UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark one)

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

 

For the quarterly period ended March 31, 2024

OR

 

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

 

For the transition period _________ to _________ 

 

Commission File Number:   0-28599

 

QuoteMedia, Inc.

(Exact name of registrant as specified in its charter)

 

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)

 

(602) 830-1443

(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

Smaller reporting company

(Do not check if a 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 May 1, 2024.

 

 

 

 

QUOTEMEDIA, INC.

 

FORM 10-Q for the Quarter Ended March 31, 2024

 

INDEX

 

 

 

Page

Part I.

Financial Information

 

 

 

 

Item 1.

Consolidated financial statements (unaudited):

3

 

 

 

 

Condensed Consolidated Balance Sheets at March 31, 2024 and December 31, 2023

3

 

 

 

 

Condensed Consolidated Statements of Operations for the three-months ended March 31, 2024 and 2023

4

 

 

 

 

Condensed Consolidated Statements of Changes in Series A Redeemable Convertible Preferred Stock and Stockholders’ Deficit for the three-months ended March 31, 2024 and 2023

5

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the three-months ended March 31, 2024 and 2023

6

 

 

 

 

Notes to Condensed Consolidated Financial Statements

7

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

 

 

 

Item 4.

Controls and Procedures

20

 

 

 

Part II.

Other Information

 

 

 

 

Item 6.

Exhibits

21

 

 

 

Signatures 

22

 

 
2

Table of Contnts

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

QUOTEMEDIA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

March 31,

2024

 

 

December 31,

2023

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$244,277

 

 

$342,014

 

Accounts receivable, net

 

 

1,286,609

 

 

 

1,154,787

 

Prepaid expenses

 

 

218,199

 

 

 

133,478

 

Other current assets

 

 

118,451

 

 

 

104,931

 

Total current assets

 

 

1,867,536

 

 

 

1,735,210

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

16,558

 

 

 

16,850

 

Property and equipment, net

 

 

277,590

 

 

 

302,224

 

Capitalized internal-use software development costs, net

 

 

4,680,740

 

 

 

4,552,910

 

Goodwill

 

 

110,000

 

 

 

110,000

 

Intangible assets

 

 

59,166

 

 

 

65,636

 

Operating lease right-of-use assets (see note 5)

 

 

343,369

 

 

 

393,472

 

 

 

 

 

 

 

 

 

 

Total assets

 

$7,354,959

 

 

$7,176,302

 

 

 

 

 

 

 

 

 

 

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$2,522,960

 

 

$2,210,933

 

Deferred revenue (see note 3)

 

 

1,505,807

 

 

 

1,456,381

 

Operating lease liabilities (see note 5)

 

 

204,532

 

 

 

206,146

 

Total current liabilities

 

 

4,233,299

 

 

 

3,873,460

 

 

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Deferred revenue (see note 3)

 

 

276,456

 

 

 

375,568

 

Operating lease liabilities (see note 5)

 

 

137,841

 

 

 

191,735

 

Preferred stock warrant liability (see note 6)

 

 

611,563

 

 

 

611,563

 

Total long-term liabilities

 

 

1,025,860

 

 

 

1,178,866

 

 

 

 

 

 

 

 

 

 

Mezzanine equity:

 

 

 

 

 

 

 

 

Preferred stock, 10,000,000 shares authorized:

 

 

 

 

 

 

 

 

Series A redeemable convertible preferred stock, $0.001 par value, 550,000 shares designated; shares issued and outstanding: 123,685 at March 31, 2024 and December 31, 2023 (see note 6)

 

 

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 March 31, 2024 and December 31, 2023

 

 

90,479

 

 

 

90,479

 

Additional paid-in capital

 

 

18,910,482

 

 

 

18,910,482

 

Accumulated deficit

 

 

(19,889,018)

 

 

(19,860,842)

Total stockholders’ deficit

 

 

(888,057)

 

 

(859,881)

 

 

 

 

 

 

 

 

 

Total liabilities, mezzanine equity and stockholders’ deficit

 

$7,354,959

 

 

$7,176,302

 

 

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

 

 
3

Table of Contnts

 

QUOTEMEDIA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

REVENUE (see note 3)

 

$4,679,200

 

 

$4,750,048

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE

 

 

2,342,114

 

 

 

2,319,935

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

2,337,086

 

 

 

2,430,113

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

777,202

 

 

 

824,053

 

General and administrative

 

 

808,354

 

 

 

852,514

 

Software development

 

 

803,322

 

 

 

630,073

 

 

 

 

2,388,878

 

 

 

2,306,640

 

 

 

 

 

 

 

 

 

 

OPERATING (LOSS) INCOME

 

 

(51,792)

 

 

123,473

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSES), NET

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange gain (loss)

 

 

25,307

 

 

 

(8,001)

Interest expense

 

 

(953)

 

 

(1,452)

 

 

 

24,354

 

 

 

(9,453)

 

 

 

 

 

 

 

 

 

NET (LOSS) INCOME BEFORE INCOME TAXES

 

 

(27,438)

 

 

114,020

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

(738)

 

 

(730)

 

 

 

 

 

 

 

 

 

NET (LOSS) INCOME

 

$(28,176)

 

$113,290

 

 

 

 

 

 

 

 

 

 

EARNINGS (LOSS) PER SHARE (see note 7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) earnings per share

 

$(0.00)

 

$0.00

 

Diluted (loss) earnings per share

 

$(0.00)

 

$0.00

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING (see note 7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

90,477,798

 

 

 

90,477,798

 

Diluted

 

 

90,477,798

 

 

 

120,743,864

 

 

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

 

 
4

Table of Contnts

 

QUOTEMEDIA, INC.

CONDENSED STATEMENTS OF CHANGES IN SERIES A REDEEMABLE CONVERTIBLE

PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

 (UNAUDITED)

 

 

 

Series A Redeemable

Convertible

 Preferred Stock

 

 

Common Stock

 

 

 Additional

 

 

 

 

 

 Total

 

 

 

Number of Shares

 

 

Amount

 

 

Number of

Shares

 

 

Amount

 

 

Paid-in

Capital

 

 

Accumulated

Deficit

 

 

 Stockholders’

Deficit

 

Balance, December 31, 2023

 

 

123,685

 

 

$2,983,857

 

 

 

90,477,798

 

 

$90,479

 

 

$18,910,482

 

 

$(19,860,842)

 

$(859,881)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(28,176)

 

 

(28,176)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2024

 

 

123,685

 

 

$2,983,857

 

 

 

90,477,798

 

 

$90,479

 

 

$18,910,482

 

 

$(19,889,018)

 

$(888,057)

 

 

 

Series A Redeemable

Convertible

 Preferred Stock

 

 

Common Stock

 

 

Additional

 

 

 

 

Total Stockholders’

 

 

 

Number of Shares

 

 

Amount

 

 

Number of

Shares

 

 

Amount

 

 

 Paid-in

Capital

 

 

Accumulated

Deficit

 

 

Equity

(Deficit)

 

Balance, December 31, 2022

 

 

123,685

 

 

$2,983,857

 

 

 

90,477,798

 

 

$90,479

 

 

$18,903,272

 

 

$(20,222,426)

 

$(1,228,675)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

113,290

 

 

 

113,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2023

 

 

123,685

 

 

$2,983,857

 

 

 

90,477,798

 

 

$90,479

 

 

$18,903,272

 

 

$(20,109,136)

 

$(1,115,385)

 

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

 

 
5

Table of Contnts

 

QUOTEMEDIA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$(28,176)

 

$113,290

 

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

728,678

 

 

 

627,987

 

Allowance for doubtful accounts

 

 

225,000

 

 

 

200,000

 

Stock-based compensation expense – preferred stock warrants

 

 

-

 

 

 

78,125

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(356,822)

 

 

(136,666)

Prepaid expenses

 

 

(84,721)

 

 

(23,958)

Other current assets

 

 

(13,520)

 

 

(23,104)

Deposits

 

 

292

 

 

 

(5,042)

Accounts payable, accrued and other liabilities

 

 

306,622

 

 

 

(140,666)

Deferred revenue

 

 

(49,686)

 

 

302,413

 

Net cash provided by operating activities

 

 

727,667

 

 

 

992,379

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(10,089)

 

 

(28,786)

Capitalized application software

 

 

(815,315)

 

 

(766,515)

Net cash used in investing activities

 

 

(825,404)

 

 

(795,301)

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash

 

 

(97,737)

 

 

197,078

 

 

 

 

 

 

 

 

 

 

Cash and equivalents, beginning of period

 

 

342,014

 

 

 

477,987

 

 

 

 

 

 

 

 

 

 

Cash and equivalents, end of period

 

$244,277

 

 

$675,065

 

 

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

 

 
6

Table of Contnts

 

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

1. 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, management evaluated subsequent events after the balance sheet date of March 31, 2024 through the filing of this report.

 

These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto for the fiscal year ended December 31, 2023 contained in the Form 10-K filed with the Securities and Exchange Commission dated April 8, 2024.

 

Risks and Uncertainties

 

Adverse macroeconomic conditions, including inflation, slower growth or recession, and higher interest rates could materially adversely affect demand for the Company’s services.

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

a) Nature of operations

 

Quotemedia, Inc. (the “Company”) is a software developer and distributor of financial market data and related services to a global marketplace. The Company specializes in the collection, aggregation, and delivery of both delayed and real-time financial data content via the Internet. The Company develops 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.

 

b) Basis of consolidation

 

These 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 of the 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 year, except for expenses related to balance sheet amounts remeasured at historical exchange rates. Because the U.S. dollar is the functional currency, exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in income in the period in which they occur.

 

d) Allowances for doubtful accounts

 

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. The Company believes that the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables held at March 31, 2024, because the composition of the trade receivables at that date is consistent with that used in developing the historical credit-loss percentages (i.e., the similar risk characteristics of its customers and its credit practices have not changed significantly over time).  The allowance for doubtful accounts was $225,000 as of March 31, 2024 and December 31, 2023, respectively. Bad debt expenses were $13,329 and ($64,093) for the three ended March 31, 2024 and 2023, respectively.

 

e) Revenue

 

The Company generates substantially all of its revenue from subscriptions for access to its software products and related support.  The Company licenses financial market data information on a monthly, quarterly, or annual basis. The Company’s products and services are divided into two main categories:

 

 
7

Table of Contnts

 

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

 

Interactive Content and Data Applications

 

 

·

Proprietary financial software applications and streaming market data feeds

 

·

Subscriptions are typically sold for a fixed fee and revenue is recognized ratably over the term of the subscription.

 

Portfolio Management and Real-Time Quote Systems

 

 

1.

Corporate Quotestream (Business-to-Business)

 

o

Web-delivered, embedded applications providing real-time, streaming market quotes and research information targeted to both professionals and non-professional users.

 

o

Revenue is typically earned based on customer usage.

 

 

2.

Individual Quotestream (Business-to-Consumer)

 

o

Web-delivered, embedded applications providing real-time, streaming market quotes and research information targeted to non-professional users.

 

o

Subscriptions are typically sold for a fixed fee and revenue is recognized ratably over the term of the subscription.

 

The Company does not provide its customers with the right to take possession of its software products at any time.

 

The Company determines revenue recognition through the following steps:

 

 

·

Identification of the contract, or contracts, with a customer

 

 

 

 

·

Identification of the performance obligations in the contract

 

 

 

 

·

Determination of the transaction price

 

 

 

 

·

Allocation of the transaction price to the performance obligations in the contract

 

 

 

 

·

Recognition of revenue when, or as, the Company satisfies a performance obligation

 

The Company executes a signed contract with the customer that specifies services to be provided, the payment amounts and terms, and the period of service, among other terms.

 

Contract Balances

 

The Company’s corporate customers are invoiced based on fee schedules that are agreed upon in each customer contract. Individual Quotestream customers are charged a subscription fee based on their subscription agreement. The Company recognizes revenue when performance obligations have been satisfied, which is the date the customer has access to the contracted market data.  The timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. Upfront set-up or development fees are deferred and recognized evenly from the date performance obligations have been met to the end of the service term of the contract, as set-up and development fees are not distinct from the market data service contracts to which they relate.

 

The Company considers the following factors when determining if collection of a fee is reasonably assured: customer creditworthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If these factors do not indicate collection is reasonably assured, revenue is not recognized until collection becomes reasonably assured, which is generally upon receipt of cash.

 

Cost of revenue

 

Cost of revenue primarily consists of customer support personnel-related compensation expenses, including salaries, bonuses, benefits, payroll taxes, and stock-based compensation expense, as well as expenses related to third-party hosting costs, software license fees, amortization of capitalized software development costs, amortization of acquired technology intangible assets, and allocated overhead.

 

f) Accounting Pronouncements

 

Recently Adopted

 

On January 1, 2024, the Company adopted Accounting Standards Update (“ASU”) 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies the complexity associated with applying U.S. Generally Accepted Accounting Principles (“GAAP”) for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity's own equity. The adoption of ASU 2020-06 had no impact on the Company’s consolidated financial statements.

 

 
8

Table of Contnts

  

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

 

Not Yet Adopted

 

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). This standard improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments in ASU 2023-07 will be applied retrospectively to all prior periods presented in the consolidated financial statements. The Company does not expect that the adoption of ASU 2023-07 will have a significant impact on the Company’s consolidated financial statements.

 

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosure (“ASU 2023-09”). This standard provides transparency to income tax disclosures related to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 for public entities with early adoption permitted. The amendments in ASU 2023-09 will be applied prospectively in the consolidated financial statements. The Company does not expect that the adoption of ASU 2023-09 will have a significant impact on the Company’s consolidated financial statements.

 

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

 

3. REVENUE

 

Disaggregated Revenue

 

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

 

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

Portfolio Management Systems

 

 

 

 

 

 

Corporate Quotestream

 

$1,781,685

 

 

$1,827,253

 

Individual Quotestream

 

 

469,005

 

 

 

487,567

 

Interactive Content and Data APIs

 

 

2,428,510

 

 

 

2,435,228

 

Total revenue

 

$4,679,200

 

 

$4,750,048

 

 

Deferred Revenue

 

Changes in deferred revenue were as follows for the periods ending March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Beginning balance at Jan 1,

 

$1,831,949

 

 

$1,166,848

 

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

 

 

(681,276)

 

 

(565,370)

New deferrals, net of amounts recognized in the current period

 

 

624,920

 

 

 

866,786

 

Effects of foreign currency translation

 

 

6,670

 

 

 

997

 

Total deferred revenue

 

$1,782,263

 

 

$1,469,261

 

 

Current portion of deferred revenue

 

$1,505,807

 

 

$1,095,103

 

Long-term portion of deferred revenue

 

 

276,456

 

 

 

374,158

 

Total deferred revenue

 

$1,782,263

 

 

$1,469,261

 

 

Practical Expedients 

 

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

 

 
9

Table of Contnts

  

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

4. RELATED PARTIES

 

The Company entered into a five-year office lease with 410734 B.C. Ltd. effective May 1, 2021 for approximately $6,500 per month.  David M. Shworan, CEO of Quotemedia Ltd., is a control person of 410734 B.C. Ltd. There were no amounts due to 410734 B.C. Ltd. at March 31, 2024 and December 31, 2023.

 

The Company pays a monthly marketing service fee of $3,000 to Bravenet Web Services, Inc. (“Bravenet”). At March 31, 2024 and December 31, 2023, there was $21,000 and $12,500 due to Bravenet related to this agreement, respectively. David M. Shworan is a control person of Bravenet. At March 31, 2024 and December 31, 2023, there were $162,880 and $68,988 in unreimbursed expenses owed to Keith Randall, CEO of Quotemedia, Inc., respectively.  As a matter of policy all significant related party transactions are subject to review and approval by the Company’s Board of Directors.

 

5. LEASES

 

The Company has operating leases for corporate offices. The Company’s leases have remaining lease terms of 1 year to 3 years. Management determines 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 the Company’s consolidated balance sheets. Finance lease assets and liabilities are included in property and equipment and finance lease liabilities, respectively, on the Company’s consolidated balance sheets.

 

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 the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The Company 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, the Company factors in options to extend or terminate leases when it is reasonably certain that the Company will exercise that option. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For certain leases the Company accounts for the lease and non-lease components as a single lease component.

 

Supplemental balance sheet information related to leases was as follows:

 

 

 

March 31,

2024

 

 

December 31,

2023

 

Operating Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

$343,369

 

 

$393,472

 

 

 

 

 

 

 

 

 

 

Current portion of operating lease liability

 

$204,532

 

 

$206,146

 

Long-term portion of operating lease liability

 

 

137,841

 

 

 

191,735

 

Total operating lease liability

 

$342,373

 

 

$397,881

 

 

 

 

March 31,

2024

 

 

December 31,

2023

 

 

 

 

 

 

Weighted Average Remaining Lease Term

 

 

 

 

Operating leases

 

1.7 years

 

 

1.9 years

 

Weighted Average Discount Rate

 

 

 

 

 

 

Operating leases

 

 

9.5%

 

 

9.5%

 

Maturities of lease liabilities were as follows:

 

Year ending December 31,

 

Operating

Leases

 

 

 

 

 

2024 (excluding the three-months ended March 31, 2024)

 

 

173,176

 

2025

 

 

164,773

 

2026

 

 

34,074

 

Total lease payments

 

 

372,023

 

Less imputed interest

 

 

(29,650)

Total

 

$342,373

 

 

 
10

Table of Contnts

  

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

The components of lease expense for the three-months ended March 31, 2024 and 2023 were as follows:

 

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

Operating lease costs:

 

 

 

 

 

 

Operating lease costs

 

$59,041

 

 

$58,427

 

Short-term lease costs

 

 

27,336

 

 

 

26,987

 

Total operating lease costs

 

$86,377

 

 

$85,414

 

 

Supplemental cash flow information for the three-months ended March 31, 2024 and 2023 related to leases was as follows:

 

 

 

2024

 

 

2023

 

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

 

 

 

 

 

 

Operating cash flows from operating leases

 

$57,814

 

 

$56,719

 

 

There was no additional right of use assets obtained in exchange for lease obligations for the three-months ended March 31, 2024 and 2023.

 

6. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

 

a) Redeemable Convertible Preferred Stock

 

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

 

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

 

At March 31, 2024 and December 31, 2023, 123,685 shares of Series A redeemable convertible preferred stock were outstanding. No shares of Series A redeemable convertible preferred stock were issued or redeemed during the three-months ended March 31, 2024 and 2023.

 

Redemption Rights

 

Holders of Series A redeemable convertible preferred stock shall have the right to convert their shares into shares of common stock at the rate of 83.33 shares of common stock for one share of Series A redeemable convertible preferred stock, at any time following the date the closing price of a share of common stock on a securities exchange or actively traded over-the-counter market has exceeded $0.30 for ninety (90) consecutive trading days. The conversion rights are subject to the availability of authorized but unissued shares of common stock.

 

In addition, 1,000 Series A Redeemable Convertible Preferred Stock 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.

 

In accordance with Accounting Standards Update (“ASU”) 480-10-S99, because a limited 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 Company 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

 

No shares of common stock were issued during the three-months ended March 31, 2024 and 2023.

 

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.

 

 
11

Table of Contnts

  

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

Total stock-based compensation expense, related to all of the Company’s stock-based awards, recognized for the three-months ended March 31, 2024 and 2023 was comprised as follows:

 

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Sales and marketing

 

$-

 

 

$4,239

 

Total stock-based compensation expense

 

$-

 

 

$4,239

 

 

Common Stock Options and Warrants

 

There were 25,772,803 fully vested common stock warrants and options outstanding at March 31, 2024 and December 31, 2023 at a weighted-average grant date exercise price of $0.06. No stock options or warrants to purchase common stock were granted or exercised during the three-months ended March 31, 2024 and 2023. 

 

The following table summarizes the weighted average remaining contractual life and exercise price of common stock options and warrants outstanding and exercisable at March 31, 2024:

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

Average

 

 

Weighted

 

 

 

 

 

Remaining

 

 

Average

 

 

 

Number

 

 

Contractual

 

 

Exercise

 

 

 

Outstanding

 

 

Life (Years)

 

 

Price

 

 

 

 

 

 

 

 

 

 

 

$0.03-0.11

 

 

25,772,803

 

 

 

5.51

 

 

$0.06

 

 

At March 31, 2024, there was no unrecognized compensation cost related to non-vested options and warrants granted to purchase common stock.

 

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 March 31, 2024, the aggregate intrinsic value of options and warrants outstanding and exercisable was $3,921,022. The intrinsic value of stock options and warrants are calculated as the amount by which the market price of the Company’s common stock exceeds the exercise price of the option or warrant.

 

Preferred Stock Warrants

 

Pursuant to the December 28, 2017 Compensation Agreement with David M. Shworan, the President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary of Quotemedia, Inc., the Company issued Mr. Shworan warrants to purchase shares of Series A redeemable convertible preferred stock (“compensation preferred stock warrants”) in lieu of a cash salary. From the period December 28, 2017 to December 31, 2019 the Company issued a total of 31,250 Compensation Preferred Stock Warrants at an exercise price equal to $1.00 per share.

 

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 March 31, 2024. The probability is re-evaluated each reporting period. As of March 31, 2024, there was $7,185,430 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, management is also unable to determine the weighted-average period over which the unrecognized compensation cost will be recognized.

 

As of March 31, 2024, there were a total of 413,493 preferred stock warrants outstanding with a weighted average remaining contractual life of 23.8 years. As of March 31, 2024, 31,250 preferred stock warrants were exercisable. No preferred stock warrants were granted or exercised for the three-months ended March 31, 2024 and 2023.

 

 
12

Table of Contnts

  

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

 

Fair Value Measurement of Compensation Preferred Stock Warrants

 

The Company adheres to ASC 820, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.

 

ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

 

 

·

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company could access.

 

 

 

 

·

Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals.

 

 

 

 

·

Level 3 inputs are unobservable inputs for the asset or liability, which is typically based on an entity’s own assumptions, as there is little, if any, related market activity.

 

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

 

The estimated fair value of the preferred stock warrant liability is determined using Level 3 inputs. As of March 31, 2024 and December 31, 2023, the fair value of the preferred stock warrant liability was $611,563. The preferred stock warrants were valued using a bond plus option framework reflecting the cash flow of the preferred stock warrants and used a probability weighted sum of the value in each potential year before expiration to estimate the fair value of the preferred stock warrants. Volatility was based on public peer companies, adjusted for size and leverage. Risk-free rate was selected based on term matched Treasury securities. Bond repayment depends on the Company’s timely access to the required cash and as such, is discounted at the Company’s assumed borrowing rate. This model was run based on the Management's expected term and probabilities of a liquidity event.  The key inputs for the framework were as follows as of March 31, 2024 and December 31, 2023:

 

Valuation Inputs

 

March 31,

2023

 

 

December 31,

2023

 

Expected Time to Expiration (years)

 

 

24.05

 

 

 

24.05

 

Stock Price on Valuation Date

 

$0.23

 

 

$0.23

 

Peer Volatility

 

 

47.35%

 

 

47.35%

Cash Flow Discount Rate

 

 

15.86%

 

 

15.86%

 

The following table sets forth a summary of the changes in the fair value of the Level 3 preferred stock warrant Liability for the three-months ended March 31, 2023 and 2024:

 

Fair value as of December 31, 2023 and 2022, respectively

 

$611,563

 

 

$629,375

 

Change in fair value

 

 

-

 

 

 

78,125

 

Fair value as of March 31, 2024 and 2024, respectively

 

$611,563

 

 

$707,500

 

 

The changes in fair value attributable to the preferred stock warrants are recorded as an adjustment to stock compensation expense and reported in sales and marketing expense on the three-months ended March 31, 2024 and 2023 statements of operations.

 

 
13

Table of Contnts

 

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

7. 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 per share for the three-months ended March 31, 2024 and 2023 are as follows:

 

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Net (loss) income

 

$(28,176)

 

$113,290

 

 

 

 

 

 

 

 

 

 

Weighted average common shares used to calculate net income per share

 

 

90,477,798

 

 

 

90,477,798

 

Warrants to purchase redeemable convertible preferred stock

 

 

-

 

 

 

2,499,900

 

Redeemable convertible preferred stock

 

 

-

 

 

 

10,306,671

 

Stock options and warrants to purchase common stock

 

 

-

 

 

 

17,459,495

 

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

 

 

90,477,798

 

 

 

120,743,864

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share – basic

 

$(0.00)

 

$0.00

 

Net (loss) income per share – diluted

 

$(0.00)

 

$0.00

 

 

The number of shares of potentially dilutive common stock related to options and warrants that were excluded from the calculation of dilutive shares since the inclusion of such shares would be anti-dilutive for the three-months ended March 31, 2024 and 2023 are shown below:

 

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Warrants to purchase redeemable convertible preferred stock

 

 

2,499,900

 

 

 

-

 

Redeemable convertible preferred stock

 

 

10,306,671

 

 

 

-

 

Stock options and warrants to purchase common stock

 

 

16,720,641

 

 

 

-

 

Total potential common shares excluded

 

 

29,527,212

 

 

 

-

 

 

 
14

Table of Contnts

 

ITEM 2. Management’s Discussion and Analysis

 

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this report. We caution readers regarding certain forward looking statements in the following discussion, elsewhere in this report, and in any other statements, made by, or on behalf of our company, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, our company. Uncertainties and contingencies that might cause such differences include those risk factors disclosed in our annual report on Form 10-K for the year ended December 31, 2023 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, 2023 filed with the Securities and Exchange Commission.

 

Overview

 

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

 

We have three general product lines:  Interactive Content and Data APIs, Data Feed Services, and Portfolio Management Systems. For financial reporting purposes, our product categories share similar economic characteristics and share costs; therefore, they are combined into one reporting segment.

 

Our Interactive Content and Data APIs consist of a suite of software applications that provide publicly traded company and market information to corporate clients via the Internet.  Products include stock market quotes, fundamentals, historical and interactive charts, company news, filings, option chains, insider transactions, corporate financials, corporate profiles, screeners, market research information, investor relations provisions, level II, watch lists, and real-time quotes. All our content solutions are completely customizable and embedded directly into client Web pages for seamless integration with existing content.  We are continuing to develop and launch new modules of QModTM, our new proprietary Web delivery system. QMod was created for secure market data provisioning as well as ease of integration and unlimited customization.  Additionally, QMod delivers search engine optimized (SEO) ready responsive content designed to adapt on the fly when rendered on mobile devices or standard Web pages – automatically resizing and reformatting to fit the device on which it is displayed.

 

Our Data Feed Services consist of raw streaming real-time market data delivered over the Internet or via dedicated telecommunication lines.  We provide supplemental fundamental, historical, and analytical data, keyed to the same symbology, which provides a complete market data solution offered to our customers. Currently, QuoteMedia’s Data Feed services include complete coverage of North American exchanges and over 70 exchanges worldwide. For financial reporting purposes, Data Feed Services revenue is included in the Interactive Content and Data APIs revenue totals.

 

Our Portfolio Management Systems consist of QuotestreamTM, Quotestream Mobile, Quotestream Professional, and our Web Portfolio Management systems. Quotestream Desktop is an Internet-based streaming online portfolio management system that delivers real-time and delayed market data to both consumer and corporate markets.  Quotestream has been designed for syndication and private branding by brokerage, banking, and Web portal companies.  Quotestream’s enhanced features and functionality – most notably tick-by-tick true streaming data, significantly enhanced charting features, and a broad range of additional research and analytical content and functionality – offer a professional-level experience to nonprofessional users.

 

Quotestream Professional is specifically designed for use by financial services professionals, offering exceptional coverage and functionality at extremely aggressive pricing. Quotestream Professional features broad market coverage, reliability, complete flexibility, ultra-low-latency tick-by-tick data, as well as completely customizable screens, advanced charting, comprehensive technical analysis, news, and research data.

 

Quotestream Mobile is a true companion product to the Quotestream desktop products (Quotestream and Quotestream Professional) – any changes made to portfolios in either the desktop or mobile application are automatically reflected in the other.

 

 
15

Table of Contnts

 

A key feature of QuoteMedia’s business model is that all our product lines generate recurring monthly licensing revenue from each client. Contracts to license Quotestream to our corporate clients, for example, typically have a term of one to five years and are automatically renewed unless notice is given at least 90 days prior to the expiration of the current license term. We also generate Quotestream revenue through individual end-user licenses on a monthly or annual subscription fee basis.  Interactive Content and Data APIs and Market Data Feeds are licensed for a monthly, quarterly, annual, or semi-annual subscription fee. Contracts to license our Financial Data Products and Data Feeds typically have a term of one to five years and are automatically renewed unless notice is given 90 days prior to the expiration of the contract term.

 

Business Environment and Trends

 

While our licensed-based revenue is generally more recurring in nature, the uncertainty caused by the recent market downturn and rising inflation may result in some clients to delay purchasing decisions, product and service implementations or cancel or reduce spending with us.  Events in Ukraine and Russia have continued to cause disruptions in the global financial markets. While we do not have any operations or customers in Ukraine or Russia, we will continue to monitor the situation as a prolonged conflict could impact our business.

 

Approximately 40% of our revenue and 41% of our expenses are denominated in Canadian dollars. The Canadian dollar remained relatively unchanged against the U.S. dollar when comparing the average exchange rate for the three-months ended March 31,2024 versus the comparative 2023 period.  Because our Canadian dollar revenue and expenses are evenly matched, exchange rate fluctuations have minimal impact on our net income and cash flows.

 

Our revenue decreased 1% for the three-months ended March 31, 2024 versus the comparative 2023 period.  Based on revenue already under contract, we expect positive revenue growth and net income for fiscal 2024.

 

Plan of Operation

 

For the remainder of 2024 we plan to continue to expand our product lines and improve our infrastructure.  We plan to continue to add more features and data to our existing products and release newer versions with improved performance and flexibility for client integration.  This expansion is expected to result in both increased revenue and costs for the remainder of fiscal 2024.

 

We will maintain our focus on marketing Quotestream for deployments by brokerage firms to their retail clients and continue our expansion into the investment professional market with Quotestream Professional. We also plan to continue the growth of our Data Feed Services client base, particularly through the addition of major new international data feed coverage, as well as new data delivery products.

 

QuoteMedia will continue to focus on increasing the sales of its Interactive Content and Data APIs, particularly in the context of large-scale enterprise deployments encompassing solutions ranging across several product lines. QMod is a major component of this strategy, given the broad demand for mobile-ready, SEO-friendly Web content.

 

Important development projects for the remainder of 2024 include broad expansion of data and news coverage, including the addition of a wide array of international exchange data and news, video feeds, expansion of fixed-income coverage, and the introduction of several new and upgraded market information products.

 

New deployments of our trade integration capabilities, which allow our Quotestream applications to interact with our brokerage clients’ back-end trade execution and reporting platforms (enabling on-the-fly trade execution and tracking of holdings) are underway and will continue to be a priority for the remainder of 2024.

 

We are also creating new proprietary data sets, analytics, and scoring mechanisms.  We are now aggregating data direct from the sources to produce data sets that are proprietary to QuoteMedia. This allows us to offer our clients new data products and lower our product costs structure as we replace some of our existing data providers with our own lower cost data.

 

Opportunistically, efforts will be made to evaluate and pursue the development of additional new products that may eventually be commercialized by our company. Although not currently anticipated, we may require additional capital to execute our proposed plan of operation. There can be no assurance that such additional capital will be available to our company on commercially reasonable terms or at all.

 

Our future performance will be subject to a number of business factors, including those beyond our control, such as a continuation of market uncertainty and evolving industry needs and preferences, as well as the level of competition and our ability to continue to successfully market our products and technology. There can be no assurance that we will be able to successfully implement our marketing strategy, continue our revenue growth, or maintain profitable operations.

 

 
16

Table of Contnts

 

Critical Accounting Policies and Estimates

 

Critical Accounting Policies and Estimates

 

In the 2023 Annual Report, we disclose our critical accounting policies and estimates upon which our consolidated financial statements are derived.  There have been no material changes to these policies since December 31, 2023. Readers are encouraged to read the 2023 Annual Report in conjunction.

 

Results of Operations

 

Revenue

 

Three-months ended March 31,

 

2024

 

 

2023

 

 

Change ($)

 

 

Change (%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate Quotestream

 

$1,781,685

 

 

$1,827,253

 

 

$(45,568)

 

(2

%)

Individual Quotestream

 

 

469,005

 

 

 

487,567

 

 

 

(18,562)

 

(4%)

Total Portfolio Management Systems

 

 

2,250,690

 

 

 

2,314,820

 

 

 

(64,130)

 

(3

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interactive Content and Data APIs

 

 

2,428,510

 

 

 

2,435,228

 

 

 

(6,718)

 

(0

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total subscription revenue

 

$4,679,200

 

 

$4,750,048

 

 

$(70,848)

 

(1

%) 

 

Total licensing revenue decreased 1% when comparing the three-months ended March 31, 2024 and 2023.

 

Total Portfolio Management Systems revenue decreased 3%.  Corporate Quotestream revenue decreased 2% for the three-months ended March 31, 2024 from the comparative period in 2023 due to a decrease in the number of customers, offset by an increase in average revenue per customer since the comparative period.  We have added new products over the past couple years that are continuing to gain traction in the market, and we have made improvements and upgrades to our existing Portfolio Management products as we continue to improve functionality and add new data offerings.  These improvements have allowed us to attract larger customers and increase the average revenue for our existing customers.

 

Individual Quotestream revenue decreased 4% for the three-months ended March 31, 2024 from the comparative period in 2023 due to a decrease in total subscribers, offset by an increase in average revenue per subscriber.

 

Interactive Content and Data APIs revenue was relatively unchanged for the three-months ended March 31, 2024 from the comparative period in 2023.  The decrease in the number of customers was offset by an increase in average revenue per customer since the comparative period.  The launch of new products and the expansion of our data coverage have allowed us to attract larger clients, increasing our average revenue per customer.

 

Cost of Revenue and Gross Profit Summary

 

Three-months ended March 31,

 

2024

 

 

2023

 

 

Change ($)

 

 

Change (%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$2,342,114

 

 

$2,319,935

 

 

$22,179

 

 

 

1%

Gross profit

 

$2,337,086

 

 

$2,430,113

 

 

$(93,027)

 

(4

%)

Gross margin %

 

 

50%

 

 

51%

 

 

 

 

 

 

 

 

 

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

 

Our cost of revenue increased 1% for the three-months ended March 31, 2024 from the comparative period in 2023. This was mainly due to increased amortization expenses associated with internally developed application software resulting from our major growth initiative, which included investing in infrastructure, new product development, data collection, and the expansion of our global market coverage.

 

Overall, the cost of revenue increased as a percentage of sales, as evidenced by our gross margin percentage that decreased slightly to 50% for the three-months ended March 31, 2024 from 51% in the comparative 2023 period.

 

 
17

Table of Contnts

 

Operating Expenses Summary

 

Three-months ended March 31,

 

2024

 

 

2023

 

 

Change ($)

 

 

Change (%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

$777,202

 

 

$824,053

 

 

$(46,851)

 

(6

%)

General and administrative

 

 

808,354

 

 

 

852,514

 

 

 

(44,160)

 

(5

%)

Software development

 

 

803,322

 

 

 

630,073

 

 

 

173,249

 

 

 

27%

Total operating expenses

 

$2,388,878

 

 

$2,306,640

 

 

$82,238

 

 

 

4%

 

Sales and Marketing

 

Sales and marketing consist primarily of sales and customer service salaries, investor relations, travel and advertising expenses. Sales and marketing expenses decreased 6% for the three-months ended March 31, 2024 when compared to the same period in 2023. The decrease is due to $78,125 in stock-based compensation expense incurred in the comparative 2023 period related to the fair value adjustment to our preferred stock warrant liability.  This was offset by additional sales personnel hired since the comparative period to support our product growth initiatives and salary increases for existing personnel.

 

General and Administrative

 

General and administrative expenses consist primarily of salaries expense, office rent, insurance premiums, and professional fees. General and administrative expenses decreased 5% for the three-months ended March 31, 2024, when compared to the same period in 2023. The decrease is mainly a result of additional professional fees incurred in the comparative 2023 period resulting from the change of principal accountants in January 2023.

 

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 27% for the three-months ended March 31, 2024 when compared to the same period in 2023, primarily due to new personnel hired since the comparative period to improve our infrastructure, security, and business continuity management.  The increase in software development expenses was also due to a decrease in the percentage of total development costs capitalized during the three-month period ending March 31, 2024, when compared to the same period in 2023.

 

We capitalized $815,315 of development costs for the three-month period ended March 31, 2024 compared to $766,515 in the same period in 2023.  These costs relate to the development of application software used by subscribers to access, manage, and analyze information in our databases. Capitalized costs associated with application software are amortized over their estimated economic life of three years.

 

Other Income and (Expense) Summary

 

Three-months ended March 31,

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Foreign exchange gain (loss)

 

$25,307

 

 

$(8,001)

Interest expense, net

 

 

(953)

 

 

(1,452)

Total other income (expense), net

 

$24,354

 

 

$(9,453)

 

Foreign Exchange Gain

 

We incurred a foreign exchange gain of $25,307 for the three-month period ended March 31, 2024, compared to a foreign exchange loss of $8,001 in the comparative 2023 period. Foreign exchange gains and losses arise from the re-measurement of Canadian dollar monetary assets and liabilities into U.S. dollars and from exchange rate fluctuations between transaction and settlement dates for foreign currency denominated transactions.

 

Interest Expense, Net

 

Interest expense is netted against interest earned on cash balances.  Net interest expense of $953 was incurred for the three-month period ended March 31, 2024, compared to $1,452 incurred in the same 2023 period.

 

 
18

Table of Contnts

 

Provision for Income Taxes

 

For the three-month period ended March 31, 2024, the Company recorded $738 in Canadian income tax expense compared to $730 in the comparative period in 2023.

 

Net Income (Loss) for the Period

 

As a result of the foregoing, our net loss for the three-month period ended March 31, 2024 was $28,176 compared to a net income of $113,290 in the comparative period in 2023.  The basic and diluted loss share was $(0.00) for the three-month period ended March 31, 2024, compared to the basic and diluted earnings per share of $0.00 for the three-month period ended March 31, 2023.

 

Liquidity and Capital Resources

 

Our cash totaled $244,277 at March 31, 2024, as compared with $342,014 at December 31, 2023, a decrease of $97,737.  Net cash of $727,667 was provided by operations for the three-months ended March 31, 2024, primarily due to adjustments for non-cash charges and the increase in accounts payable and accrued liabilities, offset by an increase in accounts receivable. Net cash used in investing activities for the three-months ended March 31, 2024 was $825,404, due to capitalized application software costs and purchases of computer equipment.

 

We typically operate with a working capital deficit.  As of March 31, 2024, our working capital deficit was $2,365,763, however current liabilities include $1,505,807 in deferred revenue. The expected costs necessary to realize the deferred revenue are minimal.  If circumstances dictate, we have the flexibility to reduce development spending to maintain a strong liquidity position.

 

Based on the factors discussed above, we believe that our cash on hand and cash generated from operations will be sufficient to fund our current operations for at least the next 12 months through April 2025. However, implementing our business plan may require additional financing. Additional financing may come from future equity or debt offerings that could result in dilution to our stockholders. Further, current adverse capital and credit market conditions could limit our access to capital. We may be unable to raise capital or bear an unattractive cost of capital that could reduce our financial flexibility.

 

Our long-term liquidity requirements will depend on many factors, including the rate at which we expand our business and whether we do so internally or through acquisitions. To the extent that the funds generated from operations are insufficient to fund our activities in the long term, we may be required to raise additional funds through public or private financing. No assurance can be given that additional financing will be available or that, if it is available, it will be on terms acceptable to us.

 

Foreign Exchange Risk

 

Currently, approximately 40% of our consolidated revenue and 41% percent of our consolidated expenses are denominated in Canadian dollars.  Since currently our Canadian dollar revenue and expenses are closely matched, our consolidated cashflows are not significantly impacted by foreign exchange fluctuations. 

 

Off-Balance Sheet Arrangements

 

At March 31, 2024 and December 31, 2023, we did not have any unconsolidated entities or financial partnerships, or other off-balance sheet arrangements.

 

 
19

Table of Contnts

 

ITEM 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation and supervision of our Chairman of the Board and Chairman of the Audit Committee, Chief Executive Officer and Chief Financial Officer, have evaluated 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”)) as of March 31, 2024, and concluded that our disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, our management identified the following material weaknesses in our internal control over financial reporting, as described below.

 

Notwithstanding the material weaknesses described below our management has concluded that our consolidated financial statements for the periods covered by and included in this Quarterly Report are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and fairly present, in all material respects, our financial position, results of operations and cash flows for each of the periods presented herein.

 

The following material weaknesses were identified during the preparation and review of the current period financial statements:

 

 

·

There is a lack of segregation of duties in financial reporting.

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

 

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2024 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 
20

Table of Contnts

 

PART II - OTHER INFORMATION

ITEM 6. EXHIBITS

 

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.

 

 
21

Table of Contnts

 

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: May 13, 2024

 

 
22

 

nullnullnullnullv3.24.1.1.u2
Cover - shares
3 Months Ended
Mar. 31, 2024
May 01, 2024
Cover [Abstract]    
Entity Registrant Name QuoteMedia, Inc.  
Entity Central Index Key 0001101433  
Document Type 10-Q  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Small Business true  
Entity Shell Company false  
Entity Emerging Growth Company false  
Entity Current Reporting Status Yes  
Document Period End Date Mar. 31, 2024  
Entity Filer Category Non-accelerated Filer  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2024  
Entity Common Stock Shares Outstanding   90,477,798
Entity File Number 0-28599  
Entity Incorporation State Country Code NV  
Entity Tax Identification Number 91-2008633  
Entity Address Address Line 1 17100 East Shea Boulevard  
Entity Address Address Line 2 Suite 230  
Entity Address City Or Town Fountain Hills  
Entity Address State Or Province AZ  
Entity Address Postal Zip Code 85268  
City Area Code 602  
Local Phone Number 830-1443  
Security 12b Title Common stock, par value $.001 per share  
Document Quarterly Report true  
Document Transition Report false  
Entity Interactive Data Current Yes  
v3.24.1.1.u2
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Current assets:    
Cash and cash equivalents $ 244,277 $ 342,014
Accounts receivable, net 1,286,609 1,154,787
Prepaid expenses 218,199 133,478
Other current assets 118,451 104,931
Total current assets 1,867,536 1,735,210
Deposits 16,558 16,850
Property and equipment, net 277,590 302,224
Capitalized internal-use software development costs, net 4,680,740 4,552,910
Goodwill 110,000 110,000
Intangible assets 59,166 65,636
Operating lease right-of-use assets (see note 5) 343,369 393,472
Total assets 7,354,959 7,176,302
Current liabilities:    
Accounts payable and accrued liabilities 2,522,960 2,210,933
Deferred revenue (see note 3) 1,505,807 1,456,381
Operating lease liabilities (see note 5) 204,532 206,146
Total current liabilities 4,233,299 3,873,460
Long-term liabilities:    
Deferred revenue (see note 3) N 276,456 375,568
Operating lease liabilities (see note 5) N 137,841 191,735
Preferred stock warrant liability (see note 6) 611,563 611,563
Total long-term liabilities 1,025,860 1,178,866
Mezzanine equity:    
Preferred stock, 10,000,000 shares authorized: Series A redeemable convertible preferred stock, $0.001 par value, 550,000 shares designated; shares issued and outstanding: 123,685 at March 31, 2024 and December 31, 2023 (see note 6) 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 March 31, 2024 and December 31, 2023 90,479 90,479
Additional paid-in capital 18,910,482 18,910,482
Accumulated deficit (19,889,018) (19,860,842)
Total stockholders' deficit (888,057) (859,881)
Total liabilities, mezzanine equity and stockholders' deficit $ 7,354,959 $ 7,176,302
v3.24.1.1.u2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Mar. 31, 2024
Dec. 31, 2023
CONDENSED CONSOLIDATED BALANCE SHEETS    
Common Stock, Par Value $ 0.001 $ 0.001
Common Stock, Shares Authorized 150,000,000 150,000,000
Common Stock, Shares Issued 90,477,798 90,477,798
Common Stock, Shares Outstanding 90,477,798 90,477,798
Preferred Stock, Par Value $ 0.001 $ 0.001
Preferred Stock, Shares Authorized 10,000,000 10,000,000
Preferred Stock, Issued 123,685 123,685
Preferred Stock, Outstanding 123,685 123,685
Convertible Preferred Stock Designated 550,000 550,000
v3.24.1.1.u2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)    
REVENUE (see note 3) $ 4,679,200 $ 4,750,048
COST OF REVENUE 2,342,114 2,319,935
GROSS PROFIT 2,337,086 2,430,113
OPERATING EXPENSES    
Sales and marketing 777,202 824,053
General and administrative 808,354 852,514
Software development 803,322 630,073
Total operating expenses 2,388,878 2,306,640
OPERATING (LOSS) INCOME (51,792) 123,473
OTHER INCOME (EXPENSES), NET    
Foreign exchange gain (loss) 25,307 (8,001)
Interest expense (953) (1,452)
Total other income expenses net 24,354 (9,453)
NET (LOSS) INCOME BEFORE INCOME TAXES (27,438) 114,020
Income tax expense (738) (730)
NET (LOSS) INCOME $ (28,176) $ 113,290
EARNINGS (LOSS) PER SHARE (see note 7)    
Basic (loss) earnings per share $ (0.00) $ 0.00
Diluted (loss) earnings per share $ (0.00) $ 0.00
WEIGHTED AVERAGE SHARES OUTSTANDING (see note 7)    
Basic 90,477,798 90,477,798
Diluted 90,477,798 120,743,864
v3.24.1.1.u2
CONDENSED STATEMENTS OF CHANGES IN SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS DEFICIT (UNAUDITED) - USD ($)
Total
Series A Redeemable Convertible Preferred Stock
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Balance, shares at Dec. 31, 2022   123,685 90,477,798    
Balance, amount at Dec. 31, 2022 $ (1,228,675) $ 2,983,857 $ 90,479 $ 18,903,272 $ (20,222,426)
Net income 113,290 $ 0 $ 0 0 113,290
Balance, shares at Mar. 31, 2023   123,685 90,477,798    
Balance, amount at Mar. 31, 2023 (1,115,385) $ 2,983,857 $ 90,479 18,903,272 (20,109,136)
Balance, shares at Dec. 31, 2023   123,685 90,477,798    
Balance, amount at Dec. 31, 2023 (859,881) $ 2,983,857 $ 90,479 18,910,482 (19,860,842)
Net income (28,176) $ 0 $ 0 0 (28,176)
Balance, shares at Mar. 31, 2024   123,685 90,477,798    
Balance, amount at Mar. 31, 2024 $ (888,057) $ 2,983,857 $ 90,479 $ 18,910,482 $ (19,889,018)
v3.24.1.1.u2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)    
Net (loss) income $ (28,176) $ 113,290
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 728,678 627,987
Allowance for doubtful accounts 225,000 200,000
Stock-based compensation expense - preferred stock warrants 0 78,125
Changes in assets and liabilities:    
Accounts receivable (356,822) (136,666)
Prepaid expenses (84,721) (23,958)
Other current assets (13,520) (23,104)
Deposits 292 (5,042)
Accounts payable, accrued and other liabilities 306,622 (140,666)
Deferred revenue (49,686) 302,413
Net cash provided by operating activities 727,667 992,379
INVESTING ACTIVITIES:    
Purchase of property and equipment (10,089) (28,786)
Capitalized application software (815,315) (766,515)
Net cash used in investing activities (825,404) (795,301)
Net (decrease) increase in cash (97,737) 197,078
Cash and equivalents, beginning of period 342,014 477,987
Cash and equivalents, end of period $ 244,277 $ 675,065
v3.24.1.1.u2
BASIS OF PRESENTATION
3 Months Ended
Mar. 31, 2024
BASIS OF PRESENTATION  
Basis Of Presentation

1. 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, management evaluated subsequent events after the balance sheet date of March 31, 2024 through the filing of this report.

 

These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto for the fiscal year ended December 31, 2023 contained in the Form 10-K filed with the Securities and Exchange Commission dated April 8, 2024.

 

Risks and Uncertainties

 

Adverse macroeconomic conditions, including inflation, slower growth or recession, and higher interest rates could materially adversely affect demand for the Company’s services.

v3.24.1.1.u2
SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Mar. 31, 2024
SIGNIFICANT ACCOUNTING POLICIES  
Significant Accounting Policies

2. SIGNIFICANT ACCOUNTING POLICIES

 

a) Nature of operations

 

Quotemedia, Inc. (the “Company”) is a software developer and distributor of financial market data and related services to a global marketplace. The Company specializes in the collection, aggregation, and delivery of both delayed and real-time financial data content via the Internet. The Company develops 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.

 

b) Basis of consolidation

 

These 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 of the 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 year, except for expenses related to balance sheet amounts remeasured at historical exchange rates. Because the U.S. dollar is the functional currency, exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in income in the period in which they occur.

 

d) Allowances for doubtful accounts

 

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. The Company believes that the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables held at March 31, 2024, because the composition of the trade receivables at that date is consistent with that used in developing the historical credit-loss percentages (i.e., the similar risk characteristics of its customers and its credit practices have not changed significantly over time).  The allowance for doubtful accounts was $225,000 as of March 31, 2024 and December 31, 2023, respectively. Bad debt expenses were $13,329 and ($64,093) for the three ended March 31, 2024 and 2023, respectively.

 

e) Revenue

 

The Company generates substantially all of its revenue from subscriptions for access to its software products and related support.  The Company licenses financial market data information on a monthly, quarterly, or annual basis. The Company’s products and services are divided into two main categories:

 

Interactive Content and Data Applications

 

 

·

Proprietary financial software applications and streaming market data feeds

 

·

Subscriptions are typically sold for a fixed fee and revenue is recognized ratably over the term of the subscription.

 

Portfolio Management and Real-Time Quote Systems

 

 

1.

Corporate Quotestream (Business-to-Business)

 

o

Web-delivered, embedded applications providing real-time, streaming market quotes and research information targeted to both professionals and non-professional users.

 

o

Revenue is typically earned based on customer usage.

 

 

2.

Individual Quotestream (Business-to-Consumer)

 

o

Web-delivered, embedded applications providing real-time, streaming market quotes and research information targeted to non-professional users.

 

o

Subscriptions are typically sold for a fixed fee and revenue is recognized ratably over the term of the subscription.

 

The Company does not provide its customers with the right to take possession of its software products at any time.

 

The Company determines revenue recognition through the following steps:

 

 

·

Identification of the contract, or contracts, with a customer

 

 

 

 

·

Identification of the performance obligations in the contract

 

 

 

 

·

Determination of the transaction price

 

 

 

 

·

Allocation of the transaction price to the performance obligations in the contract

 

 

 

 

·

Recognition of revenue when, or as, the Company satisfies a performance obligation

 

The Company executes a signed contract with the customer that specifies services to be provided, the payment amounts and terms, and the period of service, among other terms.

 

Contract Balances

 

The Company’s corporate customers are invoiced based on fee schedules that are agreed upon in each customer contract. Individual Quotestream customers are charged a subscription fee based on their subscription agreement. The Company recognizes revenue when performance obligations have been satisfied, which is the date the customer has access to the contracted market data.  The timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. Upfront set-up or development fees are deferred and recognized evenly from the date performance obligations have been met to the end of the service term of the contract, as set-up and development fees are not distinct from the market data service contracts to which they relate.

 

The Company considers the following factors when determining if collection of a fee is reasonably assured: customer creditworthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If these factors do not indicate collection is reasonably assured, revenue is not recognized until collection becomes reasonably assured, which is generally upon receipt of cash.

 

Cost of revenue

 

Cost of revenue primarily consists of customer support personnel-related compensation expenses, including salaries, bonuses, benefits, payroll taxes, and stock-based compensation expense, as well as expenses related to third-party hosting costs, software license fees, amortization of capitalized software development costs, amortization of acquired technology intangible assets, and allocated overhead.

 

f) Accounting Pronouncements

 

Recently Adopted

 

On January 1, 2024, the Company adopted Accounting Standards Update (“ASU”) 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies the complexity associated with applying U.S. Generally Accepted Accounting Principles (“GAAP”) for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity's own equity. The adoption of ASU 2020-06 had no impact on the Company’s consolidated financial statements.

 

Not Yet Adopted

 

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). This standard improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments in ASU 2023-07 will be applied retrospectively to all prior periods presented in the consolidated financial statements. The Company does not expect that the adoption of ASU 2023-07 will have a significant impact on the Company’s consolidated financial statements.

 

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosure (“ASU 2023-09”). This standard provides transparency to income tax disclosures related to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 for public entities with early adoption permitted. The amendments in ASU 2023-09 will be applied prospectively in the consolidated financial statements. The Company does not expect that the adoption of ASU 2023-09 will have a significant impact on the Company’s consolidated financial statements.

 

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

v3.24.1.1.u2
REVENUE
3 Months Ended
Mar. 31, 2024
REVENUE  
Revenue

3. REVENUE

 

Disaggregated Revenue

 

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

 

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

Portfolio Management Systems

 

 

 

 

 

 

Corporate Quotestream

 

$1,781,685

 

 

$1,827,253

 

Individual Quotestream

 

 

469,005

 

 

 

487,567

 

Interactive Content and Data APIs

 

 

2,428,510

 

 

 

2,435,228

 

Total revenue

 

$4,679,200

 

 

$4,750,048

 

 

Deferred Revenue

 

Changes in deferred revenue were as follows for the periods ending March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Beginning balance at Jan 1,

 

$1,831,949

 

 

$1,166,848

 

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

 

 

(681,276)

 

 

(565,370)

New deferrals, net of amounts recognized in the current period

 

 

624,920

 

 

 

866,786

 

Effects of foreign currency translation

 

 

6,670

 

 

 

997

 

Total deferred revenue

 

$1,782,263

 

 

$1,469,261

 

 

Current portion of deferred revenue

 

$1,505,807

 

 

$1,095,103

 

Long-term portion of deferred revenue

 

 

276,456

 

 

 

374,158

 

Total deferred revenue

 

$1,782,263

 

 

$1,469,261

 

 

Practical Expedients 

 

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

v3.24.1.1.u2
RELATED PARTIES
3 Months Ended
Mar. 31, 2024
RELATED PARTIES  
Related Parties

4. RELATED PARTIES

 

The Company entered into a five-year office lease with 410734 B.C. Ltd. effective May 1, 2021 for approximately $6,500 per month.  David M. Shworan, CEO of Quotemedia Ltd., is a control person of 410734 B.C. Ltd. There were no amounts due to 410734 B.C. Ltd. at March 31, 2024 and December 31, 2023.

 

The Company pays a monthly marketing service fee of $3,000 to Bravenet Web Services, Inc. (“Bravenet”). At March 31, 2024 and December 31, 2023, there was $21,000 and $12,500 due to Bravenet related to this agreement, respectively. David M. Shworan is a control person of Bravenet. At March 31, 2024 and December 31, 2023, there were $162,880 and $68,988 in unreimbursed expenses owed to Keith Randall, CEO of Quotemedia, Inc., respectively.  As a matter of policy all significant related party transactions are subject to review and approval by the Company’s Board of Directors.

v3.24.1.1.u2
LEASES
3 Months Ended
Mar. 31, 2024
LEASES  
Leases

5. LEASES

 

The Company has operating leases for corporate offices. The Company’s leases have remaining lease terms of 1 year to 3 years. Management determines 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 the Company’s consolidated balance sheets. Finance lease assets and liabilities are included in property and equipment and finance lease liabilities, respectively, on the Company’s consolidated balance sheets.

 

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 the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The Company 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, the Company factors in options to extend or terminate leases when it is reasonably certain that the Company will exercise that option. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For certain leases the Company accounts for the lease and non-lease components as a single lease component.

 

Supplemental balance sheet information related to leases was as follows:

 

 

 

March 31,

2024

 

 

December 31,

2023

 

Operating Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

$343,369

 

 

$393,472

 

 

 

 

 

 

 

 

 

 

Current portion of operating lease liability

 

$204,532

 

 

$206,146

 

Long-term portion of operating lease liability

 

 

137,841

 

 

 

191,735

 

Total operating lease liability

 

$342,373

 

 

$397,881

 

 

 

 

March 31,

2024

 

 

December 31,

2023

 

 

 

 

 

 

Weighted Average Remaining Lease Term

 

 

 

 

Operating leases

 

1.7 years

 

 

1.9 years

 

Weighted Average Discount Rate

 

 

 

 

 

 

Operating leases

 

 

9.5%

 

 

9.5%

 

Maturities of lease liabilities were as follows:

 

Year ending December 31,

 

Operating

Leases

 

 

 

 

 

2024 (excluding the three-months ended March 31, 2024)

 

 

173,176

 

2025

 

 

164,773

 

2026

 

 

34,074

 

Total lease payments

 

 

372,023

 

Less imputed interest

 

 

(29,650)

Total

 

$342,373

 

The components of lease expense for the three-months ended March 31, 2024 and 2023 were as follows:

 

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

Operating lease costs:

 

 

 

 

 

 

Operating lease costs

 

$59,041

 

 

$58,427

 

Short-term lease costs

 

 

27,336

 

 

 

26,987

 

Total operating lease costs

 

$86,377

 

 

$85,414

 

 

Supplemental cash flow information for the three-months ended March 31, 2024 and 2023 related to leases was as follows:

 

 

 

2024

 

 

2023

 

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

 

 

 

 

 

 

Operating cash flows from operating leases

 

$57,814

 

 

$56,719

 

 

There was no additional right of use assets obtained in exchange for lease obligations for the three-months ended March 31, 2024 and 2023.

v3.24.1.1.u2
REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS DEFICIT
3 Months Ended
Mar. 31, 2024
Stockholders' deficit:  
Redeemable Convertible Preferred Stock And Stockholders' Deficit

6. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

 

a) Redeemable Convertible Preferred Stock

 

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

 

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

 

At March 31, 2024 and December 31, 2023, 123,685 shares of Series A redeemable convertible preferred stock were outstanding. No shares of Series A redeemable convertible preferred stock were issued or redeemed during the three-months ended March 31, 2024 and 2023.

 

Redemption Rights

 

Holders of Series A redeemable convertible preferred stock shall have the right to convert their shares into shares of common stock at the rate of 83.33 shares of common stock for one share of Series A redeemable convertible preferred stock, at any time following the date the closing price of a share of common stock on a securities exchange or actively traded over-the-counter market has exceeded $0.30 for ninety (90) consecutive trading days. The conversion rights are subject to the availability of authorized but unissued shares of common stock.

 

In addition, 1,000 Series A Redeemable Convertible Preferred Stock 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.

 

In accordance with Accounting Standards Update (“ASU”) 480-10-S99, because a limited 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 Company 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

 

No shares of common stock were issued during the three-months ended March 31, 2024 and 2023.

 

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-months ended March 31, 2024 and 2023 was comprised as follows:

 

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Sales and marketing

 

$-

 

 

$4,239

 

Total stock-based compensation expense

 

$-

 

 

$4,239

 

 

Common Stock Options and Warrants

 

There were 25,772,803 fully vested common stock warrants and options outstanding at March 31, 2024 and December 31, 2023 at a weighted-average grant date exercise price of $0.06. No stock options or warrants to purchase common stock were granted or exercised during the three-months ended March 31, 2024 and 2023. 

 

The following table summarizes the weighted average remaining contractual life and exercise price of common stock options and warrants outstanding and exercisable at March 31, 2024:

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

Average

 

 

Weighted

 

 

 

 

 

Remaining

 

 

Average

 

 

 

Number

 

 

Contractual

 

 

Exercise

 

 

 

Outstanding

 

 

Life (Years)

 

 

Price

 

 

 

 

 

 

 

 

 

 

 

$0.03-0.11

 

 

25,772,803

 

 

 

5.51

 

 

$0.06

 

 

At March 31, 2024, there was no unrecognized compensation cost related to non-vested options and warrants granted to purchase common stock.

 

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 March 31, 2024, the aggregate intrinsic value of options and warrants outstanding and exercisable was $3,921,022. The intrinsic value of stock options and warrants are calculated as the amount by which the market price of the Company’s common stock exceeds the exercise price of the option or warrant.

 

Preferred Stock Warrants

 

Pursuant to the December 28, 2017 Compensation Agreement with David M. Shworan, the President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary of Quotemedia, Inc., the Company issued Mr. Shworan warrants to purchase shares of Series A redeemable convertible preferred stock (“compensation preferred stock warrants”) in lieu of a cash salary. From the period December 28, 2017 to December 31, 2019 the Company issued a total of 31,250 Compensation Preferred Stock Warrants at an exercise price equal to $1.00 per share.

 

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 March 31, 2024. The probability is re-evaluated each reporting period. As of March 31, 2024, there was $7,185,430 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, management is also unable to determine the weighted-average period over which the unrecognized compensation cost will be recognized.

 

As of March 31, 2024, there were a total of 413,493 preferred stock warrants outstanding with a weighted average remaining contractual life of 23.8 years. As of March 31, 2024, 31,250 preferred stock warrants were exercisable. No preferred stock warrants were granted or exercised for the three-months ended March 31, 2024 and 2023.

 

Fair Value Measurement of Compensation Preferred Stock Warrants

 

The Company adheres to ASC 820, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.

 

ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

 

 

·

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company could access.

 

 

 

 

·

Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals.

 

 

 

 

·

Level 3 inputs are unobservable inputs for the asset or liability, which is typically based on an entity’s own assumptions, as there is little, if any, related market activity.

 

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

 

The estimated fair value of the preferred stock warrant liability is determined using Level 3 inputs. As of March 31, 2024 and December 31, 2023, the fair value of the preferred stock warrant liability was $611,563. The preferred stock warrants were valued using a bond plus option framework reflecting the cash flow of the preferred stock warrants and used a probability weighted sum of the value in each potential year before expiration to estimate the fair value of the preferred stock warrants. Volatility was based on public peer companies, adjusted for size and leverage. Risk-free rate was selected based on term matched Treasury securities. Bond repayment depends on the Company’s timely access to the required cash and as such, is discounted at the Company’s assumed borrowing rate. This model was run based on the Management's expected term and probabilities of a liquidity event.  The key inputs for the framework were as follows as of March 31, 2024 and December 31, 2023:

 

Valuation Inputs

 

March 31,

2023

 

 

December 31,

2023

 

Expected Time to Expiration (years)

 

 

24.05

 

 

 

24.05

 

Stock Price on Valuation Date

 

$0.23

 

 

$0.23

 

Peer Volatility

 

 

47.35%

 

 

47.35%

Cash Flow Discount Rate

 

 

15.86%

 

 

15.86%

 

The following table sets forth a summary of the changes in the fair value of the Level 3 preferred stock warrant Liability for the three-months ended March 31, 2023 and 2024:

 

Fair value as of December 31, 2023 and 2022, respectively

 

$611,563

 

 

$629,375

 

Change in fair value

 

 

-

 

 

 

78,125

 

Fair value as of March 31, 2024 and 2024, respectively

 

$611,563

 

 

$707,500

 

 

The changes in fair value attributable to the preferred stock warrants are recorded as an adjustment to stock compensation expense and reported in sales and marketing expense on the three-months ended March 31, 2024 and 2023 statements of operations.

v3.24.1.1.u2
EARNINGS (LOSS) PER SHARE
3 Months Ended
Mar. 31, 2024
EARNINGS (LOSS) PER SHARE (see note 7)  
EARNINGS (LOSS) PER SHARE

7. 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 per share for the three-months ended March 31, 2024 and 2023 are as follows:

 

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Net (loss) income

 

$(28,176)

 

$113,290

 

 

 

 

 

 

 

 

 

 

Weighted average common shares used to calculate net income per share

 

 

90,477,798

 

 

 

90,477,798

 

Warrants to purchase redeemable convertible preferred stock

 

 

-

 

 

 

2,499,900

 

Redeemable convertible preferred stock

 

 

-

 

 

 

10,306,671

 

Stock options and warrants to purchase common stock

 

 

-

 

 

 

17,459,495

 

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

 

 

90,477,798

 

 

 

120,743,864

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share – basic

 

$(0.00)

 

$0.00

 

Net (loss) income per share – diluted

 

$(0.00)

 

$0.00

 

 

The number of shares of potentially dilutive common stock related to options and warrants that were excluded from the calculation of dilutive shares since the inclusion of such shares would be anti-dilutive for the three-months ended March 31, 2024 and 2023 are shown below:

 

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Warrants to purchase redeemable convertible preferred stock

 

 

2,499,900

 

 

 

-

 

Redeemable convertible preferred stock

 

 

10,306,671

 

 

 

-

 

Stock options and warrants to purchase common stock

 

 

16,720,641

 

 

 

-

 

Total potential common shares excluded

 

 

29,527,212

 

 

 

-

 

v3.24.1.1.u2
SIGNIFICANT ACCOUNTING POLICIES (Policies)
3 Months Ended
Mar. 31, 2024
SIGNIFICANT ACCOUNTING POLICIES  
Nature Of Operations

Quotemedia, Inc. (the “Company”) is a software developer and distributor of financial market data and related services to a global marketplace. The Company specializes in the collection, aggregation, and delivery of both delayed and real-time financial data content via the Internet. The Company develops 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.

Basis Of Consolidation

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

Foreign Currency Translation And Transactions

The U.S. dollar is the functional currency of all of the 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 year, except for expenses related to balance sheet amounts remeasured at historical exchange rates. Because the U.S. dollar is the functional currency, exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in income in the period in which they occur.

Allowances For Doubtful Accounts

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. The Company believes that the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables held at March 31, 2024, because the composition of the trade receivables at that date is consistent with that used in developing the historical credit-loss percentages (i.e., the similar risk characteristics of its customers and its credit practices have not changed significantly over time).  The allowance for doubtful accounts was $225,000 as of March 31, 2024 and December 31, 2023, respectively. Bad debt expenses were $13,329 and ($64,093) for the three ended March 31, 2024 and 2023, respectively.

Revenue

The Company generates substantially all of its revenue from subscriptions for access to its software products and related support.  The Company licenses financial market data information on a monthly, quarterly, or annual basis. The Company’s products and services are divided into two main categories:

 

Interactive Content and Data Applications

 

 

·

Proprietary financial software applications and streaming market data feeds

 

·

Subscriptions are typically sold for a fixed fee and revenue is recognized ratably over the term of the subscription.

 

Portfolio Management and Real-Time Quote Systems

 

 

1.

Corporate Quotestream (Business-to-Business)

 

o

Web-delivered, embedded applications providing real-time, streaming market quotes and research information targeted to both professionals and non-professional users.

 

o

Revenue is typically earned based on customer usage.

 

 

2.

Individual Quotestream (Business-to-Consumer)

 

o

Web-delivered, embedded applications providing real-time, streaming market quotes and research information targeted to non-professional users.

 

o

Subscriptions are typically sold for a fixed fee and revenue is recognized ratably over the term of the subscription.

 

The Company does not provide its customers with the right to take possession of its software products at any time.

 

The Company determines revenue recognition through the following steps:

 

 

·

Identification of the contract, or contracts, with a customer

 

 

 

 

·

Identification of the performance obligations in the contract

 

 

 

 

·

Determination of the transaction price

 

 

 

 

·

Allocation of the transaction price to the performance obligations in the contract

 

 

 

 

·

Recognition of revenue when, or as, the Company satisfies a performance obligation

 

The Company executes a signed contract with the customer that specifies services to be provided, the payment amounts and terms, and the period of service, among other terms.

 

Contract Balances

 

The Company’s corporate customers are invoiced based on fee schedules that are agreed upon in each customer contract. Individual Quotestream customers are charged a subscription fee based on their subscription agreement. The Company recognizes revenue when performance obligations have been satisfied, which is the date the customer has access to the contracted market data.  The timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. Upfront set-up or development fees are deferred and recognized evenly from the date performance obligations have been met to the end of the service term of the contract, as set-up and development fees are not distinct from the market data service contracts to which they relate.

 

The Company considers the following factors when determining if collection of a fee is reasonably assured: customer creditworthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If these factors do not indicate collection is reasonably assured, revenue is not recognized until collection becomes reasonably assured, which is generally upon receipt of cash.

 

Cost of revenue

 

Cost of revenue primarily consists of customer support personnel-related compensation expenses, including salaries, bonuses, benefits, payroll taxes, and stock-based compensation expense, as well as expenses related to third-party hosting costs, software license fees, amortization of capitalized software development costs, amortization of acquired technology intangible assets, and allocated overhead.

Accounting Pronouncements

Recently Adopted

 

On January 1, 2024, the Company adopted Accounting Standards Update (“ASU”) 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies the complexity associated with applying U.S. Generally Accepted Accounting Principles (“GAAP”) for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity's own equity. The adoption of ASU 2020-06 had no impact on the Company’s consolidated financial statements.

 

Not Yet Adopted

 

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). This standard improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments in ASU 2023-07 will be applied retrospectively to all prior periods presented in the consolidated financial statements. The Company does not expect that the adoption of ASU 2023-07 will have a significant impact on the Company’s consolidated financial statements.

 

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosure (“ASU 2023-09”). This standard provides transparency to income tax disclosures related to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 for public entities with early adoption permitted. The amendments in ASU 2023-09 will be applied prospectively in the consolidated financial statements. The Company does not expect that the adoption of ASU 2023-09 will have a significant impact on the Company’s consolidated financial statements.

 

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

v3.24.1.1.u2
REVENUE (Tables)
3 Months Ended
Mar. 31, 2024
REVENUE  
Schedule of Disaggregated Revenue

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

Portfolio Management Systems

 

 

 

 

 

 

Corporate Quotestream

 

$1,781,685

 

 

$1,827,253

 

Individual Quotestream

 

 

469,005

 

 

 

487,567

 

Interactive Content and Data APIs

 

 

2,428,510

 

 

 

2,435,228

 

Total revenue

 

$4,679,200

 

 

$4,750,048

 

Schedule of Deferred Revenue

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Beginning balance at Jan 1,

 

$1,831,949

 

 

$1,166,848

 

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

 

 

(681,276)

 

 

(565,370)

New deferrals, net of amounts recognized in the current period

 

 

624,920

 

 

 

866,786

 

Effects of foreign currency translation

 

 

6,670

 

 

 

997

 

Total deferred revenue

 

$1,782,263

 

 

$1,469,261

 

Current portion of deferred revenue

 

$1,505,807

 

 

$1,095,103

 

Long-term portion of deferred revenue

 

 

276,456

 

 

 

374,158

 

Total deferred revenue

 

$1,782,263

 

 

$1,469,261

 

v3.24.1.1.u2
LEASES (Tables)
3 Months Ended
Mar. 31, 2024
LEASES  
Supplemental Balance Sheet Information

 

 

March 31,

2024

 

 

December 31,

2023

 

Operating Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

$343,369

 

 

$393,472

 

 

 

 

 

 

 

 

 

 

Current portion of operating lease liability

 

$204,532

 

 

$206,146

 

Long-term portion of operating lease liability

 

 

137,841

 

 

 

191,735

 

Total operating lease liability

 

$342,373

 

 

$397,881

 

Schdule Of Weighted Average Remaining Lease Term

 

 

March 31,

2024

 

 

December 31,

2023

 

 

 

 

 

 

Weighted Average Remaining Lease Term

 

 

 

 

Operating leases

 

1.7 years

 

 

1.9 years

 

Weighted Average Discount Rate

 

 

 

 

 

 

Operating leases

 

 

9.5%

 

 

9.5%
Maturities Of Lease Liabilities

Year ending December 31,

 

Operating

Leases

 

 

 

 

 

2024 (excluding the three-months ended March 31, 2024)

 

 

173,176

 

2025

 

 

164,773

 

2026

 

 

34,074

 

Total lease payments

 

 

372,023

 

Less imputed interest

 

 

(29,650)

Total

 

$342,373

 

Summary of components Of Lease Expense

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

Operating lease costs:

 

 

 

 

 

 

Operating lease costs

 

$59,041

 

 

$58,427

 

Short-term lease costs

 

 

27,336

 

 

 

26,987

 

Total operating lease costs

 

$86,377

 

 

$85,414

 

Schedule of supplemental Cash Flow Information

 

 

2024

 

 

2023

 

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

 

 

 

 

 

 

Operating cash flows from operating leases

 

$57,814

 

 

$56,719

 

v3.24.1.1.u2
REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS DEFICIT (Tables)
3 Months Ended
Mar. 31, 2024
Stockholders' deficit:  
Summary Of Stock Based Compensation Expense

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Sales and marketing

 

$-

 

 

$4,239

 

Total stock-based compensation expense

 

$-

 

 

$4,239

 

Summary Of Weighted Average Remaining Contractual Life And Exercise Price Of Common Stock Options And Warrants Outstanding

 

 

 

 

Weighted

 

 

 

 

 

 

 

Average

 

 

Weighted

 

 

 

 

 

Remaining

 

 

Average

 

 

 

Number

 

 

Contractual

 

 

Exercise

 

 

 

Outstanding

 

 

Life (Years)

 

 

Price

 

 

 

 

 

 

 

 

 

 

 

$0.03-0.11

 

 

25,772,803

 

 

 

5.51

 

 

$0.06

 

Fair Value Measurement of Compensation Preferred Stock Warrants

Valuation Inputs

 

March 31,

2023

 

 

December 31,

2023

 

Expected Time to Expiration (years)

 

 

24.05

 

 

 

24.05

 

Stock Price on Valuation Date

 

$0.23

 

 

$0.23

 

Peer Volatility

 

 

47.35%

 

 

47.35%

Cash Flow Discount Rate

 

 

15.86%

 

 

15.86%
Summary of the changes in the fair value of the Level 3 Preferred Stock Warrant Liability

Fair value as of December 31, 2023 and 2022, respectively

 

$611,563

 

 

$629,375

 

Change in fair value

 

 

-

 

 

 

78,125

 

Fair value as of March 31, 2024 and 2024, respectively

 

$611,563

 

 

$707,500

 

v3.24.1.1.u2
EARNINGS (LOSS) PER SHARE (Tables)
3 Months Ended
Mar. 31, 2024
EARNINGS (LOSS) PER SHARE (see note 7)  
Schedule Of Earnings Per Share, Basic And Diluted

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Net (loss) income

 

$(28,176)

 

$113,290

 

 

 

 

 

 

 

 

 

 

Weighted average common shares used to calculate net income per share

 

 

90,477,798

 

 

 

90,477,798

 

Warrants to purchase redeemable convertible preferred stock

 

 

-

 

 

 

2,499,900

 

Redeemable convertible preferred stock

 

 

-

 

 

 

10,306,671

 

Stock options and warrants to purchase common stock

 

 

-

 

 

 

17,459,495

 

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

 

 

90,477,798

 

 

 

120,743,864

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share – basic

 

$(0.00)

 

$0.00

 

Net (loss) income per share – diluted

 

$(0.00)

 

$0.00

 

Schedule Of Antidilutive Securities

 

 

Three-months ended March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Warrants to purchase redeemable convertible preferred stock

 

 

2,499,900

 

 

 

-

 

Redeemable convertible preferred stock

 

 

10,306,671

 

 

 

-

 

Stock options and warrants to purchase common stock

 

 

16,720,641

 

 

 

-

 

Total potential common shares excluded

 

 

29,527,212

 

 

 

-

 

v3.24.1.1.u2
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
SIGNIFICANT ACCOUNTING POLICIES    
Allowance for doubtful accounts $ 225,000  
Bad debt expense $ 13,329 $ (64,093)
v3.24.1.1.u2
REVENUE (Details) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Total revenue $ 4,679,200 $ 4,750,048
Interactive Content and Data APIs    
Total revenue 2,428,510 2,435,228
Corporate Quotestream    
Total revenue 1,781,685 1,827,253
Individual Quotestream    
Total revenue $ 469,005 $ 487,567
v3.24.1.1.u2
REVENUE (Details 1) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
REVENUE      
Deferred Revenue, Beginning Balance $ 1,831,949 $ 1,166,848  
Revenue Recognized In The Current Period From The Amounts In The Beginning Balance (681,276) (565,370)  
New Deferrals, Net Of Amounts Recognized In The Current Period 624,920 866,786  
Effects Of Foreign Currency Translation 6,670 997  
Deferred Revenue, Ending Balance 1,782,263 1,469,261  
Current portion of deferred revenue 1,505,807 1,095,103 $ 1,456,381
Long-term portion of deferred revenue 276,456 374,158 $ 375,568
Total deferred revenue $ 1,782,263 $ 1,469,261  
v3.24.1.1.u2
RELATED PARTIES (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Bravenet Web Services, Inc.    
Due To Related Party $ 21,000 $ 12,500
Lease Per Month 6,500  
Monthly marketing service fee 3,000  
Keith Randall    
Unreimbursed expenses $ 162,880 $ 68,988
v3.24.1.1.u2
LEASES (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2024
Dec. 31, 2023
LEASES    
Operating lease right-of-use assets $ 343,369 $ 393,472
Current portion of operating lease liability 204,532 206,146
Long-term portion of operating lease liability 137,841 191,735
Total operating lease liability $ 342,373 $ 397,881
Weighted Average Remaining Lease Term    
Operating Leases 1 year 8 months 12 days 1 year 10 months 24 days
Weighted Average Discount Rate    
Operating Leases 9.50% 9.50%
v3.24.1.1.u2
LEASES (Details 1) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Operating Lease Obligations    
2024 (excluding the three-months ended March 31, 2024) $ 173,176  
2025 164,773  
2026 34,074  
Total Lease Payments 372,023  
Less Imputed Interest (29,650)  
Total $ 342,373 $ 397,881
v3.24.1.1.u2
LEASES (Details 2) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Operating lease costs:    
Operating lease costs $ 59,041 $ 58,427
Short-term lease costs 27,336 26,987
Total operating lease costs $ 86,377 $ 85,414
v3.24.1.1.u2
LEASES (Details 3) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Cash paid for amounts included in the measurement of lease liabilities:    
Operating cash flows from operating leases $ 57,814 $ 56,719
v3.24.1.1.u2
LEASES (Details Narrative)
3 Months Ended
Mar. 31, 2024
LEASES  
Lessee, Operating Lease, Description 1 year to 3 years
v3.24.1.1.u2
REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS DEFICIT (Details) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Stock-based compensation expense $ 0 $ 4,239
Sales and Marketing    
Stock-based compensation expense $ 0 $ 4,239
v3.24.1.1.u2
REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS DEFICIT (Details 1) - Common Stock Options and Warrants
3 Months Ended
Mar. 31, 2024
$ / shares
shares
Range of exercise price, minimum $ 0.03
Range of exercise price, maximum $ 0.11
Outstanding, beginning | shares 25,772,803
Weighted average remaining contractual life 5 years 6 months 3 days
Weighted-average exercise price outstanding, beginning $ 0.06
v3.24.1.1.u2
REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS DEFICIT (Details 2) - $ / shares
3 Months Ended 12 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Stockholders' deficit:    
Expected Time to Expiration (years) 24 years 18 days 24 years 18 days
Stock Price on Valuation Date $ 0.23 $ 0.23
Peer Volatility 47.35% 47.35%
Cash Flow Discount Rate 15.86% 15.86%
v3.24.1.1.u2
REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS DEFICIT (Details 3) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Beginning balance $ 611,563  
Ending balance 611,563  
Preferred Stock Warrant Liability    
Beginning balance 611,563 $ 629,375
Change in fair value 0 78,125
Ending balance $ 611,563 $ 707,500
v3.24.1.1.u2
REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS DEFICIT (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Dec. 28, 2017
Preferred stock, shares authorized 10,000,000 10,000,000  
Common Stock Options and Warrants      
Warrant to purchase of common stock exercise price per share $ 0.06    
Preferred stock warrant outstanding 25,772,803 25,772,803  
Aggregate intrinsic value, outstanding $ 3,921,022    
Series A Redeemable Convertible Preferred      
Preferred stock, shares designated 550,000    
Convertible Preferred Stock redeemed $ 123,685    
Redeemable convertible preferred stock, amount $ 400,000    
Additional preferred stock redeemed 1,000    
Preferred stock liquidation value $ 25    
Conversion price per share $ 83.33    
Number of consecutive trading days 90 days    
Closing price of share of common stock on securities exchange exceed price per share $ 0.30    
Warrant to purchase of common stock     382,243
Warrant to purchase of common stock exercise price per share     $ 1.00
Preferred Stock Warrant      
Warrant to purchase of common stock exercise price per share     $ 1.00
Weighted average remaining contractual life 23 years 9 months 18 days    
Preferred stock warrants exercisable     31,250
Fair value of the Preferred Stock Warrant Liability $ 611,563 $ 611,523  
Stock Warrants Exercisable 31,250    
Preferred stock warrant outstanding 413,493 413,493  
Unrecognized share-based compensation $ 7,185,430    
v3.24.1.1.u2
EARNINGS (LOSS) PER SHARE (Details) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
EARNINGS (LOSS) PER SHARE (see note 7)    
Net income (loss) $ (28,176) $ 113,290
Weighted average common shares used to calculate net income per share 90,477,798 90,477,798
Warrants to purchase redeemable convertible preferred stock $ 0 $ 2,499,900
Redeemable convertible preferred stock $ 0 $ 10,306,671
Stock options and warrants to purchase common stock   17,459,495
Weighted average common shares used to calculate diluted net income per share 90,477,798 120,743,864
Net income per share - basic $ (0.00) $ 0.00
Net income per share - diluted $ (0.00) $ 0.00
v3.24.1.1.u2
EARNINGS (LOSS) PER SHARE (Details 1)
3 Months Ended
Mar. 31, 2024
shares
Total potential common shares excluded 29,527,212
Stock options and warrants to purchase common stock [Member]  
Total potential common shares excluded 16,720,641
Warrants to purchase redeemable convertible preferred stock [Member]  
Total potential common shares excluded 2,499,900
Redeemable convertible preferred stock  
Total potential common shares excluded 10,306,671

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