##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10  QSB



|x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------



For the quarterly period ended March 31, 2005



Commission File Number: 0-28599



QUOTEMEDIA, INC.

(Exact name of
small business issuer as specified in its charter)



Nevada

(State or other jurisdiction of incorporation or organization)



91-2008633

(IRS Employer Identification Number)



17100 East Shea Boulevard, Suite 230, Fountain Hills, AZ

(Address of
principal executive offices)



85268

(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 ̈.



On May 10, 2005, the Registrant had 58,664,204 shares of common stock outstanding.



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##### Table of Contents

QUOTEMEDIA, INC.

INDEX TO QUARTERLY REPORT

ON FORM 10-QSB



|                              |  |                                                             |  |     
|----------------------------- |  | ----------------------------------------------------------- |  | ----
|                              |  |                                                             |  | Page
|Part I. Financial Information |  |                                                            
|                              |  |                                                            
|Item 1.                       |  | Consolidated Financial Statements                           |  |     
|                              |  |                                                            
|                              |  | Consolidated Balance Sheet                                  |  | 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                        |  | 11  
|                              |  |                                                            
|Item 3.                       |  | Controls and Procedures                                     |  | 14  
|                              | 
|Part II. Other Information    |  |                                                            
|                              |  |                                                            
|Item 1.                       |  | Legal Proceedings                                           |  | 15  
|                              |  |                                                            
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds |  | 15  
|                              |  |                                                            
|Item 3.                       |  | Defaults Upon Senior Securities                             |  | 15  
|                              |  |                                                            
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders         |  | 15  
|                              |  |                                                            
|Item 5.                       |  | Other Information                                           |  | 15  
|                              |  |                                                            
|Item 6.                       |  | Exhibits                                                    |  | 15  
|                              | 
|Signatures                    |  | 16                                                         



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##### Table of Contents

QUOTEMEDIA, INC.

CONSOLIDATED BALANCE SHEET

(Unaudited)



|                                                                                                        |  |               |            |  
|------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | -
|                                                                                                        |  | MARCH 31,2005 |           
|ASSETS                                                                                                  |  |               |            |  
|Current assets:                                                                                         |  |               |            |  
|Cash                                                                                                    |  | $             | 134,029    |  
|Accounts receivable, net                                                                                |  |               | 111,972    |  
|Prepaid Expenses                                                                                        |  |               | 8,633      |  
|Deposits                                                                                                |  |               | 10,246     |  
|                                                                                                        |  |               |            |  
|Total current assets                                                                                    |  |               | 264,880    |  
|Equipment, net                                                                                          |  |               | 47,030     |  
|Intangible assets                                                                                       |  |               | 37,030     |  
|                                                                                                        |  |               |            |  
|Total assets                                                                                            |  | $             | 348,940    |  
|                                                                                                        |  |               |            |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                   |  |               |            |  
|Current liabilities:                                                                                    |  |               |            |  
|Accounts payable and accrued liabilities                                                                |  | $             | 180,276    |  
|Deferred revenue                                                                                        |  |               | 115,030    |  
|Current portion of amounts due to related parties                                                       |  |               | 114,674    |  
|                                                                                                        |  |               |            |  
|Total current liabilities                                                                               |  |               | 409,980    |  
|                                                                                                        |  |               |            |  
|Other long-term liabilities                                                                             |  |               | 16,365     |  
|Long-term portion of amounts due to related parties                                                     |  |               | 558,817    |  
|Stockholders deficit:                                                                                  |  |               |            |  
|Preferred stock, non designated, 10,000,000 shares authorized, none issued.                             |  |               |           |  
|Common stock, $0.001 par value, 100,000,000 shares authorized, 58,664,204 shares issued and outstanding |  |               | 58,665     |  
|Additional paid-in capital                                                                              |  |               | 6,429,367  |  
|Accumulated deficit                                                                                     |  |               | (7,124,254 | )
|                                                                                                        |  |               |            |  
|Total stockholders deficit                                                                             |  |               | (636,222   | )
|Total liabilities and stockholders deficit                                                             |  | $             | 348,940    |  
|                                                                                                        |  |               |            |  



See accompanying notes



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QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                    |  |                                   |            |   |                                   |   |            |  
|----------------------------------- |  | --------------------------------- | ---------- | - | --------------------------------- | - | ---------- | -
|                                    |  | Three months ended MARCH 31, 2005 |            |   | Three months ended MARCH 31, 2004 |  
|OPERATING REVENUE                   |  |                                   |            |   |                                   |   |            |  
|Licensing fees                      |  | $                                 | 443,423    |   |                                   | $ | 171,028    |  
|                                    |  |                                   |            |   |                                   |   |            |  
|OPERATING EXPENSES                  |  |                                   |            |   |                                   |   |            |  
|Sales and marketing                 |  |                                   | 97,204     |   |                                   |   | 4,479      |  
|General and administrative          |  |                                   | 198,680    |   |                                   |   | 108,228    |  
|Professional fees                   |  |                                   | 9,402      |   |                                   |   | 10,562     |  
|Research and development            |  |                                   | 87,981     |   |                                   |   | 48,898     |  
|Financial data                      |  |                                   | 111,772    |   |                                   |   | 90,135     |  
|                                    |  |                                   |            |   |                                   |   |            |  
|                                    |  |                                   | 505,039    |   |                                   |   | 262,302    |  
|                                    |  |                                   |            |   |                                   |   |            |  
|OPERATING LOSS                      |  |                                   | (61,616    | ) |                                   |   | (91,274    | )
|OTHER INCOME AND EXPENSES           |  |                                   |            |   |                                   |   |            |  
|Foreign exchange adjustment         |  |                                   | (521       | ) |                                   |   | (1,110     | )
|Interest expense                    |  |                                   | (7,663     | ) |                                   |   | (3,395     | )
|                                    |  |                                   |            |   |                                   |   |            |  
|                                    |  |                                   | (8,184     | ) |                                   |   | (4,505     | )
|                                    |  |                                   |            |   |                                   |   |            |  
|NET LOSS                            |  | $                                 | (69,800    | ) |                                   | $ | (95,779    | )
|                                    |  |                                   |            |   |                                   |   |            |  
|LOSS PER SHARE                      |  |                                   |            |   |                                   |   |            |  
|Basic and diluted loss per share    |  | $                                 |           |   |                                   | $ |           |  
|                                    |  |                                   |            |   |                                   |   |            |  
|WEIGHTED AVERAGE SHARES OUTSTANDING |  |                                   |            |   |                                   |   |            |  
|Basic and diluted                   |  |                                   | 58,664,204 |   |                                   |   | 58,664,204 |  
|                                    |  |                                   |            |   |                                   |   |            |  



See accompanying notes



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QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                        |  |                                  |         |   |                                  |   |          |  
|----------------------------------------------------------------------- |  | -------------------------------- | ------- | - | -------------------------------- | - | -------- | -
|                                                                        |  | Three months endedMARCH 31, 2005 |         |   | Three months endedMARCH 31, 2004 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                   |  |                                  |         |   |                                  |   |          |  
|Net loss                                                                |  | $                                | (69,800 | ) |                                  | $ | (95,779  | )
|Adjustments to reconcile loss to net cash used in operating activities: |  |                                  |         |   |                                  |   |          |  
|Depreciation                                                            |  |                                  | 2,080   |   |                                  |   | 3,934    |  
|Bad debt expense                                                        |  |                                  | 6,929   |   |                                  |   | 2,200    |  
|Changes in assets and liabilities:                                      |  |                                  |         |   |                                  |   |          |  
|Accounts receivable                                                     |  |                                  | (29,686 | ) |                                  |   | (19,944  | )
|Prepaid expenses                                                        |  |                                  | (43     | ) |                                  |   |         |  
|Deposits                                                                |  |                                  | (82     | ) |                                  |   | 2,931    |  
|Accounts payable, accrued and other liabilities                         |  |                                  | 128,554 |   |                                  |   | 31,995   |  
|Deferred revenue                                                        |  |                                  | 13,689  |   |                                  |   | (9,434   | )
|                                                                        |  |                                  |         |   |                                  |   |          |  
|Net cash provided by (used in) operating activities                     |  |                                  | 51,641  |   |                                  |   | (84,097  | )
|                                                                        |  |                                  |         |   |                                  |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                   |  |                                  |         |   |                                  |   |          |  
|Purchase of equipment and intangible assets                             |  |                                  | (7,327  | ) |                                  |   | (8,235   | )
|                                                                        |  |                                  |         |   |                                  |   |          |  
|Net cash used in investing activities                                   |  |                                  | (7,327  | ) |                                  |   | (8,235   | )
|                                                                        |  |                                  |         |   |                                  |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                   |  |                                  |         |   |                                  |   |          |  
|Repayment of amounts due to related parties                             |  |                                  | (41,550 | ) |                                  |   | (9,200   | )
|                                                                        |  |                                  |         |   |                                  |   |          |  
|Net cash used in financing activities                                   |  |                                  | (41,550 | ) |                                  |   | (9,200   | )
|                                                                        |  |                                  |         |   |                                  |   |          |  
|Net increase (decrease) in cash                                         |  |                                  | 2,764   |   |                                  |   | (101,532 | )
|Cash, beginning of period                                               |  |                                  | 131,265 |   |                                  |   | 143,034  |  
|                                                                        |  |                                  |         |   |                                  |   |          |  
|Cash, end of period                                                     |  | $                                | 134,029 |   |                                  | $ | 41,502   |  
|                                                                        |  |                                  |         |   |                                  |   |          |  



See supplementary information (note 5)



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



|1. | BASIS OF PRESENTATION
|-- | ---------------------



The accompanying unaudited consolidated financial statements have been prepared in accordance with the generally accepted accounting principles for
interim financial statements 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 financial statements and the notes thereto for the fiscal year ended December 31, 2004 contained in our Form 10-KSB filed with the Securities and Exchange Commission dated March 30, 2005.



|2. | SIGNIFICANT ACCOUNTING POLICIES
|-- | -------------------------------



| | a) | 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.



| | b) | Equipment
| | -- | ---------



|                                      |  |   |         |  
|------------------------------------- |  | - | ------- | -
|Cost of computer and office equipment |  | $ | 86,007  |  
|Accumulated Depreciation              |  |   | (38,977 | )
|                                      |  |   |         |  
|Net                                   |  | $ | 47,030  |  
|                                      |  |   |         |  



Equipment is recorded
at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over 5 years. Depreciation expense totaled $2,080 and $3,934 for the three months ended March 31, 2005 and 2004 respectively.



In 2005, we changed from the declining balance to the straight-line method
of depreciation for equipment. The change was made because management believes that the straight-line method more closely approximates the equipments useful lives than does the declining balance method. The effect of the change to prior
periods was included in depreciation expense in the current period as the effect was insignificant and had no effect on Earnings per Share.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



| | c) | Stock based compensation
| | -- | ------------------------



We have elected to account for employee stock options using the intrinsic value method described in Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to Employees, and related interpretations as allowed under FAS No. 123. The following pro forma disclosures are provided as required under SFAS No. 148, Accounting for Stock-Based Compensation
 Transition and Disclosure.



As we grant all stock
options with an exercise price equal to the market value of the underlying common shares on the date of the grant, no compensation expense has been recognized under APB 25. FAS No. 123 uses a fair value method of calculating the cost of stock option
grants. Had compensation cost for our employee stock option plan been determined by this method, our net loss and loss per share would have been as follows:



|                                                                                                          |  |      |         |   |      |   |          |  
|--------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | -------- | -
|                                                                                                          |  | 2005 |         |   | 2004 |  
|Three months ended March 31,                                                                              |  |      |         |   |      |   |          |  
|Net income:                                                                                               |  |      |         |   |      |   |          |  
|As reported                                                                                               |  | $    | (69,800 | ) |      | $ | (95,779  | )
|Deduct: Total stock-based employee compensation expense determined under fair value method for all awards |  |      | (28,769 | ) |      |   | (44,143  | )
|                                                                                                          |  |      |         |   |      |   |          |  
|Pro forma                                                                                                 |  |      | (98,569 | ) |      | $ | (139,922 | )
|                                                                                                          |  |      |         |   |      |   |          |  
|Basic and diluted loss per share:                                                                         |  |      |         |   |      |   |          |  
|As reported                                                                                               |  | $    |        |   |      | $ |         |  
|Pro forma                                                                                                 |  | $    |        |   |      | $ |         |  



We have estimated the
fair value of each option on the date of the grant using the Black-Scholes option-pricing model with the following assumptions:



|                                               |  |      |            |   |      |   |        |  
|---------------------------------------------- |  | ---- | ---------- | - | ---- | - | ------ | -
|                                               |  | 2005 |            |   | 2004 |  
|Three months ended March 31,                   |  |      |            |   |      |   |        |  
|Expected dividend yield                        |  |      |           |   |      |   |       |  
|Expected stock price volatility                |  |      | 100        | % |      |   | 132    | %
|Risk-free interest rate                        |  |      | 4          | % |      |   | 4      | %
|Expected life of options                       |  |      | 6.25 years |   |      |   | 1 year |  
|Weighted average fair value of options granted |  | $    | 0.32       |   |      | $ | 0.18   |  



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



| | d) | Recent accounting pronouncements
| | -- | --------------------------------



In December 2004, the Financial Accounting Standards Board (FASB) issued revised Statement of Financial Accounting Standards No. 123 entitled
Share-Based Payment (FAS No. 123R). This revised statement addresses accounting for stock-based compensation and results in the fair value of all stock-based compensation arrangements, including options, being recognized as
an expense in a companys financial statements. The revised Statement eliminates the ability to account for stock-based compensation transactions using APB Opinion No. 25 with supplemental disclosure in the notes to financial statements as
previously allowed under FAS 123. FAS No. 123R is effective for public entities that file as small business issuers as of the beginning of the first interim or annual reporting period that begins after December 15, 2005. The Company is currently
assessing the impact that FAS 123R will have on its financial statements.



| | e) | Reclassification
| | -- | ----------------



Certain figures in the comparative period have been reclassified to conform to the current periods presentation, with no effect on net loss.



|3. | RELATED PARTY TRANSACTIONS
|-- | --------------------------



In May 2004 we entered into a loan agreement with Bravenet Web Services, Inc. (Bravenet). We borrowed $250,000 from Bravenet with interest at
10% per annum. It is anticipated that the loan will be repaid in 12 equal monthly installments beginning in the first quarter of 2006. The President and Chief Executive Officer of Quotemedia, Ltd., a wholly owned subsidiary, is a control person of
Bravenet. At March 31, 2005, the loan balance due to Bravenet including accrued interest is $273,896.



In the first quarter of 2005 we entered into an agreement with Bravenet to provide sales support. During the three months ended March 31, 2005, $85,671 in
sales expenses payable to Bravenet was accrued. Payment of amounts due to Bravenet for sales services are expected to commence in the second quarter of 2006. Interest is accrued at the prime bank rate minus 1%. At March 31, 2005, the balance due to
Bravenet for sales fees including accrued interest is $86,584.



At March 31, 2004, we owed a total of $256,547 to officers of the Company for amounts advanced to the company and for accrued unpaid salary. No interest is required to be accrued on these amounts. An additional $56,464 of unpaid salary is
owed to an officer of the Company. This amount includes interest accrued at the prime bank rate minus 1%.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMETS

(Unaudited)



|4. | STOCK BASED COMPENSATION
|-- | ------------------------



The following table sets forth certain stock option and warrant information:



|                                        |  |                     |   |  |                                |     
|--------------------------------------- |  | ------------------- | - |  | ------------------------------ | ----
|                                        |  | Options andWarrants |   |  | Weighted-AverageExercise Price
|Outstanding at December 31, 2003        |  | 43,741,812          |   |  | $                              | 0.09
|Granted under company stock option plan |  | 2,625,000           |   |  | $                              | 0.40
|Warrants granted                        |  | 1,584,000           |   |  | $                              | 0.40
|Expired                                 |  | (150,000            | ) |  | $                              | 1.06
|Outstanding at December 31, 2004        |  | 47,800,812          |   |  | $                              | 0.12
|                                        |  |                     |   |  |                                |     
|Granted under company stock option plan |  | 50,000              |   |  | $                              | 0.39
|                                        |  |                     |   |  |                                |     
|Outstanding at March 31, 2005           |  | 47,850,812          |   |  | $                              | 0.12
|                                        |  |                     |   |  |                                |     



|                        |  |                                    |  |                                          |  |                              |      |                                      |            |                               |   |     
|----------------------- |  | ---------------------------------- |  | ---------------------------------------- |  | ---------------------------- | ---- | ------------------------------------ | ---------- | ----------------------------- | - | ----
|                        |  | Options and Warrants Outstanding   |  | Options and WarrantsExercisable         
|Range of Exercise Price |  | NumberOutstanding at March 31,2005 |  | WeightedAverageRemainingContractual Life |  | WeightedAverageExercisePrice |      | Number Exercisable at March 31, 2005 |            | WeightedAverageExercise Price
|$0.05-0.10              |  | 32,086,026                         |  | 2.53                                     |  | $                            | 0.06 |                                      | 32,086,026 |                               | $ | 0.06
|$0.11-0.30              |  | 11,455,786                         |  | 1.50                                     |  | $                            | 0.18 |                                      | 11,455,786 |                               | $ | 0.18
|$0.31-0.50              |  | 4,309,000                          |  | 8.18                                     |  | $                            | 0.40 |                                      | 2,368,375  |                               | $ | 0.40



As at March 31, 2005
all stock options and warrants have been granted with exercise prices equal to or greater than the market value of the underlying common shares on the date of grant therefore no compensation expense has been recognized for grants of stock options
and warrants in the statement of operations.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



|5. | SUPPLEMENTARY CASH FLOW INFORMATION
|-- | -----------------------------------



|                             |  |      |     |      |   |  
|---------------------------- |  | ---- | --- | ---- | - | -
|                             |  | 2005 |     | 2004
|Three months ended March 31, |  |      |     |      |   |  
|Cash paid for Interest       |  | $    | 390 |      | $ | 
|Cash received for Interest   |  |      |    |      |   | 
|Cash paid for taxes          |  |      |    |      |   | 



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|ITEM 2. | Managements Discussion and Analysis
|------- | ------------------------------------



The following discussion should be read in conjunction with our 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. Uncertainties and contingencies that
might cause such differences include, but are not limited to:



| |  |  | lack of market acceptance of our products;
| | - |  | ------------------------------------------



| |  |  | dependence on third parties for data feeds for our products;
| | - |  | ------------------------------------------------------------



| |  |  | our inability to diversify our product offerings;
| | - |  | -------------------------------------------------



| |  |  | failure to respond to evolving industry standards and technological changes;
| | - |  | ----------------------------------------------------------------------------



| |  |  | our inability to meet our future additional capital requirements;
| | - |  | -----------------------------------------------------------------



| |  |  | our inability to retain key technical personnel;
| | - |  | ------------------------------------------------



| |  |  | conditions beyond our control such as war, terrorist attacks and economic recession.
| | - |  | ------------------------------------------------------------------------------------



We disclaim any obligation to update forward-looking statements. All references to we, our,
us, of quotemedia refer to QuoteMedia, Inc., and it predecessors, operating divisions, and subsidiaries.



This report should be read in conjunction with our Form 10-KSB for the fiscal year ended December 31, 2004 filed with the Securities and Exchange
Commission.



Overview



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.



We have three product lines: Quotestream portfolio management and market analysis software; a broad array of Corporate
Financial Data Products; and Packaged Market Data Feeds. Quotestream is an Internet-based streaming online portfolio management system that delivers real-time and delayed market data to both consumer and corporate markets. Quotestream has been
designed for syndication and private branding by brokerage, banking, and web portal companies. Quotestream is available to customers in both a desktop version accessible via personal computer, and a companion wireless version accessible via a wide
variety of wireless handheld devices.



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##### Table of Contents

Our Financial Data Product line consists of a suite of software applications that provide company and
market information to corporate clients via the Internet. These Financial Data Products include stock and market quotes, fundamentals, historical and interactive charts, company news, filings, option chains, insider transactions, corporate
financials, corporate profiles, investor relations provisions, level II, watchlists, and real-time snap quotes.



Our Packaged Market Data Feed products consist of the delivery of XML or CSV delimited data sources for companies requiring simple formatted financial
data for internal use, or use outside our standard product provision. Our Packaged Market Data Feeds consist of quote data, fundamentals, historical information, and options.



We generate recurring revenue from each product line by licensing products to financial institutions and websites. Contracts
to license Quotestream to our corporate clients typically have a term of 2 to 3 years and are automatically renewed unless notice is given within 90 days. We also generate Quotestream revenue through individual end-user licenses on a monthly or
annual subscription fee basis. Financial Data Products and Market Data Feeds are licensed for a monthly, quarterly, annual, or biannual subscription fee. Contracts to license our Financial Data Products and Data Feeds typically have a term of 1 to 2
years and are automatically renewed unless notice is given within 90 days



Results of Operations



Revenue



Licensing revenue for the three month period ended March 31, 2005 was
$443,423 compared to $171,028 for the three month period ended March 31, 2004, representing an increase of 153%. The majority of the revenue growth was from increased sales of our Financial Data Products. We expanded our line of Corporate Financial
Data Products and Market Data Feeds which helped to contribute to the revenue increase from the comparable period. The number of Quotestream subscribers and the average subscription revenue per user were higher than the comparable period, also
contributing to the increase in revenue.



Operating Expenses



Financial Data Fees



Financial data fees consist primarily of fees paid to our strategic partners
for providing financial content such as news, stock quotes, charts, company background data, and general information. Financial data fees for the three month period ended March 31, 2005 were $111,772 compared with $90,135 for the three month period
ending March 31, 2004. The increase is primarily due to the cost of the additional financial content provided with our products compared to the prior period. The increase is also due to increased variable content usage charges resulting from the
growth in the number of corporate clients from the comparable period.



12



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##### Table of Contents

Professional fees



Professional fees consist primarily of legal and accounting fees. Professional fees for the three month period ended March
31, 2005 were $9,402 compared with $10,562 for the three month period ending March 31, 2004.



Research and Development



Research and development expenses consist primarily of costs associated with the design, programming, and testing of our software applications. Research and development expenses for the three month period ended March 31, 2005 were $87,981
compared with $48,898 for the three month period ended March 31, 2004. The increase is due to the cost of hiring of additional development staff.



Sales and Marketing



Sales and marketing consists primarily of marketing, investor relations, travel, and printing expenses. Sales and marketing expenses for the three month
period ended March 31, 2005 were $97,204 compared to $4,479 for the three month period ended March 31, 2004. The increase is due to the costs associated with initiating the service of a contracted sales agency in January 2005.



General and Administrative



General and administrative expenses consist primarily of salaries, rent,
computer equipment leases, computer maintenance, and storage expenses. Office expenses for the three month period ended March 31, 2005 were $198,680 compared to $108,228 for the three month period ended March 31, 2004. The increase is primarily due
to increased salary and director fee expenses, as well as increased insurance expenses.



Loss for the period



As a result of the foregoing, we incurred
a loss for the three months ended March 31, 2005 of $69,800 or approximately $(0.00) per share compared to a loss of $95,779 and $(0.00) per share for the three months ended March 31, 2004.



Liquidity and Capital Resources



Our cash totaled $134,029 at March 31, 2005, as compared with $131,265 at December 31, 2004,
an increase of $2,764. Net cash of $51,641 was provided by operations for the three months ended March 31, 2005, primarily resulting from an increase in accounts payable and other liabilities, offset by our net loss for the period and an increase in
accounts receivable. Net cash used in investing activities for the three months ended March 31, 2005 was $7,327 resulting from the purchase of equipment. Net cash used financing activities for the three months ended March 31, 2005 was $41,550
resulting from the repayment of amounts due to related parties.



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We are currently generating positive cash flow from operations. We believe this will continue for the next 12 months, as
our revenue is recurring in nature based on client contracts which have one to three year terms.



Our current liabilities include $114,674 due to related parties. All repayments of amounts due to related parties must be approved by our Board of Directors. Repayments are subject to our company having sufficient
cash on hand and are intended not to impair continuing business operations. Deferred revenue of $115,030 is also included in our current liabilities. The costs incurred to realize the deferred revenue in the next 12 months are minimal.



Based on the factors discussed above, we believe that our cash on hand and cash generated
from operations will be sufficient to fund our current 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.



Our long-term liquidity requirements will
depend on many factors, including the rate at which we expand our business, and whether we do so internally or through acquisitions. To the extent that the funds generated from operations are insufficient to fund our activities in the long term, we
may be required to raise additional funds through public or private financing. No assurance can be given that additional financing will be available or that, if it is available, it will be on terms acceptable to us.



|ITEM 3. | Disclosure Controls and Procedures
|------- | ----------------------------------



We have evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of
March 31, 2005. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have each concluded that our disclosure controls and procedures are effective to ensure that we record, process, summarize, and report information
required to be disclosed by us in our quarterly reports filed under the Securities Exchange Act within the time periods specified by the Securities and Exchange Commissions rules and forms. During the quarterly period covered by this report,
there have not been any changes in our internal controls over financial reporting that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS NONE
|------- | -----------------------



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 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
|------- | --------



|              |  |                                                                                                                                                           
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                                                    
|              | 
|31.1          |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.
|              | 
|31.2          |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.
|              | 
|32.1          |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.        
|              | 
|32.2          |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.        



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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, INC.Dated: May 10, 2005By:

/s/ R. Keith GuelpaR. Keith Guelpa,President and Chief Executive Officer(Principal Executive Officer)By:

/s/ Keith J. RandallKeith J. Randall,Chief Financial Officer(Principal Accounting Officer)




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