Quotemedia Inc 10-K for FY2020

Quotemedia Inc (QMCI)

10-K 2021-03-26 For: 2020-12-31

Added on April 06, 2026

About this 10-K

Quotemedia Inc filed this 10-K on March 26, 2021, covering the fiscal year ended December 31, 2020 (FY2020).

Headline figures

Fiscal year ended December 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $12.4M; up 5.2% from $11.79M a year earlier
Net loss: $646.32K; compared with net income of $559K a year earlier
Diluted EPS: -$0.01; 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 ☐

ITEM 1.	BUSINESS	2
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	19
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	19
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
		19
ITEM 9A	CONTROL AND PROCEDURES
ITEM 9B.	OTHER INFORMATION	21
PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	21
ITEM 11.	EXECUTIVE COMPENSATION	22
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	25

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	29
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	30
PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	31
SIGNATURES		32
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		33

	Years ended December 31
	2020	2019	Change ($)	Change (%)

Corporate Quotestream	$4,520,099	$3,841,722	$678,377	18%
Individual Quotestream	1,871,728	1,829,149	42,579	2%
Total Portfolio Management Systems	6,391,827	5,670,871	720,956	13%
Interactive Content and Data Applications	6,010,397	6,122,860	(112,463)	(2%)
Total Licensing Revenue	$12,402,224	$11,793,731	$608,493	5%

	Years ended December 31,
	2020	2019

Foreign exchange loss	$(3,791)	$(31,385)
Interest expense	(4,582)	(6,259)
Other income	8,000	-
Total other income and (expenses)	$(373)	$(37,644)

Name	Age	Position

Robert J. Thompson	78	Chairman of the Board

Keith J. Randall	54	Chief Executive Officer and Chief Financial Officer, and Director

David M. Shworan	53	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)	2020	$185,000	-	-	-	$185,000
Chief Executive Officer & CFO,	2019	$162,000	-	-	-	$162,000
QuoteMedia, Inc.

David M. Shworan (4)	2020	$350,000	$50,000	-	-	$400,000
Chief Executive Officer,	2019	-	-	$360,000	-	$360,000
QuoteMedia, Ltd.

	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
	1,250,000	2,750,000	$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	$120,000	-	-	$120,000

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)	41,401,800	40.1%
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	41.9%

5% Stockholders (6)	12,247,400	13.5%

	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

	2020	2019

Audit Fees	$104,515	$106,550
Audit-Related Fees	$-	$-
Tax Fees	$-	$-
All Other Fees	$-	$-

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.

	QUOTEMEDIA, INC.

Date: March 26, 2021	By:	/s/ Keith J. Randall
		Keith J. Randall
		Chief Executive Officer and Chief Financial Officer

			Page
PART I

	Years ended December 31
	2020	2019	Change ($)	Change (%)

Cost of revenue	$6,702,321	$5,781,756	$920,565	16%

Gross profit	$5,699,903	$6,011,975	$(312,072)	(5%)

Gross margin %	46%	51%

	Years ended December 31
	2020	2019	Change ($)	Change (%)

Sales and marketing	$2,214,815	$1,879,404	$335,411	18%
General and administrative	2,479,037	2,279,861	199,176	9%
Software development	1,649,765	1,253,055	396,711	32%
Total operating expenses	$6,343,617	$5,412,320	$931,297	17%

	2020	2019
ASSETS

Current assets:
Cash and cash equivalents	$417,910	$815,487
Accounts receivable, net	698,334	680,759
Prepaid expenses	108,477	103,093
Other current assets	113,826	47,793
Total current assets	1,338,547	1,647,132

Deposits	15,886	16,084
Property and equipment, net	2,755,537	2,273,087
Goodwill	110,000	110,000
Intangible assets	61,914	51,265
Operating lease right-of-use assets	671,402	328,676

Total assets	$4,953,286	$4,426,244

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:
Accounts payable and accrued liabilities	$2,026,741	$1,286,340
Deferred revenue	544,902	579,343
Current portion of operating lease liabilities	164,843	172,049
Current portion of finance lease liabilities	11,951	33,914
Total current liabilities	2,748,437	2,071,646

Paycheck Protection Program loan (Note 12)	133,257	-
Long-term portion of operating lease liabilities	504,783	167,496
Long-term portion of finance lease liabilities	2,108	13,949

Mezzanine equity:
Series A Redeemable Convertible Preferred stock, $0.001 par value,
550,000 shares designated; Shares issued and outstanding:
123,685 at December 31, 2020 and December 31, 2019	2,983,857	2,983,857

Stockholders’ deficit:
Preferred stock, 10,000,000 shares authorized, 550,000 shares designated	-	-
Common stock, $0.001 par value, 150,000,000 shares authorized, shares issued and
outstanding: 90,477,798 at December 31, 2020 and December 31, 2019, respectively	90,479	90,479

/s/ Robert J. Thompson Robert J. Thompson	Chairman of the Board	March 26, 2021

/s/ David M. Shworan David M. Shworan	Director	March 26, 2021

/s/ Keith J. Randall Keith J. Randall	Chief Executive Officer and Chief Financial Officer and Director (Principal Executive and Financial and Accounting Officer)	March 26, 2021

Report of Independent Registered Public Accounting Firm	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

	2020	2019

REVENUE	$12,402,224	$11,793,731

COST OF REVENUE	6,702,321	5,781,756

GROSS PROFIT	5,699,903	6,011,975

OPERATING EXPENSES

Sales and marketing	2,214,815	1,879,404
General and administrative	2,479,037	2,279,861
Software development	1,649,765	1,253,055
	6,343,617	5,412,320

OPERATING PROFIT (LOSS)	(643,714)	599,655

OTHER INCOME (EXPENSES), NET

Foreign exchange loss	(3,791)	(31,385)
Interest expense	(4,582)	(6,259)
Other income	8,000	-
	(373)	(37,644)

INCOME (LOSS) BEFORE INCOME TAXES	(644,087)	562,011

Income tax expense	(2,237)	(3,014)

NET INCOME (LOSS)	$(646,324)	$558,997

EARNINGS (LOSS) PER SHARE

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

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic	90,477,798	90,477,798
Diluted	90,477,798	118,745,576

	Series A Redeemable Convertible Preferred Stock		Common Stock
	Number of Shares	Amount	Number of Shares	Amount	Additional Paid-in Capital	Accumulated Deficit	Total Stockholders’ Equity (Deficit)
Balance, January 1, 2019	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)

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)

	2020	2019
OPERATING ACTIVITIES:

Net income (loss)	$(646,324)	$558,997

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	1,331,910	1,113,129
Stock-based compensation expense	37,872	411,714
Changes in assets and liabilities:
Accounts receivable	(17,575)	(142,678)
Prepaid expenses	(5,384)	29,263
Other current assets	(66,033)	123,121
Deposits	198	(745)
Accounts payable, accrued and other liabilities	727,756	(197,855)
Deferred revenue	(34,441)	(128,537)
Net cash provided by operating activities	1,327,979	1,766,409

INVESTING ACTIVITIES:

Purchase of fixed assets	(134,193)	(325,655)
Purchase of intangible assets	(17,127)	-
Capitalized application software	(1,673,689)	(1,351,922)
Net cash used in investing activities	(1,825,009)	(1,677,577)

FINANCING ACTIVITIES:

Proceeds from Paycheck Protection Program loan	133,257	-
Repayment of finance lease obligations	(33,804)	(28,677)
Redemption of preferred stock	-	(55,000)
Net cash provided by (used in) financing activities	99,453	(83,677)

Net increase (decrease) in cash and cash equivalents	(397,577)	5,155

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

Cash and cash equivalents, end of period	$417,910	$815,487

See supplementary information (Note 11)

	2020	2019

Portfolio Management Systems
Corporate Quotestream	$4,520,099	$3,841,722
Individual Quotestream	1,871,728	1,829,149
Interactive Content & Data Applications	6,010,397	6,122,860
Total revenue	$12,402,224	$11,793,731

Balance at December 31, 2019	$579,343
Revenue recognized in the current period from the amounts in the beginning balance	(467,066)
New deferrals, net of amounts recognized in the current period	423,561
Effects of foreign currency translation	9,064
Balance at December 31, 2020	$544,902

	2020	2019

Operating Leases

Operating lease right-of-use assets	$671,402	$328,676

Current portion of operating lease liability	$164,843	$172,049
Long-term portion of operating lease liability	504,783	167,496
Total operating lease liability	$669,626	$339,545

Finance Leases

Computer equipment on financing lease	$101,049	$101,049
Less: accumulated depreciation	85,936	52,888
Computer equipment on financing lease, net	$15,113	$48,161

Current portion of finance lease liability	11,951	33,914
Long-term portion of finance lease liability	2,108	13,949
Total finance lease liability	$14,059	$47,863

	2020	2019

Weighted Average Remaining Lease Term
Operating leases	4.1 years	2.9 years
Finance leases	0.9 years	1.5 years

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

Year ending December 31,	Operating Leases	Finance Leases

2021	$221,849	$12,387
2022	185,402	2,151
2023	171,075	-
2024	155,531	-
2025	83,139	-
Total lease payments	816,996	14,538
Less imputed interest	(147,370)	(479)
Total	$669,626	$14,059

	2020	2019
Operating lease costs:
Operating lease costs	$241,421	$184,634
Short-term lease costs	93,530	125,430
Total operating lease costs	$334,951	$310,064

Finance lease costs:
Amortization	$31,855	$35,053
Interest	2,926	5,795
Total finance lease cost	$34,781	$40,848

	2020	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$241,858	$190,719
Operating cash flows from finance leases	2,926	5,795
Financing cash flows from finance leases	34,258	31,015

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	507,753	207,034

	2020	2019

Computer equipment	$1,237,396	$1,104,845
Office furniture and equipment	25,387	25,387
Leasehold improvements	13,651	12,009
Capitalized application software	11,273,884	9,600,195
Total property and equipment	12,550,318	10,742,436
Less: accumulated depreciation and amortization	(9,794,781)	(8,469,349)
Property and equipment, net	$2,755,537	$2,273,087

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

At December 31:	2020	2019

Intangible assets:
Software licenses	$121,845	$104,718
Domain names	10,570	10,570
	132,415	115,288
Less: accumulated amortization	(70,501)	(64,023)
Total intangible assets, net	$61,914	$51,265

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

Year ending December 31,

2021	$6,621
2022	6,621
2023	6,621
2024	6,621
2025	6,621
Thereafter	28,809
Total	$61,914

	2020	2019
Tax provision (benefit) at the statutory rate of 21%	$(136,209)	$116,746
State income taxes, net of federal income tax	(25,108)	17,012
Stock-based compensation	7,953	86,460
Change in federal NOL	(2,846)	(1,090)
Change in valuation allowance	165,505	(243,588)
Change in other items	(9,296)	24,460
State income tax expense (benefit)	51	50
Canadian income tax expense (benefit)	2,237	3,014
Income tax expense	$2,287	$3,064

	2020	2019
Tax effect of net operating loss carryforward	$2,509,000	$2,235,000
Property & equipment	5,000	4,000
Intangibles	(552,000)	(420,000)
Other	42,000	19,000
Less valuation allowance	(2,004,000)	(1,838,000)
Net deferred tax asset	$-	$-

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

Non-vested at January 1, 2019	6,225,000	$0.08
Vested during the period	(600,000)	$0.05
Non-vested at December 31, 2019	5,625,000	$0.08
Vested during the period	(1,925,000)	$0.08
Non-vested at December 31, 2020	3,700,000	$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
	2020	Life (Years)	Price	2020	Price

$0.03-0.11	26,372,803	8.4	$0.06	22,672,803	$0.05