Quotemedia Inc 10-K for FY2021

Quotemedia Inc (QMCI)

10-K 2022-03-30 For: 2021-12-31

Added on April 06, 2026

About this 10-K

Quotemedia Inc filed this 10-K on March 30, 2022, covering the fiscal year ended December 31, 2021 (FY2021).

Headline figures

Fiscal year ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $15.17M; up 22.4% from $12.4M a year earlier
Net income: $212.37K; compared with a net loss of $646.32K a year earlier
Diluted EPS: $0.00; compared with -$0.01 a year earlier

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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	☐	Smaller reporting company	☒
	(Do not check if a smaller reporting company)	Emerging growth company	☐

		Page
PART I
ITEM 1.	BUSINESS	4
ITEM 1A.	RISK FACTORS	10
ITEM 1B.	UNRESOLVED STAFF COMMENTS	13
ITEM 2.	PROPERTIES	13
ITEM 3.	LEGAL PROCEEDINGS	13
ITEM 4.	MINE SAFETY DISCLOSURES	13

PART II

ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.	14
ITEM 6.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 6A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21
ITEM 7.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	21
ITEM 8.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	21
ITEM 8A.	CONTROLS AND PROCEDURES	22
ITEM 8B.	OTHER INFORMATION	22

PART III

ITEM 9.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	23
ITEM 10.	EXECUTIVE COMPENSATION	24
ITEM 11.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	27
ITEM 12.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	31
ITEM 13.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	32

PART IV

ITEM 14.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	33
SIGNATURES		34
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		35

	·	Streaming Real-time Data Feeds
	·	Dynamic Content Web Displays
	·	Data APIs, XML and JSON Data
	·	News Feed Aggregation and Delivery
	·	Mobile App Solutions
	·	Complete Portfolio Management
	·	Corporate Investor Relations Solutions
	·	Research Information Supply
	·	Custom Software Application Development

·	Online brokerages	·	Mutual fund companies
·	Full-service brokerage firms	·	Internet service providers
·	Banks and other financial institutions	·	Media companies
·	Financial Web sites	·	Publishers and Data firms
·	Web portals	·	Wealth management companies
·	Public companies	·	Individual traders and investors
·	Investor relations firms	·	Securities exchanges

	·	A risk disclosure document;

	·	Disclosure of market quotations, if any;

	·	Disclosure of the compensation of the broker-dealer and its salesperson in the transaction; and

	·	Monthly account statements showing the market values of our securities held in the customer’s accounts.

	Years ended December 31
	2021		2020		Change ($)		Change (%)

Corporate Quotestream	$	6,399,618	$	4,520,099	$	1,879,519		42	%
Individual Quotestream		2,281,966		1,871,728		410,238		22	%
Total Portfolio Management Systems		8,681,584		6,391,827		2,289,757		36	%
Interactive Content and Data APIs		6,492,788		6,010,397		482,391		8	%
Total Licensing Revenue	$	15,174,372	$	12,402,224	$	2,772,148		22	%

	Years ended December 31,
	2021			2020

Foreign exchange gain (loss)	$	107,382		$	(3,791	)
Interest expense		(2,641	)		(4,582	)
Other income		133,257			8,000
Total other income and (expenses)	$	237,998		$	(373	)

Name	Age	Position

Robert J. Thompson	79	Chairman of the Board

Keith J. Randall	55	Chief Executive Officer and Chief Financial Officer, and Director

David M. Shworan	54	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)	2021	$	185,000		-		-		-	$	185,000
Chief Executive Officer &	2020	$	185,000		-		-		-	$	185,000
CFO, QuoteMedia, Inc.

David M. Shworan (4)	2021	$	400,000		-		-		-	$	400,000
Chief Executive Officer,	2020	$	350,000	$	50,000		-		-	$	400,000
QuoteMedia, Ltd.

(1)	Options Awards represent the fair value of option awards granted, repriced, or otherwise modified, computed in accordance with FASB ASC 718, Stock Compensation.
(2)	The executive officers listed also received certain perquisites, the aggregate value of which did not exceed $10,000 for any year presented.
(3)	Mr. Randall is our Chief Financial Officer, and effective March 31, 2018, was also appointed Chief Executive Officer, and Director. Mr. Randall has retained his role as Chief Financial Officer and will serve as both “Principal Executive Officer” and “Principal Financial and Accounting Officer”.
(4)	Mr. Shworan is President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary of QuoteMedia, Inc. In 2020 Mr. Shworan was paid a base salary of $350,000 and was awarded a bonus of $50,000 which was accrued as of December 31, 2020 and paid in 2021.

	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
		2,500,000		1,500,000	$	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

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

David M. Shworan		1,250		-	$	1.00	28-Dec-2047
		15,000		-	$	1.00	01-Jan-2048
		15,000		-	$	1.00	01-Jan-2049
		-		382,243	$	1.00	28-Dec-2037

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)		41,401,800		40.8	%
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		43,806,062		42.6	%

5% Stockholders (6)		6,478,027		7.2	%

(1)	Each person named in the table has sole voting and investment power with respect to all common stock beneficially owned by him or her, subject to applicable community property law, except as otherwise indicated. Except as otherwise indicated, each person may be reached through us at 17100 E. Shea Blvd., Suite 230, Fountain Hills, Arizona 85268.

(2)	The percentages shown are calculated based upon 90,477,798 shares of common stock outstanding on March 8, 2021. The numbers and percentages shown include the shares of common stock actually owned as of March 8, 2021 and the shares of common stock that the identified person or group had the right to acquire within 60 days of such date. In calculating the percentage of ownership, all shares of common stock that the identified person or group had the right to acquire within 60 days of March 8, 2021 upon the exercise of options are deemed to be outstanding for the purpose of computing the percentage of the shares of common stock owned by such person or group but are not deemed to be outstanding for the purpose of computing the percentage of the shares of common stock owned by any other person.

(3)	Represents the following:

	·	10,511,800 shares of common stock owned by Mr. Shworan and vested options and warrants to acquire directly 8,850,000 shares of common stock

	·	17,002,500 shares owned by Mr. Shworan’s wife

	·	1,037,500 shares of common stock owned by Bravenet Web Services, Inc. and vested options and warrants to acquire 1,480,000 shares of common stock. Mr. Shworan is a control person of Bravenet Web Services, Inc. and Mr. Shworan disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein

	·	Vested options and warrants to acquire 2,520,000 shares of common stock owned by Harrison Avenue Holdings Ltd. Mr. Shworan is a control person of Harrison Avenue Holdings Ltd. and Mr. Shworan disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein

	·	See also Item 11, “Executive Compensation - Employment Agreements.”

	Years ended December 31
	2021			2020			Change ($)		Change (%)

Cost of revenue	$	8,438,658		$	6,702,321		$	1,736,337		26	%

Gross profit	$	6,735,714		$	5,699,903		$	1,035,811		18	%

Gross margin %		44	%		46	%

	Years ended December 31
	2021		2020		Change ($)		Change (%)

Sales and marketing	$	2,507,169	$	2,214,815	$	292,354		13	%
General and administrative		2,538,429		2,479,037		59,392		2	%
Software development		1,712,558		1,649,765		62,793		4	%
Total operating expenses	$	6,758,156	$	6,343,617	$	414,539		7	%

(4)	Represents 807,483 shares of common stock and vested options and warrants to acquire 802,803 shares of common stock.

(5)	Represents 493,976 shares of common stock and vested options and warrants to acquire 300,000 shares of common stock.

(6)	Represents 6,478,027 shares of our common stock owned by Sue Guelpa.

	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		4,720,000	$	0.04		7,929,628

Equity Compensation Plans not approved by stockholders		21,052,803	$	0.03		N/A
Total		25,772,803				7,329,628

	·	The cash and fair market value of property that is the highest price per share paid (including extraordinary dividends) in any reorganization, merger, consolidation, liquidation, dissolution, or sale of substantially all assets of our company; or

	·	The highest fair market value per share (generally based on market prices) at any time during the 60 days before and 60 days after a change in control.

	·	Approval by stockholders of any reorganization, merger, or consolidation or other transaction or series of transactions if persons who were shareholders immediately prior to such reorganization, merger, or consolidation or other transaction do not, immediately thereafter, own more than 50% of the combined voting power of the reorganized, merged, or consolidated company’s then outstanding, voting securities, or a liquidation or dissolution of our company or the sale of all or substantially all of the assets of our company (unless the reorganization, merger, consolidation or other corporate transaction, liquidation, dissolution or sale is subsequently abandoned),

	·	A change in the composition of our Board of Directors such that the persons constituting the Board of Directors on the date the award is granted, or the Incumbent Board, and subsequent directors approved by the Incumbent Board (or approved by such subsequent directors), cease to constitute at least a majority of our Board of Directors, or

	·	The acquisition by any person, entity or “group”, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act, of more than 50% of either the then outstanding shares of our common stock or the combined voting power of our company’s then outstanding voting securities entitled to vote generally in the election of directors excluding, for this purpose, any acquisitions by (1) our company, (2) any person, entity, or “group” that as of the date on which the award is granted owns beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of a controlling interest, or (3) any employee benefit plan of our company.

	2021		2020

Audit Fees	$	108,985	$	104,515
Audit-Related Fees	$	-	$	-
Tax Fees	$	-	$	-
All Other Fees	$	-	$	-

(a)	The following documents are filed as a part of the report:

(1)	Financial Statements

	Financial Statements are listed in the Index to Consolidated Financial Statements of this report.

(2)	Financial Statement Schedules

	No financial statement schedules are included because such schedules are not applicable, are not required, or because required information is included in the consolidated financial statements or notes thereto.

(3)	Exhibits

Exhibit Number		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 Registered Public Accounting Firm
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.

(1)	Incorporated by reference to the Annual Report on Form 10-KSB filed with the Commission on March 27, 2003.

(2)	Incorporated by reference to the Quarterly Report on Form 10-QSB filed with the Commission on August 12, 2003.

Date: March 30, 2022	QUOTEMEDIA, INC.

	By:	/s/ Keith J. Randall
		Keith J. Randall
		Chief Executive Officer and Chief Financial Officer

/s/ Robert J. Thompson	Chairman of the Board	March 30, 2022
Robert J. Thompson

/s/ David M. Shworan	Director	March 30, 2022
David M. Shworan

/s/ Keith J. Randall	Chief Executive Officer and Chief Financial Officer and	March 30, 2022
Keith J. Randall	Director (Principal Executive and Financial and Accounting Officer)

Report of Independent Registered Public Accounting Firm (Moss Adams LLP, Phoenix, AZ, PCAOB ID: 659)		F-1 – F-2

Consolidated Balance Sheets		F-3

Consolidated Statements of Operations		F-4

Consolidated Statements of Changes in Series A Redeemable Convertible Preferred Stock and Stockholders’ Deficit		F-5

Consolidated Statements of Cash Flows		F-6

Notes to Consolidated Financial Statements		F-7 – F-17

	·	Obtaining an understanding of the Company’s process to identify development projects and development costs qualifying for capitalization,

	·	Evaluating management’s listing of active development projects by review of project reports and discussions with development personnel to assess the reasonableness as to whether the activities were demonstrative of the capitalization criteria in accordance with the applicable accounting guidance,

	·	Obtaining a schedule compiled by management to compute the capitalized costs by project and performing testing over the completeness and mathematical accuracy of the hours and payroll rates included within the schedule,

	·	Testing a sample of the Company’s capitalized costs by validating the nature of the activities performed and time devoted to capitalizable activities through discussion with individual software developers and project managers, and

	·	Agreeing the calculated amounts for capitalization to underlying payroll data to evaluate the reasonableness of hourly rates used for cost capitalization.

	2021			2020
ASSETS

Current assets:
Cash and cash equivalents	$	258,705		$	417,910
Accounts receivable, net		624,127			698,334
Prepaid expenses		220,399			108,477
Other current assets		39,226			113,826
Total current assets		1,142,457			1,338,547

Deposits		16,005			15,886
Property and equipment, net		3,417,977			2,755,537
Goodwill		110,000			110,000
Intangible assets		64,856			61,914
Operating lease right-of-use assets		829,960			671,402

Total assets	$	5,581,255		$	4,953,286

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ DEFICIT

Current liabilities:
Accounts payable and accrued liabilities	$	2,434,389		$	2,026,741
Deferred revenue		622,497			544,902
Current portion of operating lease liabilities		180,544			164,843
Current portion of finance lease liabilities		2,094			11,951
Total current liabilities		3,239,524			2,748,437

Paycheck Protection Program loan (Note 12)		-			133,257
Long-term portion of operating lease liabilities		532,782			504,783
Long-term portion of finance lease liabilities		-			2,108

Mezzanine equity:
Preferred stock, 10,000,000 shares authorized:
Series A Redeemable Convertible Preferred stock, $0.001 par value, 550,000 shares designated; shares issued and outstanding: 123,685 at December 31, 2021 and December 31, 2020		2,983,857			2,983,857

Stockholders’ deficit:
Common stock, $0.001 par value, 150,000,000 shares authorized, shares issued and outstanding: 90,477,798 at December 31, 2021 and December 31, 2020		90,479			90,479
Additional paid-in capital		19,637,759			19,605,883
Accumulated deficit		(20,903,146	)		(21,115,518	)
Total stockholders’ deficit		(1,174,908	)		(1,419,156	)

Total liabilities and stockholders’ deficit	$	5,581,255		$	4,953,286

	2021			2020

REVENUE	$	15,174,372		$	12,402,224

COST OF REVENUE		8,438,658			6,702,321

GROSS PROFIT		6,735,714			5,699,903

OPERATING EXPENSES

Sales and marketing		2,507,169			2,214,815
General and administrative		2,538,429			2,479,037
Software development		1,712,558			1,649,765
		6,758,156			6,343,617

OPERATING LOSS		(22,442	)		(643,714	)

OTHER INCOME (EXPENSES), NET

Foreign exchange gain (loss)		107,382			(3,791	)
Interest expense		(2,641	)		(4,582	)
Other income		133,257			8,000
		237,998			(373	)

INCOME (LOSS) BEFORE INCOME TAXES		215,556			(644,087	)

Income tax expense		(3,184	)		(2,237	)

NET INCOME (LOSS)	$	212,372		$	(646,324	)

EARNINGS (LOSS) PER SHARE

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

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic		90,477,798			90,477,798
Diluted		119,313,662			90,477,798

	Series A Redeemable Convertible Preferred Stock				Common Stock				Additional					Total Stockholders’
	Number of Shares		Amount		Number of Shares		Amount		Paid-in Capital		Accumulated Deficit			Equity (Deficit)
Balance, January 1, 2020		123,685	$	2,983,857		90,477,798	$	90,479	$	19,568,011	$	(20,469,194	)	$	(810,704	)

Stock-based compensation										37,872					37,872

Net loss												(646,324	)		(646,324	)

Balance, December 31, 2020		123,685		2,983,857		90,477,798		90,479		19,605,883		(21,115,518	)		(1,419,156	)

Stock-based compensation										31,876					31,876

Net income												212,372			212,372

Balance, December 31, 2021		123,685	$	2,983,857		90,477,798	$	90,479	$	19,637,759	$	(20,903,146)		$	(1,174,908)

	2021			2020
OPERATING ACTIVITIES:

Net income (loss)	$	212,372		$	(646,324	)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		1,640,245			1,331,910
Stock-based compensation expense		31,876			37,872
Gain on forgiveness of PPP loan (Note 12)		(133,257	)		-
Changes in assets and liabilities:
Accounts receivable		74,207			(17,575	)
Prepaid expenses		(111,922	)		(5,384	)
Other current assets		74,600			(66,033	)
Deposits		(119	)		198
Accounts payable, accrued and other liabilities		292,790			727,756
Deferred revenue		77,595			(34,441	)
Net cash provided by operating activities		2,158,387			1,327,979

INVESTING ACTIVITIES:

Purchase of fixed assets		(94,406	)		(134,193	)
Purchase of intangible assets		(9,999	)		(17,127	)
Capitalized application software		(2,201,222	)		(1,673,689	)
Net cash used in investing activities		(2,305,627	)		(1,825,009	)

FINANCING ACTIVITIES:

Proceeds from Paycheck Protection Program loan		-			133,257
Repayment of finance lease obligations		(11,965	)		(33,804	)
Net cash provided by (used in) financing activities		(11,965	)		99,453

Net decrease in cash and cash equivalents		(159,205	)		(397,577	)

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

Cash and cash equivalents, end of period	$	258,705		$	417,910

	·	Identification of the contract, or contracts, with a customer

	·	Identification of the performance obligations in the contract

	·	Determination of the transaction price

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

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

	2021		2020

Portfolio Management Systems
Corporate Quotestream	$	6,399,618	$	4,520,099
Individual Quotestream		2,281,966		1,871,728
Interactive Content & Data APIs		6,492,788		6,010,397
Total revenue	$	15,174,372	$	12,402,224

Balance at December 31, 2020	$	544,902
Revenue recognized in the current period from the amounts in the beginning balance		(422,118	)
New deferrals, net of amounts recognized in the current period		500,936
Effects of foreign currency translation		(1,223	)
Balance at December 31, 2021	$	622,497

	2021		2020

Operating Leases

Operating lease right-of-use assets, net	$	829,960	$	671,402

Current portion of operating lease liability	$	180,544	$	164,843
Long-term portion of operating lease liability		532,782		504,783
Total operating lease liability	$	713,326	$	669,626

Finance Leases

Computer equipment on financing lease	$	11,929	$	101,049
Less: accumulated depreciation		11,929		85,936
Computer equipment on financing lease, net	$	-	$	15,113

Current portion of finance lease liability		2,094		11,951
Long-term portion of finance lease liability		-		2,108
Total finance lease liability	$	2,094	$	14,059