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: June 30, 2000
Commission File Number: 0-28599
QUOTEMEDIA.COM, INC.
--------------------
(Exact name of small business issuer as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
91-2008633
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(IRS Employer Identification No.)
14500 Northsight Blvd.
Suite 312
Scottsdale, AZ
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(Address of principal executive offices)
85260
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(Zip Code)
(480) 905-7311
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(Issuer's Telephone Number)
11100 NE 8th Street, Suite 300
Bellevue, Washington 98004
--------------------------
(Former address of small business issuer)
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 ____.
The number of shares of the registrant's only class of common stock issued and
outstanding, as of June 30, 2000 was 19,240,683 shares.
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PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the six month period ended June
30, 2000, are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Financial Statements and notes thereto included herein. In connection with, and
because it desires to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, the Company cautions readers
regarding certain forward looking statements in the following discussion and
elsewhere in this report and in any other statement made by, or on the behalf of
the 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 the Company's 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, the
Company. The Company disclaims any obligation to update forward looking
statements.
Plan of Operation
QuoteMedia's business strategy is to offer the market proprietary
software applications including i) Financial content software engines; ii) Kool
Tools(TM); and iii) Corporate Tools(TM).
Financial content software engines
Quotemedia's financial content software engine is a proprietary
software application which is intended to power large web portals. The software
is customizable to meet the needs of a client on a private branded basis.
Currently Quotemedia's financial content software engine powers its own
corporate website and one private branded website. This application was launched
in February, 2000.
Website
QuoteMedia's corporate website provides financial information, tools
and services worldwide via the Internet in what management believes is a simple
and direct format that is as appealing to the
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novice as it is to the more experienced cyber investor. The Company's tools and
features provide access to investment information for research purposes,
utilizing the Company's financial content software engines and modules to
provide users instant access to timely quotes, financial data, stock market news
and other media coverage. These include but are not limited to:
- Comprehensive online global financial and market information
- User-driven transaction based portfolio management system
- Desktop access to a complete suite of interactive applications
- Graphical user interface
- Web technologies, including Java, XML, Live Video/Audio
Broadcasts
- Streaming Delayed and Real-Time stock quotations
- Interactive historical and live intra-day charting
- Comprehensive search functionality
- International editorial and market commentaries
- Scrolling personalized stock tickers
- Active Desktop components
QuoteMedia's web content software engines and proprietary web
applications are readily customized as a branded information rich gateway for
financial information, analytic applications and e- commerce. QuoteMedia makes
the above solutions available internationally to large web portals and other
select companies on a private branded basis. QuoteMedia expects to profit from
this strategy as it derives the page views from these private branded sites,
which in turn should increase our revenue base.
Kool Tools(TM) financial information software applications
QuoteMedia's Kool Tools(TM) software applications are a suite of Java
applets that deliver stock market information. Kool Tools(TM) are differentiated
by visual layout, functionality, and content type. Typical content consists of
stock and market index quotes, news headlines, and historical charts. Kool
Tools(TM) functionality allows a user to enter a stock or market symbol and link
to detailed information provided by QuoteMedia's QuoteBrowser(TM) financial web
application.
These tools are aimed primarily at webmasters who add them to their
site in order to enhance the "stickiness" of the site. Individual users can add
the tools directly to their desktops.
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Several versions of Kool Tools(TM) products are currently under development and,
while no assurances can be provided, it is expected that these products will be
ready for launch by the third quarter of 2000.
QuoteMedia expects to profit from this product line as the Company
hopes to license Kool Tools(TM) to thousands of sites which all link back to a
central QuoteMedia source. The expected traffic is hoped to dramatically
increase the number of QuoteMedia page views and thus increase our revenue base.
Corporate Tools(TM) financial information software applications
Corporate Tools(TM) are web applications which will be targeted at
corporate Intranets or corporations such as those in the mutual funds,
insurance, or financial planning industries who are expected to license
QuoteMedia's "Portfolio Manager" or "Stock Watch" applications in order to
provide a premium service for their VIP customers or employees. Corporate
Tools(TM) revenues are expected to be derived from a combination of license fees
and user fees. It is hoped that this product line will be launched in the fourth
quarter of 2000.
Target Markets
Potential markets identified by QuoteMedia for our products include:
1. Large established web portals
2. Brokerage firms, banks and other financial institutions
3. Corporate Intranets via Corporate Tools(TM)
4. Wireless (WAP) Portals
5. Any smaller websites, which can benefit by providing
financial content via QuoteMedia's Kool Tools(TM)
As of the date of this report, we have negotiated a number of contracts
with major providers of financial content, including but not limited to
StockPoint Inc., which provides quotes, charts, company background data and
general information; Thomas Information Services Inc., which provides research
reports, analysis and educational data; CNBC/Dow Jones, which provides video
feeds; IPO.com Inc., which provides IPO information; Market Guide Inc., which
provides company performance reports, financial analysis and a " What's Hot,
What's Not" report; and Prophet Financial Systems Inc., which provides stock
charting.
The contracts with the aforementioned companies have a term of between
one and three years and are based upon a worldwide license fee and/or cost per
thousand page view format. We have commitments with respect to these contracts
totaling $673,953, $673,953 and $561,627 in years 2000, 2001 and 2002,
respectively. While no assurance can be provided, we expect that similar
additional
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agreements with key content providers will be reached in the future as the reach
of the Company's information source is expanded.
Revenue Model
The Company's multi faceted revenue sources are evolving over time.
QuoteMedia's revenue sources are varied but are expected to center on three main
categories as described below.
Licensing Revenue. The Company expects to earns monthly revenue through
licensing fees for Kool Tools(TM) information software applications such as
tickers, quote boxes and other products used by smaller websites worldwide. We
also expect to derive fees from licensing our turnkey private branded financial
content software engines to large web portals or through our Corporate
Tools(TM), targeted at Corporate Intranets or VIP customers.
Sponsorship/Advertising Revenue. We currently earn advertising revenue
from our North American corporate site under the terms of our advertising
agreement with DoubleClick, a leading provider of comprehensive global Internet
advertising solutions for marketers and web publishers.
QuoteMedia's advertising revenue is expected to include sponsorship or
cyber billboards, buttons, key words and hot corners on our own website, on
other private branded websites and in the future on our Kool Tools(TM) products.
By aggregating page views using other websites traffic in addition to our own,
management believes that the Company will be able to build a revenue base faster
than attempting a pure branded approached.
Transaction Revenue. QuoteMedia, in the future, will provide our
partners with online trading technologies that are engineered to interface with
existing ECN's such as Island or Instinet. Through their partners' established
clearing firm relationships, QuoteMedia will accommodate buy/sell transactions
for a percentage fee per transaction.
In addition to the aforesaid three prospective revenue streams,
management also expects to derive transaction revenue from online sale of
related goods and services. The Company will offer financial books, magazine and
newsletter subscriptions, investment software, investment tools and other
relevant goods and services and it will be compensated on a transaction fee
basis.
Marketing
QuoteMedia's products will be marketed through a combination of direct
sales and online wholesale aggregation strategies. The Company is currently
building a sales team consisting of account managers and executive salespersons
to market and distribute our products throughout North America. QuoteMedia's
multi-faceted direct
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sales team will be responsible for the sale of private label contracts, content
and related products and tools to financial institutions, or other financial
sites.
The Company's marketing communications strategy will encompass
extensive promotions on and off line, directed at cyber investors, institutional
clients, corporate advertisers and public company audiences. Promotional
campaigns may be comprised of digital or online marketing, direct marketing,
print media advertising and public relations. To accomplish sales goals, the
Company has engaged an Internet advertising network/agency (DoubleClick) to
promote the sale of advertising space on the website.
Management acknowledges that simply having a website does not
automatically guarantee reaching millions of customers. The Company expects to
expand our online presence by placing our name, Internet address, identity and
message in front of as many end users as possible in a manner that is respectful
of Internet culture. QuoteMedia may use one or more of the following listed
online tools to accomplish these goals:
(i) Usenet Newsgroups - A newsgroup is a place on the Internet where
groups of people post and read messages on a particular topic. QuoteMedia will
participate in industry related newsgroups to gain visibility and develop
relationships with our target audience. Newsgroups offer a great deal of
marketing leverage because their potential audience includes participants who
are interested in related topics.
(ii) Mailing Lists - Mailing lists are not direct mail lists but,
rather, they are similar to e-mail newsletters or on-going dialogues dedicated
to special interests. Like newsgroups where messages are posted, e-mail messages
are sent to specific mailing lists. QuoteMedia will participate in special
interest mailing lists to gain visibility among a targeted audience and generate
site traffic.
(iii) Internet Advertising - Advertising online is expected to help
create visibility in cyberspace. The Company will develop, purchase and place
banner ads with links to its site on industry- related and high volume search
engines. These ads are expected to promote its online presence and help direct
traffic to the site. QuoteMedia will employ online ad networks and brokers such
as Web Connect to guide purchase of ad space on appropriate sites. QuoteMedia
will also actively post notices on What's New sites and newsgroups that cover
new Net features and websites. The Company anticipates submitting its site to
all What's Cool rating services and contests in order to position as a "best of
breed" site.
(iv) Search Engines, Directories, Regional Indexes, and Business
Indices - The Company intends to register and list its web addresses with search
engines and directories such as Yahoo, Lycos,
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Web Crawler and Infoseek. A professional service company such as
www.submitit.com, www.netcreations.com, or www.mgroup.com may be employed to
register the appropriate URLs with the most significant search engines. When
registering, the Company will include keyword sensitive content tags and titles
to ensure that it results in the top 20 or better on most search returns.
Professional services will also be employed to list its URL with numerous e-mail
directories (similar to the White pages), business and regional indices and
promotional sites.
(v) Mutual Links - For every search engine there are at least 100
special interest websites dedicated to a specific market. Management believes
that creating mutual links can be more powerful than listing with search engines
and directories because mutual links allow us to target a very specific market.
This tactic is considerably more successful than banner ads, as the link is
perceived by the user to be "information" rather than advertising. QuoteMedia
will attempt to select industry-related and trade association websites (NIRI,
CIRI, and American Association for Individual Investors) and negotiate
reciprocal links to and from their web pages.
(vi) Public Relations - QuoteMedia has engaged the services of the
public relations company Investor Relations Group, Inc. (IRG) to devise and
implement an aggressive public relations campaign. IRG will act as the primary
spokesperson for the Company and will be expected to create and distribute press
kits to appropriate audiences to acquire substantial exposure for QuoteMedia on
local, national and radio talk shows an TV magazines shows both in Canada and
the US. IRG will also be responsible for organizing press tours and interviews
to further enhance editorial coverage for us in key business and technology
magazines and newspapers.
Results of Operations
We began generating revenues from operations during the six month
period ended June 30, 2000. As a result, this report does not contain any
comparative information, as there is nothing with which to compare our current
results of operations.
Revenues for this period totalled $14,213, which consisted of
advertising fees generated from sponsorship advertising sold on the Company's
own website. Sponsorship advertisements are sold under the terms of our
advertising agreement with Doubleclick, a leading provider of comprehensive
global Internet advertising solutions for marketers and web publishers.
While the Company did earn revenue during the period, it was still in a
development stage. Management expects revenues to significantly increase in the
fourth quarter of 2000, when it begins to aggressively market its newly
developed products.
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Operating costs, including selling, general and administrative costs
totalled $1,254,087. Included in these costs were Website content expenses of
$281,912. Website content expenses consist primarily of fees paid to the
Company's strategic partners for providing financial content such as stock
quotes, charts, company background data and general information. Also included
were professional fees of $75,402 and research and development expenses of
$210,772 for the six-month period ended June 30, 2000. Research and development
expenses consist primarily of costs associated with the design, programming and
testing of the Company's software applications.
As a result, we incurred a loss during the six month period ended June
30, 2000, of $(1,220,389), or approximately $(.07) per share.
Liquidity and Capital Resources
The Company's cash and cash equivalents totaled $727,379 at June 30,
2000, as compared to $672,038 at December 31, 1999, an increase of $55,341. Net
cash of $1,069,876 was used in operations for the six-month period ended June
30, 2000, primarily resulting from the Company's net loss for the period. Net
cash used by investing activities for the six-month period ended June 30, 2000
was $170,033, resulting primarily from fixed asset purchases and advances made
to related parties. Net cash provided by financing activities for the six-month
period ended June 30, 2000 was $1,295,250 resulting from a private offering of
common stock which closed February 29, 2000, wherein we sold an aggregate of
1,726,999 shares of common stock at an offering price of $0.75 per share and
derived net proceeds of $1,295,250 therefrom.
The Company intends to raise additional capital through private equity
financing to satisfy working capital and capital expenditure requirements until
the Company achieves positive cash flows. As of the date of this report,
management has not made any decisions on the structure of any new financing, nor
does the Company have any commitment from any third party to raise additional
cash, either debt or equity. Failure of the Company to raise additional cash in
the foreseeable future will have a negative impact on management's ability to
successfully implement the Company's business plan described herein.
TRENDS
In July 2000, QuoteMedia launched its proprietary Kool Tools(TM) web
applications and began marketing this unique suite of products to webmasters
worldwide. Quotemedia also has licensed its Kool Tools(TM) suite of products to
Bravenet.com. Kool Tools is expected to enable Bravenet to offer customized
online financial content and news to its approximately one million worldwide
website members. QuoteMedia expects to derive revenue from this contract through
a
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combination of license fees and advertising revenue from page view banner ads.
As of the date of this report, the Company has established a
contractual relationship with over 1,000 unrelated websites for our Kool
Toolstm. QuoteMedia intends to develop more licensing of our software in the
future and we will pursue a dual sales strategy of targeting well-established
web portals that can demonstrate significant registered user bases as well as
smaller websites, worldwide. We also intend to identify, purchase and develop
additional proprietary technologies and information tools in the sports, music
and movies area to enhance our software applications Kool Tools product line and
help build a strong market differentiation. There can be no assurances that our
efforts in this regard will be successful.
QuoteMedia's management believes it can begin generating profits from
operations by the second quarter of 2001 based on the early results of the Kool
Tool(TM) launch. However, no assurances can be provided that this will occur
within the time parameter stated herein, or at all.
Inflation
Although management expects that the operations of the Company will be
influenced by general economic conditions once the Company commences generating
revenues, the Company does not believe that inflation had a material effect on
the results of operations during the six-month period ended June 30, 2000.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - NONE
ITEM 2. CHANGES IN SECURITIES - NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -
NONE
ITEM 5. OTHER INFORMATION - NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits
EX-27 Financial Data Schedule
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(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
six month period ended June 30, 2000.
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<TABLE>
QUOTEMEDIA.COM, INC.
(A Development Stage Company)
BALANCE SHEET
<CAPTION>
(Unaudited) (Audited)
June 30, December 31,
2000 1999
---------- ----------
<S> <C> <C>
ASSETS
CURRENT
Cash and cash equivalents $ 727,379 $ 672,038
Marketable securities 74,860 102,500
Accounts receivable 4,602 23,931
Prepaid expenses 274,000 0
Deposits 48,921 0
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1,129,762 798,469
Fixed assets 49,676 14,206
Investments and advances 161,638 0
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$1,341,076 $ 812,675
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable 203,030 130,240
Due to related parties 0 13,200
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203,030 143,440
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STOCKHOLDERS' EQUITY
Capital stock issued 19,241 17,228
Additional paid-in capital 3,057,723 1,370,536
Deficit (1,938,918) (718,529)
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1,138,046 669,235
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$1,341,076 $ 812,675
========== ==========
See accompanying notes
</TABLE>
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<TABLE>
QUOTEMEDIA.COM, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
2000 2000
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<S> <C> <C>
Operating revenue
Advertising $ 7,422 $ 14,213
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7,422 $ 14,213
Operating expenses
Website content 171,319 281,912
Professional fees 56,946 75,402
Research and development 136,927 210,772
Business development 132,547 261,903
Office 238,366 424,098
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736,104 1,254,087
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Operating loss (728,682) (1,239,874)
Interest and other income 16,789 19,485
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Loss for the period (711,893) (1,220,389)
=========== ==========
Basic loss per share $ (0.04) $ (0.07)
=========== ==========
Diluted loss per share $ (0.03) $ (0.06)
=========== ==========
See accompanying notes
</TABLE>
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QUOTEMEDIA.COM, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
Six Months
Ended
June 30,
2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $(1,220,389)
Adjustments to reconcile loss to net cash
used in operating activities
Depreciation 5,620
Gain on sale of marketable securities (5,055)
Issuance of capital stock for services 393,950
Changes in non-cash working capital items
Accounts receivable 19,329
Prepaid expenses (274,000)
Deposits (48,921)
Accounts payable 72,790
Due to related parties (13,200)
-----------
(1,069,876)
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Cash flow from investing activities
Proceeds on sale of marketable securities 26,785
Write-down of marketable securities 5,910
Fixed assets (41,090)
Due from related parties (161,638)
-----------
(170,033)
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Cash flow from financing activities
Issuance of capital stock for cash 1,295,250
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1,295,250
-----------
Net increase in cash 55,341
Cash, Beginning 672,038
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Cash, Ending $ 727,379
===========
Cash and cash equivalents include cash and money market investments
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QUOTEMEDIA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
Six-Month Period Ended June 30, 2000
1. Unaudited Interim Financial Statements
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10 - QSB and 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.
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 it's 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 to be 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.
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QUOTEMEDIA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
Six-Month Period Ended June 30, 2000
Earnings per share
Earnings per share have been computed based on the weighted average
number of common shares outstanding. For the six-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.
3. History and Business Activity
The Company was incorporated in the state of Nevada on June 29, 1992,
under the name "Genetic Futures, Inc." Since its inception, the
Company has undertaken to implement numerous business plans and, in
relation to such various businesses, has been known under many
different names, including (in order) Physician's Cybernetic Systems,
Inc., Videocom International, Inc., Canadian Tasty Fries, Inc.
International Tasty Fries, Inc., Filtered Souls Entertainment, Inc.,
Skyline Entertainment, Inc., and, finally its current name,
QuoteMedia.com, Inc. The name was changed to QuoteMedia.com, Inc.
concurrent with the business combination described in Note 2. Prior to
such business combinations, Old QMI had not engaged in any operations
or generated any revenue.
4. Comparative Figures
There are no comparative figures as Old QMI, the surviving entity for
accounting purposes, commenced operations on June 28, 1999.
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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.
(Registrant)
Dated: August 11, 2000
By: R. Keith Guelpa
------------------------------
R. Keith Guelpa, President
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QUOTEMEDIA.COM, INC.
EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTER ENDED JUNE 30, 2000
EXHIBITS Page No.
EX-27 Financial Data Schedule.....................................18
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