UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (State or Other Jurisdiction of Incorporation or Organization) (IRS Employer Identification Number) ☐ ☐ Large accelerated filer Accelerated filer Non-accelerated filer ☑ 2020 Page 3 3 4 19 September 30, 2017 December 31, 2016 ASSETS Current assets: Cash Accounts receivable, net of allowance for doubtful accounts of $120,000 at September 30, 2017 and December 31, 2016, respectively Prepaid expenses Other current assets Total current assets Deposits Property and equipment, net Goodwill Intangible assets Total assets LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable and accrued liabilities Deferred revenue Current portion of amounts due to related parties Total current liabilities Long-term portion of amounts due to related parties Stockholders’ deficit: Preferred stock, nondesignated, 10,000,000 shares authorized, none issued Common stock, $0.001 par value, 150,000,000 shares authorized, 90,477,798 shares issued and outstanding Additional paid-in capital Accumulated deficit Total stockholders’ deficit Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Revenue Cost of revenue Gross profit Operating expenses Sales and marketing General and administrative Software development Operating loss Other income and (expense) Foreign exchange gain (loss) Interest expense (related party) Loss before income taxes Provision for income taxes Net loss Loss per share Basic and diluted loss per share Weighted average shares outstanding Basic and diluted INC. Nine months ended September 30, 2017 2016 Operating activities: Net loss Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization Bad debt expense Stock-based compensation expense Changes in assets and liabilities: Accounts receivable Prepaid expenses Other current assets Deposits Accounts payable and amounts due to related parties Deferred revenue Net cash provided by operating activities Investing activities: Purchase of fixed assets Capitalized application software Net cash used in investing activities Net increase (decrease) in cash Cash and equivalents, beginning of period Cash and equivalents, end of period 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. 27, 2020. 2019, respectively. Bad debt expense was $94,845 and ($776) for the six-months ended June 30, 2020 and 2019, respectively. statements and related disclosures. September 30, December 31, Current Long-term Current Long-term Purchase of business unit Computer hosting services Office rent Other Loan Lead generation services Due to Management Total stock-based compensation to this agreement. As a matter of policy all related party transactions are subject to review and approval by the Company’s Board of Directors. met: Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Sales and marketing General and administrative Development Total stock-based compensation Weighted- Options and Average Grant Date Warrants Fair Value Non-vested stock options and warrants at December 31, 2016 Vested during the period Non-vested stock options and warrants at September 30, 2017 Options and Warrants Options and Warrants Outstanding Exercisable Weighted Number Average Weighted Number Weighted Outstanding at Remaining Average Exercisable at Average September 30, Contractual Exercise September 30, Exercise 2017 Life Price 2017 Price $0.03-0.07 At 2019 are shown below: Trends 2020 despite current market conditions related to COVID-19. Operation coverage, as well as new data delivery products. 2017 2016 Change ($) Change (%) Three months ended September 30, Corporate Quotestream Individual Quotestream Total Portfolio Management Systems Interactive Content and Data Applications Total Licensing Revenue Corporate Quotestream Individual Quotestream Total Portfolio Management Systems Interactive Content and Data Applications Total Licensing Revenue 2019, respectively. 2019. customers. periods and foreign exchange fluctuations as 55% of Individual Quotestream revenue is earned in Canadian dollars. The Canadian dollar depreciated 2.3% and 3.5% when comparing average exchange rates for the three and six-month periods ended June 30, 2020 and 2019 to the comparative periods, lowering Canadian dollar revenue when translated into $U.S. dollars. system, the expansion of our data coverage, as well as the general strengthening of our financial position, all of which have allowed us to attract larger clients. 2017 2016 Change ($) Change (%) Three months ended September 30, Cost of revenue Gross profit Gross margin % Nine months ended September 30, Cost of revenue Gross profit Gross margin % during the application development stage. periods. 2020. 2017 2016 Change ($) Change (%) Three months ended September 30, Sales and marketing General and administrative Software development Total operating expenses Nine months ended September 30, Sales and marketing General and administrative Software development Total operating expenses 2019, respectively. Increases were due to increases in salaries and health benefits due to the hiring of additional personnel to meet expected future growth. We also incurred an increase in bad debts from the comparative period of $95,621, primarily due to the impact of Covid-19 as some of our smaller customers have struggled to keep up with their payments or have ceased operations altogether. period. 2017 2016 Three months ended September 30, Foreign exchange gain (loss) Interest expense Total other expenses Foreign exchange gain (loss) Interest expense Total other expenses dollar in 2018. 2019 periods. 2019. 2019. XHIBITS Exhibit Number Description of Exhibit , D.C. 20549(MarkxQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2017¨For the transition period _________ to _________QUOTEMEDIA, INC.91-2008633 (Exact name of registrant as specified in its charter)Nevada91-2008633, Fountain Hills, AZ 85268x ☑ No ¨x ☑ No ¨“smaller"smaller reporting company”company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):¨¨¨Smaller reporting companyx(Do ☐ (Do not check if a smaller reporting company)Smaller reporting company ☑ Emerging growth company ☐ ¨ ☐ No xNovember 14, 2017.August 3, 2020. SeptemberJune 30, 20175 56 67 1114 2021 2 20 20 $ 498,416 $ 271,700 332,127 433,889 33,194 74,949 138,881 103,345 1,002,618 883,883 16,759 15,555 1,409,046 1,372,940 110,000 110,000 66,141 70,594 $ 2,604,564 $ 2,452,972 $ 1,404,304 $ 1,499,827 775,828 549,233 3,004 44,212 2,183,136 2,093,272 12,225,145 10,903,439 - - 90,479 90,479 9,428,540 9,382,824 (21,322,736 ) (20,017,042 ) (11,803,717 ) (10,543,739 ) Total liabilities and stockholders’ deficit$2,604,564$2,452,972See accompanying notes3Table of Contents Current assets: Cash and cash equivalents Accounts receivable, net Prepaid expenses Other current assets Total current assets Deposits Property and equipment, net Goodwill Intangible assets Operating lease right-of-use assets Total assets LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable and accrued liabilities Deferred revenue Current portion of operating lease liabilities Current portion of finance lease liabilities Total current liabilities Paycheck Protection Program loan (Note 8) Long-term portion of operating lease liabilities Long-term portion of finance lease liabilities Mezzanine equity: Series A Redeemable Convertible Preferred stock, $0.001 par value, 550,000 shares designated; Shares issued and outstanding: 123,685 at June 30, 2020 and December 31, 2019 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 June 30, 2020 and December 31, 2019 Additional paid-in capital Accumulated deficit Total stockholders’ deficit Total liabilities and stockholders’ deficit $ 2,388,146 $ 2,224,690 $ 7,015,864 $ 6,581,748 1,310,995 1,232,956 3,861,602 3,817,315 1,077,151 991,734 3,154,262 2,764,433 397,357 384,572 1,174,706 1,130,774 478,805 480,218 1,507,252 1,476,233 251,286 248,387 746,754 708,383 1,127,448 1,113,177 3,428,712 3,315,390 (50,297 ) (121,443 ) (274,450 ) (550,957 ) (96,120 ) 23,402 (169,587 ) (82,483 ) (297,865 ) (263,957 ) (859,362 ) (747,878 ) (393,985 ) (240,555 ) (1,028,949 ) (830,361 ) (444,282 ) (361,998 ) (1,303,399 ) (1,381,318 ) (796 ) (767 ) (2,295 ) (2,269 ) $ (445,078 ) $ (362,765 ) $ (1,305,694 ) $ (1,383,587 ) (0.00 ) (0.00 ) (0.01 ) (0.02 ) 90,477,798 90,477,798 90,477,798 90,477,798 See accompanying notes4Table of Contents COST OF REVENUE GROSS PROFIT OPERATING EXPENSES Sales and marketing General and administrative Software development OPERATING PROFIT (LOSS) OTHER INCOME (EXPENSES) Foreign exchange gain (loss) Interest expense - other INCOME (LOSS) BEFORE INCOME TAXES Provision for income taxes NET INCOME (LOSS) EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share Diluted earnings (loss) per share WEIGHTED AVERAGE SHARES OUTSTANDING Basic Diluted INC.S Balance, March 31, 2020 Stock-based compensation Net loss Balance, June 30, 2020 Six-months ended June 30, 2020: Balance, December 31, 2019 Stock-based compensation Net loss Balance, June 30, 2020 Three-months ended June 30, 2019: Balance, March 31, 2019 Preferred shares redeemed Stock-based compensation Net income Balance, June 30, 2019 Six-months ended June 30, 2019: Balance, December 31, 2018 Preferred shares redeemed Stock-based compensation Net income Balance, June 30, 2019 $ (1,305,694 ) $ (1,383,587 ) 628,011 649,523 34,841 58,187 45,716 65,464 66,921 10,238 41,755 44,269 (35,536 ) (51,322 ) (1,204 ) (1,255 ) 1,184,975 1,163,861 226,595 10,612 886,380 565,990 (76,965 ) (116,002 ) (582,699 ) (517,383 ) (659,664 ) (633,385 ) 226,716 (67,395 ) 271,700 251,834 $ 498,416 $ 184,439 See accompanying notes5Table of Contents Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization Stock-based compensation expense Bad debt expense Changes in assets and liabilities: Accounts receivable Prepaid expenses Other current assets Deposits Accounts payable, accrued and other liabilities Deferred revenue Net cash provided by operating activities INVESTING ACTIVITIES: Purchase of fixed assets Purchase of intangible assets Capitalized application software Net cash used in investing activities FINANCING ACTIVITIES: Paycheck Protection Program loan Repayment of finance lease obligations Redemption of preferred stock Net cash provided by (used) in financing activities Net increase (decrease) in cash Cash and equivalents, beginning of period Cash and equivalents, end of period BASISSeptemberJune 30, 20172020 through the filing of this report.Fornine months ended September 30, 2017, the Company has a net loss of $1,305,694 and has a working capital deficit of $1,180,518.$761,503. Our current liabilities include deferred revenue of $775,828.$579,137. The costs expected to be incurred to realize the deferred revenue in the next 12 months are minimal. Our long term liabilities include $12,225,145 due to related parties. All repayments of amounts due to related parties must be approved by our Board of Directors. Repayments are subject to our company having sufficient cash on hand and are intended not to impair continuing business operations.20162019 contained in our Form 10-K filed with the Securities and Exchange Commission dated March 31, 2017.6Table of ContentsQUOTEMEDIA, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)$120,000$100,000 and $80,000 as of SeptemberJune 30, 20172020 and December 31, 2016.Accounting Pronouncements Not YetMay 2014,January 2017, the Financial Accounting Standards Board ("FASB"(“FASB”) issued Accounting Standards Update ("ASU"(“ASU”) No. 2014-09 which created new Accounting Standards Codification ("ASC") topic 606, Revenue from Contracts with Customers. This guidance supersedes ASC 605, Revenue Recognition, and introduces a single, comprehensive, five-step revenue recognition model. ASC 606 also enhances disclosures related to revenue recognition. ASC 606, as amended, is effective for us January 1, 2018 and allows for either a full retrospective or a modified retrospective approach at adoption. We are continuing to assess the impact of adopting ASC 606 and intend to use a modified retrospective approach. Based on the initial evaluation of our current contracts and revenue streams, we do not expect that adoption will have a material impact on our results of operations or financial position. We believe we are following an appropriate timeline to allow for the proper recognition, reporting, and disclosure of revenue upon adoption of ASC 606 at the beginning of fiscal 2018.In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842) which amends lease accounting by lessors and lessees. This new standard will require, among other things, that lessees recognize a right-to-use asset and related lease liability for all significant financing and operating leases, and specifies where in the statement of cash flows the related lease payments are to be presented. The standard is effective for years beginning after December 15, 2018, including interim periods within those years (beginning in calendar year 2019 for the Company), and early adoption is permitted. The Company is currently in the process of evaluating the impact the adoption of ASU 2016-02 will have on its consolidated financial statements.7Table of ContentsQUOTEMEDIA, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payment. The main purpose of this update is to address the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. This Update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements.In January 2017, the FASB issued ASU 2017-04,Impairment. The new standard eliminates StepImpairment. This ASU simplifies the accounting for goodwill by eliminating step 2 offrom the goodwill impairment test. If a company determines in Step 1 ofUnder the goodwill impairment test thatnew ASU, if the carrying valueamount of goodwill is less than thea reporting unit exceeds its fair value, an impairment in that amount shouldloss will be recorded to the income statement, rather than proceeding to Step 2. The new guidance is effectiverecognized for the Company beginning after December 31, 2019, although early adoption is permitted.amount by which the carrying amount exceeds its fair value. The Company is currently evaluatingadopted the new standard on January 1, 2020. There was no impact of this ASU on the Company’supon adoption to our consolidated financial statements. Portfolio Management Systems Corporate Quotestream Individual Quotestream Interactive Content & Data Application Total revenue Balance at December 31, 2019 Revenue recognized in the current period from the amounts in the beginning balance New deferrals, net of amounts recognized in the current period Effects of foreign currency translation Balance at June 30, 2020 following table summarizesCompany entered into a five-year office lease with 410734 B.C. Ltd. effective May 1, 2016 for approximately $7,365 per month. David M. Shworan is a control person of 410734 B.C. Ltd. At June 30, 2020, there were no amounts due to 410734 B.C. Ltd.parties at September 30, 2017 and December 31, 2016:
2017
2016$ - $ 212,659 $ - $ 182,183 - 216,666 - 137,931 - 1,296,904 7,365 1,113,079 3,004 17,276 36,847 17,276 - 1,098,668 - 997,072 - 1,526,428 - 1,416,574 - 7,856,544 - 7,039,324 $ 3,004 $ 12,225,145 $ 44,212 $ 10,903,439 Amounts duerelated parties that have been classified as non-current5 years. We determine if an arrangement is a lease at inception. Operating lease assets and liabilities are not expected to be repaid within a yearincluded 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.September 30, 2017future 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.date. All repaymentsinformation related to leases was as follows: Operating Leases Operating lease right-of-use assets Current portion of operating lease liability Long-term portion of operating lease liability Total operating lease liability Finance Leases Computer equipment on financing lease Less: accumulated depreciation Property and equipment, net Current portion of finance lease liability Long-term portion of finance lease liability Total finance lease liability Weighted Average Remaining Lease Term Operating leases Finance leases Weighted Average Discount Rate Operating leases Finance leases amounts duelease liabilities were as follows: 2020 (for the remainder of the year) 2021 2022 2023 2024 Total lease payments Less imputed interest Total Operating lease costs: Operating lease costs Short-term lease costs Total operating lease costs Finance lease costs: Amortization Interest Total finance lease costs related parties must be approved by ourleases was as follows: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases Operating cash flows from finance leases Directors. RepaymentsDirectors’ discretion.our company having sufficient cash on hand andthe availability of authorized but unissued shares of common stock.intended not to impair continuing business operations. Our related party creditors have agreed to these repayment terms.8Table of Contents4. STOCK-BASED COMPENSATION estimated stock-based compensation expense, related to all of the Company’s stock-based awards, recognized for the three and nine monthssix-months ended SeptemberJune 30, 20172020 and 20162019 was comprised as follows:$ 5,052 $ 5,376 $ 15,716 $ 16,128 10,000 45,334 30,000 49,336 - - - - $ 15,052 $ 50,710 $ 45,716 $ 65,464 Sales and marketing General and administrative Development Stock-based compensation expense Non-vested at January 1, 2020 Vested during the period Non-vested at June 30, 2020 Weighted Average Weighted Weighted Remaining Average Average Number Contractual Exercise Number Exercise Outstanding Life (Years) Price Exercisable Price $0.03-0.11 26,372,803 8.9 $0.06 21,022,803 $0.05 SeptemberJune 30, 20172020, there was $92,252$57,147 of unrecognized compensation cost related to non-vested share-based paymentsoptions and warrants granted to purchase common stock which is expected to be recognized over a weighted-average period of 1.842.1 years.There was no option and warrant activity for the nine months ended September 30, 2017. As of September 30, 2017 there were a total of 16,372,803 options and warrants outstanding at a weighted average exercise price of $0.04.The following table summarizes our non-vestedto purchase common stock option and warrant activity for the nine months ended September 30, 2017:3,308,315 $ 0.05 (1,308,315 ) $ 0.05 2,000,000 $ 0.05 9Table of ContentsQUOTEMEDIA, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)16,372,803 7.59 $ 0.04 14,372,803 $ 0.04 As at September 30, 2017 all stock options and warrants have been granted with exercise prices equal to or greater than the market value of the underlying common shares on the date of grant.SeptemberJune 30, 20172020, the aggregate intrinsic value of options and warrants outstanding was $1,388,241. The aggregate intrinsic value of options and warrants exercisable was $55,675.$1,256,991. 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.5. LOSSloss per share was $(0.00)income per share for the three monthsand six-months ended SeptemberJune 30, 20172020 and 2016. 2019 are as follows: Net income (loss) Weighted average common shares used to calculate net income per share Warrants to purchase redeemable convertible preferred stock Redeemable convertible preferred stock Stock options and warrants to purchase common stock Weighted average common shares used to calculate diluted net income per share Net income per share – basic Net income per share – diluted basicnumber of shares of potentially dilutive common stock related to options, warrants and diluted net loss per share was $(0.01) and $(0.02) per share for the nine months ended September 30, 2017 and 2016, respectively. Thereredeemable convertible preferred stock that were 16,372,803 stock options and warrants excluded from the calculation of dilutive loss per shareshares since the inclusion of such shares would be anti-dilutive for the three and nine monthssix-months ended SeptemberJune 30, 20172020 and 2016, because they were anti-dilutive.6. SUBSEQUENT EVENTS Stock options and warrants to purchase common stock Warrants to purchase redeemable convertible preferred stock Redeemable convertible preferred stock Total potential common shares excluded October 26, 2017,April 24, 2020, the Company’s Board of Directors and Compensation Committee authorized granting a total of 2,000,000 options and warrants to certain executives and employeesCompany received an $8,000 grant as part of the Company.Economic Injury Disaster Loan (“EIDL”) program through the Small Business Administration (“SBA”), and on May 4, 2020, the Company received a $133,257 loan under the Paycheck Protection Program (“PPP”). The options and warrants have a ten year expiry term and an exercise price of $0.035 which was the market valuePPP, established as part of the underlying common shares on the date of grant. The fair valueCoronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides qualifying businesses with these proceeds for amounts up to 2.5 times of the new grants totaled $60,000, with the corresponding stock-based compensationaverage monthly payroll expenses recognized over the vesting terms of the new grants.
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 in accordance with ASC 470, Debt.10Table of ContentsManagement’sManagement’s Discussion and Analysis20162019 and other reports filed from time to time with the SEC.“quotemedia”“QuoteMedia” refer to QuoteMedia, Inc., and its predecessors, operating divisions, and subsidiaries.20162019 filed with the Securities and Exchange Commission.sources,sources; we offer a comprehensive range of solutions for all market-related information provisioning requirements.costs,costs; therefore, they are combined into one reporting segment.11Table of Contents specifically 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.environmentEnvironment and trendsyears. Asmonths. The outbreak of the COVID-19 pandemic and the resulting response by governments and individuals around the world has caused contraction in global economies. We are closely monitoring 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.result, financial institutions globallyrange 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 of our employees and vendors to limit the spread of COVID-19. We have actedtaken numerous steps, and will continue to controltake 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.operational spending. While in some areasspending with us. Given the anticipateddynamic nature of these circumstances, it is too early to assess the full impact of current market conditionsthe COVID-19 pandemic on our ongoing business, results of operations, and overall future financial performance. We are actively managing our response and assessing potential impacts to our financial position and operating results. This includes the evaluation and implementation of certain cost control efforts to help us mitigate the impact that COVID-19 may lead tohave on our 2020 financial results. We are focusing on maintaining a decision to reduce demand for market datastrong balance sheet and related services, we expect overall spending on financial information services will grow modestly overliquidity position.next several years.12Table of ContentsIn recent years, the depreciationCompany received an $8,000 grant as part of the Economic Injury Disaster Loan (“EIDL”) program through the Small Business Administration (“SBA”), and on May 4, 2020, the Company received a $133,257 loan under the Paycheck Protection Program (“PPP”). The Company anticipates that it will meet the requirements for full forgiveness for our PPP loan.. See Financial Statement Note 8 – Paycheck Protection Program.versusdepreciated 2.3% when comparing average exchange rates for the U.S. dollar resulted in loweringsix-months ended June 30, 2020 and 2019. The exchange rate fluctuation decreased both our reported Canadian dollar revenues and expenses once translated into U.S. dollars. The Canadian dollar has remained relatively stable versus the U.S. dollar in 2017 and exchange rate fluctuations had minimal impact on our financial resultsdollars for the three and nine monthssix-months ended SeptemberJune 30, 20172020 when compared to the same periodsperiod in 2016.We experienced steady revenue growth for the first three quarters of 2017. 2019 but had a minimal impact on our net income.growth combined with cost containment measures have to lead to an improved gross margin percentage year to date compared to prior period. Gross margin percentages were 45% forgrew 2% when comparing the three and nine month periodssix-months ended SeptemberJune 30, 2017 compared2020 to 45% and 42% in the respectivecomparative periods in 2016. We2019. Based on clients currently under contract, we expect these trendsour positive revenue growth to continue for the remainder of 2017 and 2018.operation20172020 we plan to continue to expand our product lines and improve our infrastructure. We plan to add more features and data to our existing products and release newer versions with improved performance and flexibility for client integration.coverage.20172020 include broad expansion of data and news coverage, including the addition of a wide array of international exchange data and news and video feeds, (including foreign language sources), expansion of fixed-income coverage, launching a new Quotestream Mobile application, and the introduction of several new and upgraded market information products.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 achieve profitable operations.13Table of Contents$ 759,952 $ 699,704 $ 60,248 9 % 412,057 382,435 29,622 8 % 1,172,009 1,082,139 89,870 8 % 1,216,137 1,142,551 73,586 6 % $ 2,388,146 $ 2,224,690 $ 163,456 7 % Nine months ended September 30,$ 2,246,365 $ 2,052,750 $ 193,615 9 % 1,232,144 1,134,764 97,380 9 % 3,478,509 3,187,514 290,995 9 % 3,537,355 3,394,234 143,121 4 % $ 7,015,864 $ 6,581,748 $ 434,116 7 % Corporate Quotestream Individual Quotestream Total portfolio management systems Interactive content and data applications Total subscription revenue Six-months ended June 30, Corporate Quotestream Individual Quotestream Total portfolio management systems Interactive content and data applications Total subscription revenue licensingsubscription revenue increased 7%1% and 2% when comparing the three and nine monthssix-months ended SeptemberJune 30, 20172020 and 2016.8%9% and 9%3%, respectively, when comparing the three and nine monthsix-month periods ended SeptemberJune 30, 20172020 and 2016, respectively, due to an increase in both Corporate Quotestream Revenue and Individual Quotestream revenue. The increases are attributable in part to improvements and upgrades made to our Portfolio Management products.9%15% and 6% for the three and nine monthsix-month periods ended SeptemberJune 30, 20172020, respectively, from the comparative periods in 2016, respectively,2019 due to new contractsCorporate Quotestream customers signed since the comparative periodperiods and increases in the number of subscribersusers for existing clients.increased 8%decreased 3% and 9% from4% for the three and nine monthsix-month periods ended June 30, 2020, respectively, from the comparative periods in 2016, respectively.2019. The increases aredecrease was due to increasesa decrease in both the number of subscribers and average revenue per subscriberusers from the comparative periods.14Table of Contents6% and 4%2% when comparing the threesix-month period ended June 30, 2020 and nine month periods ended September 30, 2017 and 2016, respectively, due2019, mainly attributable to increasesan increase in the average revenue per Interactive Content and Data Application client contracts partially attributableoffset by service suspensions due to COVID-19. The increase in average revenue per client results from the launch of new products such as QMod, our new proprietary Web delivery system.$ 1,310,995 $ 1,232,956 $ 78,039 6 % $ 1,077,151 $ 991,734 $ 85,417 9 % 45 % 45 % $ 3,861,602 $ 3,817,315 $ 44,287 1 % $ 3,154,262 $ 2,764,433 $ 389,829 14 % 45 % 42 % Three-months ended June 30, Cost of revenue Gross profit Gross margin % Six-months ended June 30, Cost of revenue Gross profit Gross margin % applicationinternal-use software costs. We capitalize the costs associated with developing new products once technological feasibility has been established.6%9% and 1%6% when comparing the three and nine monthsix-month periods ended SeptemberJune 30, 20172020 and 2016,2019, respectively. The increasesincrease in cost of revenue wereis primarily due to increased financial content feesan increase in the amortization of capitalized internal-use software costs related to the increase in capitalized development costs from the comparative periods due to new and increased fees levied by a number of content providers, offset by cost savings from switching data line vendors.theour cost of revenue decreased as a percentage ofincreased relative to the increase in sales, as evidenced by our gross margin percentages of 45%percentage which decreased to 48% for the three and nine monthsix-month periods ended SeptemberJune 30, 2017 compared to 45% and 42% in the respective periods in 2016.15Table of Contents$ 397,357 $ 384,572 $ 12,785 3 % 478,805 480,218 (1,413 ) (0 )% 251,286 248,387 2,899 1 % $ 1,127,448 $ 1,113,177 $ 14,271 1 % $ 1,174,706 $ 1,130,774 $ 43,932 4 % 1,507,252 1,476,233 31,019 2 % 746,754 708,383 38,371 5 % $ 3,428,712 $ 3,315,390 $ 113,322 3 % Three-months ended June 30, Sales and marketing General and administrative Software development Total operating expenses Six-months ended June 30, Sales and marketing General and administrative Software development Total operating expenses consistsconsist primarily of sales and customer service salaries, investor relations, travel and advertising expenses. Sales and marketing expenses increased 3%by 9% and 4%13% when comparing the three and nine monthsix-month periods ended SeptemberJune 30, 20172020 and 2016.2019, respectively. The increases were due primarily toare a result of additional sales personnel hired since the comparative periods.remained relatively unchanged from the comparative periods, decreasing 0%increased 17% and increasing 2%21% when comparing the three and nine monthsix-month periods ended SeptemberJune 30, 20172020 and 2016.1%39% and 5%37% for the three and nine monthsix-month periods ended SeptemberJune 30, 20172020, respectively, when compared to the same periodsperiod in 2016.2019. The increases wereincrease was mainly due to hiring additional development personnel since the comparative periods.16Table of Contents$212,030$429,683 and $582,669$765,232 of development costs for the three and nine monthssix-month periods ended SeptemberJune 30, 2017,2020, respectively, compared to $176,328$348,528 and $349,206$660,240 for the same periods in 2016.2019. These costs relate to the development of application software used by subscribers to access, manage, and analyze information in our databases. Capitalized costs associated with application software are amortized over their estimated economic life of three years.$ (96,120 ) $ 23,402 (297,865 ) (263,957 ) $ (393,985 ) $ (240,555 ) Nine months ended September 30,$ (169,587 ) $ (82,483 ) (859,362 ) (747,878 ) $ (1,028,949 ) $ (830,361 ) Three-months ended June 30, Foreign exchange loss Interest expense Total other expenses Six-months ended June 30, Foreign exchange gain (loss) Interest expense Total other income and (expenses) Exchange primarily arise from the re-measurement of Canadian dollar monetary assets and liabilities into U.S. dollars. We have a net Canadian dollar liability,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.The 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.4.5%4% versus the U.S. dollar when comparing the foreign exchange ratesrate at SeptemberJune 30, 20172020 to the rate at June 30, 2017. This resulted inMarch 31, 2020. We incurred a foreign exchange loss of $96,120$7,256 for the three months ended September 30, 2017, compared tosame period in 2019 arising from exchange rate fluctuations between transaction and settlement dates for foreign currency denominated transactions.$23,402$5,957 for the same period in 2016 whensix-months ended June 30, 2020 primarily due to the foreign exchange re-measurement gain as the Canadian dollar depreciated 1.2% versus the U.S. dollar.The Canadian dollar appreciated 7.7%5% versus the U.S. dollar when comparing the foreign exchange ratesrate at SeptemberJune 30, 20172020 to the rate at December 31, 2016. This resulted in2020. We incurred a foreign exchange loss of $169,587$21,314 for the nine months ended September 30, 2017, comparedcomparative 2019 period mainly attributable to a foreign exchange lossthe re-measurement of $82,483 for the same period in 2016 whenCanadian dollar monetary assets and liabilities into U.S. dollars as the Canadian dollar appreciated 5.1%3.8% versus the U.S. dollar.Interest is accrued on certain amounts owed to related parties. increasedrelates primarily to the interest expense associated with our finance leases and was relatively unchanged from the comparative period. Interest expense of $1,191 and $2,718 was incurred for the three and nine monthsix-month periods ended SeptemberJune 30, 2017 due to additional borrowings2020, respectively, compared to $1,506 and $3,184 incurred in the same periods in 2016. Interest is accrued at 10% per annum. Interest income earned on cash balances is netted against interest expenses.17Table of Contentsnine monthsix-month periods ended SeptemberJune 30, 2017,2020, the Company recorded Canadian income tax expense of $796$721 and $2,295,$1,465 compared to $767$747 and $2,269$1,499 in the comparative periods in 2016.LossIncome (Loss) for the Periodmonthsand six-month periods ended SeptemberJune 30, 2017 was $(445,078) or $(0.00) per share2020 compared to a net lossincome of $(362,765) or $(0.00) per share$202,361 and $315,417 for the three monthsand six-month periods ended SeptemberJune 30, 2016. The net loss2019. Basic and diluted earnings per share were $(0.00) for the nine monthsthree and six-month periods ended SeptemberJune 30, 2017 was $(1,305,694) or $(0.01) per share compared to a net loss of $(1,383,587) or $(0.02) per share2020, and $0.00 for the nine monthsthree and six-month periods ended SeptemberJune 30, 2016.$498,416$636,012 at SeptemberJune 30, 2017,2020, as compared with $271,700$815,487 at December 31, 2016, an increase2019, a decrease of $226,716.$179,475. Net cash of $886,380$548,176 was provided by operations for the nine monthssix-months ended SeptemberJune 30, 2017,2020, primarily due to non-cash charges and the increase in amounts due to related parties,accounts payable, offset by the increase in accounts receivable and our net loss for the period adjusted for non-cash charges.loss. Net cash used in investing activities for the nine monthssix-months ended SeptemberJune 30, 20172020 was $659,664$851,464 resulting primarily from capitalized application software costs and the purchase of new computer equipment. There were noCash provided by financing activities for the three month periodsix-months ended SeptemberJune 30, 2017.Our long-term liquidity requirements will depend2020 was $123,813 related to the PPP loan offset by repayment of capital lease financing.manythe factors including the rate at whichdiscussed above, we expandbelieve that our business,cash on hand and whether we do so internally or through acquisitions. To the extent that the fundscash generated from operations are insufficientwill be sufficient to fund our activitiescurrent operations for a period of one year after issuance of these Financial Statements. However, to implement our business plan may require additional financing. Additional financings may come from future equity or debt offerings that could result in the long term, wedilution to our stockholders. Further, current adverse capital and credit market conditions could limit our access to capital. We may be requiredunable to raise additional funds through publiccapital or private financing. No assurance can be givenbear an unattractive cost of capital that additional financing will be available or that, if it is available, it will be on terms acceptable to us.18Table of ContentsControlsControls and ProceduresSeptemberJune 30, 20172020 were effective at the reasonable assurance level to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and are designed to ensure that information required to be disclosed by us in these reports is accumulated and communicated to our management, as appropriate to allow timely decisions regarding required disclosures. In the three monthssix-months ended SeptemberJune 30, 2017,2020, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to affect, our internal control over financial reporting.19Table of ContentsPARTPART II - OTHER INFORMATIONEXHIBITS20Table of ContentsQUOTEMEDIA, INC.Date: November 20, 2017By: /s/ R. Keith GuelpaR. Keith Guelpa, President and Chief Executive Officer (PrincipalChief Executive Officer)Officer and Chief Financial Officer (Duly authorized officer and principal financial officer) By:/s/ Keith J. RandallKeith J. Randall,Chief Financial Officer(Principal Accounting Officer)21