10-Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2016

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)

(480) 905-7311

(Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x 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 x 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" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if a smaller reporting company)

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

The Registrant has 90,477,798 shares of common stock outstanding as at May 4, 2016.

QUOTEMEDIA, INC.

FORM 10-Q for the Quarter Ended March 31, 2016

INDEX

		Page
Part I. Financial Information
Item 1.	Financial Statements (unaudited):		3
	Condensed Consolidated Balance Sheets at March 31, 2016 and December 31, 2015		3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015		4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015		5
	Notes to Condensed Consolidated Financial Statements		6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		11
Item 4.	Controls and Procedures		17
Part II. Other Information
Item 6.	Exhibits		18
Signatures			19

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements 

 

QUOTEMEDIA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	March 31, 2016			December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	318,101		$	251,834
Accounts receivable, net		424,128			419,098
Prepaid expenses		79,980			82,285
Other current assets		61,689			47,287
Total current assets		883,898			800,504
Deposits		20,036			18,971
Property and equipment, net		1,379,202			1,403,765
Goodwill		110,000			110,000
Intangible assets		75,047			76,531
Total assets	$	2,468,183		$	2,409,771
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities		1,506,778		$	1,309,746
Deferred revenue		549,363			607,024
Total current liabilities		2,056,141			1,916,770
Long-term portion of amounts due to related parties		9,901,146			9,436,923
Stockholders' deficit:
Preferred stock, nondesignated, 10,000,000 shares authorized, none issued		-			-
Common stock, $0.001 par value, 150,000,000 shares authorized, 90,477,798 and 90,477,798 shares issued and outstanding		90,479			90,479
Additional paid-in capital		9,308,715			9,301,338
Accumulated deficit		(18,888,298	)		(18,335,739	)
Total stockholders' deficit		(9,489,104	)		(8,943,922	)
Total liabilities and stockholders' deficit		2,468,183		$	2,409,771

See accompanying notes

 

3

QUOTEMEDIA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

	Three months ended March 31,
	2016			2015
LICENSING FEES	$	2,168,866		$	2,188,317
COST OF REVENUE		1,283,138			1,261,398
GROSS PROFIT		885,728			926,919
OPERATING EXPENSES
Sales and marketing		363,091			380,680
General and administrative		499,989			483,418
Software development		221,681			260,340
Total operating expenses		1,084,761			1,124,438
OPERATING LOSS		(199,033	)		(197,519	)
OTHER INCOME AND (EXPENSE)
Foreign exchange gain (loss)		(113,605	)		97,998
Interest expense (related party)		(239,193	)		(209,251	)
Total other income and (expenses)		(352,798	)		(111,253	)
LOSS BEFORE INCOME TAXES		(551,831	)		(308,772	)
Income tax expense		(728	)		(808	)
NET LOSS	$	(552,559	)	$	(309,580	)
LOSS PER SHARE
Basic and diluted loss per share	$	(0.01	)	$	(0.00	)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic and diluted		90,477,798			90,444,162

See accompanying notes

4

QUOTEMEDIA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

	Three months ended March 31,
	2016			2015
Operating activities:
Net loss	$	(552,559	)	$	(309,580	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		216,116			222,129
Bad debt expense		19,080			18,991
Stock-based compensation expense		7,377			3,900
Changes in assets and liabilities:
Accounts receivable		(24,110	)		(79,995	)
Prepaid expenses		2,305			(17,494	)
Other current assets		(14,402	)		7,883
Deposits		(1,065	)		1,365
Accounts payable and amounts due to related parties		661,255			187,321
Deferred revenue		(57,661	)		(17,935	)
Net cash provided by operating activities		256,336			16,585
Investing activities:
Purchase of fixed assets		(17,191	)		(68,724	)
Capitalized application software		(172,878	)		(175,217	)
Net cash used in investing activities		(190,069	)		(243,941	)
Net increase (decrease) in cash		66,267			(227,356	)
Cash and equivalents, beginning of period		251,834			423,053
Cash and equivalents, end of period	$	318,101		$	195,697

See accompanying notes

5

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 the Company evaluated subsequent events after the balance sheet date of March 31, 2016 through the filing of this report and determined no disclosures were required.

For the three months ended March 31, 2016, the Company has a net loss of $552,559 and has a working capital deficit of $1,172,243. The Company has a plan in place for the next 12 months to ensure ongoing expenditures are balanced with the expected growth rate, and believes cash on hand and cash generated will be sufficient to fund operations for the next 12 months. See Liquidity and Capital Resources in Item 2 below.

These financial statements should be read in conjunction with our financial statements and the notes thereto for the fiscal year ended December 31, 2015 contained in our Form 10-K filed with the Securities and Exchange Commission dated March 30, 2016.

2. SIGNIFICANT ACCOUNTING POLICIES

a) Nature of operations

We are a software developer and distributor of financial market data and related services to a global marketplace. We specialize in the collection, aggregation, and delivery of both delayed and real-time financial data content via the Internet. We develop and license software components that deliver dynamic content to banks, brokerage firms, financial institutions, mutual fund companies, online information and financial portals, media outlets, public companies, and corporate intranets.

b) Basis of consolidation

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

c) Foreign currency translation and transactions

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

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QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

d) Allowances for doubtful accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of the Company's customers to make required payments. The Company determines the allowance by reviewing the age of the receivables and assessing the anticipated ability of customers to pay. No collateral is required for any of the receivables and the Company does not usually apply financing charges to outstanding accounts receivable balances. If the financial condition of our customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. The allowance for doubtful accounts was $90,000 as at March 31, 2016 and December 31, 2015.

e) Accounting Pronouncements

Accounting Pronouncements Adopted During the Current Year

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The amendment requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. The new standard is limited to the presentation of debt issuance costs and does not affect the recognition or measurement of debt issuance costs. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2015. The adoption of this standard did not have a material impact on our consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. This standard describes how an entity's management should assess whether there are conditions and events that raise substantial doubt about an entity's ability to continue as a going concern within one year after the date that the financial statements are issued. Management should consider both quantitative and qualitative factors in making its assessment. If after considering management's plans, substantial doubt about an entity's going concern is alleviated, an entity shall disclose information in the footnotes that enables the users of the financial statements to understand the events that raised the going concern and how management's plan alleviated this concern. If after considering management's plans, substantial doubt about an entity's going concern is not alleviated, the entity shall disclose in the footnotes indicating that a substantial doubt about the entity's going concern exists within one year of the date of the issued financial statements. Additionally, the entity shall disclose the events that led to this going concern and management's plans to mitigate them. We adopted this standard on January 1, 2016. Our adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures.

Accounting Pronouncements Not Yet Adopted

There have been no developments to recently issued accounting standards, including the expected dates of adoption and estimated effects on our consolidated financial statements, from those disclosed in our Form 10-K for the year ending December 31, 2015, except for the following:

7

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842) which amends lease accounting by lessors and lessees. This new standard will require, among other things, that lessees recognize a right-to-use asset and related lease liability for all significant financing and operating leases, and specifies where in the statement of cash flows the related lease payments are to be presented. The standard is effective for years beginning after December 15, 2018, including interim periods within those years (beginning in calendar year 2019 for the Company), and early adoption is permitted. The Company is currently in the process of evaluating the impact the adoption of ASU 2016-02 will have on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718). This ASU changes how companies account for certain aspects of share-based payment awards to employees, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. We are currently evaluating the impact of adopting this ASU and expect this standard to not have a significant impact on our consolidated financial statements and related disclosures, which is effective for us in our fiscal year beginning January 1, 2017. Early adoption is permitted.

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. RELATED PARTIES

The following table summarizes amounts due to related parties at March 31, 2016 and December 31, 2015:

	March 31, 2016		December 31, 2015
Purchase of business unit	$	175,202	$	159,790
Computer hosting services		83,230		60,122
Office rent		1,080,951		967,839
Other		17,276		17,276
Loan		934,417		894,952
Lead generation services		1,314,626		1,282,300
Due to Management		6,295,444		6,054,644
	$	9,901,146	$	9,436,923

As a matter of policy all related party transactions are subject to review and approval by the Company's Board of Directors. All amounts due to related parties have been classified as non-current liabilities as we do not expect to repay amounts due to related parties within a year of the March 31, 2016 balance sheet date. Repayments are subject to our company having sufficient cash on hand and are intended not to impair continuing business operations. Our related party creditors have agreed to these repayment terms.

8

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

4. STOCK-BASED COMPENSATION

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 estimated stock-based compensation expense, related to all of the Company's stock-based awards, recognized for the three months ended March 31, 2016 and 2015 was comprised as follows:

	Three months ended March 31,
	2016		2015
Sales and marketing	$	5,376	$	1,899
General and administrative		2,001		2,001
Total stock-based compensation	$	7,377	$	3,900

At March 31, 2016 there was $92,077 of unrecognized compensation cost related to non-vested share-based payments which is expected to be recognized over a weighted-average period of 4.21 years.

There was no stock option and warrant activity for the three months ended March 31, 2016. As of March 31, 2016 there were a total of 13,372,803 options and warrants outstanding at a weighted average exercise price of $0.04.

The following table summarizes our non-vested stock option and warrant activity for the three months ended March 31, 2016:

				Weighted-
	Options and			Average Grant
	Warrants			Date Fair Value
Non-vested stock options and warrants at December 31, 2015		1,878,319		$	0.06
Vested during the period		(255,001	)	$	0.03
Non-vested stock options and warrants at March 31, 2016		1,623,318		$	0.06

9

QUOTEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Options and Warrants Outstanding						Options and Warrants Exercisable
	Number		Weighted Average		Weighted		Number		Weighted
	Outstanding at		Remaining		Average		Exercisable at		Average
	March 31,		Contractual		Exercise		March 31,		Exercise
	2016		Life		Price		2016		Price
$0.03-0.07		13,372,803		8.79	$	0.04		11,749,485	$	0.04

As at March 31, 2016 all stock options and warrants have been granted with exercise prices equal to or greater than the market value of the underlying common shares on the date of grant.

At March 31, 2016 the aggregate intrinsic value of options and warrants outstanding and exercisable was $289,101. The intrinsic value of stock options and warrants are calculated as the amount by which the market price of our common stock exceeds the exercise price of the option or warrant.

5. LOSS PER SHARE

The basic and diluted net loss per share was $(0.01) and $(0.00) per share for the three months ended March 31, 2016 and 2015, respectively. There were 13,372,803 stock options and warrants excluded from the calculation of dilutive loss per share for the three months ended March 31, 2016 and 2015 because they were anti-dilutive.

10

ITEM 2. Management's Discussion and Analysis

 

The following discussion should be read in conjunction with our financial statements and notes thereto included elsewhere in this report. We caution readers regarding certain forward looking statements in the following discussion, elsewhere in this report, and in any other statements, made by, or on behalf of our company, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, our company. Uncertainties and contingencies that might cause such differences include those risk factors disclosed in our annual report on Form 10-K for the year ended December 31, 2015 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, 2015 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: Data Feed Services, Interactive Content and Data Applications, and Portfolio Management Systems.

Our Data Feed Services consist of raw streaming real-time market data delivered over the Internet or via dedicated telecommunication lines, and supplemental fundamental, historical, and analytical data, keyed to the same symbology, which provides a complete market data solution to be offered to our customers. Currently, QuoteMedia's Data Feed services include complete coverage of North American exchanges and over 70 exchanges worldwide.

Our Interactive Content and Data Applications consist of a suite of software applications that provide publicly traded company and market information to corporate clients via the Internet. Products include stock market quotes, fundamentals, historical and interactive charts, company news, filings, option chains, insider transactions, corporate financials, corporate profiles, screeners, market research information, investor relations provisions, level II, watch lists, and real-time quotes. All of our content solutions are completely customizable and embed directly into client Web pages for seamless integration with existing content. We also recently launched QMod^TM, our new proprietary Web delivery system. QMod was created for secure market data provisioning as well as ease of integration and unlimited customization. Additionally, QMod delivers 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 Portfolio Management Systems consist of Quotestream, 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.

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

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

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

Business environment and trends

The global financial markets have experienced extreme volatility and disruption in recent years. As a result, financial institutions globally have acted to control or reduce operational spending. While in some areas the anticipated impact of current market conditions may lead to a decision to reduce demand for market data and related services, we expect overall spending on financial information services will grow modestly over the next several years.

The Canadian dollar depreciated an average of 11% versus the U.S. dollar for the three months ending March 31, 2016 compared to the same period in 2015. This has resulted in lowering both our reported Canadian dollar revenues and expenses in the first quarter of 2016 compared to 2015 once translated into U.S. dollars. Approximately 26% of our revenues and 31% of our expenses are in Canadian dollars, so while the appreciation of the U.S. dollar lowers our revenue figures, it has a positive impact on our bottom line.

Plan of operation

For the remainder of 2016 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 Quotestream Connect^TM, our new method of delivering realtime data feeds directly to individual users to power third party applications. Quotestream Connect^TM represents a huge opportunity for QuoteMedia in the coming year, as this allows QuoteMedia to retain Vendor of Record status with the exchanges in most cases – resulting in significant savings for our clients in resources and exchange fees.

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

12

Important new development projects for the remainder of 2016 include broad expansion of data and news coverage, including the addition of a wide array of international exchange data, real-time forex coverage, and several premium news services.

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) will also be a priority in the coming year.

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

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

Results of Operations

Revenue

	Three Months ended March 31,
	2016		2015		Change ($)			Change (%)
Corporate Quotestream	$	662,801	$	685,686	$	(22,885	)		(3	)%
Individual Quotestream		367,056		405,897		(38,841	)		(10	)%
Total Portfolio Management Systems		1,029,857		1,091,583		(61,726	)		(6	)%
Interactive Content and Data Applications		1,139,009		1,096,734		42,275			4	%
Total Licensing Revenue	$	2,168,866	$	2,188,317	$	(19,451	)		(1	)%

Total licensing revenue decreased 1% when comparing the three months ended March 31, 2016 and 2015. When comparing the first quarter of 2016 to the comparative period in 2015, the average U.S. dollar exchange rate appreciated 11% versus the average Canadian dollar exchange rate. This resulted in lowering our reported Canadian dollar revenues in 2016 compared to 2015 once translated into U.S. dollars. Approximately 26% of our revenues are in Canadian dollars – had the exchange rate remained the same, our revenues would have shown an increase of approximately 2% compared to the first quarter of 2015.

13

Total Portfolio Management System revenue decreased by 6% when comparing the three month periods ended March 31, 2016 and 2015, due to a decrease in Corporate Quotestream Revenue and Individual Quotestream revenue.

Corporate Quotestream revenue decreased 3% from the comparative period in 2015 due to the average depreciation of the Canadian dollar. The depreciation of the Canadian dollar resulted in a 3.5% decrease in Corporate Quotestream revenue as approximately 36% of our Corporate Quotestream revenue is in Canadian dollars.

Our individual Quotestream revenue decreased by 10% from the comparative period in 2015. The decrease is due to a decrease in the number of subscribers from the comparative period and the average depreciation of the Canadian dollar. The depreciation of the Canadian dollar from the comparative period resulted in a 3.9% decrease in Individual Quotestream revenue as approximately 39% of our individual Quotestream revenue is in Canadian dollars.

Interactive Content and Data Application revenue increased 4% from the comparative period in 2015. The increase is due to an increase in average revenue per Interactive Content and Data Application client contract, offset by the average depreciation of Canadian dollar. The average depreciation of the Canadian dollar from the comparative period resulted in a 2% decrease in our Interactive Content and Data Application revenue as approximately 17% of our Interactive Content and Data Application revenue is in Canadian dollars.

Cost of Revenue and Gross Profit Summary

	2016			2015			Change ($)			Change (%)
Three months ended March 31,
Cost of revenue	$	1,283,138		$	1,261,398		$	21,740			2	%
Gross profit	$	885,728		$	926,919		$	(41,191	)	(4)		%
Gross margin %		41	%		42	%

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 application software costs. We capitalize the costs associated with developing new products once technological feasibility has been established and is available for general release to customers.

Cost of revenue increased 2% when comparing the three month periods ended March 31, 2016 and 2015. The increase was mainly due to increased stock exchange fees due to new and increased fees levied by a number of stock exchanges.

Overall, the cost of revenue increased as a percentage of sales, as evidenced by our gross margin percentage which decreased to 41% for the three month period ended March 31, 2016 from 42% in the respective comparative period in 2015.

14

Operating Expenses Summary

	2016		2015		Change ($)			Change (%)
Three months ended March 31,
Sales and marketing	$	363,091	$	380,680	$	(17,589	)		(5	)%
General and administrative		499,989		483,418		16,571			3	%
Software development		221,681		260,340		(38,659	)		(15	)%
Total operating expenses	$	1,084,761	$	1,124,438	$	(39,677	)		(4	)%

Sales and Marketing

Sales and marketing consists primarily of sales and customer service salaries, investor relations, travel and advertising expenses. Sales and marketing expenses decreased 5% for the three month period ended March 31, 2016 when compared to the same period in 2015. The decrease is mainly due to the 11% depreciation from the comparative quarter of the Canadian dollar versus the U.S. dollar, as the majority of our sales and marketing expenses are incurred in Canadian dollars.

General and Administrative

General and administrative expenses consist primarily of salaries expense, office rent, customer service outsourcing, insurance premiums, and professional fees. General and administrative expenses increased 3% for the three month period ended March 31, 2016 when compared to the same period in 2015. The increase is primarily due to hiring additional personnel since the comparative period.

Software Development

Software development expenses consist primarily of costs associated with the design, programming, and testing of our software applications prior to the establishment of technological feasibility. Software development expenses also include costs incurred to maintain our software applications.

Software development expenses decreased 15% for the three month period ended March 31, 2016 when compared to the same period in 2015. The decrease was mainly due to the 11% average appreciation of the U.S. dollar from the comparative period, as our development expenses are incurred mainly in Canadian dollars.

We capitalized $172,878 of development costs for the three months ended March 31, 2016, compared to $175,217 for the same period in 2015. 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.

15

Other Income and (Expense) Summary

	2016			2015
Three months ended March 31,
Foreign exchange gain (loss)	$	(113,605	)	$	97,998
Interest expense		(239,193	)		(209,251	)
Total other income and (expenses)	$	(352,798	)	$	(111,253	)

Foreign Exchange Gain (Loss)

We recognized foreign exchange loss of $113,605 for the three month period ended March 31, 2016, compared to foreign exchange gain of $97,998 for the same period in 2015. The foreign exchange loss for the three month period ended March 31, 2016 is due to the gain arising from the re-measurement of Canadian dollar monetary assets and liabilities into U.S. dollars as we have a net Canadian dollar liability and the Canadian dollar appreciated 6.5% versus the U.S. dollar when comparing the rates at December 31, 2015 and March 31, 2016.

Interest Expense

Interest is accrued on certain amounts owed to related parties. Interest expense increased for the three months ended March 31, 2016 due to additional accruals related to unpaid related party expenses incurred since the comparative period in 2015. Interest is accrued at 10% per annum. Interest income earned on cash balances is netted against interest expense.

Provision for Income Taxes

For the three month period ended March 31, 2016, the Company recorded Canadian income tax expense of $728, compared to $808 in the comparative period in 2015.

Net Loss for the Period

As a result of the foregoing, net loss for the three months ended March 31, 2016 was $552,559 or $(0.01) per share compared to a net loss of $309,580 or $(0.00) per share for the three months ended March 31, 2015.

16

Liquidity and Capital Resources

Our cash totaled $318,101 at March 31, 2016, as compared with $251,834 at December 31, 2015, a increase of $66,267. Net cash of $256,336 was provided by operations for the three months ended March 31, 2016, primarily due to the increase in accounts payable and amounts due to related parties, offset by the net loss for the period adjusted for non-cash charges. Net cash used in investing activities for the three months ended March 31, 2016 was $190,069 resulting from capitalized application software costs and the purchase of new computer equipment. There were no financing activities for the three month period ended March 31, 2016.

Our current liabilities include deferred revenue of $549,363. The costs expected to be incurred to realize the deferred revenue in the next 12 months are minimal.

Our long term liabilities include $9,901,146 due to related parties. All repayments of amounts due to related parties must be approved by our Board of Directors. Repayments are subject to our company having sufficient cash on hand and are intended not to impair continuing business operations.

Based on the factors discussed above, we believe that our cash on hand and cash generated from operations will be sufficient to fund our current operations for at least the next 12 months. However, to implement our business plan may require additional financing. Additional financings may come from future equity or debt offerings that could result in dilution to our stockholders.

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

  

ITEM 4. Controls and Procedures

 

Under the supervision and with the participation of our Chairman of the Board and Chairman of the Audit Committee, Chief Executive Officer and Chief Financial Officer, we completed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) to the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based on that evaluation, we and our management have concluded that our disclosure controls and procedures at March 31, 2016 were effective at the reasonable assurance level to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and are designed to ensure that information required to be disclosed by us in these reports is accumulated and communicated to our management, as appropriate to allow timely decisions regarding required disclosures. In the three months ended March 31, 2016, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to affect, our internal control over financial reporting.

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

17

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.

18

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.
Dated: May 13, 2016	By:	/s/ R. Keith Guelpa
		R. Keith Guelpa
		President and Chief Executive Officer  (Principal Executive Officer)
	By:	/s/ Keith J. Randall
		Keith J. Randall
		Chief Financial Officer  (Principal Accounting Officer)

19

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, R. Keith Guelpa, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Quotemedia, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date: May 13, 2016	By:	/s/ R. Keith Guelpa
		R. Keith Guelpa
		Chief Executive Officer

 

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Keith J. Randall, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Quotemedia, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date: May 13, 2016	By:	/s/ Keith J. Randall
		Keith J. Randall
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Quotemedia, Inc. (the "Company") for the quarterly period ended March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, R. Keith Guelpa, Chief Executive Officer of the Company, certify, to my best knowledge and belief, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 13, 2016	By:	/s/ R. Keith Guelpa
		R. Keith Guelpa
		Chief Executive Officer

EX-32.2

 EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Quotemedia, Inc. (the "Company") for the quarterly period ended March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Keith J. Randall, Chief Financial Officer of the Company, certify, to my best knowledge and belief, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 13, 2016	By:	/s/ Keith J. Randall
		Keith J. Randall
		Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 04, 2016
Document And Entity Information
Entity Registrant Name	QUOTEMEDIA INC
Entity Central Index Key	0001101433
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		90,477,798
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2016

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 318,101	$ 251,834
Accounts receivable, net	424,128	419,098
Prepaid expenses	79,980	82,285
Other current assets	61,689	47,287
Total current assets	883,898	800,504
Deposits	20,036	18,971
Property and equipment, net	1,379,202	1,403,765
Goodwill	110,000	110,000
Intangible assets	75,047	76,531
Total assets	2,468,183	2,409,771
Current liabilities:
Accounts payable and accrued liabilities	1,506,778	1,309,746
Deferred revenue	549,363	607,024
Total current liabilities	2,056,141	1,916,770
Long-term portion of amounts due to related parties	$ 9,901,146	$ 9,436,923
Stockholders' deficit:
Preferred stock, nondesignated, 10,000,000 shares authorized, none issued
Common stock, $0.001 par value, 150,000,000 shares authorized, 90,477,798 and 90,477,798 shares issued and outstanding	$ 90,479	$ 90,479
Additional paid-in capital	9,308,715	9,301,338
Accumulated deficit	(18,888,298)	(18,335,739)
Total stockholders' deficit	(9,489,104)	(8,943,922)
Total liabilities and stockholders' deficit	$ 2,468,183	$ 2,409,771

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Stockholders' equity:
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
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

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Consolidated Statements Of Operations
LICENSING FEES	$ 2,168,866	$ 2,188,317
COST OF REVENUE	1,283,138	1,261,398
GROSS PROFIT	885,728	926,919
OPERATING EXPENSES
Sales and marketing	363,091	380,680
General and administrative	499,989	483,418
Software development	221,681	260,340
Total operating expenses	1,084,761	1,124,438
OPERATING LOSS	(199,033)	(197,519)
OTHER INCOME AND (EXPENSE)
Foreign exchange gain (loss)	(113,605)	97,998
Interest expense (related party)	(239,193)	(209,251)
Total other income and (expense)	(352,798)	(111,253)
LOSS BEFORE INCOME TAXES	(551,831)	(308,772)
Income tax expense	(728)	(808)
NET LOSS	$ (552,559)	$ (309,580)
LOSS PER SHARE
Basic and diluted loss per share	$ (0.01)	$ (0.00)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic and diluted	90,477,798	90,444,162

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
OPERATING ACTIVITIES
Net loss	$ (552,559)	$ (309,580)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	216,116	222,129
Bad debt expense	19,080	18,991
Stock-based compensation expense	7,377	3,900
Changes in assets and liabilities:
Accounts receivable	(24,110)	(79,995)
Prepaid expenses	2,305	(17,494)
Other current assets	(14,402)	7,883
Deposits	(1,065)	1,365
Accounts payable and amounts due to related parties	661,255	187,321
Deferred revenue	(57,661)	(17,935)
Net cash provided by operating activities	256,336	16,585
INVESTING ACTIVITIES
Purchase of fixed assets	(17,191)	(68,724)
Capitalized application software	(172,878)	(175,217)
Net cash used in investing activities	(190,069)	(243,941)
Net increase (decrease) in cash	66,267	(227,356)
Cash and equivalents, beginning of period	251,834	423,053
Cash and equivalents, end of period	$ 318,101	$ 195,697

XML

BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Note 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 the Company evaluated subsequent events after the balance sheet date of March 31, 2016 through the filing of this report and determined no disclosures were required.

For the three months ended March 31, 2016, the Company has a net loss of $552,559 and has a working capital deficit of $1,172,243. The Company has a plan in place for the next 12 months to ensure ongoing expenditures are balanced with the expected growth rate, and believes cash on hand and cash generated will be sufficient to fund operations for the next 12 months. See Liquidity and Capital Resources in Item 2 below.

These financial statements should be read in conjunction with our financial statements and the notes thereto for the fiscal year ended December 31, 2015 contained in our Form 10-K filed with the Securities and Exchange Commission dated March 30, 2016.

XML

SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Note 2. SIGNIFICANT ACCOUNTING POLICIES

a) Nature of operations

We are a software developer and distributor of financial market data and related services to a global marketplace. We specialize in the collection, aggregation, and delivery of both delayed and real-time financial data content via the Internet. We develop and license software components that deliver dynamic content to banks, brokerage firms, financial institutions, mutual fund companies, online information and financial portals, media outlets, public companies, and corporate intranets.

b) Basis of consolidation

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

c) Foreign currency translation and transactions

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

d) Allowances for doubtful accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of the Company's customers to make required payments. The Company determines the allowance by reviewing the age of the receivables and assessing the anticipated ability of customers to pay. No collateral is required for any of the receivables and the Company does not usually apply financing charges to outstanding accounts receivable balances. If the financial condition of our customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. The allowance for doubtful accounts was $90,000 as at March 31, 2016 and December 31, 2015.

e) Accounting Pronouncements

Accounting Pronouncements Adopted During the Current Year

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The amendment requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. The new standard is limited to the presentation of debt issuance costs and does not affect the recognition or measurement of debt issuance costs. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2015. The adoption of this standard did not have a material impact on our consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. This standard describes how an entity's management should assess whether there are conditions and events that raise substantial doubt about an entity's ability to continue as a going concern within one year after the date that the financial statements are issued. Management should consider both quantitative and qualitative factors in making its assessment. If after considering management's plans, substantial doubt about an entity's going concern is alleviated, an entity shall disclose information in the footnotes that enables the users of the financial statements to understand the events that raised the going concern and how management's plan alleviated this concern. If after considering management's plans, substantial doubt about an entity's going concern is not alleviated, the entity shall disclose in the footnotes indicating that a substantial doubt about the entity's going concern exists within one year of the date of the issued financial statements. Additionally, the entity shall disclose the events that led to this going concern and management's plans to mitigate them. We adopted this standard on January 1, 2016. Our adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures.

Accounting Pronouncements Not Yet Adopted

There have been no developments to recently issued accounting standards, including the expected dates of adoption and estimated effects on our consolidated financial statements, from those disclosed in our Form 10-K for the year ending December 31, 2015, except for the following:

In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842) which amends lease accounting by lessors and lessees. This new standard will require, among other things, that lessees recognize a right-to-use asset and related lease liability for all significant financing and operating leases, and specifies where in the statement of cash flows the related lease payments are to be presented. The standard is effective for years beginning after December 15, 2018, including interim periods within those years (beginning in calendar year 2019 for the Company), and early adoption is permitted. The Company is currently in the process of evaluating the impact the adoption of ASU 2016-02 will have on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718). This ASU changes how companies account for certain aspects of share-based payment awards to employees, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. We are currently evaluating the impact of adopting this ASU and expect this standard to not have a significant impact on our consolidated financial statements and related disclosures, which is effective for us in our fiscal year beginning January 1, 2017. Early adoption is permitted.

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.

XML

RELATED PARTIES

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Note 3. RELATED PARTIES

The following table summarizes amounts due to related parties at March 31, 2016 and December 31, 2015:

	March 31, 2016		December 31, 2015
Purchase of business unit	$	175,202	$	159,790
Computer hosting services		83,230		60,122
Office rent		1,080,951		967,839
Other		17,276		17,276
Loan		934,417		894,952
Lead generation services		1,314,626		1,282,300
Due to Management		6,295,444		6,054,644
	$	9,901,146	$	9,436,923

As a matter of policy all related party transactions are subject to review and approval by the Company's Board of Directors. All amounts due to related parties have been classified as non-current liabilities as we do not expect to repay amounts due to related parties within a year of the March 31, 2016 balance sheet date. Repayments are subject to our company having sufficient cash on hand and are intended not to impair continuing business operations. Our related party creditors have agreed to these repayment terms.

XML

STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Note 4. STOCK-BASED COMPENSATION

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 estimated stock-based compensation expense, related to all of the Company's stock-based awards, recognized for the three months ended March 31, 2016 and 2015 was comprised as follows:

	Three months ended March 31,
	2016		2015
Sales and marketing	$	5,376	$	1,899
General and administrative		2,001		2,001
Total stock-based compensation	$	7,377	$	3,900

At March 31, 2016 there was $92,077 of unrecognized compensation cost related to non-vested share-based payments which is expected to be recognized over a weighted-average period of 4.21 years.

There was no stock option and warrant activity for the three months ended March 31, 2016. As of March 31, 2016 there were a total of 13,372,803 options and warrants outstanding at a weighted average exercise price of $0.04.

The following table summarizes our non-vested stock option and warrant activity for the three months ended March 31, 2016:

				Weighted-
				Average
	Options and Warrants			Grant Date Fair value
Non-vested stock options and warrants at December 31, 2015		1,878,319		$	0.06
Vested during the period		(255,001	)	$	0.03
Non-vested stock options and warrants at March 31, 2016		1,623,318		$	0.06

	Options and Warrants Outstanding						Options and Warrants Exercisable
	Number Outstanding at March 31, 2016		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable at March 31, 2016		Weighted Average Exercise Price
$0.03-0.07		13,372,803		8.79	$	0.04		11,749,485	$	0.04

As at March 31, 2016 all stock options and warrants have been granted with exercise prices equal to or greater than the market value of the underlying common shares on the date of grant.

At March 31, 2016 the aggregate intrinsic value of options and warrants outstanding and exercisable was $289,101. The intrinsic value of stock options and warrants are calculated as the amount by which the market price of our common stock exceeds the exercise price of the option or warrant.

XML

LOSS PER SHARE

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Note 5. LOSS PER SHARE

The basic and diluted net loss per share was $(0.01) and $(0.00) per share for the three months ended March 31, 2016 and 2015, respectively. There were 13,372,803 stock options and warrants excluded from the calculation of dilutive loss per share for the three months ended March 31, 2016 and 2015 because they were anti-dilutive.

XML

SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2016

Significant Accounting Policies Policies

Nature of operations

We are a software developer and distributor of financial market data and related services to a global marketplace. We specialize in the collection, aggregation, and delivery of both delayed and real-time financial data content via the Internet. We develop and license software components that deliver dynamic content to banks, brokerage firms, financial institutions, mutual fund companies, online information and financial portals, media outlets, public companies, and corporate intranets.

Basis of consolidation

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

Foreign currency translation and transactions

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

Allowances for doubtful accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of the Company's customers to make required payments. The Company determines the allowance by reviewing the age of the receivables and assessing the anticipated ability of customers to pay. No collateral is required for any of the receivables and the Company does not usually apply financing charges to outstanding accounts receivable balances. If the financial condition of our customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. The allowance for doubtful accounts was $90,000 as at March 31, 2016 and December 31, 2015.

Accounting Pronouncements

Accounting Pronouncements Adopted During the Current Year

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The amendment requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. The new standard is limited to the presentation of debt issuance costs and does not affect the recognition or measurement of debt issuance costs. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2015. The adoption of this standard did not have a material impact on our consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. This standard describes how an entity's management should assess whether there are conditions and events that raise substantial doubt about an entity's ability to continue as a going concern within one year after the date that the financial statements are issued. Management should consider both quantitative and qualitative factors in making its assessment. If after considering management's plans, substantial doubt about an entity's going concern is alleviated, an entity shall disclose information in the footnotes that enables the users of the financial statements to understand the events that raised the going concern and how management's plan alleviated this concern. If after considering management's plans, substantial doubt about an entity's going concern is not alleviated, the entity shall disclose in the footnotes indicating that a substantial doubt about the entity's going concern exists within one year of the date of the issued financial statements. Additionally, the entity shall disclose the events that led to this going concern and management's plans to mitigate them. We adopted this standard on January 1, 2016. Our adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures.

Accounting Pronouncements Not Yet Adopted

There have been no developments to recently issued accounting standards, including the expected dates of adoption and estimated effects on our consolidated financial statements, from those disclosed in our Form 10-K for the year ending December 31, 2015, except for the following:

In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842) which amends lease accounting by lessors and lessees. This new standard will require, among other things, that lessees recognize a right-to-use asset and related lease liability for all significant financing and operating leases, and specifies where in the statement of cash flows the related lease payments are to be presented. The standard is effective for years beginning after December 15, 2018, including interim periods within those years (beginning in calendar year 2019 for the Company), and early adoption is permitted. The Company is currently in the process of evaluating the impact the adoption of ASU 2016-02 will have on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718). This ASU changes how companies account for certain aspects of share-based payment awards to employees, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. We are currently evaluating the impact of adopting this ASU and expect this standard to not have a significant impact on our consolidated financial statements and related disclosures, which is effective for us in our fiscal year beginning January 1, 2017. Early adoption is permitted.

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.

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RELATED PARTIES (Tables)

3 Months Ended

Mar. 31, 2016

Related Parties Tables

Amounts due to related parties

	March 31, 2016		December 31, 2015
Purchase of business unit	$	175,202	$	159,790
Computer hosting services		83,230		60,122
Office rent		1,080,951		967,839
Other		17,276		17,276
Loan		934,417		894,952
Lead generation services		1,314,626		1,282,300
Due to Management		6,295,444		6,054,644
	$	9,901,146	$	9,436,923

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STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2016

Stock-based Compensation Tables

Stock option and warrant activity

	Three months ended March 31,
	2016		2015
Sales and marketing	$	5,376	$	1,899
General and administrative		2,001		2,001
Total stock-based compensation	$	7,377	$	3,900

Nonvested stock option and warrant activity

				Weighted-
				Average
	Options and Warrants			Grant Date Fair Value
Non-vested stock options and warrants at December 31, 2015		1,878,319		$	0.06
Vested during the period		(255,001	)	$	0.03
Non-vested stock options and warrants at March 31, 2016		1,623,318		$	0.06

Option and Warrats

	Options and Warrants Outstanding						Options and Warrants Exercisable
	Number Outstanding at March 31, 2016		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable at March 31, 2016		Weighted Average Exercise Price
$0.03-0.07		13,372,803		8.79	$	0.04		11,749,485	$	0.04

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BASIS OF PRESENTATION (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Basis Of Presentation Details Narrative
Net loss	$ (552,559)	$ (309,580)
Working capital deficit	$ 1,172,243

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SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Significant Accounting Policies Details Narrative
Allowance for doubtful accounts	$ 90,000	$ 90,000

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RELATED PARTIES (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Due to related parties	$ 9,901,146	$ 9,436,923
Purchase of Business Unit [Member]
Due to related parties	175,202	159,790
Computer Hosting Services [Member]
Due to related parties	83,230	60,122
Office Rent [Member]
Due to related parties	1,080,951	967,839
Other [Member]
Due to related parties	17,276	17,276
Loan [Member]
Due to related parties	934,417	894,952
Lead Generation Services [Member]
Due to related parties	1,314,626	1,282,300
Due to Management [Member]
Due to related parties	$ 6,295,444	$ 6,054,644

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STOCK-BASED COMPENSATION (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Stock-based Compensation Details
Sales and marketing	$ 5,376	$ 1,899
General and administrative	2,001	2,001
Total stock-based compensation	$ 7,377	$ 3,900

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STOCK-BASED COMPENSATION (Details 1)	3 Months Ended
	Mar. 31, 2016 $ / shares shares
Options and Warrants
Outstanding - Opening Balance | shares	1,878,319
Vested during the period | shares	(255,001)
Outstanding - Ending Balance | shares	1,623,318
Weighted-Average Exercise Price
Weighted-Average Exercise Price Outstanding - Opening Balance | $ / shares	$ 0.06
Vested during the period | $ / shares	0.03
Weighted-Average Exercise Price Outstanding - Ending Balance | $ / shares	$ 0.06

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STOCK-BASED COMPENSATION (Details 2)	3 Months Ended
	Mar. 31, 2016 $ / shares shares
Stock-based Compensation Details 2
Number Outstanding | shares	13,372,803
Weighted Average Remaining Contractual Life	8 years 9 months 15 days
Weighted-Average Exercise Price | $ / shares	$ 0.04
Number Exercisable | shares	11,749,485
Weighted-Average Exercise Price | $ / shares	$ 0.04

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STOCK-BASED COMPENSATION (Details Narrative)	3 Months Ended
	Mar. 31, 2016 USD ($) $ / shares
Stock-based Compensation Details Narrative
unrecognized compensation cost	$ 92,077
weighted-average period	4 years 2 months 16 days
Aggregate intrinsic value of options and warrants outstanding	$ 13,372,803
Aggregate intrinsic value of options and warrants exercisable	$ 289,101
weighted average exercise price | $ / shares	$ 0.04

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LOSS PER SHARE (Details Narrative) - $ / shares	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Loss Per Share Details Narrative
Basic and diluted loss per share	$ (0.01)	$ (0.00)
Stock options and warrants	13,372,803	13,372,803