Quotemedia Inc 10-K for FY2019

Quotemedia Inc (QMCI)

10-K 2020-03-27 For: 2019-12-31

Added on April 06, 2026

About this 10-K

Quotemedia Inc filed this 10-K on March 27, 2020, covering the fiscal year ended December 31, 2019 (FY2019).

Headline figures

Fiscal year ended December 31, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $11.79M; up 6.0% from $11.13M a year earlier
Net income: $559K; up 12.3% from net income of $497.87K a year earlier
Diluted EPS: $0.00; compared with $0.00 a year earlier

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Nevada	91-2008633
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification Number)

Title of each class	Name of exchange on which registered
Common stock, par value $.001 per share	OTCQB tier of the OTC Markets

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

		Page
	PART I
ITEM 1.	BUSINESS	3
ITEM 1A.	RISK FACTORS	8
ITEM 1B.	UNRESOLVED STAFF COMMENTS	11
ITEM 2.	PROPERTIES	11
ITEM 3.	LEGAL PROCEEDINGS	11
ITEM 4.	MINE SAFETY DISCLOSURES	11

	PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.	12
ITEM 6.	SELECTED FINANCIAL DATA	12
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	12
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	17
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	17
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	17
ITEM 9A.	CONTROLS AND PROCEDURES	17
ITEM 9B.	OTHER INFORMATION	18

	PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	19
ITEM 11.	EXECUTIVE COMPENSATION	20
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	22
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	26
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	26

	PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	27
SIGNATURES		28
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		29

	Years ended December 31
	2019	2018	Change ($)	Change (%)

Corporate Quotestream	$3,841,722	$3,616,907	$224,815	6%
Individual Quotestream	1,829,149	1,856,840	(27,691)	(1%)
Total Portfolio Management Systems	5,670,871	5,473,747	197,124	4%
Interactive Content and Data Applications	6,122,860	5,653,923	468,937	8%
Total Licensing Revenue	$11,793,731	$11,127,670	$666,061	6%

	Years ended December 31,
	2019	2018

Foreign exchange gain (loss)	$(31,385)	$8,743
Interest expense	(6,259)	(7,289)
Total other income and (expenses)	$(37,644)	$1,454

Name	Age	Position
Robert J. Thompson	77	Chairman of the Board

Keith J. Randall	53	Chief Executive Officer and Chief Financial Officer, and Director

David M. Shworan	52	President and Chief Executive Officer of QuoteMedia, Ltd., and Director

Name and Principal Position	Year	Salary ($)	Bonus ($)	Option Awards ($) (1),(4),(5)	All Other Compensation ($) (2)	Total ($)

Keith J. Randall (3)	2019	$162,000	-	-	-	$162,000
Chief Executive Officer,	2018	$162,000	-	-	-	$162,000
QuoteMedia, Inc.

David M. Shworan (4)	2019	-	-	$360,000	-	$360,000
Chief Executive Officer,	2018	-	-	$360,000	-	$360,000
QuoteMedia, Ltd.

R. Keith Guelpa (5)	2019	-	-	-	-	-
Chief Executive Officer,	2018	$48,000	-	-	-	$48,000
QuoteMedia, Inc.

	Number of Securities Underlying Unexercised Common Stock Options/Warrants
Name	Exercisable	Unexercisable	Option/Warrant Exercise Price ($)	Option/Warrant Exercise Date

David M. Shworan	200,000	-	$0.036	15-May-2025
	2,000,000	-	$0.036	15-May-2025
	3,000,000	-	$0.036	15-May-2025
	2,400,000	-	$0.036	15-May-2025
	-	4,000,000	$0.100	28-Dec-2037

Keith J. Randall	100,000	-	$0.036	15-May-2025
	50,000	-	$0.036	15-May-2025
	50,000	-	$0.036	15-May-2025
	100,000	-	$0.035	26-Oct-2027

Name	Fees Earned or Paid in Cash ($)	Option Awards ($)	All Other Compensation ($)	Total ($)
Robert J. Thompson	$100,000	-	-	$100,000

Name of Beneficial Owner (1)	Number of Shares of Common Stock Owned (2)	Percentage of Common Stock Beneficially Owned (2)

Directors and Executive Officers
David M. Shworan (3)	40,151,800	39.3%
Robert J. Thompson (4)	1,610,286	1.8%
Keith J. Randall (5)	793,976	0.9%

All directors and executive officers as a group	42,556,062	41.2%

5% Stockholders (6)	12,478,027	13.8%

	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights	Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
Plan Category	(a)	(b)	(c)

Equity Compensation Plans approved by stockholders	5,320,000	$0.04	7,329,628

Equity Compensation Plans not approved by stockholders	21,052,803	$0.03	N/A
Total	26,372,803		7,329,628

	2019	2018

Audit Fees	$106,550	$103,665
Audit-Related Fees	$-	$-
Tax Fees	$-	$5,250
All Other Fees	$-	$-

ExhibitNumber	Description of Exhibit
3.1	Second Amended and Restated Articles of Incorporation (1)
3.2	Amended and Restated Bylaws (1)
10.4	Amended 1999 Equity Incentive Compensation Plan (2)
10.7	2003 Equity Incentive Compensation Plan (1)
21	List of Subsidiaries
23.1	Consent of Moss Adams LLP, Independent Auditors
31.1	Certification of Chief 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 Chief 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 Chief 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 Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	QUOTEMEDIA, INC.

Date: March 27, 2020	By:	/s/ Keith J. Randall
		Keith J. Randall
		Chief Executive Officer and Chief Financial Officer

	Years ended December 31
	2019	2018	Change ($)	Change (%)

Cost of revenue	$5,781,756	$5,528,723	$253,033	5%

Gross profit	$6,011,975	$5,598,947	$413,028	7%

Gross margin %	51%	50%

	Years ended December 31
	2019	2018	Change ($)	Change (%)

Sales and marketing	$1,879,404	$1,839,957	$39,447	2%
General and administrative	2,279,861	2,044,337	235,524	12%
Software development	1,253,055	1,215,151	37,904	3%
Total operating expenses	$5,412,320	$5,099,445	$312,875	6%

ASSETS	2019	2018

Current assets:
Cash and cash equivalents	$815,487	$810,332
Accounts receivable, net	680,759	538,081
Prepaid expenses	103,093	132,356
Other current assets	47,793	170,914
Total current assets	1,647,132	1,651,683

Deposits	16,084	15,339
Property and equipment, net	2,273,087	1,702,875
Goodwill	110,000	110,000
Intangible assets	51,265	57,029
Operating lease right-of-use assets	328,676	-

Total assets	$4,426,244	$3,536,926

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:
Accounts payable and accrued liabilities	$1,286,340	$1,495,064
Deferred revenue	579,343	707,880
Current portion of operating lease liabilities	172,049	-
Current portion of finance lease liabilities	33,914	30,083
Total current liabilities	2,071,646	2,233,027

Long-term portion of operating lease liabilities	167,496	-
Long-term portion of finance lease liabilities	13,949	46,457

Mezzanine equity:
Series A Redeemable Convertible Preferred stock, $0.001 par value,
550,000 shares designated; Shares issued and outstanding:
123,685 at December 31, 2019 and 125,885 at December 31, 2018	2,983,857	3,037,952

Stockholders’ deficit:
Preferred stock, 10,000,000 shares authorized, 550,000 shares designated	-	-
Common stock, $0.001 par value, 150,000,000 shares authorized, shares issued and
outstanding: 90,477,798 at December 31, 2019 and December 31, 2018, respectively	90,479	90,479
Additional paid-in capital	19,568,011	19,157,202
Accumulated deficit	(20,469,194)	(21,028,191)

	2019	2018

REVENUE	$11,793,731	$11,127,670

COST OF REVENUE	5,781,756	5,528,723

GROSS PROFIT	6,011,975	5,598,947

OPERATING EXPENSES

Sales and marketing	1,879,404	1,839,957
General and administrative	2,279,861	2,044,337
Software development	1,253,055	1,215,151
	5,412,320	5,099,445

OPERATING PROFIT	599,655	499,502

OTHER INCOME (EXPENSES)

Foreign exchange gain (loss)	(31,385)	8,743
Interest expense	(6,259)	(7,289)
	(37,644)	1,454

INCOME BEFORE INCOME TAXES	562,011	500,956

Income tax expense	(3,014)	(3,085)

NET INCOME	$558,997	$497,871

EARNINGS PER SHARE

Basic earnings per share	$0.01	$0.01
Diluted earnings per share	$0.00	$0.00

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic	90,477,798	90,477,798
Diluted	118,745,576	113,367,414

/s/ Robert J. Thompson Robert J. Thompson	Chairman of the Board	March 27, 2020

/s/ David M. Shworan David M. Shworan	Director	March 27, 2020

/s/ Keith J. Randall Keith J. Randall	Chief Executive Officer and Chief Financial Officer and Director (Principal Executive and Financial and Accounting Officer)	March 27, 2020

Report of Independent Registered Public Accounting Firm	F-1

Consolidated Balance Sheets	F-2

Consolidated Statements of Operations	F-3

Consolidated Statements of Changes in Series A Redeemable Convertible Preferred Stock and Stockholders’ Deficit	F-4

Consolidated Statements of Cash Flows	F-5

Notes to Consolidated Financial Statements	F-6 – F-16

	Series A Redeemable Convertible Preferred Stock		Common Stock
Years ended December 31, 2019 and 2018:	Number of Shares	Amount	Number of Shares	Amount	Additional Paid-in Capital	Accumulated Deficit	Total Stockholders’ Equity (Deficit)
Balance, January 1, 2018	127,685	$3,082,211	90,477,798	$90,479	$18,727,661	$(21,526,062)	$(2,707,922)

Preferred shares issued (redeemed)	(1,800)	(44,259)			(741)		(741)

Costs associated with forgiveness of debt					(8,850)		(8,850)

Stock-based compensation					439,132		439,132

Net income						497,871	497,871

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

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

Stock-based compensation					411,714		411,714

Net income						558,997	558,997

Balance, December 31, 2019	123,685	$2,983,857	90,477,798	$90,479	$19,568,011	$(20,469,194)	$(810,704)

	2019	2018
OPERATING ACTIVITIES:

Net income	$558,997	$497,871

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,113,129	893,248
Stock-based compensation expense	411,714	439,132
Changes in assets and liabilities:
Accounts receivable	(142,678)	(193,569)
Prepaid expenses	29,263	(42,472)
Other current assets	123,121	(21,535)
Deposits	(745)	1,212
Accounts payable, accrued and other liabilities	(197,855)	(70,908)
Deferred revenue	(128,537)	1,061
Net cash provided by operating activities	1,766,409	1,504,040

INVESTING ACTIVITIES:

Purchase of fixed assets	(325,655)	(190,161)
Capitalized application software	(1,351,922)	(879,534)
Net cash used in investing activities	(1,677,577)	(1,069,695)

FINANCING ACTIVITIES:

Repayment of capital lease obligations	(28,677)	(21,314)
Costs associated with forgiveness of debt	-	(8,850)
Redemption of preferred stock	(55,000)	(45,000)
Net cash used in financing activities	(83,677)	(75,164)

Net increase in cash	5,155	359,181

Cash and equivalents, beginning of period	810,332	451,151

Cash and equivalents, end of period	$815,487	$810,332

See supplementary information (Note 11)

	2019	2018
Portfolio Management Systems
Corporate Quotestream	$3,841,722	$3,616,907
Individual Quotestream	1,829,149	1,856,840
Interactive Content & Data Applications	6,122,860	5,653,923
Total revenue	$11,793,731	$11,127,670

Balance at December 31, 2018	$707,880
Revenue recognized in the current period from the amounts in the beginning balance	(566,535)
New deferrals, net of amounts recognized in the current period	447,884
Effects of foreign currency translation	(9,885)
Balance at December 31, 2019	$579,343

	2019	2018
Operating Leases

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

Current portion of operating lease liability	$172,049	$-
Long-term portion of operating lease liability	167,496	-
Total operating lease liability	$339,545	$-

Finance Leases

Computer equipment on financing lease	$101,049	$101,049
Less: accumulated depreciation	52,888	17,836
Computer equipment on financing lease, net	$48,161	$83,213

Current portion of finance lease liability	33,914	30,083
Long-term portion of finance lease liability	13,949	46,457
Total finance lease liability	$47,863	$76,540

	2019	2018
Weighted Average Remaining Lease Term
Operating leases	2.9 years	-
Finance leases	1.5 years	2.5 years

Weighted Average Discount Rate
Operating leases	9.3%	-
Finance leases	8.9%	8.9%

Year ending December 31,	Operating Leases	Finance Leases

2020	$194,961	$36,810
2021	88,499	12,263
2022	50,572	2,162
2023	33,326	-
2024	15,715	-
Total lease payments	383,073	51,235
Less imputed interest	(43,528)	(3,372)
Total	$339,545	$47,863

	2019	2018
Operating lease costs:
Operating lease costs	$184,634	$-
Short-term lease costs	125,430	-
Total operating lease costs	$310,064	$-

Finance lease costs:
Amortization	$35,053	$17,836
Interest	5,795	6,049
Total finance lease cost	$40,848	$23,885

	2019	2018
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$190,719	$-
Operating cash flows from finance leases	5,795	6,049
Financing cash flows from finance leases	31,015	17,836

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	207,034	-

	2019	2018

Computer equipment	$1,104,845	$782,202
Office furniture and equipment	25,387	22,375
Leasehold improvements	12,009	12,009
Capitalized application software	9,600,195	8,447,294
Total property and equipment	10,742,436	9,263,880
Less: accumulated depreciation	(8,469,349)	(7,561,005)
Property and equipment, net	$2,273,087	$1,702,875

Computer equipment	5 years
Office furniture and equipment	5 years
Leasehold improvements	Shorter of useful life or the term of lease
Capitalized application software	3 years

	2019	2018
Intangible assets:
Software licenses	$104,718	$104,718
Domain names	10,570	10,570
	115,288	115,288
Less: accumulated amortization	(64,023)	(58,259)
Total intangible assets, net	$51,265	$57,029

Goodwill:
Purchase of business unit	$110,000	$110,000

Year ending December 31,

2020	$5,764
2021	5,764
2022	5,764
2023	5,764
2024	5,764
Thereafter	22,445
Total	$51,265

	2019	2018

Tax provision at the statutory rate of 21%	$116,746	$103,883
State income taxes, net of federal income tax	17,012	15,137
Stock-based compensation	86,460	92,218
Change in federal NOL	(1,090)	(349)
Change in valuation allowance and other	(219,128)	(210,890)
State income tax expense	50	104
Canadian income tax expense	3,014	3,085
Income tax expense	$3,064	$3,188

	2019	2018

Tax effect of net operating loss carryforward	$2,235,000	$2,372,000
Property and equipment	4,000	1,000
Intangibles	(420,000)	(315,000)
Other	19,000	24,000
Less valuation allowance	(1,838,000)	(2,082,000)
Net deferred tax asset	$-	$-

	Common Stock Options and Warrants	Weighted-Average Grant Date Exercise Price

Non-vested at January 1, 2018	7,625,000	$0.04
Vested during the period	(1,400,000)	$0.05
Non-vested at December 31, 2018	6,225,000	$0.08
Vested during the period	(600,000)	$0.05
Non-vested at December 31, 2019	5,625,000	$0.08

	Common Stock Options and Warrants Outstanding			Common Stock Options and Warrants Exercisable
		Weighted
	Number	Average	Weighted	Number	Weighted
	Outstanding at	Remaining	Average	Exercisable at	Average
	December 31,	Contractual	Exercise	December 31,	Exercise
	2019	Life (Years)	Price	2019	Price

$0.03-0.10	26,372,803	9.4	$0.06	20,747,803	$0.05

	Preferred Stock Warrants	Weighted-Average Exercise Price

Outstanding at January 1, 2018	383,493	$1.00
Granted during the period	15,000	$1.00
Outstanding at December 31, 2018	398,493	$1.00
Granted during the period	15,000	$1.00
Outstanding at December 31, 2019	413,493	$1.00