UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~(Mark~~

(Mark one)

☑

☒

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

~~For the quarterly period ended September 30, 2020~~


	For the quarterly period ended June 30, 2021

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

	For the transition period _________ to _________

~~For the transition period _________ to _________~~

Commission File Number: 0-28599

~~QUOTEMEDIA, INC.~~

~~(Exact name of registrant as specified in its charter)~~

~~Nevada~~	~~91-2008633~~	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)

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):

Large accelerated filer ☐	☐		Accelerated filer	☐
Non-accelerated filer £	☐ ~~(Do~~	(Do not check if a smaller reporting company)	Smaller reporting company ☑	☒
			Emerging growth company	☐

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

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

The Registrant has 90,477,798 shares of common stock outstanding as ~~of November 2, 2020.~~

at August 3, 2021.

QUOTEMEDIA, INC.

FORM 10-Q for the Quarter Ended ~~September~~June 30, ~~2020~~

2021

INDEX

			Page
Part I.	Financial Information	3

Item 1.	Financial Statements (unaudited):		3

	Condensed Consolidated Balance Sheets at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020		3

	Condensed Consolidated Statements of Operations for the three and ~~nine-months~~six-month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020		4

	Condensed Consolidated Statements of Changes in Series A Redeemable Convertible Preferred Stock and Stockholders’ Deficit for the three and ~~nine-months~~six-month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020		5

	Condensed Consolidated Statements of Cash Flows for the ~~nine-months~~six-month period ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020		6

	Notes to Condensed Consolidated Financial Statements		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16	14

Item 4.	Controls and Procedures	22	19

Part II.	Other Information

Item 6.	Exhibits	23	20

Signatures			24 21

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

QUOTEMEDIA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

September 30,
2020

December 31,
2019

ASSETS

Current assets:

    Cash and cash equivalents
$678,552
$815,487
    Accounts receivable, net
  728,740
  680,759
    Prepaid expenses
  135,029
  103,093
    Other current assets
  90,263
  47,793
    Total current assets
  1,632,584
  1,647,132



    Deposits
  16,755
  16,084
    Property and equipment, net
  2,643,666
  2,273,087
    Goodwill
  110,000
  110,000
    Intangible assets
  63,498
  51,265
    Operating lease right-of-use assets
  699,658
  328,676



        Total assets
$5,166,161
$4,426,244



LIABILITIES AND STOCKHOLDERS’ DEFICIT





Current liabilities:


    Accounts payable and accrued liabilities
$1,759,714
$1,286,340
    Deferred revenue
  666,516
  579,343
    Current portion of operating lease liabilities
  171,542
  172,049
    Current portion of finance lease liabilities
  19,583
  33,914
        Total current liabilities
  2,617,355
  2,071,646



Paycheck Protection Program loan (Note 8)
  141,257
  -
Long-term portion of operating lease liabilities
  520,414
  167,496
Long-term portion of finance lease liabilities
  2,777
  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 September 30, 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 September 30, 2020 and December 31, 2019
  90,479
  90,479
    Additional paid-in capital
  19,598,944
  19,568,011
    Accumulated deficit
  (20,788,922)
  (20,469,194)
        Total stockholders’ deficit
  (1,099,499)
  (810,704)



        Total liabilities and stockholders’ deficit
$5,166,161
$4,426,244

	June 30, 2021			December 31, 2020
ASSETS

Current assets:
Cash and cash equivalents	$	627,229		$	417,910
Accounts receivable, net		456,571			698,334
Prepaid expenses		203,378			108,477
Other current assets		38,895			113,826
Total current assets		1,326,073			1,338,547

Deposits		21,297			15,886
Property and equipment, net		3,092,739			2,755,537
Goodwill		110,000			110,000
Intangible assets		68,416			61,914
Operating lease right-of-use assets		857,680			671,402

Total assets	$	5,476,205		$	4,953,286

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ DEFICIT

Current liabilities:
Accounts payable and accrued liabilities	$	2,393,149		$	2,026,741
Deferred revenue		739,272			544,902
Current portion of operating lease liabilities		181,240			164,843
Current portion of finance lease liabilities		2,704			11,951
Total current liabilities		3,316,365			2,748,437

Paycheck Protection Program loan (Note 8)		0			133,257
Long-term portion of operating lease liabilities		637,084			504,783
Long-term portion of finance lease liabilities		715			2,108

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, 2021 and December 31, 2020		2,983,857			2,983,857

Stockholders’ deficit:
Common stock, $0.001 par value, 150,000,000 shares authorized, shares issued and
outstanding: 90,477,798 at June 30, 2021 and December 31, 2020		90,479			90,479
Additional paid-in capital		19,619,761			19,605,883
Accumulated deficit		(21,172,056	)		(21,115,518	)
Total stockholders’ deficit		(1,461,816	)		(1,419,156	)

Total liabilities and stockholders’ deficit	$	5,476,205		$	4,953,286

Table of Contents

QUOTEMEDIA, INC.

C~~ONDENSED~~

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three-months ended September 30,

Nine-months ended September 30,

2020

2019

2020

2019

LICENSING FEES
$3,140,358
$2,963,172
$9,136,141
$8,818,637





COST OF REVENUE
  1,706,476
  1,429,308
  4,795,150
  4,355,110





GROSS PROFIT
  1,433,882
  1,533,864
  4,340,991
  4,463,527





OPERATING EXPENSES









Sales and marketing
  552,960
  463,929
  1,602,501
  1,393,929
General and administrative
  555,002
  600,329
  1,817,748
  1,646,388
Software development
  405,703
  311,028
  1,246,722
  923,218

  1,513,665
  1,375,286
  4,666,971
  3,963,535





OPERATING PROFIT (LOSS)
  (79,783)
  158,578
  (325,980)
  499,992





OTHER INCOME (EXPENSES)









Foreign exchange gain (loss)
  5,930
  (543)
  11,887
  (21,857)
Interest and other expense, net
  (701)
  (1,349)
  (3,419)
  (4,533)

  5,229
  (1,892)
  8,468
  (26,390)





INCOME (LOSS) BEFORE INCOME TAXES
  (74,554)
  156,686
  (317,512)
  473,602





Provision for income taxes
  (751)
  (758)
  (2,216)
  (2,257)





NET INCOME (LOSS)
$(75,305)
$155,928
$(319,728)
$471,345





EARNINGS (LOSS) PER SHARE









Basic earnings (loss) per share
$(0.00)
$0.00
$(0.00)
$0.01
Diluted earnings (loss) per share
$(0.00)
$0.00
$(0.00)
$0.00





WEIGHTED AVERAGE SHARES OUTSTANDING









Basic
  90,477,798
  90,477,798
  90,477,798
  90,477,798
Diluted
  90,477,798
  107,173,219
  90,477,798
  105,577,615

	Three-months ended June 30,						Six-months ended June 30,
	2021			2020			2021			2020

REVENUE	$	3,833,018		$	3,029,199		$	7,439,236		$	5,995,783

COST OF REVENUE		2,186,357			1,589,190			4,249,997			3,088,674

GROSS PROFIT		1,646,661			1,440,009			3,189,239			2,907,109

OPERATING EXPENSES

Sales and marketing		620,122			532,061			1,258,986			1,049,541
General and administrative		685,731			612,693			1,292,971			1,262,746
Software development		439,045			415,192			846,333			841,019
		1,744,898			1,559,946			3,398,290			3,153,306

OPERATING LOSS		(98,237	)		(119,937	)		(209,051	)		(246,197	)

OTHER INCOME (EXPENSES)

Foreign exchange gain (loss)		19,880			(5,249	)		22,328			5,957
Interest expense		(451	)		(1,191	)		(1,459	)		(2,718	)
Other income (Note 8)		0			0			133,257			0
		19,429			(6,440	)		154,126			3,239

NET LOSS BEFORE INCOME TAXES		(78,808	)		(126,377	)		(54,925	)		(242,958	)

Income tax expense		(817	)		(721	)		(1,613	)		(1,465	)

NET LOSS	$	(79,625	)	$	(127,098	)	$	(56,538	)	$	(244,423	)

LOSS PER SHARE

Basic and diluted loss per share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic and diluted		90,477,798			90,477,798			90,477,798			90,477,798

Table of Contents

QUOTEMEDIA, INC.

CONDENSED STATEMENTS OF CHANGES IN SERIES A REDEEMABLE CONVERTIBLE

P~~REFERRED~~

PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(UNAUDITED)

Series A Redeemable Convertible
Preferred Stock

Common Stock

Three-months ended September 30, 2020:

Number of Shares

Amount

Number of
Shares

Amount

Additional Paid-in Capital

Accumulated Deficit

Total Stockholders’ Equity (Deficit)

Balance, June 30, 2020
  123,685
$2,983,857
  90,477,798
$90,479
$19,592,005
$(20,713,617)
$(1,031,133)








Stock-based compensation
  -
  -
  -
  -
  6,939
  -
  6,939








Net loss
  -
  -
  -
  -
  -
  (75,305)
  (75,305)








Balance, September 30, 2020
  123,685
$2,983,857
  90,477,798
$90,479
$19,598,944
$(20,788,922)
$(1,099,499)

Series A Redeemable Convertible
Preferred Stock

Common Stock

Nine-months ended September 30, 2020:

Number of Shares

Amount

Number of
Shares

Amount

Additional Paid-in Capital

Accumulated Deficit

Total Stockholders’ Equity (Deficit)

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
  -
  -
  -
  -
  30,933
  -
  30,933








Net loss
  -
  -
  -
  -
  -
  (319,728)
  (319,728)








Balance, September 30, 2020
  123,685
$2,983,857
  90,477,798
$90,479
$19,598,944
$(20,788,922)
$(1,099,499)

Series A Redeemable Convertible
Preferred Stock

Common Stock

Three-months ended September 30, 2019:

Number of Shares

Amount

Number of
Shares

Amount

Additional Paid-in Capital

Accumulated Deficit

Total Stockholders’ Equity (Deficit)

Balance, June 30, 2019
  124,485
$3,003,528
  90,477,798
$90,479
$19,362,858
$(20,712,774)
$(1,259,437)








Preferred shares redeemed
  (800)
  (19,671)
  -
  -
  (329)
  -
  (329)








Stock-based compensation
  -
  -
  -
  -
  103,116
  -
  103,116








Net income
  -
  -
  -
  -
  -
  155,928
  155,928








Balance, September 30, 2019
  123,685
$2,983,857
  90,477,798
$90,479
$19,465,645
$(20,556,846)
$(1,000,722)

Series A Redeemable Convertible
Preferred Stock

Common Stock

Nine-months ended September 30, 2019:

Number of Shares

Amount

Number of
Shares

Amount

Additional Paid-in Capital

Accumulated Deficit

Total Stockholders’ Equity (Deficit)

Balance, December 31, 2018
  125,885
$3,037,952
  90,477,798
$90,479
$19,157,202
$(21,028,191)
$(1,780,510)








Preferred shares redeemed
  (2,200)
  (54,095)
  -
  -
  (905)
  -
  (905)








Stock-based compensation
  -
  -
  -
  -
  309,348
  -
  309,348








Net income
  -
  -
  -
  -
  -
  471,345
  471,345








Balance, September 30, 2019
  123,685
$2,983,857
  90,477,798
$90,479
$19,465,645
$(20,556,846)
$(1,000,722)

	Series A Redeemable Convertible Preferred Stock				Common Stock				Additional					Total Stockholders’
Three-months ended June 30, 2021:	Number of Shares		Amount		Number of Shares		Amount		Paid-in Capital		Accumulated Deficit			Equity (Deficit)
Balance, March 31, 2021		123,685	$	2,983,857		90,477,798	$	90,479	$	19,612,822	$	(21,092,431	)	$	(1,389,130	)

Stock-based compensation										6,939					6,939

Net loss												(79,625	)		(79,625	)

Balance, June 30, 2021		123,685	$	2,983,857		90,477,798	$	90,479	$	19,619,761	$	(21,172,056	)	$	(1,461,816	)

	Series A Redeemable Convertible Preferred Stock				Common Stock				Additional					Total Stockholders’
Six-months ended June 30, 2021:	Number of Shares		Amount		Number of Shares		Amount		Paid-in Capital		Accumulated Deficit			Equity (Deficit)
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										13,878					13,878

Net loss												(56,538	)		(56,538	)

Balance, June 30, 2021		123,685	$	2,983,857		90,477,798	$	90,479	$	19,619,761	$	(21,172,056	)	$	(1,461,816	)

	Series A Redeemable Convertible Preferred Stock				Common Stock				Additional					Total Stockholders’
Three-months ended June 30, 2020:	Number of Shares		Amount		Number of Shares		Amount		Paid-in Capital		Accumulated Deficit			Equity (Deficit)
Balance, March 31, 2020		123,685	$	2,983,857		90,477,798	$	90,479	$	19,580,002	$	(20,586,519	)	$	(916,038	)

Stock-based compensation		-		0		-		0		12,003		0			12,003

Net loss		-		0		-		0		0		(127,098	)		(127,098	)

Balance, June 30, 2020		123,685	$	2,983,857		90,477,798	$	90,479	$	19,592,005	$	(20,713,617	)	$	(1,031,133	)

	Series A Redeemable Convertible Preferred Stock				Common Stock				Additional					Total Stockholders’
Six-months ended June 30, 2020:	Number of Shares		Amount		Number of Shares		Amount		Paid-in Capital		Accumulated Deficit			Equity (Deficit)
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		-		0		-		0		23,994		0			23,994

Net loss		-		0		-		0		0		(244,423	)		(244,423	)

Balance, June 30, 2020		123,685	$	2,983,857		90,477,798	$	90,479	$	19,592,005	$	(20,713,617	)	$	(1,031,133	)

Table of Contents

QUOTEMEDIA, INC.

C~~ONDENSED~~

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine-months ended September 30,

2020

2019

OPERATING ACTIVITIES:

Net income (loss)
$(319,728)
$471,345



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


    Depreciation and amortization
  971,274
  790,563
    Stock-based compensation expense
  30,933
  309,348
    Bad debt expense
  120,509
  12,619
Changes in assets and liabilities:


    Accounts receivable
  (168,490)
  (119,572)
    Prepaid expenses
  (31,936)
  42,044
    Other current assets
  (42,470)
  (68,182)
    Deposits
  (671)
  (3,073)
    Accounts payable, accrued and other liabilities
  454,803
  217,678
    Deferred revenue
  87,173
  (82,704)
Net cash provided by operating activities
  1,101,397
  1,570,066



INVESTING ACTIVITIES:





    Purchase of fixed assets
  (111,060)
  (322,124)
    Purchase of intangible assets
  (17,127)
  -
    Capitalized application software
  (1,225,899)
  (1,007,189)
Net cash used in investing activities
  (1,354,086)
  (1,329,313)



FINANCING ACTIVITIES:





    Paycheck Protection Program loan
  141,257
  -
    Repayment of finance lease obligations
  (25,503)
  (21,364)
    Redemption of preferred stock
  -
  (55,000)
Net cash provided by (used) in financing activities
  115,754
  (76,364)



Net increase (decrease) in cash
  (136,935)
  164,389



Cash and equivalents, beginning of period
  815,487
  810,332



Cash and equivalents, end of period
$678,552
$974,721

	Six-months ended June 30,
	2021			2020
OPERATING ACTIVITIES:

Net loss	$	(56,538	)	$	(244,423	)

Adjustments to reconcile loss to net cash provided by operating activities:
Depreciation and amortization		750,866			627,339
Stock-based compensation expense		13,878			23,994
Gain on forgiveness of PPP loan (Note 8)		(133,257	)		0
Changes in assets and liabilities:
Accounts receivable		241,763			(109,956	)
Prepaid expenses		(94,901	)		7,058
Other current assets		74,931			(19,679	)
Deposits		(5,411	)		(757	)
Accounts payable, accrued and other liabilities		328,828			264,806
Deferred revenue		194,370			(206	)
Net cash provided by operating activities		1,314,529			548,176

INVESTING ACTIVITIES:

Purchase of fixed assets		(35,628	)		(69,104	)
Purchase of intangible assets		(9,999	)		(17,128	)
Capitalized application software		(1,048,943	)		(765,232	)
Net cash used in investing activities		(1,094,570	)		(851,464	)

FINANCING ACTIVITIES:

Paycheck Protection Program loan		0			141,257
Repayment of finance lease obligations		(10,640	)		(17,444	)
Net cash provided by (used) in financing activities		(10,640	)		123,813

Net increase (decrease) in cash		209,319			(179,475	)

Cash and equivalents, beginning of period		417,910			815,487

Cash and equivalents, end of period	$	627,229		$	636,012

Table of Contents

QUOTEMEDIA, INC.

N~~OTES~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

BASIS OF PRESENTATION

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~~June 30, ~~2020~~2021 through the filing of this report.

As of ~~September~~June 30, ~~2020,~~2021, the Company has a working capital deficit of ~~$984,771.~~$1,990,292. Our current liabilities include deferred revenue of ~~$666,516.~~$739,272. 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, ~~2019~~2020 contained in our Form 10-K filed with the Securities and Exchange Commission dated March ~~27, 2020.~~

26, 2021.

Risks and Uncertainties

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.

SIGNIFICANT 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 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.

~~QUOTEMEDIA, INC.~~

N~~OTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

b) Basis of consolidation

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.

c) Foreign currency translation and transactions

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.

d) Allowances 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 was ~~$110,000 and $73,500~~$175,000 as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019, respectively.~~2020. Bad debt expense was ~~$25,664~~$58,502 and ~~$120,509~~$23,914 for the ~~three~~three-months ended June 30, 2021 and ~~nine-months ended September 30,~~ 2020, respectively. Bad debt expense was ~~$13,395~~$78,324 and ~~$12,619~~$94,845 for the ~~three~~six-months ended June 30, 2021 and ~~nine-months ended September 30, 2019,~~2020, respectively.

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QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

e) 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 Measurement~~No. 2019-12, 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 ~~modifies~~certain exceptions to the general principles in Topic 740 and ~~adds various disclosure requirements around the topic in order~~also clarifies and amends existing guidance to ~~clarify and~~ improve ~~the cost-benefit nature of disclosures. For example, disclosures around transfers between fair value hierarchy Levels~~consistent application. The new standard will be ~~removed~~effective 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 Company~~annual periods beginning after December 15, 2020, with early adoption permitted. We adopted ~~the new standard~~this Topic 740 on January 1, ~~2020. There was no impact upon~~2021. 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.

~~QUOTEMEDIA, INC.~~

N~~OTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~Not Yet Adopted~~

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.

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:

Three-months ended September 30,

Nine-months ended September 30,

2020

2019

2020

2019

Portfolio Management Systems

   Corporate Quotestream
$1,127,941
$944,122
$3,158,076
$2,864,166
   Individual Quotestream
  485,392
  458,338
  1,379,518
  1,383,196
Interactive Content & Data Application
  1,527,025
  1,560,712
  4,598,547
  4,571,275
Total revenue
$3,140,358
$2,963,172
$9,136,141
$8,818,637

	Three-months ended June 30,				Six-months ended June 30,
	2021		2020		2021		2020
Portfolio Management Systems
Corporate Quotestream	$	1,635,071	$	1,053,218	$	3,089,143	$	2,030,135
Individual Quotestream		591,415		455,492		1,154,202		894,126
Interactive Content & Data Application		1,606,532		1,520,489		3,195,891		3,071,522
Total revenue	$	3,833,018	$	3,029,199	$	7,439,236	$	5,995,783

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~~	~~(429,616~~)
~~New deferrals, net of amounts recognized in the current period~~	~~512,066~~
~~Effects of foreign currency translation~~	~~4,723~~
~~Balance at September 30, 2020~~	$~~666,516~~

Balance at December 31, 2020	$	544,902
Revenue recognized in the current period from the amounts in the beginning balance		(337,480	)
New deferrals, net of amounts recognized in the current period		533,641
Effects of foreign currency translation		(1,791	)
Balance at June 30, 2021	$	739,272

Practical Expedients

As permitted under ASU 2014-09 (and related ASUs), unsatisfied performance obligations are not disclosed, as the original expected duration of substantially all of our contracts is one year or less.

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QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

RELATED PARTIES

The Company entered into a five-year office lease with 410734 B.C. Ltd. effective May 1, ~~2016~~2021 for approximately ~~$7,365~~$6,800 per month. David M. Shworan is a control person of 410734 B.C. Ltd. At ~~September~~June 30, 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~~June 30, ~~2020,~~2021 and December 31,2020, there was $5,000 and $7,500, ~~are~~respectively, 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.

~~QUOTEMEDIA, INC.~~

N~~OTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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 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.

Supplemental balance sheet information related to leases was as follows:

September 30,
2020

December 31,
2019

Operating Leases

Operating lease right-of-use assets
$699,658
$328,676



Current portion of operating lease liability
$171,542
$172,049
Long-term portion of operating lease liability
  520,414
  167,496
Total operating lease liability
$691,956
$339,545



Finance Leases





Computer equipment on financing lease
$101,049
$101,049
Less: accumulated depreciation
  80,371
  52,888

$20,678
$48,161



Current portion of finance lease liability
  19,583
  33,914
Long-term portion of finance lease liability
  2,777
  13,949
Total finance lease liability
$22,360
$47,863

	June 30, 2021		December 31, 2020

Operating Leases

Operating lease right-of-use assets	$	857,680	$	671,402

Current portion of operating lease liability	$	181,240	$	164,843
Long-term portion of operating lease liability		637,084		504,783
Total operating lease liability	$	818,324	$	669,626

Finance Leases

Computer equipment on financing lease	$	11,929	$	101,049
Less: accumulated depreciation		10,007		85,936
Property and equipment, net	$	1,922	$	15,113

Current portion of finance lease liability		2,704		11,951
Long-term portion of finance lease liability		715		2,108
Total finance lease liability	$	3,419	$	14,059

	June 30, 2021			December 31, 2020
Weighted Average Remaining Lease Term
Operating leases	3.8 years			4.1 years
Finance leases	1.5 years			0.9 years
Weighted Average Discount Rate
Operating leases		9.7	%		9.7	%
Finance leases		7.5	%		8.8	%

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QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

September 30,
2020

December 31,
2019

Weighted Average Remaining Lease Term

    Operating leases

4.3 years

2.9 years

    Finance leases

1.0 years

1.5 years

Weighted Average Discount Rate

    Operating leases
  9.7%
  9.3%
    Finance leases
  8.8%
  8.9%

Maturities of lease liabilities were as follows:

Year ending December 31,

Operating
Leases

Finance
Leases

2020 (for the remainder of the year)
$64,571
$9,051
2021
  213,556
  12,061
2022
  178,695
  2,151
2023
  164,374
  -
2024
  148,877
  -
Thereafter
  79,581
  -
Total lease payments
  849,654
  23,263
Less imputed interest
  (157,698)
  (903)
Total
$691,956
$22,360

Year ending December 31,	Operating Leases			Finance Leases
2021 (excluding the six-months ended June 30, 2021)	$	129,647		$	1,434
2022		246,816			2,157
2023		234,179			0
2024		220,300			0
2025		147,590			0
Thereafter		20,900			0
Total lease payments		999,432			3,591
Less imputed interest		(181,108	)		(172	)
Total	$	818,324		$	3,419

The components of lease expense for the three and ~~nine-months~~six-month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 were as follows:

Three-months ended September 30,

Nine-months ended September 30,

2020

2019

2020

2019

Operating lease costs:

Operating lease costs
$62,235
$38,440
$176,396
$130,463
Short-term lease costs
  20,661
  31,765
  71,660
  97,526
Total operating lease costs
$82,896
$70,205
$248,056
$227,989





Finance lease costs:




Amortization
$8,763
$8,763
$26,289
$26,289
Interest
  645
  1,327
  2,415
  4,544
Total finance lease costs
$9,408
$10,090
$28,704
$30,833

~~QUOTEMEDIA, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

	Three-months ended June 30,				Six-months ended June 30,
	2021		2020		2021		2020
Operating lease costs:
Operating lease costs	$	65,185	$	57,205	$	130,812	$	114,161
Short-term lease costs		14,946		25,500		37,349		50,999
Total operating lease costs	$	80,131	$	82,705	$	168,161	$	165,160

Finance lease costs:
Amortization	$	2,596	$	8,763	$	13,191	$	17,526
Interest		6		821		148		1,770
Total finance lease costs	$	2,602	$	9,584	$	13,339	$	19,296

Supplemental cash flow information for the ~~nine-months~~six-month period ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 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
$118,985
$131,803
    Operating cash flows from finance leases
  2,415
  4,544



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


    Operating leases
  507,753
  -

	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	134,180	$	113,953
Operating cash flows from finance leases		148		1,770
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		231,734		0

REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

a) Redeemable Convertible Preferred ~~Shares~~

Stock

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~~are designated as “Series A Redeemable Convertible Preferred Stock.” The Series A Redeemable Convertible Preferred Stock has no dividend or voting rights.

At ~~September~~June 30, ~~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 or redeemed during the three and ~~nine-months~~six-months ended ~~September~~June 30, ~~2020. During the three~~2021 and ~~nine-months ended September 30, 2019 2,200 shares of Series A Redeemable Convertible Preferred Stock were redeemed.~~

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.

Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In addition, ~~a limited amount of~~1,000 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.

~~QUOTEMEDIA, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(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~~number 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 three and ~~nine-months~~six-months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~

2020.

c) Stock Options and Warrants

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.

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

Three-months ended September 30,

Nine-months ended September 30,

2020

2019

2020

2019

Sales and marketing
$4,239
$99,291
$22,833
$297,873
General and administrative
  2,700
  2,700
  8,100
  8,100
Development
  -
  1,125
  -
  3,375
Stock-based compensation expense
$6,939
$103,116
$30,933
$309,348

	Three-months ended June 30,				Six-months ended June 30,
	2021		2020		2021		2020

Sales and marketing	$	4,239	$	9,303	$	8,478	$	18,594
General and administrative		2,700		2,700		5,400		5,400
Stock-based compensation expense	$	6,939	$	12,003	$	13,878	$	23,994

Common Stock Options and Warrants

~~There were 26,372,803~~

The following table summarizes our common stock ~~warrants~~option and ~~options outstanding at September~~warrant activity for the six-months ended June 30, ~~2020. No stock options or warrants to purchase common stock were granted or exercised during the three and nine-months ended September 30, 2020 and 2019.~~

2021:

	Common Stock Options and Warrants			Weighted-Average Grant Date Exercise Price
Outstanding at January 1, 2021		26,372,803		$	0.06
Forfeited during the period		(600,000	)	$	0.04
Outstanding at June 30, 2021		25,772,803		$	0.06

The following table summarizes our non-vested common stock option and warrant activity for the ~~nine-months~~six-months ended ~~September~~June 30, ~~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
  (675,000)
$0.05
Non-vested at September 30, 2020
  4,950,000
$0.09

2021:

	Common Stock Options and Warrants			Weighted-Average Grant Date Exercise Price
Non-vested at January 1, 2021		3,700,000		$	0.08
Vested during the period		(425,000	)	$	0.04
Non-vested at June 30, 2021		3,275,000		$	0.09

Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table summarizes the weighted average remaining contractual life and exercise price of common stock options and warrants outstanding at ~~September~~June 30, ~~2020:~~

Common Stock Options
and Warrants Outstanding

Common Stock Options
and Warrants Exercisable

Weighted Average Remaining
Weighted Average

Weighted Average

Number Outstanding

Contractual Life (Years)

Exercise Price

Number Exercisable

Exercise Price

$0.03-0.11
  26,372,803
  8.6
$0.06
  21,422,803
$0.05

2021:

Common Stock Options and Warrants Outstanding

Common Stock Options

and Warrants Exercisable

Weighted

Average

Weighted

Remaining

Average

Number

Contractual

Exercise

Number

Exercise

Outstanding

Life (Years)

Price

Exercisable

Price

$0.03-0.11

25,772,803

8.0

0.06

22,497,803

0.05

At ~~September~~June 30, ~~2020,~~2021, there was ~~$50,208~~$13,878 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 ~~2.1~~1.3 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 ~~September~~June 30, ~~2020,~~2021, the aggregate intrinsic value of options and warrants outstanding was ~~$940,785.~~$2,890,110. The aggregate intrinsic value of options and warrants exercisable was ~~$888,535.~~$2,626,735. 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.

Preferred Stock Warrants

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 to~~issued 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 and~~December 31, 2019 the Company ~~will issue to Mr. Shworan warrants to purchase up to 15,000 shares~~issued 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~~June 30, ~~2020.~~2021. The probability is re-evaluated each reporting period. As of ~~September~~June 30, ~~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.

As of ~~September~~June 30, ~~2020,~~2021, there were a total of 413,493 preferred stock warrants outstanding with a weighted average remaining contractual life of ~~27.3~~26.5 years. As of ~~September~~June 30, ~~2020;~~2021, 31,250 preferred stock warrants were exercisable. No preferred stock warrants were exercised for the three and ~~nine-months~~six-month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~

2020.

Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

~~EARNINGS~~ LOSS 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 outstanding redeemable convertible preferred stock, stock options and warrants that are in-the-money. In periods when a net loss is reported, all common stock equivalents are excluded from the calculation because they would have an anti-dilutive effect, meaning the loss per share would be reduced. Therefore, in periods when a loss is reported, the calculation of basic and dilutive loss per share results in the same value. The calculations for basic and diluted ~~net income~~loss per share for the three and ~~nine-months~~six-month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 are as follows:

~~QUOTEMEDIA, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

Three-months ended September 30,

Nine-months ended September 30,

2020

2019

2020

2019

Net income (loss)
$(75,305)
$155,928
$(319,728)
$471,345





Weighted average common shares used




  to calculate net income per share
  90,477,798
  90,477,798
  90,477,798
  90,477,798
Stock options and warrants to purchase




  common stock
  -
  16,695,421
  -
  15,099,817
Weighted average common shares used




  to calculate diluted net income per share
  90,477,798
  107,173,219
  90,477,798
  105,577,615





Net income per share – basic
$(0.00)
$0.00
$(0.00)
$0.01
Net income per share – diluted
$(0.00)
$0.00
$(0.00)
$0.00

	Three-months ended June 30,						Six-months ended June 30,
	2021			2020			2021			2020

Net loss	$	(79,625	)	$	(127,098	)	$	(56,538	)	$	(244,423	)

Weighted average shares outstanding - basic and diluted		90,477,798			90,477,798			90,477,798			90,477,798

Net loss per share – basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

The number of shares of potentially dilutive common stock related to options, warrants and redeemable convertible preferred stock that were excluded from the calculation of dilutive shares since the inclusion of such shares would be anti-dilutive for the three and ~~nine-months~~six-month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 are shown below:

Three-months ended September 30,

Nine-months ended September 30,

2020

2019

2020

2019

Stock options and warrants to purchase

  common stock
  11,245,134
  -
  13,021,821
  -
Warrants to purchase redeemable




  convertible preferred stock
  2,499,900
  2,604,063
  2,499,900
  2,604,063
Redeemable convertible preferred stock
  10,306,671
  10,306,671
  10,306,671
  10,306,671
Total potential common shares excluded
  24,051,705
  12,910,734
  25,828,392
  12,910,734

	Three-months ended June 30,				Six-months ended June 30,
	2021		2020		2021		2020

Stock options and warrants to purchase
common stock		15,968,192		12,256,740		16,261,354		13,679,312
Warrants to purchase redeemable
convertible preferred stock		2,499,900		2,499,900		2,499,900		2,499,900
Redeemable convertible preferred stock		10,306,671		10,306,671		10,306,671		10,306,671
Total potential common shares excluded		28,774,763		25,063,311		29,067,925		26,485,883

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”), and 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,.

I~~TEM~~the forgiveness of the loan was recognized as other income on our consolidated statements of operations.

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ITEM 2. Management’s Discussion and Analysis

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, ~~2019~~2020 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, ~~2019~~2020 filed with the Securities and Exchange Commission.

Overview

We are a developer of financial software and a distributor of market data and research information to online brokerages, clearing firms, banks, media properties, public companies and financial service corporations worldwide. Through the aggregation of information from many direct data, news, and research sources; we offer a comprehensive range of solutions for all market-related information provisioning requirements.

We have three general product lines: Interactive Content and Data 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 Interactive Content and Data Applications 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 QMod^TM, our new proprietary Web delivery system. QMod was created for secure market data provisioning as well as ease of integration and unlimited customization. Additionally, QMod delivers search engine optimized (SEO) ready responsive content designed to adapt on the fly when rendered on mobile devices or standard Web pages – automatically resizing and reformatting to fit the device on which it is displayed.

Our Data Feed Services consist of raw streaming real-time market data delivered over the Internet or via dedicated telecommunication lines, 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.

Our Portfolio Management Systems consist of Quotestream^TM, 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.

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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.

Business Environment and Trends

The global financial markets ~~have~~ experienced extreme volatility and disruption ~~in recent months. The outbreak of~~over the past year due to COVID-19 ~~pandemic and the resulting response by governments and individuals around the world has caused contraction in~~pandemic. While global ~~economies. We~~financial markets are recovering, risk still exists therefore we will continue to closely ~~monitoring~~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.

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 will~~particularly 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~~had led some clients to delay purchasing decisions, product and service implementations or cancel or reduce spending with ~~us. We~~in 2020. 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 evaluating~~will 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.

The Canadian dollar depreciated 2% when comparing average exchange rates for the nine-months ended September 30, 2020 and 2019. The exchange rate fluctuation decreased both Canadian dollar revenues and expenses once translated into U.S. dollars for the nine-months ended September 30, 2020 when compared to the same period in 2019 but had a minimal impact on our net income.

Our revenue grew ~~6 %~~27% and 4%24% when comparing the three and ~~nine-months~~six-month periods ended ~~September~~June 30, ~~2020~~2021 to the comparative ~~periods in 2019.~~2020 periods. Based on clients currently under contract, ~~and new contracts signed subsequent to September 30, 2020,~~ we expect ~~accelerated~~to maintain similar revenue growth for the remainder of ~~2020 and for 2021 despite current market conditions related to COVID-19.~~

2021.

Plan of Operation

For the remainder of ~~2020~~2021 and ~~for 2021~~into 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.

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, 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 ~~2020 and~~the 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.

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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.

Critical Accounting Policies and Estimates

In the 2020 Annual Report, we disclose our critical accounting policies and estimates upon which our financial statements are derived. There have been no material changes to these policies since December 31, 2020 that are not included in Note 3 of the accompanying consolidated financial statements for the three and six-months ended June 30, 2021. Readers are encouraged to read the 2020 Annual Report in conjunction.

Results of Operations

Revenue

Three-months ended September 30,

2020

2019

Change ($)

Change (%)

   Corporate Quotestream
$1,127,941
$944,122
$183,819
  19%
   Individual Quotestream
  485,392
  458,338
  27,054
  6%
Total portfolio management systems
  1,613,333
  1,402,460
  210,873
  15%





Interactive content and data applications
  1,527,025
  1,560,712
  (33,687)
  (2%)





Total subscription revenue
$3,140,358
$2,963,172
$177,186
  6%

Nine-months ended September 30,

2020

2019

Change ($)

Change (%)

   Corporate Quotestream
$3,158,076
$2,864,166
$293,910
  10%
   Individual Quotestream
  1,379,518
  1,383,196
  (3,678)
  (0%)
Total portfolio management systems
  4,537,594
  4,247,362
  290,232
  7%





Interactive content and data applications
  4,598,547
  4,571,275
  27,272
  1%





Total subscription revenue
$9,136,141
$8,818,637
$317,504
  4%

Three-months ended June 30,	2021		2020		Change ($)		Change (%)

Corporate Quotestream	$	1,635,071	$	1,053,218	$	581,853		55	%
Individual Quotestream		591,415		455,492		135,923		30	%
Total portfolio management systems		2,226,486		1,508,710		717,776		48	%

Interactive content and data applications		1,606,532		1,520,489		86,043		6	%

Total subscription revenue	$	3,833,018	$	3,029,199	$	803,819		27	%

Six-months ended June 30,	2021		2020		Change ($)		Change (%)

Corporate Quotestream	$	3,089,143	$	2,030,135	$	1,059,008		52	%
Individual Quotestream		1,154,202		894,126		260,076		29	%
Total portfolio management systems		4,243,345		2,924,261		1,319,084		45	%

Interactive content and data applications		3,195,891		3,071,522		124,369		4	%

Total subscription revenue	$	7,439,236	$	5,995,783	$	1,443,453		24	%

Total ~~subscription~~revenue increased 27% and 24% when comparing the three and six-month periods ended June 30, 2021 and 2020.

Our total Portfolio Management System revenue increased by 48% and 45% when comparing the three and six-month periods ended June 30, 2021 from the comparative periods, due to increases in both Corporate Quotestream and Individual Quotestream revenue.

Corporate Quotestream revenue increased 55% and 52% for the three and six-month periods ended June 30, 2021 from the comparative periods in 2020 primarily due to new contracts signed since the comparative periods and increases in the number of subscribers for existing clients. The increases are attributable in part to improvements and upgrades made to our Portfolio Management products as the additional data offerings and improved functionality have contributed to increases 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 30% and 29% for the three and six-month periods ended June 30, 2021 from the comparative periods in 2020. There were increases in total users and average revenue per user, which can be attributed to new marketing efforts initiated since the comparative periods and more customers working remotely due to COVID-19.

Interactive Content and Data Application revenue increased 6% and 4% when comparing the three and ~~nine-months ended September 30, 2020 and 2019, respectively.~~

~~Our total Portfolio Management System revenue increased by 15% and 7%, respectively, when comparing the three and nine-month~~six-month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~

~~Corporate Quotestream revenue increased 19% and 10% for the three and nine-month periods ended September 30,~~ 2020, ~~respectively, from the comparative periods in 2019 due to new Corporate Quotestream customers signed since the comparative periods and increases in users for existing customers.~~

Individual Quotestream revenue increased 6% for the three-month period ended September 30, 2020 from the comparative 2019 period but was relatively unchanged year to date versus the comparative 2019 period. The increase was due mostly to an increase in average revenue per customer.

Interactive Content and Data Application revenue decreased 2% when comparing the three-months ended September 30, 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~~increases 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.

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Cost of Revenue and Gross Profit Summary

Three-months ended September 30,

2020

2019

Change ($)

Change (%)

Cost of revenue
$1,706,476
$1,429,308
$277,168
  19%
Gross profit
$1,433,882
$1,533,864
$(99,982)
  (7%)
Gross margin %
  46%
  52%

Nine-months ended September 30,

2020

2019

Change ($)

Change (%)

Cost of revenue
$4,795,150
$4,355,110
$440,040
  10%
Gross profit
$4,340,991
$4,463,527
$(122,536)
  (3%)
Gross margin %
  48%
  51%

Three-months ended June 30,	2021			2020			Change ($)		Change (%)

Cost of revenue	$	2,186,357		$	1,589,190		$	597,167		38	%
Gross profit	$	1,646,661		$	1,440,009		$	206,652		14	%
Gross margin %		43	%		48	%

Six-months ended June 30,	2021			2020			Change ($)		Change (%)

Cost of revenue	$	4,249,997		$	3,088,674		$	1,161,323		38	%
Gross profit	$	3,189,239		$	2,907,109		$	282,130		10	%
Gross margin %		43	%		48	%

Our cost of revenue consists of fixed and variable stock exchange fees and data feed provisioning costs. Cost of revenue also includes amortization of capitalized internal-use software costs. We capitalize the costs associated with developing new products during the application development stage.

~~Cost~~

We launched a major growth initiative 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 ~~19% and 10% when comparing~~38% for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020 and 2019, respectively. The increases in cost of revenue are primarily due to increases in stock exchange fees due to increased customer usage~~2021 from the comparative periods ~~that are consistent~~in 2020. We incurred increased stock exchange fees related to increased usage and new market data added since the comparative periods, and increased amortization expenses associated with ~~increases in Corporate Quotestream revenue. The increases are also due to increases in~~internally developed application software.

Overall, the ~~amortization of capitalized internal-use software costs resulting from increased investment in product development and data collection.~~

~~Overall, our~~ cost of revenue ~~increases led to~~increased as a ~~decrease in~~percentage of sales, as evidenced by our gross margin percentage ~~which~~that decreased to ~~46% and 48%~~43% for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020~~2021 from ~~52% and 51%~~48% in the comparative periods.

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 revenue which typically has higher gross margins.

Operating Expenses Summary

Three-months ended September 30,

2020

2019

Change ($)

Change (%)

Sales and marketing
$552,960
$463,929
$89,031
  19%
General and administrative
  555,002
  600,329
  (45,327)
  (8%)
Software development
  405,703
  311,028
  94,675
  30%
Total operating expenses
$1,513,665
$1,375,286
$138,379
  10%

Nine-months ended September 30,

2020

2019

Change ($)

Change (%)

Sales and marketing
$1,602,501
$1,393,929
$208,572
  15%
General and administrative
  1,817,748
  1,646,388
  171,360
  10%
Software development
  1,246,722
  923,218
  323,504
  35%
Total operating expenses
$4,666,971
$3,963,535
$703,436
  18%

Three-months ended June 30,	2021		2020		Change ($)		Change (%)

Sales and marketing	$	620,122	$	532,061	$	88,061		17	%
General and administrative		685,731		612,693		73,038		12	%
Software development		439,045		415,192		23,853		6	%
Total operating expenses	$	1,744,898	$	1,559,946	$	184,952		12	%

Six-months ended June 30,	2021		2020		Change ($)		Change (%)

Sales and marketing	$	1,258,986	$	1,049,541	$	209,445		20	%
General and administrative		1,292,971		1,262,746		30,225		2	%
Software development		846,333		841,019		5,314		1	%
Total operating expenses	$	3,398,290	$	3,153,306	$	244,984		8	%

Sales and Marketing

Sales and marketing consist primarily of sales and customer service salaries, investor relations, travel and advertising expenses. Sales and marketing expenses increased by ~~19%~~17% and ~~15%~~20% when comparing the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020 and 2019, respectively.~~2021 from the comparative periods in 2020. The increases are ~~primarily~~ 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

General and administrative expenses consist primarily of salaries expense, office rent, insurance premiums, and professional fees. General and administrative expenses ~~decreased 8%~~remained relatively unchanged from the comparative periods, increasing 12% and ~~increased 10%~~2% when comparing the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020 and 2019, respectively.~~2021 to the same periods in 2020. The ~~quarter to date decrease is mainly~~12% increase for the three months ended June 30, 2021 was due to ~~one-time recruiting fees in~~a large bad debt incurred during the ~~comparative period. The year to date increase is primarily due to additional hiring of personnel to meet expected future growth and an increase in bad debts related to the impact of COVID-19.~~

quarter.

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Software Development

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

Software development expenses ~~increased 30%~~remained relatively unchanged from the comparative periods, increasing 6% and ~~35%~~1% for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020, respectively,~~2021 when compared to the same periods in ~~2019.~~2020, The ~~increases were mainly~~6% increase for the three month period ended June 31, 2021 was due to hiring additional development personnel ~~since~~during the ~~comparative periods to accelerate new product development and data collection.~~

quarter. We capitalized ~~$460,666~~$489,306 and ~~$1,225,898~~$1.048,943 of development costs for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020, respectively,~~2021 compared to ~~$346,949~~$429,683 and ~~$1,007,189 for~~$765,232 in the same periods 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. ~~Amortization~~

Other Income and (Expense) Summary

Three-months ended June 30,	2021			2020

Foreign exchange gain (loss)	$	19,880		$	(5,249	)
Interest expense		(451	)		(1,191	)
Total other income (expenses), net	$	19,429		$	(6,440	)

Six-months ended June 30,	2021			2020

Foreign exchange gain	$	22,328		$	5,957
Interest expense		(1,459	)		(2,718	)
Other income		133,257			-
Total other income, net	$	154,126		$	3,239

Foreign Exchange Gain (Loss)

We incurred foreign exchange gains of ~~capitalized costs of software were $290,791~~$19,880 and ~~$814,410~~$22,328 for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020, respectively,~~2021 compared to ~~$229,677~~foreign exchange loss of $5,249 and ~~$648,169 for~~gain of $5,957 in the ~~same~~comparative 2020 periods, ~~in 2019.~~

~~Other Income and (Expense) Summary~~

Three-months ended September 30,

2020

2019

Foreign exchange loss
$5,930
$(543)
Interest expense
(701)
(1,349)
Total other income (expenses)
$5,229
$(1,892)

Nine-months ended September 30,

2020

2019

Foreign exchange gain (loss)
$11,887
$(21,857)
Interest expense
(3,419)
(4,533)
Total other income (expenses)
$8,468
$(26,390)

~~Foreign Exchange Gain (Loss)~~

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.~~

We incurred a foreign exchange gain of $5,930 for the three-months ended September 30, 2020. 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 $CAD681,999 ($US507,753). The remeasurement of this operating lease liability into U.S. dollars at September 30, 2020 resulted in a foreign exchange gain as the Canadian dollar depreciated 2% versus the U.S. dollar from the lease renewal date. This foreign exchange gain was offset by the foreign exchange re-measurement loss arising from the Canadian dollar appreciating 2% versus the U.S. dollar when comparing the foreign exchange rate at June 30, 2020 to the rate at September 30, 2020. We incurred a foreign exchange loss of $543 for the same quarterly period in 2019 arising from exchange rate fluctuations between transaction and settlement dates for foreign currency denominated transactions.

We incurred a foreign exchange gain of $11,887 for the nine-months ended September 30, 2020 primarily due to the foreign exchange re-measurement gain as the Canadian dollar depreciated 5% versus the U.S. dollar when comparing the foreign exchange rate at September 30, 2020 to the rate at December 31, 2019. We incurred a foreign exchange loss of $21,857 for the comparative 2019 period mainly attributable to the re-measurement of Canadian dollar monetary assets and liabilities into U.S. dollars as the Canadian dollar appreciated 2.9% versus the U.S. dollar in 2018.

Interest Expense

Interest expense relates primarily to the interest expense associated with our finance leases and was relatively unchanged from the comparative ~~period.~~periods. Interest expense of ~~$701~~$451 and ~~$3,419~~$1,459 was incurred for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020, respectively,~~2021, compared to ~~$1,349~~$1,191 and ~~$4,533~~$2,718 incurred in the same ~~2019~~2020 periods.

Other Income

Other income was $133,257 for the three and six-month periods ended June 30, 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 periods. See Financial Statement Note 8 “Paycheck Protection Program”.

Provision for Income Taxes

For the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020,~~2021, the Company recorded Canadian income tax expense of ~~$751~~$817 and ~~$2,216, respectively,~~$1,613 compared to ~~$758~~$721 and ~~$2,257~~$1,465 in the comparative periods in ~~2019.~~

2020.

Net ~~Income (Loss)~~Loss for the Period

As a result of the foregoing, ~~the Company recognized~~our net ~~loss of $75,305 and $319,728~~losses for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020~~2021 were $79,625 and $56,538 compared to net ~~income~~losses of ~~$155,928~~$127,098 and ~~$471,345~~$244,423 for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2019.~~2020. Basic and diluted ~~earnings~~losses per share were $(0.00) for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2020. Basic~~2021, and ~~diluted earnings per share were $0.00 and $0.01~~$(0.00) for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2019.~~

2020.

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Liquidity and Capital Resources

Our cash totaled ~~$678,552~~$627,229 at ~~September~~June 30, ~~2020,~~2021, as compared with ~~$815,487~~$417,910 at December 31, ~~2019, a decrease~~2020, an increase of ~~$136,935.~~$209,319. Net cash of ~~$1,101,397~~$1,314,529 was provided by operations for the ~~nine-months~~six-month period ended ~~September~~June 30, ~~2020,~~2021, primarily due to ~~cash generated from~~ the ~~results of operations excluding~~net 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-months~~six-month period ended ~~September~~June 30, ~~2020~~2021 was ~~$1,354,086~~$1,094,570 resulting primarily from capitalized application software ~~costs and the purchase of new computer equipment.~~costs. Cash ~~provided by~~used in financing activities for the ~~nine-months~~six-month period ended ~~September~~June 30, ~~2020~~2021 was ~~$115,754~~$10,640 related to the ~~PPP loan offset by~~ repayment of capital lease financing.

We ~~have~~typically operate with a working capital deficit. As of June 30, 2021 our working capital deficit ~~of $984,771 as of September 30, 2020,~~is $1,990,292, however current liabilities include ~~$666,516~~$739,272 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.

I~~TEM~~

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.

Preferred Stock Redemption Rights

At June 30, 2021, 123,685 shares of Series A Redeemable Convertible Preferred Stock were outstanding and 1,000 shares may be redeemed at the holder’s option at the liquidation value of $25 per share if the cash balance of the Company as reported at the end of each fiscal quarter exceeds $400,000. See Financial Statement Note 6 a) “Preferred shares”.

Foreign Exchange Risk

Approximately 28% of our consolidated revenue and 34% percent of our consolidated expenses are denominated in Canadian dollars; therefore, our consolidated cashflow may be impacted by foreign exchange fluctuations.

Off-Balance Sheet Arrangements

At June 30, 2021 and December 31, 2020, we did not have any unconsolidated entities or financial partnerships, or other off-balance sheet arrangements.

ITEM 4. Controls and Procedures

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~~June 30, ~~2020~~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-months~~six-month period ended ~~September~~June 30, ~~2020,~~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.

P~~ART~~

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PART II - OTHER INFORMATION

I~~TEM~~

ITEM 6. EXHIBITS

~~ExhibitNumber~~ Exhibit Number		Description of Exhibit

31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.
31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.
32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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S~~IGNATURES~~

SIGNATURES

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.

QUOTEMEDIA, INC.

By:	/s/ Keith J. Randall
	Keith J. Randall
	Chief Executive Officer and Chief Financial Officer
	(Duly authorized officer and principal financial officer)

Dated: August 12, 2021

	September 30, 2020	December 31, 2019
ASSETS

Current assets:
Cash and cash equivalents	$678,552	$815,487
Accounts receivable, net	728,740	680,759
Prepaid expenses	135,029	103,093
Other current assets	90,263	47,793
Total current assets	1,632,584	1,647,132

Deposits	16,755	16,084
Property and equipment, net	2,643,666	2,273,087
Goodwill	110,000	110,000
Intangible assets	63,498	51,265
Operating lease right-of-use assets	699,658	328,676

Total assets	$5,166,161	$4,426,244

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:
Accounts payable and accrued liabilities	$1,759,714	$1,286,340
Deferred revenue	666,516	579,343
Current portion of operating lease liabilities	171,542	172,049
Current portion of finance lease liabilities	19,583	33,914
Total current liabilities	2,617,355	2,071,646

Paycheck Protection Program loan (Note 8)	141,257	-
Long-term portion of operating lease liabilities	520,414	167,496
Long-term portion of finance lease liabilities	2,777	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 September 30, 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 September 30, 2020 and December 31, 2019	90,479	90,479
Additional paid-in capital	19,598,944	19,568,011
Accumulated deficit	(20,788,922)	(20,469,194)
Total stockholders’ deficit	(1,099,499)	(810,704)

Total liabilities and stockholders’ deficit	$5,166,161	$4,426,244

	Three-months ended September 30,		Nine-months ended September 30,
	2020	2019	2020	2019

LICENSING FEES	$3,140,358	$2,963,172	$9,136,141	$8,818,637

COST OF REVENUE	1,706,476	1,429,308	4,795,150	4,355,110

GROSS PROFIT	1,433,882	1,533,864	4,340,991	4,463,527

OPERATING EXPENSES

Sales and marketing	552,960	463,929	1,602,501	1,393,929
General and administrative	555,002	600,329	1,817,748	1,646,388
Software development	405,703	311,028	1,246,722	923,218
	1,513,665	1,375,286	4,666,971	3,963,535

OPERATING PROFIT (LOSS)	(79,783)	158,578	(325,980)	499,992

OTHER INCOME (EXPENSES)

Foreign exchange gain (loss)	5,930	(543)	11,887	(21,857)
Interest and other expense, net	(701)	(1,349)	(3,419)	(4,533)
	5,229	(1,892)	8,468	(26,390)

INCOME (LOSS) BEFORE INCOME TAXES	(74,554)	156,686	(317,512)	473,602

Provision for income taxes	(751)	(758)	(2,216)	(2,257)

NET INCOME (LOSS)	$(75,305)	$155,928	$(319,728)	$471,345

EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share	$(0.00)	$0.00	$(0.00)	$0.01
Diluted earnings (loss) per share	$(0.00)	$0.00	$(0.00)	$0.00

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic	90,477,798	90,477,798	90,477,798	90,477,798
Diluted	90,477,798	107,173,219	90,477,798	105,577,615

	Series A Redeemable Convertible Preferred Stock		Common Stock
Three-months ended September 30, 2020:	Number of Shares	Amount	Number of Shares	Amount	Additional Paid-in Capital	Accumulated Deficit	Total Stockholders’ Equity (Deficit)
Balance, June 30, 2020	123,685	$2,983,857	90,477,798	$90,479	$19,592,005	$(20,713,617)	$(1,031,133)

Stock-based compensation	-	-	-	-	6,939	-	6,939

Net loss	-	-	-	-	-	(75,305)	(75,305)

Balance, September 30, 2020	123,685	$2,983,857	90,477,798	$90,479	$19,598,944	$(20,788,922)	$(1,099,499)

	Series A Redeemable Convertible Preferred Stock		Common Stock
Nine-months ended September 30, 2020:	Number of Shares	Amount	Number of Shares	Amount	Additional Paid-in Capital	Accumulated Deficit	Total Stockholders’ Equity (Deficit)
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	-	-	-	-	30,933	-	30,933

Net loss	-	-	-	-	-	(319,728)	(319,728)

Balance, September 30, 2020	123,685	$2,983,857	90,477,798	$90,479	$19,598,944	$(20,788,922)	$(1,099,499)

	Series A Redeemable Convertible Preferred Stock		Common Stock
Three-months ended September 30, 2019:	Number of Shares	Amount	Number of Shares	Amount	Additional Paid-in Capital	Accumulated Deficit	Total Stockholders’ Equity (Deficit)
Balance, June 30, 2019	124,485	$3,003,528	90,477,798	$90,479	$19,362,858	$(20,712,774)	$(1,259,437)

Preferred shares redeemed	(800)	(19,671)	-	-	(329)	-	(329)

Stock-based compensation	-	-	-	-	103,116	-	103,116

Net income	-	-	-	-	-	155,928	155,928

Balance, September 30, 2019	123,685	$2,983,857	90,477,798	$90,479	$19,465,645	$(20,556,846)	$(1,000,722)

	Series A Redeemable Convertible Preferred Stock		Common Stock
Nine-months ended September 30, 2019:	Number of Shares	Amount	Number of Shares	Amount	Additional Paid-in Capital	Accumulated Deficit	Total Stockholders’ Equity (Deficit)
Balance, December 31, 2018	125,885	$3,037,952	90,477,798	$90,479	$19,157,202	$(21,028,191)	$(1,780,510)

Preferred shares redeemed	(2,200)	(54,095)	-	-	(905)	-	(905)

Stock-based compensation	-	-	-	-	309,348	-	309,348

Net income	-	-	-	-	-	471,345	471,345

Balance, September 30, 2019	123,685	$2,983,857	90,477,798	$90,479	$19,465,645	$(20,556,846)	$(1,000,722)

	September 30, 2020	December 31, 2019

Weighted Average Remaining Lease Term
Operating leases	4.3 years	2.9 years
Finance leases	1.0 years	1.5 years

Weighted Average Discount Rate
Operating leases	9.7%	9.3%
Finance leases	8.8%	8.9%

Year ending December 31,	Operating Leases	Finance Leases

2020 (for the remainder of the year)	$64,571	$9,051
2021	213,556	12,061
2022	178,695	2,151
2023	164,374	-
2024	148,877	-
Thereafter	79,581	-
Total lease payments	849,654	23,263
Less imputed interest	(157,698)	(903)
Total	$691,956	$22,360

	2020	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$118,985	$131,803
Operating cash flows from finance leases	2,415	4,544

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	507,753	-

	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	(675,000)	$0.05
Non-vested at September 30, 2020	4,950,000	$0.09

	Common Stock Options and Warrants Outstanding			Common Stock Options and Warrants Exercisable
		Weighted Average Remaining	Weighted Average		Weighted Average
	Number Outstanding	Contractual Life (Years)	Exercise Price	Number Exercisable	Exercise Price

$0.03-0.11	26,372,803	8.6	$0.06	21,422,803	$0.05