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 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 accelerated filer,” “accelerated filer” and "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

 

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

The Registrant has 90,477,798 shares of common stock outstanding as of November 2, 2020.at May 3, 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the generally accepted accounting principles for interim financial statements and instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for a full year. In connection with the preparation of the condensed consolidated financial statements the Company evaluated subsequent events after the balance sheet date of September 30, 2020March 31, 2021 through the filing of this report.

As of September 30, 2020,March 31, 2021, the Company has a working capital deficit of $984,771.$1,697,654. Our current liabilities include deferred revenue of $666,516.$541,862. The costs expected to be incurred to realize the deferred revenue in the next 12 months are minimal.

The Company has a plan in place for the next 12 months to ensure ongoing expenditures are balanced with the expected growth rate and believes cash on hand and cash generated will be sufficient to fund operations for 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. 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.

These financial statements should be read in conjunction with our financial statements and the notes thereto for the fiscal year ended December 31, 20192020 contained in our Form 10-K filed with the Securities and Exchange Commission dated March 27, 2020.26, 2021.

 

 

We are continuing to closely monitor 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. 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. The COVID-19 pandemic has also caused some of our smaller clients to cease operations altogether resulting in an increase in bad debts from 2019. Given the dynamic nature of these circumstances, it is too early to assess the full impact of the COVID-19 pandemic on our ongoing business, results of operations, and overall future financial performance.

 

 

 

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 and license software components that deliver dynamic content to banks, brokerage firms, financial institutions, mutual fund companies, online information and financial portals, media outlets, public companies, and corporate intranets.

 

 

The consolidated financial statements include the operations of QuoteMedia, Ltd., a wholly owned subsidiary of QuoteMedia, Inc. All intercompany transactions and balances have been eliminated.

 

 

The U.S. dollar is the functional currency of all our company's operations. Foreign currency asset and liability amounts are remeasured into U.S. dollars at end-of-period exchange rates, except for equipment and intangible assets, which are remeasured at historical rates. Foreign currency income and expenses are remeasured at average exchange rates in effect during the period, except for expenses related to balance sheet amounts remeasured at historical exchange rates. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in earnings in the period in which they occur.

 

 

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 was $110,000 and $73,500$175,000 as of September 30, 2020March 31, 2021 and December 31, 2019, respectively.2020. Bad debt expense was $25,664$19,822 and $120,509$70,931 for the three months ended March 31, 2021 and nine-months ended September 30, 2020, respectively. Bad debt expense was $13,395 and $12,619 for the three and nine-months ended September 30, 2019, respectively.

 

 

 

 

 

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.

 

 

 

 

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

 

 

 

Changes in deferred revenue for the period were as follows:

 

 

 

 

 

The Company 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 September 30,March 31, 2021 and December 31, 2020, 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 for approximately $2,500 per month. David M. Shworan is a control person of Bravenet. At September 30, 2020,March 31, 2021 and December 31,2020, there was $6,500 and $7,500, arerespectively, due to Bravenet related 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.

 

 

Supplemental balance sheet information related to leases was as follows:

 

 

 

Maturities of lease liabilities were as follows:

 

 

The components of lease expense for the three months ended March 31, 2021 and nine-months ended September 30, 2020 and 2019 were as follows:

 

 

Supplemental cash flow information for the nine-monthsthree months ended September 30,March 31, 2021 and 2020 and 2019 related to leases was as follows:

 

 

 

 

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

 

On December 28, 2017, aA total of 550,000 shares of the Company’s Preferred Stock wereare designated as “Series A Redeemable Convertible Preferred Stock.” The Series A Redeemable Convertible Preferred Stock has no dividend or voting rights.

 

At September 30, 2020,March 31, 2021, 123,685 shares of Series A Redeemable Convertible Preferred Stock were outstanding. No shares of Series A Redeemable Convertible Preferred Stock were issued or redeemed during the three months ended March 31, 2021 and nine-months ended September 30, 2020. During the three and nine-months ended September 30, 2019 2,200 shares of Series A Redeemable Convertible Preferred Stock were redeemed.

 

 

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:

 

In accordance with ASC 480-10-S99, because a limited amountnumber 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.

 

 

No shares of common stock were issued during the three months ended March 31, 2021 and nine-months ended September 30, 2020 and 2019.2020.

 

 

 

Total stock-based compensation expense, related to all of the Company’s stock-based awards, recognized for the three months ended March 31, 2021 and nine-months ended September 30, 2020 and 2019 was comprised as follows:

 

 

 

There were 26,372,803The following table summarizes our common stock warrantsoption and options outstanding at September 30, 2020. No stock options or warrants to purchase common stock were granted or exercised duringwarrant activity for the three and nine-monthsmonths ended September 30, 2020 and 2019.March 31, 2021:

 

 

 

 

 

 

At September 30, 2020,March 31, 2021, there was $50,208$20,817 of unrecognized compensation cost related to non-vested options and warrants granted to purchase common stock which is expected to be recognized over a weighted-average period of 2.11.6 years.

 

 

 

OnPursuant 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”). Provided that Mr. Shworan is employed by or otherwise providing services in lieu of a cash salary. From the period December 28, 2017 to the Company or its subsidiaries on each of January 1, 2018 andDecember 31, 2019 the Company will issue to Mr. Shworan warrants to purchase up to 15,000 sharesissued a total of 31,250 Compensation Preferred Stock Warrants at an exercise price equal to $1.00 per share. A total of $90,000 of stock-based compensation expense was recognized related to the Compensation Preferred Stock Warrants during the comparative three-months ended March 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 September 30, 2020.March 31, 2021. The probability is re-evaluated each reporting period. As of September 30, 2020,March 31, 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 discussion should be read in conjunction with our financial statements and notes thereto included elsewhere in this report. We caution readers regarding certain forward looking statements in the following discussion, elsewhere in this report, and in any other statements, made by, or on behalf of our company, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, our company. Uncertainties and contingencies that might cause such differences include those risk factors disclosed in our annual report on Form 10-K for the year ended December 31, 20192020 and other reports filed from time to time with the SEC.

 

We disclaim any obligation to update forward-looking statements. All references to “we”, “our”, “us”, or “QuoteMedia” refer to QuoteMedia, Inc., and its predecessors, operating divisions, and subsidiaries.

 

This report should be read in conjunction with our Form 10-K for the fiscal year ended December 31, 20192020 filed with the Securities and Exchange Commission.

 

 

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, 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 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 Applications revenue totals.

 

 

 

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 Applications 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.

 

 

The global financial markets have experienced extreme volatility and disruption in recent months. The outbreak ofover the past year due to 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.

 

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. WeWhile 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, the Company 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”). On February 19, 2021, the Company received forgiveness from the SBA for its PPP loan in its entirety. The Company anticipates that it will meetrecognized the requirements for full forgiveness forof the loan as other income on our PPP loan.consolidated statements of operations. See Financial Statement Note 8 – Paycheck Protection Program.

 

 

 

For the remainder of 2020 and for 2021 we plan to continue to expand our product lines and improve our infrastructure. We plan to continue to add more features and data to our existing products and release newer versions with improved performance and flexibility for client integration.

 

We 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.

 

 

Important development projects for 2020 andthe remainder of 2021 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; 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.

 

 

 

Total subscription revenue increased 6% and 4%22% when comparing the three months ended March 31, 2021 and nine-months ended September 30, 2020 and 2019, respectively.

 

Our total Portfolio Management System revenue increased by 15% and 7%, respectively,42% when comparing the three months ended March 31, 2021 and nine-month periods ended September 30, 2020, due to increases in both Corporate Quotestream and 2019.Individual Quotestream revenue.

 

Corporate Quotestream revenue increased 19% and 10%49% for the three and nine-month periodsmonths ended September 30, 2020, respectively,March 31, 2021 from the comparative periodsperiod in 20192020 primarily due to new Corporate Quotestream customerscontracts signed since the comparative periodsperiod and increasesan increase in usersthe number of subscribers for existing customers.clients. The increase is attributable in part to improvements and upgrades made to our Portfolio Management products as the additional data offerings and improved functionality have contributed to the increase in our average revenue per customer. We have also been able to take advantage of new opportunities arising from the economic downturn related to COVID-19 as financial sector firms are looking for more efficient and cost-effective solutions to their data and technology needs. We also believe there has been an increase in the need for our services for customers working remotely during the pandemic, a trend we expect to continue for the foreseeable future.

 

Individual Quotestream revenue increased 6%28% for the three-month periodthree months ended September 30, 2020March 31, 2021 from the comparative 2019 period butin 2020. There was relatively unchanged year to date versus the comparative 2019 period. The increase was due mostly to an increase in average revenue per customer.total users, which can be attributed to new marketing efforts initiated since the comparative period and more customers working remotely due to COVID-19.

 

Interactive Content and Data Application revenue decreasedincreased 2% when comparing the three-months ended September 30,March 31, 2021 and 2020, and 2019, primarily due to the impact of COVID-19 as we have seen an increase in bad debts and a number of our smaller customers have temporarily suspended their services or ceased operations altogether. Interactive Content and Data Application revenue increased 1% when comparing the nine-month periods ended September 30, 2020 and 2019, mainly attributable to an increase in the average revenue per client despite a decrease in number of clients.client. The increase in average revenue per client results from the launch of new products such as QMod, our new proprietary Web delivery system,and the expansion of our data coverage as well as the general strengthening of our financial position, all of which have allowed us to attract new, larger clients.clients to replace some of our smaller clients lost due to the economic hardship related to COVID-19.

 

 

 

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.

 

Cost of revenue increased 19% and 10% when comparing the three and nine-month periods ended September 30,We launched a major growth initiative in early 2020, and 2019, respectively. The increasesinvesting in cost of revenue are primarily due to increases in stock exchange fees due to increased customer usage from the comparative periods that are consistent with increases in Corporate Quotestream revenue. The increases are also due to increases in the amortization of capitalized internal-use software costs resulting from increased investment ininfrastructure, new product development, data collection, and data collection.

Overall, the cost of revenue increased as a decrease inpercentage of sales, as evidenced by our gross margin percentage whichthat decreased to 46% and 48%43% for the three and nine-month periodsmonths ended September 30, 2020March 31, 2021 from 52% and 51%49% in the comparative periods.

 

 

 

 

Sales and marketing consist primarily of sales and customer service salaries, investor relations, travel and advertising expenses. Sales and marketing expenses increased by 19% and 15%23% when comparing the three months ended March 31, 2021 and nine-month periods ended September 30, 2020 and 2019, respectively.2020. The increases are primarilyincrease is a result of additional sales personnel hired since the comparative periods. We also implemented a new marketing program in February 2020 targeted at potential new Individual Quotestream customers.to support our growth initiative.

 

 

General and administrative expenses consist primarily of salaries expense, office rent, insurance premiums, and professional fees. General and administrative expenses decreased 8% and increased 10%7% when comparing the three months ended March 31, 2021 and nine-month periods ended September 30, 2020 and 2019, respectively.2020. The quarter to date decrease is mainly due to one-time recruiting feesprimarily driven by a decrease in bad debts from the comparative period. Bad debts in the comparative period. The year to date increase is primarilyperiod were abnormally high due to additional hiring of personnel to meet expected future growth and an increase in bad debts related to the impact of COVID-19.

 

 

Software development expenses consist primarily of costs associated with the design, programming, and testing of our software applications during the preliminary project stage. Software development expenses also include costs incurred to maintain our software applications.

 

Software development expenses increased 30% and 35%decreased 4% for the three and nine-month periodsmonths ended September 30, 2020, respectively,March 31, 2021 when compared to the same periodsperiod in 2019. The increases were mainly2020, primarily due to hiring additional development personnel since the comparative periods to accelerate new product development and data collection.

 

 

 

 

 

We incurred foreign exchange gains of $2,448 and $11,206 for the three months ended March 31, 2021 and 2020, respectively. 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 generally incur a foreign exchange gain when the Canadian dollar depreciates from the period beginning date,dollars 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.

 

 

Interest expense relates primarily to the interest expense associated with our finance leases and was relatively unchanged from the comparative period. Interest expense of $701 and $3,419$1,008 was incurred for the three and nine-month periodsmonths ended September 30, 2020, respectively,March 31, 2021, compared to $1,349 and $4,533$1,527 incurred in the same 2019 periods.2020 period.

 

 

For the three and nine-month periodsmonths ended September 30, 2020,March 31, 2021, the Company recorded Canadian income tax expense of $751 and $2,216, respectively,$796 compared to $758 and $2,257$744 in the comparative periodsperiod in 2019.2020.

 

 

As a result of the foregoing, our net income for the Company recognizedthree months ended March 31, 2021 was $23,087 compared to net loss of $75,305 and $319,728$117,325 for the three and nine-month periodsmonths ended September 30, 2020 compared to net income of $155,928 and $471,345 for the three and nine-month periods ended September 30, 2019. Basic and diluted earnings per share were $(0.00) for the three and nine-month periods ended September 30,March 31, 2020. Basic and diluted earnings per share were $0.00 and $0.01 for the three months ended March 31, 2021, and nine-month periods$(0.00) for the three months ended September 30, 2019.March 31, 2020.

 

 

 

Our cash totaled $678,552$815,499 at September 30, 2020,March 31, 2021, as compared with $815,487$417,910 at December 31, 2019, a decrease2020, an increase of $136,935.$397,589. Net cash of $1,101,397$936,027 was provided by operations for the nine-monthsthree months ended September 30, 2020,March 31, 2021, primarily due to cash generated from the results of operations excludingnet income during the period adjusted for non-cash charges and the increase in accounts payable, offset by the increase in accounts receivable and net loss.payable. Net cash used in investing activities for the nine-monthsthree months ended September 30, 2020March 31, 2021 was $1,354,086$530,365 resulting primarily from capitalized application software costs and the purchase of new computer equipment.costs. Cash provided byused in financing activities for the nine-monthsthree months ended September 30, 2020March 31, 2021 was $115,754$8,073 related to the PPP loan offset by repayment of capital lease financing.

 

We havetypically operate with a working capital deficit. As of March 31, 2021 our working capital deficit of $984,771 as of September 30, 2020,is $1,697,654, however current liabilities include $666,516$541,862 in deferred revenue and the expected costs necessary to realize the deferred revenue are minimal. If circumstances dictate, we have the flexibility to reduce development spending to maintain a strong liquidity position.

 

Based on the factors discussed above, we believe that our cash on hand and cash generated from operations will be sufficient to fund our current operations for a period of one year after issuance of these Financial Statements.at least the next 12 months through May 2022. 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.

 

 

Under the supervision and with the participation of our Chairman of the Board and Chairman of the Audit Committee, Chief Executive Officer and Chief Financial Officer, we completed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) to the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, we and our management have concluded that our disclosure controls and procedures at September 30, 2020March 31, 2021 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-monthsthree months ended September 30, 2020,March 31, 2021, 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.

 

We will consider further actions and continue to evaluate the effectiveness of our disclosure controls and internal controls and procedures on an ongoing basis, taking corrective action as appropriate. Management does not expect that disclosure controls and procedures or internal controls can prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable and not absolute assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. While management believes that its disclosure controls and procedures provide reasonable assurance that fraud can be detected and prevented, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

 

 

 

 

 

 

 

 

 

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.