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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark one)

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

For the quarterly period ended September 30, 2009

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 of Incorporation or Organization) |  | (IRS Employer Identification 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  x    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 |  | x

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

The Registrant has 89,371,320 shares of common stock outstanding as at November 6, 2009.









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QUOTEMEDIA, INC.

FORM 10-Q for the Quarter Ended September 30, 2009

INDEX



|           |  |                                                                                                       |  |     
|---------- |  | ----------------------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                                       |  | Page
|Part I.    |  | Financial Information                                                                                 |  |     
|           |  |                                                                                                      
|Item 1.    |  | Financial Statements (unaudited):                                                                     |  | 3   
|           |  |                                                                                                      
|           |  | Consolidated Balance Sheets at September 30, 2009 and December 31, 2008                               |  | 3   
|           |  |                                                                                                      
|           |  | Consolidated Statements of Operations for the three and nine months ended September 30, 2009 and 2008 |  | 4   
|           |  |                                                                                                      
|           |  | Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 and 2008           |  | 5   
|           |  |                                                                                                      
|           |  | Notes to Consolidated Financial Statements                                                            |  | 6   
|           |  |                                                                                                      
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                 |  | 19  
|           |  |                                                                                                      
|Item 4T.   |  | Controls and Procedures                                                                               |  | 26  
|           |  |                                                                                                      
|Part II.   |  | Other Information                                                                                     |  |     
|           |  |                                                                                                      
|Item 6.    |  | Exhibits                                                                                              |  | 27  
|           | 
|Signatures |  | 28                                                                                                   



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QUOTEMEDIA, INC.

CONSOLIDATED BALANCE SHEETS



|                                                                                                                       |  |                    |             |   |                   |   |             |  
|---------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | - | ----------------- | - | ----------- | -
|                                                                                                                       |  | September 30, 2009 |             |   | December 31, 2008 |  
|                                                                                                                       |  | (Unaudited)        |             |   |                   |  
|Assets                                                                                                                 |  |                    |             |   |                   |   |             |  
|                                                                                                                       |  |                   
|Current assets:                                                                                                        |  |                    |             |   |                   |   |             |  
|Cash and equivalents                                                                                                   |  | $                  | 440,231     |   |                   | $ | 536,624     |  
|Accounts receivable, net                                                                                               |  |                    | 497,757     |   |                   |   | 317,990     |  
|Forward contract margin deposit                                                                                        |  |                    | 48,750      |   |                   |   | 68,750      |  
|Prepaid expenses                                                                                                       |  |                    | 285,754     |   |                   |   | 281,929     |  
|Other current assets                                                                                                   |  |                    | 201,992     |   |                   |   | 52,231      |  
|                                                                                                                       |  |                    |             |   |                   |   |             |  
|Total current assets                                                                                                   |  |                    | 1,474,484   |   |                   |   | 1,257,524   |  
|                                                                                                                       |  |                   
|Deposits                                                                                                               |  |                    | 25,450      |   |                   |   | 22,998      |  
|Property and equipment, net                                                                                            |  |                    | 1,104,933   |   |                   |   | 1,006,693   |  
|Intangible assets                                                                                                      |  |                    | 187,221     |   |                   |   | 191,862     |  
|                                                                                                                       |  |                    |             |   |                   |   |             |  
|Total assets                                                                                                           |  | $                  | 2,792,088   |   |                   | $ | 2,479,077   |  
|                                                                                                                       |  |                    |             |   |                   |   |             |  
|                                                                                                                       |  |                   
|Liabilities and Stockholders Deficit                                                                                  |  |                    |             |   |                   |   |             |  
|                                                                                                                       |  |                   
|Current liabilities:                                                                                                   |  |                    |             |   |                   |   |             |  
|Accounts payable and accrued liabilities                                                                               |  | $                  | 988,166     |   |                   | $ | 939,387     |  
|Deferred revenue                                                                                                       |  |                    | 435,726     |   |                   |   | 447,246     |  
|Current portion of amounts due to related parties                                                                      |  |                    | 901,476     |   |                   |   | 626,729     |  
|                                                                                                                       |  |                    |             |   |                   |   |             |  
|Total current liabilities                                                                                              |  |                    | 2,325,368   |   |                   |   | 2,013,362   |  
|                                                                                                                       |  |                    |             |   |                   |   |             |  
|Long-term portion of amounts due to related parties                                                                    |  |                    | 2,480,114   |   |                   |   | 2,049,737   |  
|                                                                                                                       |  |                   
|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                                                                                             |  |                    | 8,511,977   |   |                   |   | 8,384,859   |  
|Accumulated deficit                                                                                                    |  |                    | (10,614,743 | ) |                   |   | (10,058,253 | )
|                                                                                                                       |  |                    |             |   |                   |   |             |  
|Total stockholders deficit                                                                                            |  |                    | (2,013,394  | ) |                   |   | (1,584,022  | )
|                                                                                                                       |  |                    |             |   |                   |   |             |  
|Total liabilities and stockholders deficit                                                                            |  | $                  | 2,792,088   |   |                   | $ | 2,479,077   |  
|                                                                                                                       |  |                    |             |   |                   |   |             |  

See accompanying notes



3



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QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|------------------------------------ |  | ------------------------------- | ---------- | - | ------------------------------ | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                     |  | Three months endedSeptember 30, |            |   | Nine months endedSeptember 30, |  
|                                     |  | 2009                            |            |   | 2008                           |   |            | 2009 |  |   | 2008       |  
|Revenue                              |  | $                               | 1,910,884  |   |                                | $ | 1,888,279  |      |  | $ | 5,658,444  |   |  | $ | 5,300,350  |  
|Cost of revenue                      |  |                                 | 827,255    |   |                                |   | 802,757    |      |  |   | 2,430,244  |   |  |   | 2,267,709  |  
|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Gross profit                         |  |                                 | 1,083,629  |   |                                |   | 1,085,522  |      |  |   | 3,228,200  |   |  |   | 3,032,641  |  
|                                     |  |                                 |            |  
|Operating expenses:                  |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Sales and marketing                  |  |                                 | 455,612    |   |                                |   | 458,668    |      |  |   | 1,382,767  |   |  |   | 1,587,405  |  
|General and administrative           |  |                                 | 501,880    |   |                                |   | 472,664    |      |  |   | 1,519,972  |   |  |   | 1,370,403  |  
|Software development                 |  |                                 | 253,468    |   |                                |   | 249,538    |      |  |   | 775,119    |   |  |   | 767,472    |  
|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|                                     |  |                                 | 1,210,960  |   |                                |   | 1,180,870  |      |  |   | 3,677,858  |   |  |   | 3,725,280  |  
|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Operating loss                       |  |                                 | (127,331   | ) |                                |   | (95,348    | )    |  |   | (449,658   | ) |  |   | (692,639   | )
|                                     |  |                                 |            |  
|Other income and (expense):          |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Foreign exchange gain, net           |  |                                 | 52,634     |   |                                |   | 11,653     |      |  |   | 118,078    |   |  |   | 20,446     |  
|Interest expense                     |  |                                 | (80,190    | ) |                                |   | (61,388    | )    |  |   | (222,773   | ) |  |   | (174,671   | )
|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|                                     |  |                                 | (27,556    | ) |                                |   | (49,735    | )    |  |   | (104,695   | ) |  |   | (154,225   | )
|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Loss before income taxes             |  |                                 | (154,887   | ) |                                |   | (145,083   | )    |  |   | (554,353   | ) |  |   | (846,864   | )
|Provision for income taxes           |  |                                 | (478       | ) |                                |   | (8,790     | )    |  |   | (2,137     | ) |  |   | (22,686    | )
|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Net loss                             |  | $                               | (155,365   | ) |                                | $ | (153,873   | )    |  | $ | (556,490   | ) |  | $ | (869,550   | )
|                                     |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Loss per share:                      |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Basic and diluted loss per share     |  |                                 | (0.00      | ) |                                |   | (0.00      | )    |  |   | (0.01      | ) |  |   | (0.01      | )
|                                     |  |                                 |            |  
|Weighted average shares outstanding: |  |                                 |            |   |                                |   |            |      |  |   |            |   |  |   |            |  
|Basic and diluted                    |  |                                 | 89,371,320 |   |                                |   | 89,371,320 |      |  |   | 89,371,320 |   |  |   | 89,043,483 |  

See accompanying notes



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QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



|                                                                                |  |                                |          |   |      |   |          |  
|------------------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ---- | - | -------- | -
|                                                                                |  | Nine months endedSeptember 30, |         
|                                                                                |  | 2009                           |          |   | 2008 |  
|Operating activities:                                                           |  |                                |          |   |      |   |          |  
|                                                                                |  |                               
|Net loss                                                                        |  | $                              | (556,490 | ) |      | $ | (869,550 | )
|                                                                                |  |                               
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                                |          |   |      |   |          |  
|Depreciation and amortization                                                   |  |                                | 420,379  |   |      |   | 308,406  |  
|Bad debt expense                                                                |  |                                | 68,301   |   |      |   | 64,190   |  
|Stock-based compensation expense                                                |  |                                | 127,118  |   |      |   | 334,011  |  
|Noncash advertising revenue                                                     |  |                                | (270,000 | ) |      |   | (270,000 | )
|Noncash barter advertising expense                                              |  |                                | 270,000  |   |      |   | 270,000  |  
|Changes in assets and liabilities:                                              |  |                                |          |   |      |   |          |  
|Accounts receivable                                                             |  |                                | (248,068 | ) |      |   | (297,282 | )
|Prepaid expenses                                                                |  |                                | (3,825   | ) |      |   | (13,982  | )
|Other current assets                                                            |  |                                | (149,761 | ) |      |   |         |  
|Deposits                                                                        |  |                                | (2,452   | ) |      |   | (17,546  | )
|Accounts payable and amounts due to related parties                             |  |                                | 753,903  |   |      |   | 854,249  |  
|Deferred revenue                                                                |  |                                | (11,520  | ) |      |   | 16,950   |  
|                                                                                |  |                                |          |   |      |   |          |  
|Net cash provided by operating activities                                       |  |                                | 397,585  |   |      |   | 379,446  |  
|                                                                                |  |                                |          |   |      |   |          |  
|                                                                                |  |                               
|Investing activities:                                                           |  |                                |          |   |      |   |          |  
|                                                                                |  |                               
|Purchase of fixed assets                                                        |  |                                | (111,752 | ) |      |   | (82,648  | )
|Capitalized application software                                                |  |                                | (402,226 | ) |      |   | (417,466 | )
|Forward contract margin deposit                                                 |  |                                | 20,000   |   |      |   |         |  
|                                                                                |  |                                |          |   |      |   |          |  
|Net cash used in investing activities                                           |  |                                | (493,978 | ) |      |   | (500,114 | )
|                                                                                |  |                                |          |   |      |   |          |  
|                                                                                |  |                               
|Financing activities:                                                           |  |                                |          |   |      |   |          |  
|                                                                                |  |                               
|Proceeds from exercise of stock options                                         |  |                                |         |   |      |   | 27,500   |  
|                                                                                |  |                                |          |   |      |   |          |  
|Net cash provided by financing activities                                       |  |                                |         |   |      |   | 27,500   |  
|                                                                                |  |                                |          |   |      |   |          |  
|Net decrease in cash                                                            |  |                                | (96,393  | ) |      |   | (93,168  | )
|Cash and equivalents, beginning of period                                       |  |                                | 536,624  |   |      |   | 357,316  |  
|                                                                                |  |                                |          |   |      |   |          |  
|Cash and equivalents, end of period                                             |  | $                              | 440,231  |   |      | $ | 264,148  |  
|                                                                                |  |                                |          |   |      |   |          |  
|See supplementary information (note 6)                                          |  |                                |          |   |      |   |          |  

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.

These financial statements should be read in conjunction with our financial statements and the notes thereto for the fiscal year ended
December 31, 2008 contained in our Form 10-K filed with the Securities and Exchange Commission dated March 31, 2009.

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.

d) Revenue recognition

Revenue is recognized over contractual periods as services are performed and when collection of the amount due is reasonably assured. Amounts recognized as revenue are determined based upon contractually
agreed upon fee schedules with our customers. The Company accounts for subscription revenues received in advance of service being performed by deferring such amounts until the related services are performed. The Company considers the following
factors when determining if collection of a fee is reasonably assured: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If these factors do not indicate
collection is reasonably assured, revenue is deferred until collection becomes reasonably assured, which is generally upon receipt of cash (also see description of barter revenue below).



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



e) Barter revenue

The Company licenses one of its portfolio management applications in exchange for advertising services of a customer, referred to as barter
revenue, whereby advertising credits are received in exchange for subscription services. This revenue is recognized in the period in which the applications are licensed based on the fair market value of the services delivered. The Company
determines the fair market value of the service delivered based upon amounts charged for similar services in non-barter arrangements within the previous six-month period. The Company also ensures that the value of barter delivered does not exceed
the value of cash based revenue in any period. Unused advertising credits are reflected as prepaid expenses. As at September 30, 2009 and December 31, 2008, $180,000 in unused advertising credits was included in prepaid expenses.

The following table summarizes our barter revenue transactions for the three and nine months ended September 30, 2009 and 2008:



|                         |  |                                 |        |                                |   |        |  |      |         |  |   |        
|------------------------ |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------- |  | - | -------
|                         |  | Three months endedSeptember 30, |        | Nine months endedSeptember 30,
|                         |  | 2009                            |        | 2008                           |   | 2009   |  | 2008
|Barter revenue earned    |  | $                               | 90,000 |                                | $ | 90,000 |  | $    | 270,000 |  | $ | 270,000
|Advertising credits used |  |                                 | 90,000 |                                |   | 90,000 |  |      | 270,000 |  |   | 270,000

f) Property and equipment



|                                 |  |                   |            |   |                  |   |           |  
|-------------------------------- |  | ----------------- | ---------- | - | ---------------- | - | --------- | -
|                                 |  | September 30,2009 |            |   | December 31,2008 |  
|Computer equipment               |  | $                 | 450,943    |   |                  | $ | 341,674   |  
|Office furniture and equipment   |  |                   | 64,783     |   |                  |   | 64,079    |  
|Leasehold improvements           |  |                   | 35,647     |   |                  |   | 33,868    |  
|Capitalized application software |  |                   | 1,751,540  |   |                  |   | 1,349,314 |  
|                                 |  |                   |            |   |                  |   |           |  
|Total property and equipment     |  |                   | 2,302,913  |   |                  |   | 1,788,935 |  
|Less: accumulated depreciation   |  |                   | (1,197,980 | ) |                  |   | (782,242  | )
|                                 |  |                   |            |   |                  |   |           |  
|Property and equipment, net      |  | $                 | 1,104,933  |   |                  | $ | 1,006,693 |  
|                                 |  |                   |            |   |                  |   |           |  

Property and equipment are recorded at cost less accumulated depreciation. Depreciation is calculated
on a straight-line basis over the assets estimated useful lives as follows:



|                                 |  |              
|-------------------------------- |  | -------------
|Computer equipment               |  | 5 years      
|Office furniture and equipment   |  | 5 years      
|Leasehold improvements           |  | Term of lease
|Capitalized application software |  | 3 years      



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



For the three and nine months ended September 30, 2009, we capitalized $146,426 and $402,226 of
costs, respectively, related to the development of new software applications after technological feasibility had been established. We also capitalized costs related to enhancements made to existing software applications. Software applications are
used by our subscribers to access, manage and analyze information in our databases. For the three months ended September 30, 2009 and 2008, amortization expenses associated with the internally developed application software was $122,062 and
$93,771 respectively. For the nine months ended September 30, 2009 and 2008, amortization expenses associated with the internally developed application software was $349,093 and $246,851 respectively. At September 30, 2009, the remaining
book value of the capitalized application software was $828,837. Depreciation expense for equipment and leaseholds for the three months ended September 30, 2009 and 2008 was $25,123 and $20,372 respectively. Depreciation expense for equipment
and leaseholds for the nine months ended September 30, 2009 and 2008 was $66,645 and $56,914 respectively.

g)
Intangible assets



|                                                   |  |                   |         |   |                  |   |         |  
|-------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                   |  | September 30,2009 |         |   | December 31,2008 |  
|Amortized intangible assets:                       |  |                   |         |   |                  |   |         |  
|Purchase option for office building                |  | $                 | 10,000  |   |                  | $ | 10,000  |  
|Software licenses                                  |  |                   | 70,256  |   |                  |   | 70,256  |  
|Domain names                                       |  |                   | 10,652  |   |                  |   | 10,652  |  
|                                                   |  |                   |         |   |                  |   |         |  
|                                                   |  |                   | 90,908  |   |                  |   | 90,908  |  
|                                                   |  |                   |         |   |                  |   |         |  
|Unamortized intangible assets:                     |  |                   |         |   |                  |   |         |  
|Goodwill associated with purchase of business unit |  |                   | 110,000 |   |                  |   | 110,000 |  
|                                                   |  |                   |         |   |                  |   |         |  
|Total intangible assets                            |  |                   | 200,908 |   |                  |   | 200,908 |  
|Less: accumulated amortization                     |  |                   | (13,687 | ) |                  |   | (9,046  | )
|                                                   |  |                   |         |   |                  |   |         |  
|Intangible assets, net                             |  | $                 | 187,221 |   |                  | $ | 191,862 |  
|                                                   |  |                   |         |   |                  |   |         |  

Amortization for amortized intangible assets is calculated on a straight-line basis over the
assets estimated useful lives. The useful life of the purchase option is 5 years which is the term of the option. The useful life of the software licenses and domain names is estimated to be 20 years. For the three months ended
September 30, 2009 and 2008, amortization expense for amortized intangible assets was $1,547. For the nine months ended September 30, 2009 and 2008, amortization expense for amortized intangible assets was $4,641. We evaluate goodwill for
impairment in accordance to Financial Accounting Standards Board (FASB) ASC 350-20, Goodwill. Through September 30, 2009 we have not had any goodwill impairment.

h) 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.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



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, 2009 and 2008 was comprised as follows:



|                               |  |                                 |        |                                |   |        |  |      |         |  |   |        
|------------------------------ |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------- |  | - | -------
|                               |  | Three months endedSeptember 30, |        | Nine months endedSeptember 30,
|                               |  | 2009                            |        | 2008                           |   | 2009   |  | 2008
|Sales and marketing            |  | $                               | 15,025 |                                | $ | 22,284 |  | $    | 61,575  |  | $ | 217,172
|General and administrative     |  |                                 | 3,213  |                                |   | 4,284  |  |      | 11,925  |  |   | 14,572 
|Software development           |  |                                 | 16,771 |                                |   | 34,089 |  |      | 53,618  |  |   | 102,267
|                               |  |                                 |        |                                |   |        |  |      |         |  |   |        
|Total stock-based compensation |  | $                               | 35,009 |                                | $ | 60,657 |  | $    | 127,118 |  | $ | 334,011
|                               |  |                                 |        |                                |   |        |  |      |         |  |   |        

At September 30, 2009 there was $81,813 of unrecognized compensation cost related to non-vested
share-based payments which is expected to be recognized over a weighted-average period of 1.41 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, |     
|                                               |  | 2009                            |           |                                | 2008 |     | 2009 |   |           | 2008 | 
|Expected dividend yield                        |  |                                 |          |                                |      | n/a |      |   |          |      |  |   |          |  
|Expected stock price volatility                |  |                                 | 223       | %                              |      | n/a |      |   | 215       | %    |  |   | 103       | %
|Risk-free interest rate                        |  |                                 | 4         | %                              |      | n/a |      |   | 4         | %    |  |   | 4         | %
|Expected life of options                       |  |                                 | 5.0 years |                                |      | n/a |      |   | 2.6 years |      |  |   | 5.2 years |  
|Weighted average fair value of options granted |  | $                               | 0.06      |                                |      | n/a |      | $ | 0.06      |      |  | $ | 0.14      |  

Expected volatility is based on the historical volatility of the Companys share price in the
period prior to option grant equivalent to the expected life of the options. The expected term is determined under the simplified method and represents the period of time that options granted are expected to be outstanding. The risk-free
interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

i) Software development expenses

Software development costs incurred prior to
establishing the technological feasibility of our software application products and costs incurred to maintain existing products and services are expensed as incurred. The Company expensed $253,468 and $249,538 in software development costs during
the three months ended September 30, 2009 and 2008, respectively. The Company expensed $775,119 and $767,472 in software development costs during the nine months ended September 30, 2009 and 2008, respectively.



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



j) Income taxes

Income taxes are provided in accordance with FASB ASC 740, Income Taxes. A deferred tax asset or liability is recorded for all temporary differences
between income for financial statement purposes and income for tax purposes as well as operating loss carry-forwards. Deferred tax expenses or recoveries result from the net change during the year of deferred tax assets and liabilities. Deferred tax
assets are reduced by a valuation allowance, when, in the opinion of management, it is likely that some portion of the deferred tax asset will not be realized. Deferred taxes are adjusted for the effects of changes in tax laws and rates. For the
three months ended September 30, 2009 and 2008, we recorded Canadian income tax expense of $478 and $8,790, respectively. For the nine months ended September 30, 2009 and 2008, we recorded Canadian income tax expense of $2,137 and $22,686,
respectively.

k) Accounting Pronouncements

Recently Adopted Accounting Guidance

On January 1, 2008, we adopted certain provisions of Accounting Standards Codification (ASC) topic 820 (formerly SFAS No. 157, Fair Value Measurements). ASC 820 defines fair value, establishes a framework for
measuring fair value in GAAP, and expands disclosures about fair value measurements. ASC 820 applies when another portion of the codification requires or permits assets or liabilities to be measured at fair value. Accordingly, ASC 820 does not
require any new fair value measurements. On January 1, 2009, we adopted the remaining provisions of ASC 820 as it relates to nonfinancial assets and liabilities that are not recognized or disclosed at fair value on a recurring basis. The
adoption of ASC 820 did not materially impact our consolidated financial statements. See Note 3 a) for disclosures about the fair value of our financial instruments.

On January 1, 2009, we adopted ASC topic 805 (formerly SFAS No. 141R, Business Combinations). ASC 805 applies to all transactions or other events in which an entity obtains control of one
or more businesses and requires that all assets and liabilities of an acquired business as well as any noncontrolling interest in the acquiree be recorded at their fair values at the acquisition date. Contingent consideration arrangements are
recognized at their acquisition date fair values, with subsequent changes in fair value generally reflected in earnings. Pre-acquisition contingencies are also typically recognized at their acquisition date fair values. In subsequent periods,
contingent liabilities are measured at the higher of their acquisition date fair values or the estimated amounts to be realized. The adoption of ASC 805 did not impact our consolidated financial statements.

On January 1, 2009, we adopted ASC sub-topic 810-10 (formerly SFAS No. 160, Accounting and Reporting on Non-controlling Interest in
Consolidated Financial Statements, an Amendment of ARB 51). ASC 810-10 states that accounting and reporting for minority interests are to be recharacterized as noncontrolling interests and classified as a component of equity. The
calculation of earnings per share continues to be based on income amounts attributable to the parent. ASC 810-10 applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, but affects only those
entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. The adoption of ASC 810-10 did not impact our consolidated financial statements.



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



On January 1, 2009, we adopted ASC subtopic 815-10-50 (formerly SFAS No. 161, Disclosures
about Derivative Instruments and Hedging Activities). ASC 815-10-50 requires enhanced disclosures about an entitys derivative and hedging activities, including how and why an entity uses derivative instruments, how derivative instruments
and related hedged items are accounted for and how derivative instruments and related hedged items affect an entitys financial position, financial performance, and cash flows. The adoption of ASC 815-10-50 did not materially impact our
consolidated financial statements. See Note 3 b) for disclosures about our derivative instruments and hedging activities.

During the second
quarter of 2009, we adopted guidance issued by the Financial Accounting Standards Board (FASB) in April 2009 that is intended to provide additional application guidance and enhance disclosures about fair value measurements and
impairments of securities and guidance that expanded the fair value disclosures required for all financial instruments within the scope of ASC topic 825 to interim periods. The adoption of this guidance did not materially impact our consolidated
financial statements. See Note 3 a) for disclosures about the fair value of our financial instruments.

During the second quarter of 2009, we
adopted ASC topic 855 (formerly SFAS No. 165, Subsequent Events), on a prospective basis. ASC 855 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial
statements are issued or are available to be issued. The adoption did not materially impact our consolidated financial statements. We have evaluated subsequent events through the time that we filed our financial statements on November 12, 2009.

During the third quarter of 2009, we adopted ASC topic 105 (formerly SFAS No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles), which establishes only two levels of U.S. GAAP, authoritative and nonauthoritative. The FASB Accounting Standards Codification (the Codification) is
the source of authoritative, nongovernmental GAAP, except for rules and interpretive releases of the SEC, which are sources of authoritative GAAP for SEC registrants. All other nongrandfathered, non-SEC accounting literature not included in the
Codification is nonauthoritative. We now use the new guidelines and numbering system prescribed by the Codification when referring to GAAP. As the Codification does not change or alter existing GAAP, it did not have any impact on our consolidated
financial statements.



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



New Accounting Guidance

In August 2009, the FASB issued Accounting Standards Update (ASU) 2009-05, Measuring Liabilities at Fair Value (ASU
2009-05). The amendments in this ASU apply to all entities that measure liabilities at fair value and provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, an
entity is required to measure fair value using one or more techniques laid out in this ASU. The guidance provided in this ASU is effective for the first reporting period (including interim periods) beginning after issuance. 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
Accounting Standards Update (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.

l) 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. 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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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



The following table presents our assets and liabilities that are measured at fair value on a recurring
basis at September 30, 2009 consistent with the fair value hierarchy provisions of FASB ASC 820:



|                           |  |                                         |         |                                                            |   |                                            |  |                                        |         |  |   |  
|-------------------------- |  | --------------------------------------- | ------- | ---------------------------------------------------------- | - | ------------------------------------------ |  | -------------------------------------- | ------- |  | - | -
|                           |  |                                         |         | Fair Value Measurement at Reporting Date Using            
|Description                |  | EstimatedFair Value
atSeptember 30,2009 |         | Quoted Prices inActive
Marketsfor IdenticalAssets(Level 1) |   | Significant OtherObservableInputs(Level 2) |  | SignificantUnobservableInputs(Level 3)
|Assets:                    |  |                                         |         |                                                            |   |                                            |  |                                        |         |  |   |  
|Money market funds (1)     |  | $                                       | 51,040  |                                                            | $ | 51,040                                     |  | $                                      |        |  | $ | 
|Forward Contracts, net (2) |  |                                         | 126,365 |                                                            |   |                                           |  |                                        | 126,365 |  |   | 
|                           |  |                                         |         |                                                            |   |                                            |  |                                        |         |  |   |  
|Total Assets               |  | $                                       | 177,405 |                                                            | $ | 51,040                                     |  | $                                      | 126,365 |  | $ | 
|                           |  |                                         |         |                                                            |   |                                            |  |                                        |         |  |   |  



|(1) | Included in cash and equivalents
|--- | --------------------------------

|(2) | 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, 2009 had maturities ranging up to 5 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.



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



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, 2009 |         | December 31, 2008    |  
|                  |  | NotionalAmount     |         | Net Asset(Liability) |   | NotionalAmount |  | Net Asset(Liability) |          
|Forward contracts |  | $                  | 975,000 |                      | $ | 126,365        |  | $                    | 1,375,000 |  | $ | (2,728 | )

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 $48,750 and $68,750 related to forward contracts outstanding at September 30, 2009 and December 31, 2008, respectively.

4. RELATED PARTIES

The following table
summarizes amounts due to related parties at September 30, 2009 and December 31, 2008:



|                          |  |                    |         |                   |   |           |  |            |         |  |   |          
|------------------------- |  | ------------------ | ------- | ----------------- | - | --------- |  | ---------- | ------- |  | - | ---------
|                          |  | September 30, 2009 |         | December 31, 2008
|                          |  | Current            |         | Noncurrent        |   | Current   |  | Noncurrent
|Purchase of business unit |  | $                  | 151,889 |                   | $ |          |  | $          | 125,200 |  | $ |         
|Computer hosting services |  |                    | 232,472 |                   |   |          |  |            | 139,218 |  |   |         
|Office rent               |  |                    | 476,019 |                   |   |          |  |            | 327,659 |  |   |         
|Other                     |  |                    | 41,096  |                   |   |          |  |            | 34,652  |  |   |         
|Loan                      |  |                    |        |                   |   | 182,122   |  |            |        |  |   | 169,016  
|Lead generation services  |  |                    |        |                   |   | 688,146   |  |            |        |  |   | 638,621  
|Accrued salary            |  |                    |        |                   |   | 1,609,846 |  |            |        |  |   | 1,242,100
|                          |  |                    |         |                   |   |           |  |            |         |  |   |          
|                          |  | $                  | 901,476 |                   | $ | 2,480,114 |  | $          | 626,729 |  | $ | 2,049,737
|                          |  |                    |         |                   |   |           |  |            |         |  |   |          

The Company has a loan agreement with Bravenet Web Services, Inc. (Bravenet). The
President and Chief Executive Officer of Quotemedia, Ltd., a wholly owned subsidiary, is a control person of Bravenet. At September 30, 2009, the remaining loan balance due to Bravenet including accrued interest at 10% is $182,122.

From January 1, 2005 to November 30, 2006, Bravenet provided the Company customer promotion and lead generation services. At September 30,
2009, all amounts due to Bravenet for customer promotion and lead generation services have been accrued in amounts due to related parties, and total $688,146 including accrued interest at 10% per annum.



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



On September 29, 2006, Quotemedia, Ltd. purchased the Bravenet business unit that was responsible
for providing the Company customer promotion and lead generation services. The $110,000 purchase price due to Bravenet has been accrued in amounts due to related parties and remains unpaid as at September 30, 2009. At September 30, 2009,
the balance due to Bravenet for the unpaid purchase price is $151,889 which includes interest accrued at 10%.

Bravenet provides computer
hosting and maintenance services to the Company for approximately $6,000 per month. At September 30, 2009, the balance due to Bravenet for unpaid computer hosting and maintenance services is $232,472. This amount includes interest accrued at
10%.

The Company leases office space from Harrison Avenue Holdings Ltd. (Harrison) for approximately $9,500 per month. The
President and Chief Executive Officer of Quotemedia, Ltd., a wholly owned subsidiary, is a control person of Harrison. At September 30, 2009, all amounts due to Harrison related to the leased office space have been accrued in amounts due to
related parties. As at September 30, 2009, the balance due to Harrison for unpaid office rent is $476,019. This amount includes interest accrued at 10%.

At September 30, 2009, the Company owed $1,609,846 to an officer of the Company for accrued salary. This amount includes interest accrued at 10%.

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.

5. STOCKHOLDERS DEFICIT

a) Preferred shares

We are authorized to issue up to 10,000,000 non-designated preferred shares at the Board of
Directors discretion. As at September 30, 2009 no preferred shares have been issued.

b) Common stock

No shares of common stock were issued during the three or nine month period ended September 30, 2009.



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



c) Stock option plan

We have stock option plans whereby shares of our common stock may be issued pursuant to the exercise of stock options granted to employees, officers,
directors, advisors, and our independent contractors. The exercise price of the common stock underlying an option will be determined by the Board of Directors or compensation committee and may be equal to, greater than, or less than the market value
of our common stock at the date of grant but in no event less than 50% of such market value. The options generally vest in one to four years unless, at the discretion of the Board of Directors, alternative vesting methods are allowed. The term of
each option is determined at the time of grant and may extend to a maximum of ten years. At September 30, 2009, we had reserved 12,500,000 options for issuance under the stock option plan. Options may also be granted outside our stock option
plan. Options granted outside the plan generally contain terms that are more restrictive in nature and have a maximum expiration term of ten years. We may grant an unlimited number of options outside our stock option plan at the discretion of the
Board of Directors.

The following table represents stock option and warrant activity for the nine months ended September 30, 2009:



|                                        |  |                     |   |  |                                |     
|--------------------------------------- |  | ------------------- | - |  | ------------------------------ | ----
|                                        |  | Options andWarrants |   |  | Weighted-AverageExercise Price
|Outstanding at December 31, 2008        |  | 13,727,803          |   |  | $                              | 0.17
|                                        |  |                     |   |  |                                |     
|Granted under company stock option plan |  | 3,405,000           |   |  | $                              | 0.07
|Warrants granted                        |  | 6,552,803           |   |  | $                              | 0.07
|Stock options exercised                 |  |                    |   |  |                                | n/a 
|Warrants exercised                      |  |                    |   |  |                                | n/a 
|Stock options forfeited/expired         |  | (3,365,000          | ) |  | $                              | 0.19
|Warrants forfeited/expired              |  | (7,552,803          | ) |  | $                              | 0.18
|                                        |  |                     |   |  |                                |     
|Outstanding at September 30, 2009       |  | 12,767,803          |   |  | $                              | 0.08
|                                        |  |                     |   |  |                                |     



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



The following table summarizes our non-vested stock option and warrant activity for the nine months
ended September 30, 2009:



|                                                            |  |                     |   |  |                                       |     
|----------------------------------------------------------- |  | ------------------- | - |  | ------------------------------------- | ----
|                                                            |  | Options andWarrants |   |  | Weighted-Average GrantDate Fair Value
|Non-vested stock options and warrants at December 31, 2008  |  | 1,909,467           |   |  | $                                     | 0.19
|Granted during the period                                   |  | 4,722,803           |   |  | $                                     | 0.07
|Vested during the period                                    |  | (5,105,138          | ) |  | $                                     | 0.09
|Forfeited during the period                                 |  | (1,090,965          | ) |  | $                                     | 0.19
|                                                            |  |                     |   |  |                                       |     
|Non-vested stock options and warrants at September 30, 2009 |  | 436,167             |   |  | $                                     | 0.07
|                                                            |  |                     |   |  |                                       |     



|           |  |                                    |  |                                         |  |                              |      |                                       |            |                              |   |     
|---------- |  | ---------------------------------- |  | --------------------------------------- |  | ---------------------------- | ---- | ------------------------------------- | ---------- | ---------------------------- | - | ----
|           |  | Options and Warrants Outstanding   |  | Options and WarrantsExercisable        
|           |  | NumberOutstandingSeptember 30,2009 |  | WeightedAverageRemainingContractualLife |  | WeightedAverageExercisePrice |      | NumberExercisable atSeptember 30,2009 |            | WeightedAverageExercisePrice
|$0.05-0.10 |  | 12,257,803                         |  | 3.69                                    |  | $                            | 0.07 |                                       | 11,821,636 |                              | $ | 0.07
|$0.11-0.30 |  | 10,000                             |  | 7.54                                    |  | $                            | 0.19 |                                       | 10,000     |                              | $ | 0.19
|$0.31-0.50 |  | 500,000                            |  | 5.13                                    |  | $                            | 0.40 |                                       | 500,000    |                              | $ | 0.40

On May 21, 2009, the Companys Board of Directors and Compensation Committee authorized a
reduction of the exercise price of a total of 9,917,803 stock options and warrants granted to employees and directors who held options or warrants with exercise prices greater than $0.07. The new exercise price for those options and warrants were
fixed at $0.07 per share, which was the market price of the Companys Common Stock at the time of the repricings. The vesting period and the expiry dates of the repriced options and warrants remained unchanged. The repricing 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 $26,781 that was recognized in May 2009.

As at September 30, 2009 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, 2009 the options and warrants outstanding have no intrinsic
value. 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.



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



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.

d) Loss per share

The basic and diluted net loss per share was $(0.00) per share for the three months ended September 30, 2009 and 2008. The basic and diluted net loss per share was $(0.01) and $(0.01) per share for the nine months ended
September 30, 2009 and 2008, respectively. There were 13,767,803 stock options and warrants excluded from the calculation of dilutive loss per share for the three and nine months ended September 30, 2009 and 2008 because they were
anti-dilutive.

6. SUPPLEMENTARY CASH FLOW INFORMATION



|                           |  |                                 |       |      |   |      
|-------------------------- |  | ------------------------------- | ----- | ---- | - | -----
|                           |  | Nine months ended September 30,
|                           |  | 2009                            |       | 2008
|Cash paid for Interest     |  | $                               | 1,708 |      | $ | 7,352
|                           |  |                                 |       |      |   |      
|Cash received for Interest |  | $                               | 48    |      |   | 3,612
|                           |  |                                 |       |      |   |      
|Cash paid for taxes        |  | $                               |      |      | $ |     
|                           |  |                                 |       |      |   |      

7. SUBSEQUENT EVENTS

We have evaluated subsequent events through November 12, 2009, the date that these financial statements were issued.



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##### Table of Contents

|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, 2008 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 it predecessors, operating divisions, and subsidiaries.

This report should be read in conjunction with our Form 10-K for the fiscal year ended December 31, 2008 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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##### Table of Contents

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

In recent months, 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. We expect
these trends to continue throughout 2009, which may affect our growth rate and operating results.

Plan of operation

Our plan of operation for the remainder of 2009 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 also look to continue the growth of our Data Feed Services client base, and to increase the sales of its Interactive Content and Data Applications, particularly in the context of large scale enterprise deployments encompassing
solutions ranging across several product lines.



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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                          |  | 2009 |           | 2008 |   | Change ($) |  | Change (%) |        
|Three months ended September 30, |  |      |           |      |   |            |  |            |         |  |   |  
|Licensing revenue                |  | $    | 1,910,884 |      | $ | 1,888,279  |  | $          | 22,605  |  | 1 | %
|                                 |  |      |           |     
|Nine months ended September 30,  |  |      |           |      |   |            |  |            |         |  |   |  
|Licensing revenue                |  | $    | 5,658,444 |      | $ | 5,300,350  |  | $          | 358,094 |  | 7 | %

Licensing revenue has increased 1% and 7% when comparing the three and nine months ended
September 30, 2009 and 2008. The increases are a result of sales growth from licensing our Portfolio Management Systems.

The number of
Quotestream subscribers increased during the periods, resulting in a $296,764 (55%) and $598,952 (36%) increase in Portfolio Management System revenue when comparing the three and nine months ended September 30, 2009 and 2008. Our low
cost base of development and operation has allowed us to maintain very 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, 2009 and 2008.

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
$274,161 (20%) and $240,859 (7%) when comparing the three and nine months ended September 30, 2009 and 2008.



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Cost of Revenue and Gross Profit Summary



|                                 |  |      |           |   |      |   |           |            |  |   |            |   |  |   |  
|-------------------------------- |  | ---- | --------- | - | ---- | - | --------- | ---------- |  | - | ---------- | - |  | - | -
|                                 |  | 2009 |           |   | 2008 |   |           | Change ($) |  |   | Change (%) |  
|Three months ended September 30, |  |      |           |   |      |   |           |            |  |   |            |   |  |   |  
|Cost of revenue                  |  | $    | 827,255   |   |      | $ | 802,757   |            |  | $ | 24,498     |   |  | 3 | %
|Gross profit                     |  | $    | 1,083,629 |   |      | $ | 1,085,522 |            |  | $ | (1,893     | ) |  | 0 | %
|Gross margin %                   |  |      | 57        | % |      |   | 57        | %          |  |   |            |   |  |   |  
|                                 |  |      |           |  
|Nine months ended September 30,  |  |      |           |   |      |   |           |            |  |   |            |   |  |   |  
|Cost of revenue                  |  | $    | 2,430,244 |   |      | $ | 2,267,709 |            |  | $ | 162,535    |   |  | 7 | %
|Gross profit                     |  | $    | 3,228,200 |   |      | $ | 3,032,641 |            |  | $ | 195,559    |   |  | 6 | %
|Gross margin %                   |  |      | 57        | % |      |   | 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 3% and 7% when comparing the three and nine months ended September 30, 2009 and 2008. The increase is primarily 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. We also incurred increases in variable stock
exchange fees resulting from the growth in the number of clients from the comparable period.

Overall, the cost of revenue remained unchanged
as a percentage of sales, as evidenced by our gross margin percentage which remained unchanged at 57% for the three and nine month periods ended September 30, 2009 and 2008.

Operating Expenses Summary



|                                 |  |      |           |      |   |            |  |   |            |   |  |    |   
|-------------------------------- |  | ---- | --------- | ---- | - | ---------- |  | - | ---------- | - |  | -- | --
|                                 |  | 2009 |           | 2008 |   | Change ($) |  |   | Change (%) |  
|Three months ended September 30, |  |      |           |      |   |            |  |   |            |   |  |    |   
|Sales and marketing              |  | $    | 455,612   |      | $ | 458,668    |  | $ | (3,056     | ) |  | (1 | )%
|General and administrative       |  |      | 501,880   |      |   | 472,664    |  |   | 29,216     |   |  | 6  | % 
|Software development             |  |      | 253,468   |      |   | 249,538    |  |   | 3,930      |   |  | 2  | % 
|                                 |  |      |           |      |   |            |  |   |            |   |  |    |   
|Total operating expenses         |  | $    | 1,210,960 |      | $ | 1,180,870  |  | $ | 30,090     |   |  | 3  | % 
|                                 |  |      |           |      |   |            |  |   |            |   |  |    |   



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|                                |  |      |           |      |   |            |  |   |            |   |  |     |   
|------------------------------- |  | ---- | --------- | ---- | - | ---------- |  | - | ---------- | - |  | --- | --
|                                |  | 2009 |           | 2008 |   | Change ($) |  |   | Change (%) |  
|Nine months ended September 30, |  |      |           |      |   |            |  |   |            |   |  |     |   
|Sales and marketing             |  | $    | 1,382,767 |      | $ | 1,587,405  |  | $ | (204,638   | ) |  | (13 | )%
|General and administrative      |  |      | 1,519,972 |      |   | 1,370,403  |  |   | 149,569    |   |  | 11  | % 
|Software development            |  |      | 775,119   |      |   | 767,472    |  |   | 7,647      |   |  | 1   | % 
|                                |  |      |           |      |   |            |  |   |            |   |  |     |   
|Total operating expenses        |  | $    | 3,677,858 |      | $ | 3,725,280  |  | $ | (47,422    | ) |  | (1  | )%
|                                |  |      |           |      |   |            |  |   |            |   |  |     |   

Sales and Marketing

Sales and marketing consists primarily of sales and customer service salaries, investor relations, travel, and advertising expenses. Sales and marketing
expenses decreased $3,056 (1%) and $204,638 (13%) for the three and nine months ended September 30, 2009 when compared to same periods in 2008. The decrease from the comparative periods is due to a decrease in stock-based compensation
and salary expense for sales personnel. The decrease in salary expense is due to the increase in the value of the U.S. dollar relative to the Canadian dollar when comparing the average exchange rates for the three and nine month periods ended
September, 2008 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 months ended September 30, 2009 and 2008. 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 $29,216 (6%) and $149,569 (11%) for the three and nine months ended September 30, 2009 when compared to fiscal 2008. The increase is primarily due to the hiring of new
personnel and competitive salary adjustments to existing personnel 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 $3,930 (2%) and $7,647 (1%) for three and nine months ended September 30, 2009 when compared to fiscal 2008. The increases were due to an increase in
salary expense for software development personnel, offset by a decrease in stock-based compensation expense related to stock options granted to development personnel.

We capitalized $146,426 and $402,226 of development costs for the three and nine months ended September 30, 2009, compared to $149,937 and $417,466 for the same periods in 2008. 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.



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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 increase in salary expense for development personnel was mitigated by the depreciation 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



|                                  |  |      |          |   |      |   |          |  
|--------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|                                  |  | 2009 |          |   | 2008 |  
|Three months ended September 30,  |  |      |          |   |      |   |          |  
|Foreign exchange gain (loss)      |  | $    | 52,634   |   |      | $ | 11,653   |  
|Interest expense                  |  |      | (80,190  | ) |      |   | (61,388  | )
|                                  |  |      |          |   |      |   |          |  
|Total other income and (expenses) |  | $    | (27,556  | ) |      | $ | (49,735  | )
|                                  |  |      |          |   |      |   |          |  
|                                  |  |     
|Nine months ended September 30,   |  |      |          |   |      |   |          |  
|Foreign exchange gain (loss)      |  | $    | 118,078  |   |      | $ | 20,446   |  
|Interest expense                  |  |      | (222,773 | ) |      |   | (174,671 | )
|                                  |  |      |          |   |      |   |          |  
|Total other income and (expenses) |  | $    | (104,695 | ) |      | $ | (154,225 | )
|                                  |  |      |          |   |      |   |          |  

Foreign Exchange Gain (Loss)

We recognized foreign exchange gains of $52,634 and $118,078 for the three and nine month periods ended September 30, 2009, compared to foreign exchange
gains of $11,653 and $20,446 for the same periods in 2008. Exchange gains and losses arise from the re-measurement of Canadian dollar monetary assets and liabilities into U.S. dollars. The change in fair value for foreign exchange forward contracts
is also included in foreign exchanges gains and losses. The foreign exchange gains for the three and nine month periods ended September 30, 2009 resulted from the change in the fair value of our foreign exchange forward contracts. This was
partially offset by a loss arising from the re-measurement of Canadian dollar monetary assets and liabilities into U.S. dollars. The re-measurement loss was due to a decrease in the value of the U.S. dollar relative to the Canadian dollar when
comparing the exchange rate at December 31, 2008 to September 30, 2009, as we have net Canadian dollar liability at September 30, 2009.

Interest Expense

Interest is accrued on certain amounts owed to related parties.
Interest expense increased for the three and nine months ended September 30, 2009 due to additional borrowings compared to the same period in 2008. Interest is accrued at 10% per annum. Interest income earned on cash balances is netted
against interest income.



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Provision for Income Taxes

For the three months ended September 30, 2009 and 2008, the Company recorded Canadian income tax expense of $478 and $8,790, respectively. For the nine
months ended September 30, 2009 and 2008, the Company recorded Canadian income tax expense of $2,137 and $22,686, respectively.

Net Income (Loss) for the Period

As a result of the foregoing, net loss for the three months ended September 30,
2009 was $(155,365) or $(0.00) per share compared to a net loss of $(153,873) or $(0.00) per share for the three months ended September 30, 2008. The net loss for the nine months ended September 30, 2009 was $(556,490) or $(0.01) per share
compared to a net loss of $(869,550) or $(0.01) per share for the nine months ended September 30, 2008.

Liquidity
and Capital Resources

Our cash totaled $440,231 at September 30, 2009, as compared with $536,624 at December 31, 2008, a
decrease of $96,393. Net cash of $397,585 was provided by operations for the nine months ended September 30, 2009, primarily due to the increase in accounts payable and amounts due to related parties, offset by the net loss for the period and
the increase in accounts receivable. Net cash used in investing activities for the nine months ended September 30, 2009 was $493,978 resulting from capitalized application software costs, the purchase of new computer equipment, offset by the
decrease in forward contract margin deposits. There were no financing activities for the nine month period ended September 30, 2009.

Our
current liabilities include $901,476 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 $435,726 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 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.



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|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, 2009 were effective 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, 2009, 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, 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.        



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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, 2009By:

/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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