Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 07, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | QUOTEMEDIA INC | |
Entity Central Index Key | 1,101,433 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
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 | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 465,715 | $ 451,151 |
Accounts receivable, net | 506,015 | 344,512 |
Prepaid expenses | 72,914 | 89,884 |
Other current assets | 151,459 | 149,379 |
Total current assets | 1,196,103 | 1,034,926 |
Deposits | 16,173 | 16,551 |
Property and equipment, net | 1,522,218 | 1,420,946 |
Goodwill | 110,000 | 110,000 |
Intangible assets | 63,173 | 64,657 |
Total assets | 2,907,667 | 2,647,080 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 1,655,121 | 1,565,972 |
Deferred revenue | 676,658 | 706,819 |
Current portion of capital lease obligation | 27,077 | |
Total current liabilities | 2,358,856 | 2,272,791 |
Long-term portion of capital lease obligation | 62,095 | |
Stockholders’ deficit: | ||
Preferred stock, 10,000,000 shares authorized, 550,000 shares designated | ||
Common stock, $0.001 par value, 150,000,000 shares authorized, 90,477,798 shares issued and outstanding | 90,479 | 90,479 |
Additional paid-in capital | 18,831,927 | 18,727,661 |
Accumulated deficit | (21,517,901) | (21,526,062) |
Total stockholders’ deficit | (2,595,495) | (2,707,922) |
Total liabilities and stockholders’ deficit | 2,907,667 | 2,647,080 |
Series A Redeemable Convertible Preferred Stock [Member] | ||
Mezzanine equity: | ||
Series A Redeemable Convertible Preferred stock, $0.001 par value, 550,000 shares designated, 127,685 shares issued | $ 3,082,211 | $ 3,082,211 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Stockholders' deficit: | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares designated | 550,000 | 550,000 |
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 |
Series A Redeemable Convertible Preferred Stock [Member] | ||
Mezzanine equity: | ||
Convertible Preferred stock designated | 550,000 | 550,000 |
Convertible Preferred stock issued | 127,685 | 127,685 |
Convertible Preferred stock, par value | $ 0.001 | $ 0.001 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Consolidated Statements Of Operations | ||
LICENSING FEES | $ 2,667,240 | $ 2,288,453 |
COST OF REVENUE | 1,371,455 | 1,307,629 |
GROSS PROFIT | 1,295,785 | 980,824 |
OPERATING EXPENSES | ||
Sales and marketing | 448,058 | 394,372 |
General and administrative | 538,355 | 532,913 |
Software development | 303,780 | 244,234 |
Total operating expenses | 1,290,193 | 1,171,519 |
OPERATING PROFIT (LOSS) | 5,592 | (190,695) |
OTHER INCOME (EXPENSES) | ||
Foreign exchange gain (loss) | 3,817 | (14,440) |
Interest expense - related party | (275,904) | |
Interest expense - other | (457) | (410) |
Total other income (expenses) | 3,360 | (290,754) |
INCOME (LOSS) BEFORE INCOME TAXES | 8,952 | (481,449) |
Income tax expense | (791) | (756) |
NET INCOME (LOSS) | $ 8,161 | $ (482,205) |
EARNINGS (LOSS) PER SHARE | ||
Basic earnings (loss) per share | $ 0 | $ (0.01) |
Diluted earnings (loss) per share | $ 0 | $ (0.01) |
WEIGHTED AVERAGE SHARES OUTSTANDING | ||
Basic | 90,477,798 | 90,477,798 |
Diluted | 101,722,932 | 90,477,798 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating activities: | ||
Net income (loss) | $ 8,161 | $ (482,205) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 211,751 | 209,830 |
Bad debt expense | 30,343 | |
Stock-based compensation expense | 113,116 | 15,375 |
Changes in assets and liabilities: | ||
Accounts receivable | (161,503) | 111,964 |
Prepaid expenses | 16,970 | 15,634 |
Other current assets | (2,080) | (8,991) |
Deposits | 378 | (120) |
Accounts payable and amounts due to related parties | 80,299 | 375,819 |
Deferred revenue | (30,161) | 62,356 |
Net cash provided by operating activities | 236,931 | 330,005 |
Investing activities: | ||
Purchase of fixed assets | (25,479) | (12,522) |
Capitalized application software | (196,888) | (182,844) |
Net cash used in investing activities | (222,367) | (195,366) |
Net increase in cash | 14,564 | 134,639 |
Cash and equivalents, beginning of period | 451,151 | 271,700 |
Cash and equivalents, end of period | 465,715 | 406,339 |
Non-cash items: | ||
Purchase of fixed assets under capital lease | $ 89,172 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 30, 2018 | |
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, 2018 through the filing of this report. For the three months ended March 31, 2018, the Company has a working capital deficit of $1,162,753. Our current liabilities include deferred revenue of $676,658. The costs expected to be incurred to realize the deferred revenue in the next 12 months are minimal. 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. 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. These financial statements should be read in conjunction with our financial statements and the notes thereto for the fiscal year ended December 31, 2017 contained in our Form 10-K filed with the Securities and Exchange Commission dated April 11, 2018. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2018 | |
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 companys 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 Companys 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 $120,000 as of March 31, 2018 and December 31, 2017. e) Accounting Pronouncements Recently Adopted In May 2014, the FASB issued ASU No. 2014-09, which creates Topic 606, Revenue from Contracts with Customers. The new guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. Additionally, the guidance requires improved disclosure to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The new guidance supersedes most current revenue recognition guidance, including industry-specific guidance. On January 1, 2018, we adopted the guidance in ASC 606 and all the related amendments and applied the new revenue standard to all contracts using the modified retrospective method. The impact of the new revenue standard was not material and there was no adjustment required to the opening balance of our accumulated deficit. We expect the impact of the adoption of the new revenue standard to be immaterial to our net income on an ongoing basis. Refer to Note 3, Revenue for additional information. Not Yet Adopted In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies the accounting for goodwill by eliminating step 2 from the goodwill impairment test. Under the new ASU, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized for the amount by which the carrying amount exceeds its fair value. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. The Company believes that this pronouncement will have no impact on its consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU addresses the classification of certain cash receipts and payments in the statement of cash flows in order to eliminate diversity in practice. This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the potential impact that adoption will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases. This ASU is intended to improve the reporting of leasing transactions to provide users of financial statements with more decision-useful information. This ASU will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, using a modified retrospective approach. Early adoption is permitted. The Company is evaluating the potential impact that adoption will have on its consolidated financial statements and related disclosures. 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 Companys consolidated financial statements upon adoption. |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
Note 3. REVENUE | Disaggregated Revenue The Company provides market data, financial web content solutions and cloud-based applications. Our revenue by type of service consists of the following: Three months ended March 31, 2018 2017 Portfolio Management Systems: Corporate Quotestream $ 865,463 $ 733,421 Individual Quotestream 477,160 407,853 Interactive Content and Data Applications 1,324,617 1,147,179 Total revenue $ 2,667,240 $ 2,288,453 Deferred Revenue Changes in deferred revenue for the period were as follows: Balance at January 1, 2018 $ 706,819 Revenue recognized in the current period from the amounts in the beginning balance (319,786 ) New deferrals, net of amounts recognized in the current period 293,845 Effects of foreign currency translation (4,221 ) Balance at March 31, 2018 $ 676,657 Practical Expedients As permitted under ASU 2014-09 (and related ASUs), unsatisfied performance obligations are not disclosed, as the original expected duration of substantially all of our contracts is one year or less. |
RELATED PARTIES
RELATED PARTIES | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
Note 4. RELATED PARTIES | On December 28, 2017, the Company entered into Debt Exchange and Debt Forgiveness Agreements with Bravenet Web Services, Inc. (Bravenet), and Harrison Avenue Holdings Ltd. (Harrison). David M. Shworan, the President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary of Quotemedia, Inc., is a control person of Bravenet and Harrison. Also effective December 28, 2017, the Company entered into a Compensation Agreement with David M. Shworan. As a result of these agreements and transactions, all of our related party debt was eliminated effective December 28, 2017; therefore no related party interest expense was incurred for the three months ended March 31, 2018. Interest was accrued at 10% on outstanding balances owed to related parties in the comparative period resulting in $275,904 in interest expenses for the three months ended March 31, 2017. Refer to Note 6, Stockholders Deficit for additional information. The Company entered into a five-year office lease with 410734 B.C. Ltd. effective May 1, 2016 for approximately $7,365 per month. David M. Shworan is a control person of 410734 B.C. Ltd. At March 31, 2018, there were no amounts due to 410734 B.C. Ltd. As a matter of policy all related party transactions are subject to review and approval by the Companys Board of Directors. |
CAPITAL LEASES
CAPITAL LEASES | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
Note 5. CAPITAL LEASES | The Companys property and equipment includes the following computer equipment on capital lease: March 31, 2018 December 31, 2017 Computer equipment on capital lease $ 89,120 - Less: accumulated depreciation 1,485 - $ 87,635 - The Companys capital lease obligations consist of the following: March 31, 2018 December 31, 2017 Total capital lease obligations $ 102,209 - Less amount representing interest 13,037 - Present value of minimum lease payments 89,172 - Less current portion 27,077 - Long-term portion $ 62,095 - |
STOCKHOLDERS_ DEFICIT
STOCKHOLDERS’ DEFICIT | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
Note 6. STOCKHOLDERS’ DEFICIT | a) Preferred shares We are authorized to issue up to 10,000,000 non-designated preferred shares at the Board of Directors discretion. On December 28, 2017, a total of 550,000 shares of the Companys Preferred Stock were designated as Series A Redeemable Convertible Preferred Stock. The Series A Redeemable Convertible Preferred Stock has no dividend or voting rights. Holders of Series A Redeemable Convertible Preferred Stock shall have the right to convert their shares into shares of common stock at the rate of 83.33 shares of common stock for one share of Series A Redeemable Convertible Preferred Stock, at any time following the date the closing price of a share of common stock on a securities exchange or actively traded over-the-counter market has exceeded $0.30 for ninety (90) consecutive trading days. The conversion rights are subject to the availability of authorized but unissued shares of common stock. In the event of any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, before any distribution or payment is made to any holders of any shares of common stock, the holders of shares of Series A Redeemable Convertible Preferred Stock shall be entitled to be paid first out of the assets of the Corporation available for distribution to holders of the Companys capital stock whether such assets are capital, surplus, or earnings, an amount equal to $25.00 per share of Series A Redeemable Convertible Preferred Stock. At March 31, 2018, 127,685 shares of Series A Redeemable Convertible Preferred Stock have been issued. No shares of Series A Redeemable Convertible Preferred Stock were issued during the three months ended March 31, 2018 and 2017. b) Common stock No shares of common stock were issued during the three months ended March 31, 2018 and 2017. c) Stock Options and Warrants FASB ASC 718, Stock Compensation, requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense over the service period (generally the vesting period) in the consolidated financial statements based on their fair values. The impact of forfeitures that may occur prior to vesting is also estimated and considered in the amount recognized. Total estimated stock-based compensation expense, related to all of the Companys stock-based awards, recognized for the three months ended March 31, 2018 and 2017 was comprised as follows: Three months ended March 31, 2018 2017 Sales and marketing $ 99,291 $ 5,375 General and administrative 12,700 10,000 Development 1,125 - Stock-based compensation expense $ 113,116 $ 15,375 Common Stock Options and Warrants As of March 31, 2018 there were a total of 26,372,803 options and warrants to purchase common stock outstanding, with a weighted average exercise price of $0.06 and a weighted average remaining contractual life of 11.1 years. As of March 31, 2018 there were a total of 18,747,803 vested and 7,625,000 non-vested options and warrants to purchase common stock with weighted average exercise prices of $0.05 and $0.07, respectively. No stock options or warrants to purchase common stock were granted during the three months ended March 31, 2018. At March 31, 2018 there was $188,871 of unrecognized compensation cost related to non-vested options and warrants granted to purchase common stock which is expected to be recognized over a weighted-average period of 3.58 years. All stock options and warrants to purchase common stock have been granted with exercise prices equal to or greater than the market value of the underlying common shares on the date of grant. At March 31, 2018 the aggregate intrinsic value of options and warrants outstanding was $1,948,241. The aggregate intrinsic value of options and warrants exercisable was $1,389,366. 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. Preferred Stock Warrants On December 28, 2017, the Company entered into a Compensation Agreement with David M. Shworan, the President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary of Quotemedia, Inc., pursuant to which, in lieu of receiving a cash salary the Company will issue to Mr. Shworan warrants to purchase shares of Series A Redeemable Convertible Preferred Stock (Compensation Preferred Stock Warrants). Provided that Mr. Shworan is employed by or otherwise providing services to the Company or its subsidiaries on each of January 1, 2018 and 2019, the Company will issue to Mr. Shworan warrants to purchase up to 15,000 shares of Compensation Preferred Stock Warrants at an exercise price equal to $1.00 per share. A total of $90,000 of stock-based compensation expense was recognized related to the Compensation Preferred Stock Warrants during the three months ending March 31, 2018. At March 31, 2018 there was $270,000 of unrecognized compensation costs related to the 15,000 Compensation Preferred Stock Warrants granted on January 1, 2018 which are expected to be recognized over a weighted-average period of 0.75 years. Also pursuant to the Compensation Agreement with Mr. Shworan, on December 28, 2017 the Company issued Mr. Shworan warrants to purchase up to 382,243 shares of Series A Redeemable Convertible Preferred Stock at an exercise price equal to $1.00 per share (Liquidity Preferred Stock Warrant). The Liquidity Preferred Stock Warrants only vest and become exercisable on the consummation of a Liquidity Event as defined in the Companys Certificate of Designation of Series A Redeemable Convertible Preferred Stock. The probability of the liquidity event performance condition is not currently determinable or probable; therefore, no compensation expense has been recognized as of March 31, 2018. The probability is re-evaluated each reporting period. As of March 31, 2018, there was $9,173,832 in unrecognized stock-based compensation expense related to these Liquidity Preferred Stock Warrants. Since the Liquidity Preferred Stock Warrants only vest and become exercisable on the consummation of a Liquidity Event which is currently not determinable or probable, we are also unable to determine the weighted-average period over which the unrecognized compensation cost will be recognized. Refer to Note 4, Related Parties for additional information. The following table represents total preferred stock warrant activity for the three months ended March 31, 2018: Weighted- Average Warrants Exercise Price Outstanding at January 1, 2018 383,493 $ 1.00 Warrants granted 15,000 $ 1.00 Outstanding at March 31, 2018 398,493 $ 1.00 The following table summarizes the total non-vested preferred stock warrant activity for the three months ended March 31, 2018: Weighted- Average Warrants Exercise Price Outstanding at January 1, 2018 382,243 $ 1.00 Granted during the period 15,000 $ 1.00 Vested during the period (3,750 ) $ 1.00 Outstanding at March 31, 2018 393,493 $ 1.00 As of March 31, 2018, a total of 393,493 preferred stock warrants were outstanding with a weighted average remaining contractual life of 19.8 years. As of March 31, 2018, a total of 5,000 preferred stock warrants were exercisable with a weighted average remaining contractual life of 19.8 years. There was no cash received from the exercise of preferred stock warrants for the three months ended March 31, 2018 or 2017. At March 31, 2018 the total aggregate intrinsic value of preferred stock warrants outstanding was $9,563,832. The aggregate intrinsic value of preferred stock warrants exercisable was $120,000. The intrinsic value of our preferred stock warrants is calculated as the amount by which the liquidation value of our Series A Redeemable Convertible Preferred Stock ($25) exceeds the exercise price of the warrant ($1). |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
Note 7. EARNINGS PER SHARE | Basic net income per share is computed by dividing net income during the period by the weighted-average number of common shares outstanding, excluding the dilutive effects of common stock equivalents. Common stock equivalents include redeemable convertible preferred stock, stock options and warrants. Diluted net income per share is computed by dividing net income by the weighted-average number of dilutive common shares outstanding during the period. Diluted shares outstanding is calculated using the treasury stock method by adding to the weighted shares outstanding any potential shares of common stock from outstanding redeemable convertible preferred stock, stock options and warrants that are in-the-money. In periods when a net loss is reported, all common stock equivalents are excluded from the calculation because they would have an anti-dilutive effect, meaning the loss per share would be reduced. Therefore, in periods when a loss is reported the calculation of basic and dilutive loss per share results in the same value. The calculations for basic and diluted net income per share for the three months ended March 31, 2018 and 2017 are as follows: Three months ended March 31, 2018 2017 Net income (loss) $ 8,161 $ (482,205 ) Weighted average common shares used to calculate net income per share 90,477,798 90,477,798 Stock options and warrants to purchase common stock 11,245,134 - Weighted average common shares used to calculate diluted net income per share 101,722,932 90,477,798 Net income (loss) per share - basic $ 0.00 $ (0.01 ) Net income (loss) per share - diluted $ 0.00 $ (0.01 ) The number of shares of potentially dilutive common stock related to options, warrants and redeemable convertible preferred stock that were excluded from the calculation of dilutive shares since the inclusion of such shares would be anti-dilutive for the three months ended March 31, 2018 and 2017 are shown below: Three months ended March 31, 2018 2017 Stock options and warrants to purchase common stock 4,000,000 16,372,803 Warrants to purchase redeemable convertible preferred stock 1,354,113 - Redeemable convertible preferred stock 10,639,991 - Total potential common shares excluded 15,994,104 16,372,803 |
SIGNIFICANT ACCOUNTING POLICI13
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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 companys 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 Companys 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 $120,000 as of March 31, 2018 and December 31, 2017. |
Accounting Pronouncements | Recently Adopted In May 2014, the FASB issued ASU No. 2014-09, which creates Topic 606, Revenue from Contracts with Customers. The new guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. Additionally, the guidance requires improved disclosure to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The new guidance supersedes most current revenue recognition guidance, including industry-specific guidance. On January 1, 2018, we adopted the guidance in ASC 606 and all the related amendments and applied the new revenue standard to all contracts using the modified retrospective method. The impact of the new revenue standard was not material and there was no adjustment required to the opening balance of our accumulated deficit. We expect the impact of the adoption of the new revenue standard to be immaterial to our net income on an ongoing basis. Refer to Note 3, Revenue for additional information. Not Yet Adopted In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies the accounting for goodwill by eliminating step 2 from the goodwill impairment test. Under the new ASU, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized for the amount by which the carrying amount exceeds its fair value. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. The Company believes that this pronouncement will have no impact on its consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU addresses the classification of certain cash receipts and payments in the statement of cash flows in order to eliminate diversity in practice. This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the potential impact that adoption will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases. This ASU is intended to improve the reporting of leasing transactions to provide users of financial statements with more decision-useful information. This ASU will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, using a modified retrospective approach. Early adoption is permitted. The Company is evaluating the potential impact that adoption will have on its consolidated financial statements and related disclosures. 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 Companys consolidated financial statements upon adoption. |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue Tables | |
Schedule of disaggregated revenue | Three months ended March 31, 2018 2017 Portfolio Management Systems: Corporate Quotestream $ 865,463 $ 733,421 Individual Quotestream 477,160 407,853 Interactive Content and Data Applications 1,324,617 1,147,179 Total revenue $ 2,667,240 $ 2,288,453 |
Schedule of deferred revenue | Balance at January 1, 2018 $ 706,819 Revenue recognized in the current period from the amounts in the beginning balance (319,786 ) New deferrals, net of amounts recognized in the current period 293,845 Effects of foreign currency translation (4,221 ) Balance at March 31, 2018 $ 676,657 |
CAPITAL LEASES (Tables)
CAPITAL LEASES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Capital Leases Tables | |
Property and equipment | March 31, 2018 December 31, 2017 Computer equipment on capital lease $ 89,120 - Less: accumulated depreciation 1,485 - $ 87,635 - |
Schedule of capital lease obligations | March 31, 2018 December 31, 2017 Total capital lease obligations $ 102,209 - Less amount representing interest 13,037 - Present value of minimum lease payments 89,172 - Less current portion 27,077 - Long-term portion $ 62,095 - |
STOCKHOLDERS_ DEFICIT (Tables)
STOCKHOLDERS’ DEFICIT (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders Deficit Tables | |
Summary of stock based compensation expense | Three months ended March 31, 2018 2017 Sales and marketing $ 99,291 $ 5,375 General and administrative 12,700 10,000 Development 1,125 - Stock-based compensation expense $ 113,116 $ 15,375 |
Preferred stock warrant activity | Weighted- Average Warrants Exercise Price Outstanding at January 1, 2018 383,493 $ 1.00 Warrants granted 15,000 $ 1.00 Outstanding at March 31, 2018 398,493 $ 1.00 |
Non-vested stock option and warrant activity | Weighted- Average Warrants Exercise Price Outstanding at January 1, 2018 382,243 $ 1.00 Granted during the period 15,000 $ 1.00 Vested during the period (3,750 ) $ 1.00 Outstanding at March 31, 2018 393,493 $ 1.00 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share Tables | |
Schedule of earnings per share, basic and diluted | Three months ended March 31, 2018 2017 Net income (loss) $ 8,161 $ (482,205 ) Weighted average common shares used to calculate net income per share 90,477,798 90,477,798 Stock options and warrants to purchase common stock 11,245,134 - Weighted average common shares used to calculate diluted net income per share 101,722,932 90,477,798 Net income (loss) per share - basic $ 0.00 $ (0.01 ) Net income (loss) per share - diluted $ 0.00 $ (0.01 ) |
Schedule of potentially dilutive securities excluded from the computation of earnings per share | Three months ended March 31, 2018 2017 Stock options and warrants to purchase common stock 4,000,000 16,372,803 Warrants to purchase redeemable convertible preferred stock 1,354,113 - Redeemable convertible preferred stock 10,639,991 - Total potential common shares excluded 15,994,104 16,372,803 |
BASIS OF PRESENTATION (Details
BASIS OF PRESENTATION (Details Narrative) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Basis Of Presentation Details Narrative | ||
Working capital deficit | $ 1,162,753 | |
Deferred revenue | $ 676,658 | $ 706,819 |
SIGNIFICANT ACCOUNTING POLICI19
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Significant Accounting Policies Details Narrative | ||
Allowance for doubtful accounts | $ 120,000 | $ 120,000 |
REVENUE (Details)
REVENUE (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Interactive Content and Data Applications | $ 1,324,617 | $ 1,147,179 |
Total revenue | 2,667,240 | 2,288,453 |
Corporate Quotestream [Member] | ||
Portfolio Management Systems | 865,463 | 733,421 |
Individual Quotestream [Member] | ||
Portfolio Management Systems | $ 477,160 | $ 407,853 |
REVENUE (Details 1)
REVENUE (Details 1) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Revenue Details 1 | |
Balance at January 1, 2018 | $ 706,819 |
Revenue recognized in the current period from the amounts in the beginning balance | (319,786) |
New deferrals, net of amounts recognized in the current period | 293,845 |
Effects of foreign currency translation | (4,221) |
Balance at March 31, 2018 | $ 676,658 |
RELATED PARTIES (Details Narrat
RELATED PARTIES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Accrued amount due to related parties | $ (275,904) | |
Bravenet [Member] | ||
Accrued interest rate | 10.00% | |
Accrued amount due to related parties | $ 275,904 | |
Office Rent [Member] | 410734 B.C. Ltd [Member] | ||
Related parties periodic payment | $ 7,365 | |
Frequency of periodic payment | Monthly |
CAPITAL LEASES (Details)
CAPITAL LEASES (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Property and equipment, Total | $ 1,522,218 | $ 1,420,946 |
Computer equipment on capital lease [Member] | ||
Computer equipment on capital lease | 89,120 | |
Less: accumulated depreciation | 1,485 | |
Property and equipment, Total | $ 87,635 |
CAPITAL LEASES (Details 1)
CAPITAL LEASES (Details 1) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Capital Leases Details 1 | ||
Total capital lease obligations | $ 102,209 | |
Less amount representing interest | 13,037 | |
Present value of minimum lease payments | 89,172 | |
Less current portion | 27,077 | |
Long-term portion | $ 62,095 |
STOCKHOLDERS' DEFICIT (Details)
STOCKHOLDERS' DEFICIT (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Sales and marketing | $ 448,058 | $ 394,372 |
General and administrative | 538,355 | 532,913 |
Stock-based compensation expense | 113,116 | 15,375 |
Stock Options and Warrants [Member] | ||
Sales and marketing | 99,291 | 5,375 |
General and administrative | 12,700 | 10,000 |
Development | 1,125 | |
Stock-based compensation expense | $ 113,116 | $ 15,375 |
STOCKHOLDERS' DEFICIT (Details
STOCKHOLDERS' DEFICIT (Details 1) - Preferred stock warrant [Member] | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Warrants | |
Outstanding - Opening Balance | shares | 383,493 |
Warrants granted | shares | 15,000 |
Outstanding - Ending Balance | shares | 398,493 |
Weighted-Average Exercise Price | |
Weighted-Average Exercise Price Outstanding - Opening Balance | $ / shares | $ 1 |
Warrants granted | $ / shares | 1 |
Weighted-Average Exercise Price Outstanding - Ending Balance | $ / shares | $ 1 |
STOCKHOLDERS' DEFICIT (Detail27
STOCKHOLDERS' DEFICIT (Details 2) - Non-vested preferred stock warrant [Member] | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Warrants | |
Outstanding - Opening Balance | shares | 382,243 |
Granted during the period | shares | 15,000 |
Vested during the period | shares | (3,750) |
Outstanding - Ending Balance | shares | 393,493 |
Weighted-Average Exercise Price | |
Weighted-Average Exercise Price Outstanding - Opening Balance | $ / shares | $ 1 |
Granted during the period | $ / shares | 1 |
Vested during the period | $ / shares | 1 |
Weighted-Average Exercise Price Outstanding - Ending Balance | $ / shares | $ 1 |
STOCKHOLDERS' DEFICIT (Detail28
STOCKHOLDERS' DEFICIT (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |
Dec. 28, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | |
Preferred stock, shares designated | 550,000 | 550,000 | |
Compensation Agreement [Member] | David M. Shworan [Member] | |||
Options and warrants issued to purchase of common stock | 15,000 | ||
Warrants exercise price | $ 1 | ||
Stock based compensation expense | $ 90,000 | ||
Granted | 15,000 | ||
Weighted average remaining contractual life | 9 months | ||
Unrecognized share-based compensation | $ 270,000 | ||
Compensation Agreement [Member] | Liquidity Preferred Stock Warrant [Member] | |||
Unrecognized share-based compensation | $ 9,173,832 | ||
Preferred stock warrant [Member] | |||
Granted | 393,493 | ||
Warrants exercisable | 5,000 | ||
Weighted average remaining contractual life | 19 years 8 months | ||
Stock Option And Warrant | |||
Aggregate intrinsic value of preferred stock warrants outstanding | $ 9,563,832 | ||
Aggregate intrinsic value of preferred stock warrants exercisable | $ 120,000 | ||
Common Stock Options and Warrants [Member] | |||
Options and warrants issued to purchase of common stock | 26,372,803 | ||
Weighted average remaining contractual life | 11 years 1 month | ||
Aggregate intrinsic value of preferred stock warrants outstanding | $ 1,948,241 | ||
Aggregate intrinsic value of preferred stock warrants exercisable | $ 1,389,366 | ||
Exercise prices | $ 0.06 | ||
Common Stock Options and Warrants [Member] | Vested [Member] | |||
Options and warrants issued to purchase of common stock | 18,747,803 | ||
Exercise prices | $ 0.05 | ||
Common Stock Options and Warrants [Member] | Non Vested [Member] | |||
Options and warrants issued to purchase of common stock | 7,625,000 | ||
Weighted average remaining contractual life | 3 years 6 months 29 days | ||
Unrecognized share-based compensation | $ 188,871 | ||
Exercise prices | $ 0.07 | ||
Series A Redeemable Convertible Preferred Stock [Member] | |||
Preferred stock, shares designated | 550,000 | ||
Conversion of Stock, Description | the right to convert their shares into shares of common stock at the rate of 83.33 shares of common stock for one share of Series A Redeemable Convertible Preferred Stock, | ||
Price per share | $ 25 | ||
Convertible Preferred stock issued | 127,685 | 127,685 | |
Conversion price, Description | the closing price of a share of common stock on a securities exchange or actively traded over-the-counter market has exceeded $0.30 for ninety (90) consecutive trading days. | ||
Series A Redeemable Convertible Preferred Stock [Member] | Compensation Agreement [Member] | Liquidity Preferred Stock Warrant [Member] | David M. Shworan [Member] | |||
Options and warrants issued to purchase of common stock | 382,243 | ||
Warrants exercise price | $ 1 | ||
Series A Redeemable Convertible Preferred Stock [Member] | Stock Option And Warrant | |||
Warrants exercise price | $ 1 | ||
Liquidation value | $ 25 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share Details | ||
Net income (loss) | $ 8,161 | $ (482,205) |
Weighted average common shares used to calculate net income per share | 90,477,798 | 90,477,798 |
Stock options and warrants to purchase common stock | 11,245,134 | |
Weighted average common shares used to calculate diluted net income per share | 101,722,932 | 90,477,798 |
Net income (loss) per share - basic | $ 0 | $ (0.01) |
Net income (loss) per share - diluted | $ 0 | $ (0.01) |
EARNINGS PER SHARE (Details 1)
EARNINGS PER SHARE (Details 1) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share Details | ||
Stock options and warrants to purchase common stock | 4,000,000 | 16,372,803 |
Warrants to purchase redeemable convertible preferred stock | 1,354,113 | |
Redeemable convertible preferred stock | 10,639,991 | |
Total potential common shares excluded | 15,994,104 | 16,372,803 |