lease liability

 

$2,094

 

 

$14,059

 

 

 

2021

 

 

2020

 

 

 

 

 

 

Weighted Average Remaining Lease Term

 

 

 

 

Operating leases

 

3.6 years

 

 

4.1 years

 

Finance leases

 

0.8 years

 

 

0.9 years

 

 

 

 

 

 

 

 

Weighted Average Discount Rate

 

 

 

 

 

 

Operating leases

 

 

9.8%

 

 

9.7%

Finance leases

 

 

7.5%

 

 

8.8%

Maturities of lease liabilities were as follows:

 
Year ending December 31,
 
Operating
Leases
 
 
Finance
Leases
 
 
 
 
 
 
 
 
2021
 $221,849 
 $12,387 
2022
  185,402 
  2,151 
2023
  171,075 
  - 
2024
  155,531 
  - 
2025
  83,139 
  - 
Total lease payments
  816,996 
  14,538 
Less imputed interest
  (147,370)
  (479)
Total
 $669,626 
 $14,059 

Year ending December 31

 

Operating

Leases

 

 

Finance

Leases

 

 

 

 

 

 

 

 

2022

 

$242,524

 

 

$2,151

 

2023

 

 

229,856

 

 

 

0

 

2024

 

 

215,966

 

 

 

0

 

2025

 

 

144,686

 

 

 

0

 

2026

 

 

20,490

 

 

 

0

 

Total lease payments

 

 

853,522

 

 

 

2,151

 

Less imputed interest

 

 

(140,196)

 

 

(57)

Total

 

$713,326

 

 

$2,094

 

The components of lease expense for the years ended December 31,were as follows:

 
 
2020
 
 
2019
 
Operating lease costs:
 
 
 
 
 
 
Operating lease costs
 $241,421 
 $184,634 
Short-term lease costs
  93,530 
  125,430 
Total operating lease costs
 $334,951 
 $310,064 
 
    
    
Finance lease costs:
    
    
Amortization
 $31,855 
 $35,053 
Interest
  2,926 
  5,795 
Total finance lease cost
 $34,781 
 $40,848 

 

 

2021

 

 

2020

 

Operating lease costs:

 

 

 

 

 

 

Operating lease costs

 

$259,191

 

 

$241,421

 

Short-term lease costs

 

 

89,634

 

 

 

93,530

 

Total operating lease costs

 

$348,825

 

 

$334,951

 

 

 

 

 

 

 

 

 

 

Finance lease costs:

 

 

 

 

 

 

 

 

Amortization

 

$15,113

 

 

$31,855

 

Interest

 

 

422

 

 

 

2,926

 

Total finance lease cost

 

$15,535

 

 

$34,781

 

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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental cash flow information related to leases was as follows:

 
 
2020
 
 
2019
 
Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
 
 
 
    Operating cash flows from operating leases
 $241,858 
 $190,719 
    Operating cash flows from finance leases
  2,926 
  5,795 
    Financing cash flows from finance leases
  34,258 
  31,015 
 
    
    
Right-of-use assets obtained in exchange for lease obligations:
    
    
    Operating leases
  507,753 
  207,034 

F-11
QUOTEMEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

2021

 

 

2020

 

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

 

 

 

 

 

 

Operating cash flows from operating leases

 

$262,060

 

 

$241,858

 

Operating cash flows from finance leases

 

 

422

 

 

 

2,926

 

Financing cash flows from finance leases

 

 

11,965

 

 

 

34,258

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Operating leases

 

 

233,978

 

 

 

507,753

 

6.PROPERTY AND EQUIPMENT

At December 31:

 
 
2020
 
 
2019
 
 
 
 
 
 
 
 
Computer equipment
 $1,237,396 
 $1,104,845 
Office furniture and equipment
  25,387 
  25,387 
Leasehold improvements
  13,651 
  12,009 
Capitalized application software
  11,273,884 
  9,600,195 
Total property and equipment
  12,550,318 
  10,742,436 
Less: accumulated depreciation and amortization
  (9,794,781)
  (8,469,349)
Property and equipment, net
 $2,755,537 
 $2,273,087 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Computer equipment

 

$1,330,548

 

 

$1,237,396

 

Office furniture and equipment

 

 

26,719

 

 

 

25,387

 

Leasehold improvements

 

 

13,573

 

 

 

13,651

 

Capitalized application software

 

 

13,475,108

 

 

 

11,273,884

 

Total property and equipment

 

 

14,845,948

 

 

 

12,550,318

 

Less: accumulated depreciation and amortization

 

 

(11,427,971)

 

 

(9,794,781)

Property and equipment, net

 

$3,417,977

 

 

$2,755,537

 

Property and Equipment are recorded at cost less accumulated depreciation. Depreciation 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

Capitalized application software

3 years


For the years ended December 31, 20202021 and 2019,2020, the Company capitalized $1,673,689$2,201,222 and $1,351,922$1,673,689 of costs, respectively, related to upgrades and enhancements made to existing software applications. Software applications are used by our subscribers to access, manage and analyze information in our databases. For the years ended December 31, 20202021 and 2019,2020, amortization expenses associated with the internally developed application software was $1,125,918$1,462,039 and $918,902,$1,125,918, respectively. At December 31, 2020,2021, the remaining book value of the capitalized application software was $2,262,893.

$3,002,078.

Depreciation expense for equipment and leaseholds for the years ended December 31, 2021 and 2020 was $171,149 and 2019 was $199,513, and $188,463, respectively.


7.INTANGIBLE ASSETS AND GOODWILL

At December 31:
 
2020
 
 
2019
 
 
 
 
 
 
 
 
Intangible assets:
 
 
 
 
 
 
   Software licenses
 $121,845 
 $104,718 
   Domain names
  10,570 
  10,570 
 
  132,415 
  115,288 
Less: accumulated amortization
  (70,501)
  (64,023)
Total intangible assets, net
 $61,914 
 $51,265 
 
    
    
Goodwill:
    
    
Purchase of business unit
 $110,000 
 $110,000 

At December 31:

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Intangible assets:

 

 

 

 

 

 

Software licenses

 

$121,845

 

 

$121,845

 

Domain names

 

 

20,569

 

 

 

10,570

 

 

 

 

142,414

 

 

 

132,415

 

Less: accumulated amortization

 

 

(77,558)

 

 

(70,501)

Total intangible assets, net

 

$64,856

 

 

$61,914

 

 

 

 

 

 

 

 

 

 

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 purchase option is 5 years which is the term of the option. The useful life of the software licenses and domain names is estimated to be 20 years. Amortization expense for amortized intangible assets was $6,478$7,057 and $5,764$6,478 for the years ended December 31, 2021 and 2020, and 2019, respectively.


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Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The estimated amortization expense of definite-lived intangible assets is as follows:

Year ending December 31,
 
 
 
 
 
 
 
2021
 $6,621 
2022
  6,621 
2023
  6,621 
2024
  6,621 
2025
  6,621 
Thereafter
  28,809 
Total
 $61,914 

Year ending December 31,

 

 

 

 

 

 

 

2022

 

$7,121

 

2023

 

 

7,121

 

2024

 

 

7,121

 

2025

 

 

7,121

 

2026

 

 

7,121

 

Thereafter

 

 

29,251

 

Total

 

$64,856

 

Goodwill is reported as an indefinite life intangible asset. We evaluate goodwill for impairment on an annual basis in accordance with FASB ASC 350-20, Goodwill. Through December 31, 20202021 we have not had any goodwill impairment.

8.INCOME TAXES

We account 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, 20202021 and 20192020 are as follows:

 
 
2020
 
 
2019
 
Tax provision (benefit) at the statutory rate of 21%
 $(136,209)
 $116,746 
State income taxes, net of federal income tax
  (25,108)
  17,012 
Stock-based compensation
  7,953 
  86,460 
Change in federal NOL
  (2,846)
  (1,090)
Change in valuation allowance
  165,505 
  (243,588)
Change in other items
  (9,296)
  24,460 
State income tax expense (benefit)
  51 
  50 
Canadian income tax expense (benefit)
  2,237 
  3,014 
Income tax expense
 $2,287 
 $3,064 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Tax provision (benefit) at the statutory rate of 21%

 

$43,916

 

 

$(136,209)

State income taxes, net of federal income tax

 

 

8,095

 

 

 

(25,108)

Stock-based compensation

 

 

6,694

 

 

 

7,953

 

Change in federal NOL

 

 

2,703

 

 

 

(2,846)

Change in valuation allowance

 

 

9,000

 

 

 

165,505

 

Change in other items

 

 

(70,408)

 

 

(9,295)

State income tax expense (benefit)

 

 

64

 

 

 

51

 

Canadian income tax expense (benefit)

 

 

3,184

 

 

 

2,237

 

Income tax expense

 

$3,248

 

 

$2,288

 

In 2020,2021, the Company recorded Arizona income tax expense of $51$64 and Canadian income tax expense of $2,237.$3,184. The Company does not have any material Canadian deferred tax assets or deferred tax liabilities.

As of December 31, 2020,2021, we had net operating loss carryforwards for federal and state income tax reporting purposes amounting to approximately $11,462,000$12,250,000 and $2,626,000$2,408,000 which expire in varying amounts through the year 2040.

The components of our deferred tax asset (liabilities) at December 31, 20202021 and 20192020 are as follows:

 
 
2020
 
 
2019
 
Tax effect of net operating loss carryforward
 $2,509,000 
 $2,235,000 
Property & equipment
  5,000 
  4,000 
Intangibles
  (552,000)
  (420,000)
Other
  42,000 
  19,000 
Less valuation allowance
  (2,004,000)
  (1,838,000)
Net deferred tax asset
 $- 
 $- 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

Tax effect of net operating loss carryforward

 

$2,703,000

 

 

$2,509,000

 

Property & equipment

 

 

4,000

 

 

 

5,000

 

Intangibles

 

 

(730,000)

 

 

(552,000)

Other

 

 

36,000

 

 

 

42,000

 

Less valuation allowance

 

 

(2,013,000)

 

 

(2,004,000)

Net deferred tax asset

 

$0

 

 

$0

 

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 $166,000$10,000 for the year ended December 31, 2020.2021. This is primarily due to the increase of federal and state net operating losses.

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 (2017-2020)(2017-2021) 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.


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Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


9.REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

a) Preferred Shares


Redeemable convertible preferred shares

We are authorized to issue up to 10,000,000 non-designated preferred shares at the Board of Directors’ discretion.

On December 28, 2017, a

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

At December 31, 2020,2021, 123,685 shares of Series A Redeemable Convertible Preferred Stock were outstanding. No shares of Series A Redeemable Convertible Preferred Stock were issued and no shares wereor redeemed during the yearyears ended December 31, 2020. No shares of Series A Redeemable Convertible Preferred Stock were issued,2021 and 2,200 shares were redeemed during the year ended December 31, 2019. The shares were redeemed at their $25 per share liquidation value.


2020.

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 addition, a limited amount of1,000 Series A Redeemable Convertible Preferred Stock may be redeemed at the holder’s option ifat the following criteria are met:

(i)Ifliquidation value of $25 per share if the cash balance of the Company as reported at the end of each fiscal quarter in 2018 exceeds $350,000, up to an aggregate of 600 Series A Redeemable Convertible Preferred Stock may be redeemed at the liquidation value of $25 per share.
(ii)If the cash balance of the Company as reported at the end of each fiscal quarter in 2019 exceeds $375,000, up to an aggregate of 800 Series A Redeemable Convertible Preferred Stock may be redeemed at the liquidation value of $25 per share.
(iii)If the cash balance of the Company as reported at the end of each fiscal quarter in 2020 and in subsequent years exceeds $400,000, up to an aggregate of 1,000 Series A Redeemable Convertible Preferred Stock may be redeemed at the liquidation value of $25 per share.
$400,000.

In accordance with ASC 480-10-S99, because a limited amount of Series A Redeemable Convertible Preferred Stock may be redeemed at the holder’s option if the above criteria are met, it was classified as mezzanine equity and not permanent equity.

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


b) Common Stock

stock

No shares of common stock were issued during the years ended December 31, 20202021 and 2019.

2020.

c) Stock Options and Warrants

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, 2020,2021, 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.

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.

F-14
QUOTEMEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2020, there are 15,000,000 shares of common stock authorized for issuance pursuant to the 2003 plan. As of December 31, 2020, 2,350,372 shares of common stock had been issued upon exercise of options granted under the 2003 plan, and there were 5,320,000 options outstanding under the 2003 plan.

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.

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Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2021, there are 15,000,000 shares of common stock authorized for issuance pursuant to the 2003 plan. As of December 31, 2021, 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.

Total estimated stock-based compensation expense, related to all the Company’s stock-based awards was comprised as follows:

 
 
2020
 
 
2019
 
 
 
 
 
 
 
 
Sales and marketing
 $27,072 
 $397,164 
General and administrative
  10,800 
  10,800 
Development
  - 
  3,750 
Stock based compensation expense
 $37,872 
 $411,714 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Sales and marketing

 

$16,956

 

 

$27,072

 

General and administrative

 

 

14,920

 

 

 

10,800

 

Stock based compensation expense

 

$31,876

 

 

$37,872

 

Common Stock Options and Warrants

There were 26,372,803

The following table summarizes our common stock warrantsoption and options outstanding at December 31, 2020. No stock options or warrants to purchase common stock were granted or exercisedwarrant activity for the years ended December 31, 20202021 and 2019.

2020:

 

 

Common Stock Options

 

and Warrants

 

 

Weighted-

Average Grant Date Exercise Price

 

 

 

 

 

 

 

 

Outstanding at January 1, 2020

 

 

26,372,803

 

 

$0.06

 

Forfeited during the period

 

 

-

 

 

$0.00

 

Outstanding at December 31, 2020

 

 

26,372,803

 

 

$0.06

 

Granted during the period

 

 

1,030,000

 

 

$0.04

 

Forfeited during the period

 

 

(1,630,000)

 

$0.04

 

Outstanding at December 31, 2021

 

 

25,772,803

 

 

$0.06

 

The following table summarizes our non-vested common stock option and warrant activity for the years ended December 31, 20202021 and 2019:

 
 
Common Stock Options
and Warrants
 
 
Weighted-Average Grant Date Exercise Price
 
 
 
 
 
 
 
 
Non-vested at January 1, 2019
  6,225,000 
 $0.08 
Vested during the period
  (600,000)
 $0.05 
Non-vested at December 31, 2019
  5,625,000 
 $0.08 
Vested during the period
  (1,925,000)
 $0.08 
Non-vested at December 31, 2020
  3,700,000 
 $0.08 
2020:

 

 

 

Common Stock Options

 

and Warrants

 

 

 

Weighted-

Average Grant Date Exercise Price

 

 

 

 

 

 

 

 

Non-vested at January 1, 2020

 

 

5,625,000

 

 

$0.08

 

Vested during the period

 

 

(1,925,000)

 

$0.08

 

Non-vested at December 31, 2020

 

 

3,700,000

 

 

$0.08

 

Vested during the period

 

 

(1,675,000)

 

$0.08

 

Non-vested at December 31, 2021

 

 

2,025,000

 

 

$0.08

 

The following table summarizes the weighted average remaining contractual life and exercise price of common stock options and warrants outstanding at December 31, 2020:


 
 
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
 

 
 2020 Life (Years) Price 2020 Price
           
$0.03-0.11 26,372,803 8.4 $0.06 22,672,803 $0.05
The number of options and warrants that have vested and are expected to vest at December 31, 2020 is 26,372,803.
2021:

 

 

 

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

 

 

 

 

2021

 

 

Life (Years)

 

 

Price

 

 

2021

 

 

Price

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.03-0.10

 

 

25,772,803

 

 

 

7.6

 

 

$0.06

 

 

 

23,747,803

 

 

$0.06

 

At December 31, 2020,2021, there was $43,269$15,513 of unrecognized compensation cost related to non-vested options granted to purchase common stock which is expected to be recognized over a weighted-average period of 1.70.7 years.

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, 2020,2021, the aggregate intrinsic value of options and warrants outstanding was $4,025,522.$2,632,382. The aggregate intrinsic value of options and warrants exercisable was $3,556,772.$2,476,757. The intrinsic value of stock options and warrants are calculated as the amount by which the market price of our common stock exceeds the exercise price of the option or warrant.

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Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Preferred Stock Warrants

On

Pursuant to the December 28, 2017 the Company entered into a Compensation Agreement with David M. Shworan, the President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary of Quotemedia, Inc., pursuant to which, in lieu of receiving a cash salary the Company will issue toissued Mr. Shworan warrants to purchase shares of Series A Redeemable Convertible Preferred Stock (“Compensation Preferred Stock Warrants”). In accordance with in lieu of a cash salary. From the Compensation Agreement, on January 1,period December 28, 2017 to December 31, 2019 the Company issued Mr. Shworan warrants to purchase up to 15,000 sharesa total of 31,250 Compensation Preferred Stock Warrants at an exercise price equal to $1.00 per share. A total of $360,000 of stock-based compensation expense was recognized related to the Compensation Preferred Stock Warrants for the year ended December 31, 2019.

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, 2020.September 30, 2021. The probability is re-evaluated each reporting period. As of December 31, 2020,2021, there was $9,173,832 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, we are also unable to determine the weighted-average period over which the unrecognized compensation cost will be recognized.

The following table represents total preferred stock warrant activity for the years ended December 31, 2020 and 2019:
 
 
 
Preferred Stock Warrants
 
 
Weighted-Average Exercise Price
 
 
 
 
 
 
 
 
Outstanding at January 1, 2019
  398,493 
 $1.00 
Granted during the period
  15,000 
 $1.00 
Outstanding at December 31, 2019
  413,493 
 $1.00 
Granted during the period
  - 
  - 
Outstanding at December 31, 2020
  413,493 
 $1.00 

As of December 31, 2021 and 2020, there were a total of 413,493 preferred stock warrants outstanding with a weighted average remaining contractual life of 2726 years. As of December 31, 2020,2021, 31,250 preferred stock warrants were exercisable. No preferred stock warrants were exercised for the years ended December 31, 20202021 and 2019.

2020.

10.EARNINGS PER SHARE

Basic net income per share is computed by dividing net income during the period by the weighted-average number of common shares outstanding, excluding the dilutive effects of common stock equivalents. 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, 20202021 and 20192020 are as follows:

 
 
2020
 
 
2019
 
 
 
 
 
 
 
 
Net income (loss)
 $(646,324)
 $558,997 
 
    
    
Weighted average common shares used to calculate net income (loss) per share
  90,477,798 
  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
  - 
  15,461,207 
Weighted average common shares used to calculate diluted net income (loss) per share
  90,477,798 
  118,745,576 
 
    
    
Net income (loss) per share – basic
 $(0.01)
 $0.01 
Net income (loss) per share – diluted
 $(0.01)
 $0.00 

F-16
QUOTEMEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Net income (loss)

 

$212,372

 

 

$(646,324)

 

 

 

 

 

 

 

 

 

Weighted average common shares used to calculate net income (loss) per share

 

 

90,477,798

 

 

 

90,477,798

 

Warrants to purchase redeemable convertible preferred stock

 

 

2,499,900

 

 

 

0

 

Redeemable convertible preferred stock

 

 

10,306,671

 

 

 

0

 

Stock options and warrants to purchase common stock

 

 

16,029,293

 

 

 

-

 

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

 

 

119,313,662

 

 

 

90,477,798

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share – basic

 

$0.00

 

 

$(0.01)

Net income (loss) per share – diluted

 

$0.00

 

 

$(0.01)

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 year ended December 31, 2021 and 2020 and 2019 are shown below:

 
 
2020
 
 
2019
 
 
 
 
 
 
 
 
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
  12,696,569 
  - 
Total potential common shares excluded
  25,503,140 
  - 

2021

2020

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

-

12,696,569

Total potential common shares excluded

-

25,503,140

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Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.SUPPLEMENTARY CASH FLOW INFORMATION

 
 
2020
 
 
2019
 
Cash paid for
 
 
 
 
 
 
    Interest
 $4,614 
 $6,314 
 
    
    
SBA grant (see Note 12)
 $8,000 
  - 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Cash paid for

 

 

 

 

 

 

Interest

 

$2,641

 

 

$4,614

 

 

 

 

 

 

 

 

 

 

SBA grant (see Note 12)

 

$0

 

 

 

8,000

 

The non-cash amounts related to right-of-use assets obtained in exchange for lease obligations are noted below for the years ended December 31,202031,2021 and 2019:

 
 
2020
 
 
2019
 
 
 
 
 
 
 
 
Right-of-use assets obtained in exchange for lease obligations
 $507,753 
 $207,034 
2020:

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

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

 

$233,978

 

 

$507,753

 

There were no non-cash amounts related to the purchase of fixed assets under finance leases for the years ended December 31, 20202021 and 2019.

2020.

12.PAYCHECK PROTECTION PROGRAM

On April 24, 2020, the Company received an $8,000 grant as part of the Economic Injury Disaster Loan (“EIDL”) program through the Small Business Administration (“SBA”). The SBA grant was recorded as other income on our consolidated statements of operations in 2020. On May 4, 2020, the Company received a $133,257 loan under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides qualifying businesses with these proceeds for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The proceeds and accrued interest are forgivable after twenty-four weeks, known as the covered period, as long as the borrower uses the proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of forgiveness will be reduced if the borrower terminates employees or reduces salaries during the twenty-four-week period. EIDL grants received are also deducted from the forgivable portion of PPP loans. The unforgiven portion of the PPP proceeds will be payable over two years at an interest rate of 1%, with a deferral of payments for the first six-months after the covered period. The Company is accounting for the PPP loan was forgiven in its entirety on February 19, 2021. In accordance with ASC 470, Debt,. The PPPthe forgiveness of the loan was forgivenrecognized as other income on February 19, 2021 (see Note 14).

our consolidated statements of operations.

13.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, 20202021 and 2019,2020, revenue from Canada accounted for approximately 30% and 31%28% of total revenue, respectively.

revenue.

14.SUBSEQUENT EVENTS

On February 19, 2021, the Company received notice of forgiveness from the SBA for its PPP loan in its entirety. The Company will recognize the forgiveness of the loan as other income on our consolidated statements of operations in 2021.

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-17

F-17