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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark one)

|þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2010

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period
 to

Commission File Number:    0-28599





QUOTEMEDIA,
INC.

(Exact name of registrant as specified in its charter)







|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|Nevada                                                        |  | 91-2008633                         
|(State or Other Jurisdiction ofIncorporation or Organization) |  | (IRS EmployerIdentification Number)

17100 East Shea Boulevard, Suite 230, Fountain Hills, AZ 85268

(Address
of Principal Executive Offices)

(480) 905-7311

(Registrants Telephone Number, Including Area Code)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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  þ    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  | þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ̈    No  þ

The
Registrant has 89,371,320 shares of common stock outstanding as at November 8, 2010.









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QUOTEMEDIA, INC.

FORM 10-Q for the Quarter Ended September 30, 2010

INDEX



|           |  |                                                                                                       |    |      |    | 
|---------- |  | ----------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|           |  |                                                                                                       |    | Page |   
|Part I.    |  | Financial Information                                                                                 |    |      |    | 
|Item 1.    |  | Financial Statements (unaudited):                                                                     |    |      | 3  | 
|           |  | Consolidated Balance Sheets at September 30, 2010 and December 31, 2009                               |    |      | 3  | 
|           |  | Consolidated Statements of Operations for the three and nine months ended September 30, 2010 and
2009 |    |      | 4  | 
|           |  | Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and
2009           |    |      | 5  | 
|           |  | Notes to Consolidated Financial Statements                                                            |    |      | 6  | 
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                 |    |      | 12 | 
|Item 4T.   |  | Controls and Procedures                                                                               |    |      | 19 | 
|Part II.   |  | Other Information                                                                                     |    |      |    | 
|Item 6.    |  | Exhibits                                                                                              |    |      | 21 | 
|Signatures |  |                                                                                                       | 21 |     



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PART IFINANCIAL INFORMATION



|ITEM 1. | Financial Statements (unaudited)
|------- | --------------------------------

QUOTEMEDIA, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)



|                                                                                                                       |  |                    |             |   |                   |   |             |  
|---------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | - | ----------------- | - | ----------- | -
|                                                                                                                       |  | September 30, 2010 |             |   | December 31, 2009 |  
|Assets                                                                                                                 |  |                    |             |   |                   |   |             |  
|Current assets:                                                                                                        |  |                    |             |   |                   |   |             |  
|Cash and equivalents                                                                                                   |  | $                  | 253,862     |   |                   | $ | 477,222     |  
|Accounts receivable, net                                                                                               |  |                    | 419,848     |   |                   |   | 466,663     |  
|Forward contract margin deposit                                                                                        |  |                    | 15,000      |   |                   |   | 15,000      |  
|Prepaid expenses                                                                                                       |  |                    | 212,998     |   |                   |   | 254,521     |  
|Other current assets                                                                                                   |  |                    | 121,951     |   |                   |   | 148,022     |  
|                                                                                                                       |  |                    |             |   |                   |   |             |  
|Total current assets                                                                                                   |  |                    | 1,023,659   |   |                   |   | 1,361,428   |  
|Deposits                                                                                                               |  |                    | 23,512      |   |                   |   | 26,301      |  
|Property and equipment, net                                                                                            |  |                    | 1,165,922   |   |                   |   | 1,111,035   |  
|Intangible assets                                                                                                      |  |                    | 215,468     |   |                   |   | 185,674     |  
|                                                                                                                       |  |                    |             |   |                   |   |             |  
|Total assets                                                                                                           |  | $                  | 2,428,561   |   |                   | $ | 2,684,438   |  
|                                                                                                                       |  |                    |             |   |                   |   |             |  
|                                                                                                                       |  |                   
|Liabilities and Stockholders Deficit                                                                                  |  |                    |             |   |                   |   |             |  
|Current liabilities:                                                                                                   |  |                    |             |   |                   |   |             |  
|Accounts payable and accrued liabilities                                                                               |  | $                  | 1,291,966   |   |                   | $ | 963,749     |  
|Deferred revenue                                                                                                       |  |                    | 438,394     |   |                   |   | 428,577     |  
|Current portion of amounts due to related parties                                                                      |  |                    |            |   |                   |   | 984,348     |  
|                                                                                                                       |  |                    |             |   |                   |   |             |  
|Total current liabilities                                                                                              |  |                    | 1,730,360   |   |                   |   | 2,376,674   |  
|                                                                                                                       |  |                    |             |   |                   |   |             |  
|                                                                                                                       |  |                   
|Long-term portion of amounts due to related parties                                                                    |  |                    | 4,286,050   |   |                   |   | 2,630,867   |  
|Stockholders deficit:                                                                                                 |  |                    |             |   |                   |   |             |  
|Preferred stock, nondesignated, 10,000,000 shares authorized, none issued                                              |  |                    |            |   |                   |   |            |  
|Common stock, $0.001 par value, 100,000,000 shares authorized, 89,371,320 and 89,371,320 shares issued and
outstanding |  |                    | 89,372      |   |                   |   | 89,372      |  
|Additional paid-in capital                                                                                             |  |                    | 8,858,375   |   |                   |   | 8,529,965   |  
|Accumulated deficit                                                                                                    |  |                    | (12,535,596 | ) |                   |   | (10,942,440 | )
|                                                                                                                       |  |                    |             |   |                   |   |             |  
|Total stockholders deficit                                                                                            |  |                    | (3,587,849  | ) |                   |   | (2,323,103  | )
|                                                                                                                       |  |                    |             |   |                   |   |             |  
|Total liabilities and stockholders deficit                                                                            |  | $                  | 2,428,561   |   |                   | $ | 2,684,438   |  
|                                                                                                                       |  |                    |             |   |                   |   |             |  

See accompanying notes



3



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QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|------------------------------------ |  | ------------------------------- | ---------- | - | ------------------------------ | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                     |  | Three months endedSeptember 30, |            |   | Nine months endedSeptember 30, |  
|                                     |  | 2010                            |            |   | 2009                           |   |            | 2010 |  |   | 2009       |  
|Revenue                              |  | $                               | 1,929,946  |   |                                | $ | 1,910,884  |      |  | $ | 5,851,421  |   |  | $ | 5,658,444  |  
|Cost of revenue                      |  |                                 | 942,825    |   |                                |   | 827,255    |      |  |   | 2,840,194  |   |  |   | 2,430,244  |  
|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Gross profit                         |  |                                 | 987,121    |   |                                |   | 1,083,629  |      |  |   | 3,011,227  |   |  |   | 3,228,200  |  
|                                     |  |                                 |            |  
|Operating expenses:                  |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Sales and marketing                  |  |                                 | 470,471    |   |                                |   | 455,612    |      |  |   | 1,719,025  |   |  |   | 1,382,767  |  
|General and administrative           |  |                                 | 503,802    |   |                                |   | 501,880    |      |  |   | 1,685,621  |   |  |   | 1,519,972  |  
|Software development                 |  |                                 | 301,762    |   |                                |   | 253,468    |      |  |   | 925,822    |   |  |   | 775,119    |  
|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|                                     |  |                                 | 1,276,035  |   |                                |   | 1,210,960  |      |  |   | 4,330,468  |   |  |   | 3,677,858  |  
|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Operating loss                       |  |                                 | (288,914   | ) |                                |   | (127,331   | )    |  |   | (1,319,241 | ) |  |   | (449,658   | )
|                                     |  |                                 |            |  
|Other income and (expense):          |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Foreign exchange gain (loss), net    |  |                                 | (8,863     | ) |                                |   | 52,634     |      |  |   | 22,706     |   |  |   | 118,078    |  
|Interest expense                     |  |                                 | (102,999   | ) |                                |   | (80,190    | )    |  |   | (294,209   | ) |  |   | (222,773   | )
|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|                                     |  |                                 | (111,862   | ) |                                |   | (27,556    | )    |  |   | (271,503   | ) |  |   | (104,695   | )
|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Loss before income taxes             |  |                                 | (400,776   | ) |                                |   | (154,887   | )    |  |   | (1,590,744 | ) |  |   | (554,353   | )
|Provision for income taxes           |  |                                 | (962       | ) |                                |   | (478       | )    |  |   | (2,412     | ) |  |   | (2,137     | )
|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Net loss                             |  | $                               | (401,738   | ) |                                | $ | (155,365   | )    |  | $ | (1,593,156 | ) |  | $ | (556,490   | )
|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|                                     |  |                                 |            |  
|Loss per share:                      |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Basic and diluted loss per share     |  |                                 | (0.00      | ) |                                |   | (0.00      | )    |  |   | (0.02      | ) |  |   | (0.01      | )
|Weighted average shares outstanding: |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Basic and diluted                    |  |                                 | 89,371,320 |   |                                |   | 89,371,320 |      |  |   | 89,371,320 |   |  |   | 89,371,320 |  

See accompanying notes



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QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



|                                                                                |  |                                 |            |   |      |   |          |  
|------------------------------------------------------------------------------- |  | ------------------------------- | ---------- | - | ---- | - | -------- | -
|                                                                                |  | Nine months ended September 30, |           
|                                                                                |  | 2010                            |            |   | 2009 |  
|Operating activities:                                                           |  |                                 |            |   |      |   |          |  
|Net loss                                                                        |  | $                               | (1,593,156 | ) |      | $ | (556,490 | )
|                                                                                |  |                                
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                                 |            |   |      |   |          |  
|Depreciation and amortization                                                   |  |                                 | 507,338    |   |      |   | 420,379  |  
|Bad debt expense                                                                |  |                                 | 116,060    |   |      |   | 68,301   |  
|Stock-based compensation expense                                                |  |                                 | 328,410    |   |      |   | 127,118  |  
|Noncash advertising revenue                                                     |  |                                 | (270,000   | ) |      |   | (270,000 | )
|Noncash barter advertising expense                                              |  |                                 | 270,000    |   |      |   | 270,000  |  
|Changes in assets and liabilities:                                              |  |                                 |            |   |      |   |          |  
|Accounts receivable                                                             |  |                                 | (69,245    | ) |      |   | (248,068 | )
|Prepaid expenses                                                                |  |                                 | 41,523     |   |      |   | (3,825   | )
|Other current assets                                                            |  |                                 | 26,071     |   |      |   | (149,761 | )
|Deposits                                                                        |  |                                 | 2,789      |   |      |   | (2,452   | )
|Accounts payable and amounts due to related parties                             |  |                                 | 999,052    |   |      |   | 753,903  |  
|Deferred revenue                                                                |  |                                 | 9,817      |   |      |   | (11,520  | )
|                                                                                |  |                                 |            |   |      |   |          |  
|Net cash provided by operating activities                                       |  |                                 | 368,659    |   |      |   | 397,585  |  
|                                                                                |  |                                 |            |   |      |   |          |  
|                                                                                |  |                                
|Investing activities:                                                           |  |                                 |            |   |      |   |          |  
|Purchase of fixed assets                                                        |  |                                 | (38,636    | ) |      |   | (111,752 | )
|Purchase of intangible assets                                                   |  |                                 | (34,729    | ) |      |   |         |  
|Capitalized application software                                                |  |                                 | (518,654   | ) |      |   | (402,226 | )
|Forward contract margin deposit                                                 |  |                                 |           |   |      |   | 20,000   |  
|                                                                                |  |                                 |            |   |      |   |          |  
|Net cash used in investing activities                                           |  |                                 | (592,019   | ) |      |   | (493,978 | )
|                                                                                |  |                                 |            |   |      |   |          |  
|Net decrease in cash                                                            |  |                                 | (223,360   | ) |      |   | (96,393  | )
|Cash and equivalents, beginning of period                                       |  |                                 | 477,222    |   |      |   | 536,624  |  
|                                                                                |  |                                 |            |   |      |   |          |  
|Cash and equivalents, end of period                                             |  | $                               | 253,862    |   |      | $ | 440,231  |  
|                                                                                |  |                                 |            |   |      |   |          |  

See accompanying notes



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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-Q. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair
presentation, have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for a full year. In connection with the preparation of the condensed financial statements the Company
evaluated subsequent events after the balance sheet date of September 30, 2010 through the filing of this report.

These financial
statements should be read in conjunction with our financial statements and the notes thereto for the fiscal year ended December 31, 2009 contained in our Form 10-K filed with the Securities and Exchange Commission dated March 30, 2010.

2. SIGNIFICANT ACCOUNTING POLICIES

a) Nature of operations

We are a software developer and distributor of financial
market data and related services to a global marketplace. We specialize in the collection, aggregation, and delivery of both delayed and real-time financial data content via the Internet. We develop and license software components that deliver
dynamic content to banks, brokerage firms, financial institutions, mutual fund companies, online information and financial portals, media outlets, public companies, and corporate intranets.

b) Basis of consolidation

The consolidated financial statements include the operations of Quotemedia, Ltd., a wholly owned subsidiary of Quotemedia, Inc. All intercompany transactions and balances have been eliminated.

c) Foreign currency translation and transactions

The U.S. dollar is the functional currency of all our companys operations. Foreign currency asset and liability amounts are remeasured into U.S. dollars at end-of-period exchange rates, except for
equipment and intangible assets, which are remeasured at historical rates. Foreign currency income and expenses are remeasured at average exchange rates in effect during the period, except for expenses related to balance sheet amounts remeasured at
historical exchange rates. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in income in the period in which they occur.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)





d)
Accounting Pronouncements

Recently Adopted Accounting Guidance

In January 2010, the FASB issued Accounting Standards Update (ASU) 2010-06, Improving Disclosures about Fair Value Measurements. The
Update provides amendments to ASC topic 820-10 that require entities to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. In addition the
Update requires entities to present separately information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements using significant unobservable inputs (Level 3). The disclosures related to Level 1 and
Level 2 fair value measurements were adopted January 1, 2010 did not have an impact on our consolidated financial statements. Disclosures related to Level 3 fair value measurements are effective January 1, 2011, and are not expected to
have any impact on our consolidated financial statements.

New Accounting Guidance

In October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements a consensus of the FASB Emerging Issues Task Force,
which amends ASC topic 605, Revenue Recognition, to require companies to allocate revenue in multiple-element arrangements based on an elements estimated selling price if vendor-specific or other third-party evidence of value is not available.
ASU 2009-13 is effective beginning January 1, 2011. Earlier application is permitted. We do not anticipate the adoption of this guidance will have a material impact on our consolidated financial statements.

In October 2009, the FASB issued ASU 2009-14, Certain Revenue Arrangements That Include Software Elements, which amends ASC Topic 985,
Software. ASU No. 2009-14 amends the ASC to change the accounting model for revenue arrangements that include both tangible products and software elements, such that tangible products containing both software and non-software components
that function together to deliver the tangible products essential functionality are no longer within the scope of software revenue guidance. ASU 2009-14 is effective January 1, 2011. We are currently evaluating the potential impact,
if any, of the adoption of this guidance on our consolidated financial statements.

3. FINANCIAL INSTRUMENTS

a) Fair value of financial instruments

FASB ASC 820, Fair Value Measurements and Disclosures establishes three levels of inputs that may be used to measure fair value: quoted prices in active markets for identical assets or liabilities
(referred to as Level 1), observable inputs other than Level 1 that are observable for the asset or liability either directly or indirectly (referred to as Level 2), and unobservable inputs to the valuation methodology that are significant to the
measurement of fair value of assets or liabilities (referred to as Level 3).



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)





Forward contracts are measured at
fair market value on a recurring basis based on level 2 inputs. At September 30, 2010, the fair market value for forward contracts was $6,470 and was included in other current assets.

b) Derivative instruments

A significant portion of our expenses are paid in Canadian dollars, therefore changes to the exchange rate between the U.S. and Canadian dollar affect our operating results. To manage this exchange rate
risk, we utilize forward contracts to purchase Canadian dollars. Our Company policy limits contracts to maturities of one year or less from the date of issuance. The outstanding contracts as of September 30, 2010 had maturities ranging up to
2 months. We do not enter into foreign exchange forward contracts for trading purposes.

We account for derivatives and hedging
activities in accordance with FASB ASC 815, Derivatives and Hedging, which requires that all derivative instruments be recorded on the balance sheet at their respective fair values. The accounting for changes in the fair value of a derivative
instrument is dependent upon whether the derivative has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship.

We have chosen not to elect hedge accounting for these forward contracts; therefore, changes in fair value for these instruments are immediately recognized in earnings and included in our foreign
exchange gain (loss). The fluctuations in the value of these forward contracts do, however, generally offset the impact of changes in the value of the underlying risk that they are intended to economically hedge.

The following table provides gross notional value of foreign currency derivative financial instruments and the related net asset or liability. The table
presents the notional amount (at contract exchange rates) and the fair value of the derivatives in U.S. dollars:



|                  |  |                    |         |  |                      |   |       |                |  |   |                      |  |  |   |        | 
|----------------- |  | ------------------ | ------- |  | -------------------- | - | ----- | -------------- |  | - | -------------------- |  |  | - | ------ | 
|                  |  | September 30, 2010 |         |  | December 31, 2009    |  
|                  |  | NotionalAmount     |         |  | Net Asset(Liability) |   |       | NotionalAmount |  |   | Net Asset(Liability) | 
|Forward contracts |  | $                  | 300,000 |  |                      | $ | 6,470 |                |  | $ | 300,000              |  |  | $ | 58,877 | 

We are required to maintain a margin
deposit with a foreign exchange corporation equal to 5% of the value of each forward contract outstanding. We had margin deposits totaling $15,000 related to forward contracts outstanding at September 30, 2010 and December 31, 2009.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)





4. RELATED PARTIES

The following table summarizes amounts due to related parties at September 30, 2010 and December 31, 2009:



|                          |  |                    |   |  |                   |   |           |         |  |   |             |  |  |   |           | 
|------------------------- |  | ------------------ | - |  | ----------------- | - | --------- | ------- |  | - | ----------- |  |  | - | --------- | 
|                          |  | September 30, 2010 |   |  | December 31, 2009 |  
|                          |  | Current            |   |  | Non-current       |   |           | Current |  |   | Non-current | 
|Purchase of business unit |  | $                  |  |  |                   | $ | 177,036   |         |  | $ | 161,164     |  |  | $ |          | 
|Computer hosting services |  |                    |  |  |                   |   | 292,582   |         |  |   | 268,057     |  |  |   |          | 
|Office rent               |  |                    |  |  |                   |   | 692,847   |         |  |   | 537,851     |  |  |   |          | 
|Other                     |  |                    |  |  |                   |   | 17,275    |         |  |   | 17,276      |  |  |   |          | 
|Loan                      |  |                    |  |  |                   |   | 201,193   |         |  |   |            |  |  |   | 186,714   | 
|Lead generation services  |  |                    |  |  |                   |   | 760,204   |         |  |   |            |  |  |   | 705,493   | 
|Accrued salary            |  |                    |  |  |                   |   | 2,144,913 |         |  |   |            |  |  |   | 1,738,660 | 
|                          |  |                    |   |  |                   |   |           |         |  |   |             |  |  |   |           | 
|                          |  | $                  |  |  |                   | $ | 4,286,050 |         |  | $ | 984,348     |  |  | $ | 2,630,867 | 
|                          |  |                    |   |  |                   |   |           |         |  |   |             |  |  |   |           | 

As a matter of policy all related party transactions are subject to review and approval by the Companys Board of
Directors. 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. All amounts
due to related parties have been classified as non-current liabilities as we do not expect to make any repayments within a year of the September 30, 2010 balance sheet date. Our related party creditors have agreed to these repayment terms.

5. STOCK-BASED COMPENSATION

FASB ASC 718, Stock Compensation requires all share-based payments to employees, including grants of employee stock options, to be recognized as
compensation expense over the service period (generally the vesting period) in the consolidated financial statements based on their fair values. The impact of forfeitures that may occur prior to vesting is also estimated and considered in the amount
recognized.

Total estimated stock-based compensation expense, related to all of the Companys stock-based awards, recognized for the
three and nine months ended September 30, 2010 and 2009 was comprised as follows:



|                               |  |                                 |        |  |                                |   |        |      |  |   |         |  |  |   |         | 
|------------------------------ |  | ------------------------------- | ------ |  | ------------------------------ | - | ------ | ---- |  | - | ------- |  |  | - | ------- | 
|                               |  | Three months endedSeptember 30, |        |  | Nine months endedSeptember 30, |  
|                               |  | 2010                            |        |  | 2009                           |   |        | 2010 |  |   | 2009    | 
|Sales and marketing            |  | $                               | 1,845  |  |                                | $ | 15,025 |      |  | $ | 286,335 |  |  | $ | 61,575  | 
|General and administrative     |  |                                 | 549    |  |                                |   | 3,213  |      |  |   | 7,047   |  |  |   | 11,925  | 
|Software development           |  |                                 | 11,676 |  |                                |   | 16,771 |      |  |   | 35,028  |  |  |   | 53,618  | 
|                               |  |                                 |        |  |                                |   |        |      |  |   |         |  |  |   |         | 
|Total stock-based compensation |  | $                               | 14,070 |  |                                | $ | 35,009 |      |  | $ | 328,410 |  |  | $ | 127,118 | 
|                               |  |                                 |        |  |                                |   |        |      |  |   |         |  |  |   |         | 



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)





At September 30, 2010 there
was $21,615 of unrecognized compensation cost related to non-vested share-based payments which is expected to be recognized over a weighted-average period of 0.63 years.

We calculate the fair value of stock options granted under the provisions of FASB ASC 718 using the Black-Scholes valuation model with the following assumptions:



|                                                            |  |                                 |     |  |                                |   |           |      |  |   |           |   |  |   |           |  
|----------------------------------------------------------- |  | ------------------------------- | --- |  | ------------------------------ | - | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                            |  | Three months endedSeptember 30, |     |  | Nine months endedSeptember 30, |  
|                                                            |  | 2010                            |     |  | 2009                           |   |           | 2010 |  |   | 2009      |  
|Expected dividend yield                                     |  |                                 | n/a |  |                                |   |          |      |  |   |          |   |  |   |          |  
|Expected stock price volatility                             |  |                                 | n/a |  |                                |   | 223       | %    |  |   | 176       | % |  |   | 215       | %
|Risk-free interest rate                                     |  |                                 | n/a |  |                                |   | 4         | %    |  |   | 4         | % |  |   | 4         | %
|Expected life of options                                    |  |                                 | n/a |  |                                |   | 5.0 years |      |  |   | 2.5 years |   |  |   | 2.6 years |  
|Weighted average fair value of options and warrants granted |  |                                 | n/a |  |                                | $ | 0.06      |      |  | $ | 0.12      |   |  | $ | 0.06      |  

The following table represents stock
option and warrant activity for the nine months ended September 30, 2010:



|                                        |  |                     |            |   |                                |   |      | 
|--------------------------------------- |  | ------------------- | ---------- | - | ------------------------------ | - | ---- | 
|                                        |  | Options andWarrants |            |   | Weighted-AverageExercise Price |  
|Outstanding at December 31, 2009        |  |                     | 12,707,803 |   |                                | $ | 0.08 | 
|                                        |  |                     |            |   |                                |   |      | 
|Granted under company stock option plan |  |                     | 300,000    |   |                                | $ | 0.07 | 
|Warrants granted                        |  |                     | 5,000,000  |   |                                | $ | 0.07 | 
|Stock options canceled                  |  |                     | (300,000   | ) |                                | $ | 0.07 | 
|Warrants canceled                       |  |                     | (5,000,000 | ) |                                | $ | 0.07 | 
|                                        |  |                     |            |   |                                |   |      | 
|Outstanding at September 30, 2010       |  |                     | 12,707,803 |   |                                | $ | 0.08 | 
|                                        |  |                     |            |   |                                |   |      | 

The following table summarizes our non-vested stock option and warrant activity for the nine months ended September 30,
2010:



|                                         |  |                     |          |   |                                       |   |      | 
|---------------------------------------- |  | ------------------- | -------- | - | ------------------------------------- | - | ---- | 
|                                         |  | Options andWarrants |          |   | Weighted-Average GrantDate Fair Value |  
|Non-vested stock options and warrants at |  |                     |          |   |                                       |   |      | 
|December 31, 2009                        |  |                     | 345,417  |   |                                       | $ | 0.07 | 
|Granted during the period                |  |                     |         |   |                                       |   | n/a  | 
|Vested during the period                 |  |                     | (228,750 | ) |                                       | $ | 0.07 | 
|Forfeited during the period              |  |                     |         |   |                                       |   | n/a  | 
|Non-vested stock options and warrants at |  |                     |          |   |                                       |   |      | 
|                                         |  |                     |          |   |                                       |   |      | 
|September 30, 2010                       |  |                     | 116,667  |   |                                       | $ | 0.07 | 
|                                         |  |                     |          |   |                                       |   |      | 



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)





|           |  |                                    |            |  |                                         |  |      |                              |  |   |                                       |  |  |                              |            |  |  |   |      | 
|---------- |  | ---------------------------------- | ---------- |  | --------------------------------------- |  | ---- | ---------------------------- |  | - | ------------------------------------- |  |  | ---------------------------- | ---------- |  |  | - | ---- | 
|           |  | Options and Warrants Outstanding   |            |  | Options and WarrantsExercisable         | 
|           |  | NumberOutstandingSeptember 30,2010 |            |  | WeightedAverageRemainingContractualLife |  |      | WeightedAverageExercisePrice |  |   | NumberExercisable atSeptember 30,2010 |  |  | WeightedAverageExercisePrice |           
|$0.05-0.10 |  |                                    | 12,207,803 |  |                                         |  | 4.82 |                              |  | $ | 0.07                                  |  |  |                              | 12,091,136 |  |  | $ | 0.07 | 
|$0.11-0.40 |  |                                    | 500,000    |  |                                         |  | 4.13 |                              |  | $ | 0.40                                  |  |  |                              | 500,000    |  |  | $ | 0.40 | 

On May 17, 2010, the
Companys Board of Directors and Compensation Committee authorized extending the term of a total of 5,300,000 options and warrants held by certain executives of the Company. The expiry dates of the options and warrants were extended by five
years. The extension of the options and warrants was accounted for as an exchange of the original awards for new awards. The incremental increase in fair value of the new awards resulted in additional stock-based compensation expenses totaling
$280,800 that was recognized in full in May 2010.

As at September 30, 2010 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.

At September 30, 2010
the aggregate intrinsic value of options and warrants outstanding was $488,712. The aggregate intrinsic value of options and warrants exercisable was $484,045. The intrinsic value of stock options and warrants are calculated as the amount by which
the market price of our common stock exceeds the exercise price of the option or warrant.

The Company is authorized to issue up to
100,000,000 common shares and 10,000,000 non-designated preferred shares. Until such time as the Company is able to increase its authorized number of shares of common stock, in the event that an exercise of warrants or stock options would result in
the number of issued common shares exceeding the authorized limit, the Company would designate the preferred shares with the same rights and preferences as the common shares to accommodate the exercise of the options or warrants.

6. LOSS PER SHARE

The basic and diluted
net loss per share was $(0.00) and $(0.00) per share for the three months ended September 30, 2010 and 2009, respectively. The basic and diluted net loss per share was $(0.02) and $(0.01) per share for the nine months ended September 30,
2010 and 2009, respectively. There were 12,707,803 stock options and warrants excluded from the calculation of dilutive loss per share for the three and nine months ended September 30, 2010 and 2009 because they were anti-dilutive.



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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 those risk factors disclosed in our annual report on Form 10-K for the year ended December 31, 2009 and other reports filed from time to time with the SEC.

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

This report should be read in
conjunction with our Form 10-K for the fiscal year ended December 31, 2009 filed with the Securities and Exchange Commission.

Overview

We are a financial software
developer and a distributor of market data and research information to online brokerages, clearing firms, banks, media properties, public companies and financial service corporations worldwide. Through the aggregation of information from many direct
data, news, and research sources, we offer a comprehensive range of solutions for all market related information provisioning requirements.

We have three general product lines: Data Feed Services, Interactive Content and Data Applications, and Portfolio Management Systems.

Our Data Feed Services consist of raw streaming real-time market data delivered over the Internet or via dedicated telecommunication lines, and
supplemental fundamental, historical, and analytical data, keyed to the same symbology, which provides a complete market data solution to be offered to our customers. Currently, QuoteMedias Data Feed services include complete coverage of North
American exchanges and over 70 exchanges worldwide.

Our Interactive Content and Data Applications consist of a suite of software applications
that provide publicly traded company and market information to corporate clients via the Internet. Products include stock market quotes, fundamentals, historical and interactive charts, company news, filings, option chains, insider
transactions, corporate financials, corporate profiles, screeners, market research information, investor relations provisions, level II, watch lists, and real-time quotes. All of our content solutions are completely customizable and embed directly
into client Web pages for seamless integration with existing content.



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Our Portfolio Management Systems
consist of Quotestream, Quotestream Professional, Quotestream Wireless, and our Web Portfolio Management systems. Quotestream Desktop 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s enhanced features and functionalitymost notably tick-by-tick
true streaming data, significantly enhanced charting features, and a broad range of additional research and analytical content and functionalityoffer a professional level experience to non professional users.

Quotestream Professional is designed specifically for use by financial services professionals, offering exceptional coverage and functionality at
extremely aggressive pricing. Quotestream Professional features broad market coverage, reliability, complete flexibility, ultra low-latency tick-by-tick data, as well as completely customizable screens, advanced charting, comprehensive technical
analysis, news and research data.

Quotestream Wireless is a true companion product to the Quotestream desktop products (Quotestream and
Quotestream Professional)any changes made to portfolios in either the desktop or wireless application are automatically reflected in the other.

A key feature of QuoteMedias business model is that all of our product lines generate recurring monthly licensing revenue from each client. Contracts to license Quotestream to our corporate clients,
for example, typically have a term of one to three years and are automatically renewed unless notice is given at least 90 days prior to the expiration of the current license term. We also generate Quotestream revenue through individual end-user
licenses on a monthly or annual subscription fee basis. Interactive Content and Data Applications 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 one to three years and are automatically renewed unless notice is given 90 days prior to the expiration of the contract term.

Business environment and trends

Global markets have been negatively impacted by a variety
of factors, and the financial services industry in particular has been adversely affected by losses in the mortgage and credit markets. Our business is dependent upon the health of the financial markets as well as the financial health of the
participants in those markets. The current financial crisis has resulted in lower activity levels and has led to the collapse of some market participants. We are also seeing customers intensify their focus on containing or reducing costs as a result
of the challenging market conditions. While we expect these trends will continue to affect our growth rate and operating results for the short term, we do expect our revenue to increase in 2011.

Plan of operation

Our plan of operation
for the remainder of 2010 and for 2011 will focus on marketing Quotestream for deployments by brokerage firms to their retail clients, and moving strongly into the investment professional market with Quotestream Professional. Licensing Quotestream
Wireless, both as a companion to the Quotestream desktop products, and as a stand-alone solution, will also continue to be a focal point. We will look to continue the growth of our Data Feed Services client



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base and to increase the sales of our Interactive Content and Data Applications, particularly in the context
of large scale enterprise deployments encompassing solutions ranging across several product lines. We also have a plan in place for 2011 to reduce costs to ensure that our ongoing expenditures are balanced with our revenue growth rate, which has
slowed markedly as a result of the recession.

Opportunistically, efforts will be made to evaluate and pursue the development of additional
new products that may eventually be commercialized by our company. Although not currently anticipated, we may require additional capital to execute our proposed plan of operation. There can be no assurance that such additional capital will be
available to our company, on commercially reasonable terms or at all.

Our future performance will be subject to a number of business factors,
including those beyond our control, such as a continued economic downturn and evolving industry needs and preferences as well as the level of competition and our ability to continue to successfully market our products and technology. There can be no
assurance that we will be able to successfully implement our marketing strategy, continue our revenue growth, or achieve profitable operations.

Results of Operations

Revenue



|                                 |  |      |           |  |      |   |           |            |  |   |            |  |  |  |   |  
|-------------------------------- |  | ---- | --------- |  | ---- | - | --------- | ---------- |  | - | ---------- |  |  |  | - | -
|                                 |  | 2010 |           |  | 2009 |   |           | Change ($) |  |   | Change (%) | 
|Three months ended September 30, |  |      |           |  |      |   |           |            |  |   |            |  |  |  |   |  
|Licensing revenue                |  | $    | 1,929,946 |  |      | $ | 1,910,884 |            |  | $ | 19,062     |  |  |  | 1 | %
|Nine months ended September 30,  |  |      |           |  |      |   |           |            |  |   |            |  |  |  |   |  
|Licensing revenue                |  | $    | 5,851,421 |  |      | $ | 5,658,444 |            |  | $ | 192,977    |  |  |  | 3 | %

Licensing revenue has increased 1% and 3%
when comparing the three and nine months ended September 30, 2010 and 2009. The increases are a result of sales growth from licensing our Portfolio Management Systems.

The number of corporate Quotestream subscribers increased during the periods, resulting in a $109,811 (13%) and $623,492 (28%) increase in Portfolio Management System revenue when comparing the
three and nine month periods ended September 30, 2010 and 2009. The increase in subscribers can be attributed to our competitive pricing which has attracted new customers looking for more cost efficient portfolio management systems. Included in
Portfolio Management System revenue is revenue earned from licensing of one of our portfolio management applications in exchange for advertising services, referred to as barter revenue, whereby advertising credits were received for
subscription services. This barter revenue amounted to $90,000 and $270,000 for the three and nine months ended September 30, 2010 and 2009.



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Interactive Content and Data
Application revenue has been impacted by the loss of clients who, as a result of the current economic downturn, have either reduced their spending or have ceased operations altogether. As a result, Interactive Content and Data Application revenue
decreased $90,749 (8%) and $430,515 (13%) when comparing the three and nine month periods ended September 30, 2010 and 2009.

Cost of Revenue and Gross Profit Summary



|                                 |  |      |           |   |      |   |           |            |  |   |            |   |  |  |    |   
|-------------------------------- |  | ---- | --------- | - | ---- | - | --------- | ---------- |  | - | ---------- | - |  |  | -- | --
|                                 |  | 2010 |           |   | 2009 |   |           | Change ($) |  |   | Change (%) |  
|Three months ended September 30, |  |      |           |   |      |   |           |            |  |   |            |   |  |  |    |   
|Cost of revenue                  |  | $    | 942,825   |   |      | $ | 827,255   |            |  | $ | 115,570    |   |  |  | 14 | % 
|Gross profit                     |  | $    | 987,121   |   |      | $ | 1,083,629 |            |  | $ | (96,508    | ) |  |  | (9 | %)
|Gross margin %                   |  |      | 51        | % |      |   | 57        | %          |  |   |            |   |  |  |    |   
|Nine months ended September 30,  |  |      |           |   |      |   |           |            |  |   |            |   |  |  |    |   
|Cost of revenue                  |  | $    | 2,840,194 |   |      | $ | 2,430,244 |            |  | $ | 409,950    |   |  |  | 17 | % 
|Gross profit                     |  | $    | 3,011,227 |   |      | $ | 3,228,200 |            |  | $ | (216,973   | ) |  |  | (7 | %)
|Gross margin %                   |  |      | 51        | % |      |   | 57        | %          |  |   |            |   |  |  |    |   

Our cost of revenue consists of fixed and variable stock exchange fees and data feed provisioning costs. Cost of
revenue also includes amortization of capitalized application software costs. We capitalize the costs associated with developing new products once technological feasibility has been established.

Cost of revenue increased 14% and 17% when comparing the three and nine month periods ended September 30, 2010 and 2009. The increases are primarily
due to increases in variable stock exchange, data feed, and bandwidth usage charges resulting from the growth in the number of Quotestream clients from the comparable periods. The increase is also due to the acquisition of data content required to
support the new products and features that we have recently developed and the amortization expense related to additional capitalized application software costs.

Overall, the cost of revenue increased as a percentage of sales, as evidenced by our gross margin percentage which decreased to 51% for the three and nine month periods ended September 30, 2010 from
57% in the respective comparative periods in 2009. The gross margin attributed to Portfolio Management System revenue is lower than Interactive Content and Data Application revenue due to the stock exchange fees associated with Portfolio Management
System revenue. The decrease in gross margins from the comparatives periods is therefore due to a change in our revenue mix, as Portfolio Management System revenue has increased from the prior periods while Interactive Content and Data Application
revenue has decreased.



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Operating Expenses Summary



|                                 |  |      |           |  |      |   |           |            |  |   |            |  |  |  |    |  
|-------------------------------- |  | ---- | --------- |  | ---- | - | --------- | ---------- |  | - | ---------- |  |  |  | -- | -
|                                 |  | 2010 |           |  | 2009 |   |           | Change ($) |  |   | Change (%) | 
|Three months ended September 30, |  |      |           |  |      |   |           |            |  |   |            |  |  |  |    |  
|Sales and marketing              |  | $    | 470,471   |  |      | $ | 455,612   |            |  | $ | 14,859     |  |  |  | 3  | %
|General and administrative       |  |      | 503,802   |  |      |   | 501,880   |            |  |   | 1,922      |  |  |  | 0  | %
|Software development             |  |      | 301,762   |  |      |   | 253,468   |            |  |   | 48,294     |  |  |  | 19 | %
|                                 |  |      |           |  |      |   |           |            |  |   |            |  |  |  |    |  
|Total operating expenses         |  | $    | 1,276,035 |  |      | $ | 1,210,960 |            |  | $ | 65,075     |  |  |  | 5  | %
|                                 |  |      |           |  |      |   |           |            |  |   |            |  |  |  |    |  
|                                 |  |      |           | 
|Nine months ended September 30,  |  |      |           |  |      |   |           |            |  |   |            |  |  |  |    |  
|Sales and marketing              |  | $    | 1,719,025 |  |      | $ | 1,382,767 |            |  | $ | 336,258    |  |  |  | 24 | %
|General and administrative       |  |      | 1,685,621 |  |      |   | 1,519,972 |            |  |   | 165,649    |  |  |  | 11 | %
|Software development             |  |      | 925,822   |  |      |   | 775,119   |            |  |   | 150,703    |  |  |  | 19 | %
|                                 |  |      |           |  |      |   |           |            |  |   |            |  |  |  |    |  
|Total operating expenses         |  | $    | 4,330,468 |  |      | $ | 3,677,858 |            |  | $ | 652,610    |  |  |  | 18 | %
|                                 |  |      |           |  |      |   |           |            |  |   |            |  |  |  |    |  

Sales and Marketing

Sales and marketing consists primarily of sales and customer service salaries, investor relations, travel, and advertising expenses. Sales and marketing expenses increased $14,859 (3%) and $336,258
(24%) for the three and nine month periods ended September 30, 2010 when compared to same periods in 2009.

The increases from the
comparative periods are primarily due to $270,000 in stock-based compensation expense recognized in May 2010 as a result of extending the terms of stock options and warrants held by an executive of the Company. The increases are also due to an
increase in salary expense for sales personnel. The increase in salary expense is due primarily to the appreciation of the Canadian dollar compared to the U.S. dollar when comparing the average exchange rates for the three month periods ended
September 30, 2010 and 2009, as salary expenses for sales personnel are incurred primarily in Canadian dollars.

Included in sales and
marketing expense are $90,000 and $270,000 in non-cash advertising costs incurred in the three and nine month periods ended September 30, 2010 and 2009. We receive advertising credits with a large national magazine in exchange for subscription
services. The advertising credits are expensed as used, and unused advertising credits are reflected as prepaid expenses.

General and
Administrative

General and administrative expenses consist primarily of salaries expense, office rent, insurance premiums, and
professional fees. General and administrative expenses increased $1,922 (0%) and $165,649 (11%) for the three and nine month periods ended September 30, 2010 when compared to same periods in 2009. The increases are due to accruals made for
potential tax penalties in the first



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quarter of 2010, as well as increases in bad debt and office lease expenses from the comparative periods.

Software Development

Software development expenses consist primarily of costs associated
with the design, programming, and testing of our software applications prior to the establishment of technological feasibility. Software development expenses also include costs incurred to maintain our software applications.

Software development expenses increased $48,294 (19%) and $150,703 (19%) for the three and nine month periods ended September 30, 2010
when compared to same periods in 2009. The increases are due to an increase in salary expense for software development personnel, offset by an increase in the amount of capitalized development costs. We capitalized $179,080 and $518,654 of
development costs for the three and nine months ended September 30, 2010, compared to $146,426 and $402,226 for the same periods in 2009. These costs relate to the development of application software used by subscribers to access, manage, and
analyze information in our databases. Capitalized costs associated with application software are amortized over their estimated economic life of three years.

Salary expense for software development personnel increased from the comparative periods due to competitive salary adjustments made for existing employees and additional new software development
personnel. Additional software development personnel were required to develop our next generation Quotestream and Quotestream Professional products, as well as our new and upgraded versions of our Web-based applications and market data feeds. The
increases in salary expense for development personnel was also due in part to the appreciation from the comparative periods of the Canadian dollar compared to the U.S. dollar, as salary expenses for development personnel are incurred primarily in
Canadian dollars.

Other Income and (Expense) Summary



|                                  |  |      |          |   |      |   |          |  
|--------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|                                  |  | 2010 |          |   | 2009 |  
|Three months ended September 30,  |  |      |          |   |      |   |          |  
|Foreign exchange loss             |  | $    | (8,863   | ) |      | $ | 52,634   |  
|Interest expense                  |  |      | (102,999 | ) |      |   | (80,190  | )
|                                  |  |      |          |   |      |   |          |  
|Total other income and (expenses) |  | $    | (111,862 | ) |      | $ | (27,556  | )
|                                  |  |      |          |   |      |   |          |  
|                                  |  |     
|Nine months ended September 30,   |  |      |          |   |      |   |          |  
|Foreign exchange gain (loss)      |  | $    | 22,706   |   |      | $ | 118,078  |  
|Interest expense                  |  |      | (294,209 | ) |      |   | (222,773 | )
|                                  |  |      |          |   |      |   |          |  
|Total other income and (expenses) |  | $    | (271,503 | ) |      | $ | (104,695 | )
|                                  |  |      |          |   |      |   |          |  



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Foreign Exchange Gain (Loss)

We recognized foreign exchange loss of $(8,863) and a gain of $22,706 for the three and nine month periods ended September 30, 2010,
compared to foreign exchange gains of $52,634 and $118,078 for the same periods in 2009. Exchange gains and losses primarily arise from the re-measurement of Canadian dollar monetary assets and liabilities into U.S. dollars. The change in fair value
for outstanding foreign exchange forward contracts is also included in foreign exchanges gains and losses as well as gains and losses recognized from foreign exchange forward contracts exercised during the period.

The foreign exchange loss for the three month period ended September 30, 2010 is primarily due to the change in fair value for outstanding foreign
exchange forward contracts, offset by gains on forward contracts exercised during 2010. The foreign exchange gain for the nine month period ended September 30, 2010 is primarily due to gains on forward contracts exercised during 2010, offset by
the change in fair value for outstanding foreign exchange forward contracts.

Interest Expense

Interest is accrued on certain amounts owed to related parties. Interest expense increased for the three and nine months ended September 30, 2010 due
to additional borrowings compared to the same periods in 2009. Interest is accrued at 10% per annum. Interest income earned on cash balances is netted against interest income.

Provision for Income Taxes

For the three and nine month periods ended September 30,
2010, the Company recorded Canadian income tax expense of $962 and $2,412, compared to $478 and $2,137 in the comparative periods in 2009.

Net Income (Loss) for the Period

As a
result of the foregoing, net loss for the three months ended September 30, 2010 was $(401,738) or $(0.00) per share compared to a net loss of $(155,365) or $(0.00) per share for the three months ended September 30, 2009. The net loss for
the nine months ended September 30, 2010 was $(1,593,156) or $(0.02) per share compared to a net loss of $(556,490) or $(0.01) per share for the nine months ended September 30, 2009.

Liquidity and Capital Resources

Our
cash totaled $253,862 at September 30, 2010, as compared with $477,222 at December 31, 2009, a decrease of $223,360. Net cash of $368,659 was provided by operations for the nine months ended September 30, 2010, primarily due to the
increase in accounts payable and amounts due to related parties, offset by the net loss for the period adjusted for non-cash charges. Net cash used in investing activities for the nine months ended September 30, 2010 was $592,019 resulting from
capitalized application software costs, the purchase of new computer equipment, and the increase in forward contract margin deposits. There were no financing activities for the nine month period ended September 30, 2010.



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For the nine months ended
September 30, 2010 we had a net loss of $1,593,156, and at September 30, 2010 we had a net working capital deficit of $268,307, which represented current assets minus current liabilities excluding current deferred revenues. These
conditions raise doubt about the Companys ability to continue as a going concern. To address these concerns, we have a plan in place for 2011 to reduce costs to ensure that our ongoing expenditures are balanced with our revenue growth rate,
which has slowed markedly as a result of the recession.

Our current liabilities include deferred revenue of $438,394. The costs expected to
be incurred to realize the deferred revenue in the next 12 months are minimal.

Our long term liabilities include $4,286,050 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.

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 at least 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 4T. | Controls and Procedures
|-------- | -----------------------

Under the
supervision and with the participation of our Chairman of the Board and Chairman of the Audit Committee, Chief Executive Officer and Chief Financial Officer, we completed an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) to the Securities Exchange Act of 1934, as amended (the Exchange Act)). Based on that evaluation, we and our management have concluded that our
disclosure controls and procedures at September 30, 2010 were effective at the reasonable assurance level to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and are designed to ensure that information required to be disclosed by us in these reports is accumulated and communicated to our management, as
appropriate to allow timely decisions regarding required disclosures. In the three months ended September 30, 2010, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely
to affect, our internal control over financial reporting.

We will consider further actions and continue to evaluate the effectiveness of our
disclosure controls and internal controls and procedures on an ongoing basis, taking corrective action as appropriate. Management does not expect that disclosure controls and procedures or internal controls can prevent all errors and all fraud. A
control system, no matter how well conceived and operated, can provide only reasonable and not absolute assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are
resource constraints,



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and the benefits of controls must be considered relative to their costs. While management believes that its disclosure controls and procedures provide reasonable assurance that fraud can be
detected and prevented, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.



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PART IIOTHER INFORMATION



|ITEM 6. | EXHIBITS
|------- | --------



|              |  |                                                                                                                                                               
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                                                        
|              | 
|31.1          |  | Certification of Principal 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 Principal 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 Principal 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 Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.        

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



QUOTEMEDIA, INC.Dated: November 12, 2010By:

/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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