U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: September 30, 2000
Commission File Number: 0-28599
QUOTEMEDIA.COM INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 91-2008633
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
14500 Northsight Blvd.
Suite 312
Scottsdale, AZ 85260
(Address of principal executive offices) (Zip Code)
(480) 905-7311
(Issuer's Telephone Number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days: Yes [X] No [ ].
At November 13, 2000, the Registrant had 21,577,612 shares of common stock
outstanding.
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QUOTEMEDIA.COM , INC.
INDEX TO QUARTERLY REPORT
ON FORM 10-QSB
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements 3
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
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QUOTEMEDIA.COM, INC.
BALANCE SHEET
September 30, 2000
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 161,104
Marketable securities 64,600
Share subscription receivable 415,000
Accounts receivable 17,074
Prepaid expenses 274,000
Deposits 27,213
-----------
Total current assets 958,991
Fixed assets, net 49,550
Due from related parties 182,368
-----------
$ 1,190,909
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 238,036
-----------
238,036
-----------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 50,000,000 shares
authorized, 21,577,612 shares issued and outstanding 19,968
Additional paid-in capital 3,783,692
Accumulated deficit (2,850,787)
-----------
952,873
-----------
$ 1,190,909
===========
See accompanying notes
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QUOTEMEDIA.COM, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
PERIOD FROM DATE OF
THREE MONTHS ENDED NINE MONTHS ENDED INCORPORATION TO
SEPTEMBER 30, 2000 SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
------------------ ------------------ ------------------
<S> <C> <C> <C>
OPERATING REVENUE
Licensing fees $ 8,000 $ 8,000 $ --
Advertising 3,612 17,825 --
------------ ------------ ------------
11,612 25,825 --
OPERATING EXPENSES
Website content 182,398 464,310 22,500
Professional fees 51,485 126,887 28,354
Research and development 345,157 555,929 137,833
Business development 123,031 384,934 10,774
Office 243,807 667,905 28,649
------------ ------------ ------------
945,878 2,199,965 228,110
------------ ------------ ------------
OPERATING LOSS (934,266) (2,174,140) (228,110)
INTEREST AND OTHER INCOME 22,397 41,882 39,063
------------ ------------ ------------
LOSS FOR THE PERIOD (911,869) (2,132,258) (189,047)
============ ============ ============
BASIC LOSS PER SHARE $ (0.04) $ (0.11) $ (0.01)
============ ============ ============
WEIGHTED AVERAGE SHARES OUSTANDING 20,409,148 19,402,648 15,678,014
============ ============ ============
</TABLE>
See accompanying notes
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QUOTEMEDIA.COM, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
PERIOD FROM DATE OF
NINE MONTHS ENDED INCORPORATION TO
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
LOSS FOR THE PERIOD $(2,132,258) $ (189,047)
ADJUSTMENTS TO RECONCILE LOSS TO NET CASH
USED IN OPERATING ACTIVITIES:
Depreciation 8,770 134
Gain on sale of marketable securities (5,134) --
Issuance of capital stock for services 705,646 120,000
CHANGES IN ASSETS AND LIABILITIES:
Share subscription receivable (415,000) --
Accounts receivable 6,857 --
Prepaid expenses (274,000) --
Deposits (27,213) --
Accounts payable 107,796 (34,639)
Due from related parties (195,568) (39,645)
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (2,220,104) (143,197)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of marketable securities 37,124 --
Writedown of marketable securities 5,910 --
Fixed assets (44,114) --
Cash acquired on acquisition of subsidiary -- 1,100
----------- -----------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (1,080) 1,100
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of capital stock for cash 1,710,250 755,001
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,710,250 755,001
----------- -----------
NET (DECREASE) INCREASE IN CASH (510,934) 612,904
CASH, BEGINNING OF PERIOD 672,038 --
----------- -----------
CASH, ENDING OF PERIOD $ 161,104 $ 612,904
=========== ===========
</TABLE>
See accompanying notes
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QUOTEMEDIA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
Nine Month Period Ended September 30, 2000
1. UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and instructions for Form 10 - QSB. 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. These financial statements should be read in conjunction with
our consolidated financial statements and the notes thereto for the fiscal year
ended December 31, 1999 contained in our registration statement on Form 10-SB.
2. BASIS OF PRESENTATION
BUSINESS COMBINATION
On July 14, 1999, pursuant to the terms of an Agreement and Plan of
Reorganization, the Company acquired all of the outstanding common stock of
QuoteMedia.com, Inc., a Colorado corporation ("Old QMI") in exchange for
11,000,000 unregistered shares of the Company's common stock. As a result of
this transaction, the former shareholders of Old QMI received shares
representing an aggregate of 72% of the Company's outstanding common stock,
resulting in a change in control of the Company. As a result of the merger, the
Company was the surviving entity and Old QMI ceased to exist. In conjunction
with the applicable Articles of Merger, the Company changed its name to
"QuoteMedia.com, Inc." References to the "Company" or "QMI" refer to
QuoteMedia.com, Inc. together, with the predecessor company, Old QMI.
The acquisition of Old QMI has been accounted for as a reverse acquisition.
Under the accounting rules for a reverse acquisition, Old QMI is considered the
acquiring entity. The Company recorded the assets and liabilities (excluding
intangibles) at their historical cost basis, which was deemed approximate fair
market value. The reverse acquisition is treated as a non-cash transaction
except to the extent of cash acquired, since all consideration given was in the
form of stock.
EARNINGS PER SHARE
Earnings per share have been computed based on the weighted average number
of common shares outstanding. For the nine-month period prior to the reverse
acquisition discussed in the business combination section of Note 2 above, the
number of common shares outstanding used in computing earnings per share is the
number of common shares outstanding as a result of such reverse acquisition,
plus such additional shares issued by the Company subsequent to the business
combination.
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QUOTEMEDIA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
Nine Month Period Ended September 30, 2000
3. COMPARATIVE FIGURES
The surviving entity for accounting purposes following the reverse
acquisition described in Note 2 to the Financial Statements commenced operations
on June 28, 1999. The results of operations therefore only contain comparative
information for the three-month period ending September 30, 2000.
4. SUBSEQUENT EVENT
On October 23, 2000, the Company entered into a settlement agreement with
Skyline Records Inc. ("Skyline") whereby the company agreed to relinquish any
claim to Skyline's record sales and cancel a $88,000 debt to the Company in
exchange for the cancellation of 1,110,000 shares of the Company owned by
Skyline and a company related to Skyline. The $3,000,000 receivable from Skyline
was written off in 1999 due to the uncertainty of collection. As a result of
this transaction, the company will recognize a gain of approximately $330,000 in
the fourth quarter of 2000 related to recovery of amounts previously written
off.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our
consolidated financial statements and notes thereto included elsewhere in this
report. We caution readers regarding certain forward looking statements in the
following discussion, elsewhere in this report, and in any other statements,
made by, or on behalf of our company, whether or not in future filings with the
Securities and Exchange Commission. Forward-looking statements are statements
not based on historical information and which relate to future operations,
strategies, financial results, or other developments. Forward-looking statements
are necessarily based upon estimates and assumptions that are inherently subject
to significant business, economic, and competitive uncertainties and
contingencies, many of which are beyond our control and many of which, with
respect to future business decisions, are subject to change. These uncertainties
and contingencies can affect actual results and could cause actual results to
differ materially from those expressed in any forward looking statements made
by, or on behalf of, our company. We disclaim any obligation to update
forward-looking statements.
All references to "we", "our", "us", or "Quotemedia" refer to
Quotemedia.com, Inc., and it predecessors, operating divisions, and
subsidiaries.
This report should be read in conjunction with our Form 10-SB/A filed with
the Securities and Exchange Commission on February 23, 2000.
OVERVIEW
We develop and provide proprietary financial, news, sports, and
entertainment software applications that are licensed to websites worldwide.
Our Financial Application tools offer websites licensed solutions that
allow them to present real time and delayed stock quotes and other financial
information without the costly ant time consuming task of developing these
complex applications/feeds internally. Our proprietary financial applications
(which we refer to as private branded applications, Kool Tools(TM), and
Corporate Tools(TM)) provide solutions to large-scale portals, smaller websites,
and Fortune 500 companies.
In the near future, we plan to launch suites of News, Sports, and
Entertainment applications.
RESULTS OF OPERATIONS
GENERAL
On July 14, 1999, our company acquired all of the outstanding common stock
of Quotemedia.com, Inc., a Colorado corporation in a reverse acquisition in
exchange for 11,000,000 shares of our common stock. As a result of this
transaction, the shareholders of our predecessor company received shares of
common stock representing an aggregate of 72% of our outstanding common stock,
resulting in a change in control of our company. As a result of the merger, we
became the surviving entity and the predecessor company ceased to exist. At this
time, we changed our name to Quotemedia.com, Inc. Following the reverse
acquisition, the surviving entity for accounting purposes commenced operations
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on June 28, 1999. Therefore, the results of operations only contain comparative
information for the three-month period ending September 30, 2000. We were in the
development phase during the comparative three-month period ending September 30,
1999. Accordingly, there are no comparative revenue figures during the period
ended September 20, 1999 and the expenses in this period reflect a lower
activity level.
REVENUES
Revenue consists of advertising fees generated from sponsorship
advertisements and licensing fees generated from our software applications.
Revenue for the three months ended September 30, 2000 was $11,612. Revenue for
the nine months ended September 30, 2000 was $25, 825.
WEBSITE CONTENT
Website content expenses consist primarily of fees paid to the company's
strategic partners for providing financial content such as news, stock quotes,
charts, company background data, and general information. Website content
expenses for the three-month period ended September 30, 2000 were $182,398
compared with $22,500 for the three-month period ending September 30, 1999. The
increase is due to the growth of the company in relation to the comparative
period as the comparative period reports the first three months of operations
from inception. Website content expenses for the nine-month period ended
September 30, 2000 were $464,310.
PROFESSIONAL FEES
Professional fees consist primarily of legal and accounting fees.
Professional fees for the three-month period ended September 30, 2000 were
$51,485 compared with $28,354 for the three-month period ending September
30,1999. Professional fees for the nine-month period ended September 30, 2000
were $126,887.
RESEARCH AND DEVELOPMENT
Research and development expenses consist primarily of costs associated
with the design, programming, and testing of the company's software
applications. Research and development expenses for the three-month period ended
September 30, 2000 were $345,157 compared with $137,833 for the three-month
period ended September 30, 1999. The increase is due to the growth of the
company in relation to the comparative period as the comparative period reports
the first three months of operations from inception. Research and development
expenses for the nine-month period ended September 30, 2000 were $555,929.
BUSINESS DEVELOPMENT
Business development consists primarily of marketing, investor relations,
travel, and printing expenses. Business development expenses for the three-month
period ended September 30, 2000 were $123,031 compared to $10,774 for the
three-month period ended September 30, 1999. The increase is due to the growth
of the company in relation to the comparative period as the comparative period
reports the first three months of operations from inception. Business
development expenses for the nine-month period ended September 30, 2000 were
$384,934.
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OFFICE
Office expenses consist primarily premises rent, computer equipment leases,
computer maintenance and storage, salary expenses and recruiting expenses.
Office expenses for the three-month period ended September 30, 2000 were
$243,807 compared to $28,649 for the three-month period ended September 30,
1999. The increase is due to the growth of the company in relation to the
comparative period as the comparative period reports the first three months of
operations from inception. Office expenses for the nine-month period ended
September 30, 2000 were $667,905.
INTEREST AND OTHER INCOME
Interest and other income consist of interest earned on cash and money
market investments and gains realized from the sale of marketable securities.
Interest and other income for the three month period ended September 30, 2000
was $22,397 compared to $41,882 for the three-month period ended September 30,
1999. The decrease was due to gains realized on the sale of securities in the
comparative period. Interest and other income for the nine-month period ended
September 30, 2000 was $41,882.
LOSS FOR THE PERIOD
As a result of the foregoing, we incurred a loss for the three months ended
September 30, 2000 of $934,266 or approximately $(0.04) per share compared to a
loss of $189,047 and ($0.01) per share for the three months ended September 30,
1999. We incurred a loss for the nine months ended September 30, 2000 of
$2,132,258 or approximately $(0.11) per share.
LIQUIDITY AND CAPITAL RESOURCES
Our cash totaled $161,104 at September 30, 2000, as compared with $672,038
at December 31, 1999, a decrease of $510,934. Net cash of $1,069,876 was used in
operations for the nine months ended September 30, 2000, primarily resulting
from our net loss for the period. Net cash used by investing activities for the
nine months ended September 30, 2000 was $183,448, resulting primarily from
fixed asset purchases and advances made to related parties. Net cash provided by
financing activities for the nine months ended September 30, 2000 was $1,710,250
resulting from the issuance of new capital stock.
We cannot predict the timing and amount of future capital expenditures.
However, we believe that the cash on hand will be sufficient to fund our current
operations through the first quarter of 2001. We intend to accelerate our
development and infrastructure spending in the coming calendar quarters if we
have sufficient available capital resources. Beyond that period, we may require
additional financings, which may come from future equity or debt offerings that
could result in further dilution to our stockholders. Adequate capital may not
be available at that time and the lack of such capital could adversely affect
our business.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
During September 2000, we issued to three accredited investors 2,075,000
shares of common stock at $0.20 per share, or an aggregate offering price of
$415,000. We issued these shares without registration under the Securities Act
in reliance on the exemption provided by Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder as a transaction by an issuer
not involving a public offering.
During September 2000, we issued 261,929 shares of common stock at $1.19
per share to four consultants in consideration for services rendered to our
company. We issued these shares without registration under the Securities Act in
reliance on the exemption provided by Section 4(2) of the Securities Act as a
transaction by an issuer not involving a public offering.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. 27 - Financial Data Schedule
(b) Reports on Form 8-K
Not applicable.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
QUOTEMEDIA.COM, INC.
Dated: November 16, 2000
By: /s/ R. Keith Guelpa
---------------------------
R. Keith Guelpa, President
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