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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark one)

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

For the quarterly period ended September 30, 2008

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  þ    No   ̈

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



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

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

The Registrant has 89,371,320 shares of common stock outstanding as at October 31, 2008.









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QUOTEMEDIA, INC.

FORM 10-Q for the Quarter Ended September 30, 2008

INDEX



|                                                                                                      |  |     
|----------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                      |  | Page
|Part I. Financial Information                                                                         |  |     
|Item 1. Financial Statements (unaudited):                                                             |  | 3   
|Consolidated Balance Sheets at September 30, 2008 and December 31, 2007                               |  | 3   
|Consolidated Statements of Operations for the three and nine months ended September 30, 2008 and
2007 |  | 4   
|Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2008 and
2007 |  | 5   
|Notes to Consolidated Financial Statements                                                            |  | 6   
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations         |  | 17  
|Item 4T. Controls and Procedures                                                                      |  | 24  
|Part II. Other Information                                                                            |  | 26  
|Item 6. Exhibits                                                                                      |  | 26  
|Signatures                                                                                            |  | 26  



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QUOTEMEDIA, INC.

CONSOLIDATED BALANCE SHEETS



|                                                                                                       |  |                    |             |   |                   |   |            |  
|------------------------------------------------------------------------------------------------------ |  | ------------------ | ----------- | - | ----------------- | - | ---------- | -
|                                                                                                       |  | September 30, 2008 |             |   | December 31, 2007 |  
|                                                                                                       |  | (Unaudited)        |             |   |                   |  
|ASSETS                                                                                                 |  |                    |             |   |                   |   |            |  
|Current assets:                                                                                        |  |                    |             |   |                   |   |            |  
|Cash                                                                                                   |  | $                  | 264,148     |   |                   | $ | 357,316    |  
|Accounts receivable, net                                                                               |  |                    | 532,898     |   |                   |   | 299,806    |  
|Prepaid expenses                                                                                       |  |                    | 279,850     |   |                   |   | 265,868    |  
|                                                                                                       |  |                    |             |   |                   |   |            |  
|Total current assets                                                                                   |  |                    | 1,076,896   |   |                   |   | 922,990    |  
|Deposits                                                                                               |  |                    | 26,573      |   |                   |   | 9,027      |  
|Property and equipment, net                                                                            |  |                    | 999,466     |   |                   |   | 803,117    |  
|Intangible assets                                                                                      |  |                    | 193,409     |   |                   |   | 198,050    |  
|                                                                                                       |  |                    |             |   |                   |   |            |  
|Total assets                                                                                           |  | $                  | 2,296,344   |   |                   | $ | 1,933,184  |  
|                                                                                                       |  |                    |             |   |                   |   |            |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                  |  |                    |             |   |                   |   |            |  
|Current liabilities:                                                                                   |  |                    |             |   |                   |   |            |  
|Accounts payable and accrued liabilities                                                               |  | $                  | 917,652     |   |                   | $ | 560,333    |  
|Deferred revenue                                                                                       |  |                    | 450,580     |   |                   |   | 433,630    |  
|Current portion of amounts due to related parties                                                      |  |                    | 644,089     |   |                   |   | 501,642    |  
|                                                                                                       |  |                    |             |   |                   |   |            |  
|Total current liabilities                                                                              |  |                    | 2,012,321   |   |                   |   | 1,495,605  |  
|                                                                                                       |  |                    |             |   |                   |   |            |  
|Long-term portion of amounts due to related parties                                                    |  |                    | 1,925,568   |   |                   |   | 1,571,085  |  
|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 88,763,365 shares issued |  |                    | 89,372      |   |                   |   | 88,764     |  
|Additional paid-in capital                                                                             |  |                    | 8,324,202   |   |                   |   | 7,963,299  |  
|Accumulated deficit                                                                                    |  |                    | (10,055,119 | ) |                   |   | (9,185,569 | )
|                                                                                                       |  |                    |             |   |                   |   |            |  
|Total stockholders deficit                                                                            |  |                    | (1,641,545  | ) |                   |   | (1,133,506 | )
|Total liabilities and stockholders deficit                                                            |  | $                  | 2,296,344   |   |                   | $ | 1,933,184  |  
|                                                                                                       |  |                    |             |   |                   |   |            |  

See accompanying notes



3



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QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                    |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|----------------------------------- |  | -------------------------------- | ---------- | - | ------------------------------- | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                    |  | Three months ended September 30, |            |   | Nine months ended September 30, |  
|                                    |  | 2008                             |            |   | 2007                            |   |            | 2008 |  |   | 2007       |  
|OPERATING REVENUE                   |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Licensing fees                      |  | $                                | 1,888,279  |   |                                 | $ | 1,501,097  |      |  | $ | 5,300,350  |   |  | $ | 3,993,202  |  
|Cost of revenue                     |  |                                  | 802,757    |   |                                 |   | 627,023    |      |  |   | 2,267,709  |   |  |   | 1,739,882  |  
|                                    |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Gross Profit                        |  |                                  | 1,085,522  |   |                                 |   | 874,074    |      |  |   | 3,032,641  |   |  |   | 2,253,320  |  
|                                    |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|OPERATING EXPENSES                  |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Sales and marketing                 |  |                                  | 458,668    |   |                                 |   | 499,975    |      |  |   | 1,587,405  |   |  |   | 1,362,708  |  
|General and administrative          |  |                                  | 472,664    |   |                                 |   | 387,259    |      |  |   | 1,370,403  |   |  |   | 1,138,260  |  
|Software development                |  |                                  | 249,538    |   |                                 |   | 299,713    |      |  |   | 767,472    |   |  |   | 710,940    |  
|                                    |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|                                    |  |                                  | 1,180,870  |   |                                 |   | 1,186,947  |      |  |   | 3,725,280  |   |  |   | 3,211,908  |  
|                                    |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|OPERATING LOSS                      |  |                                  | (95,348    | ) |                                 |   | (312,873   | )    |  |   | (692,639   | ) |  |   | (958,588   | )
|OTHER INCOME AND (EXPENSES)         |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Foreign exchange gain (loss)        |  |                                  | 11,653     |   |                                 |   | (35,322    | )    |  |   | 20,446     |   |  |   | (77,820    | )
|Interest expense                    |  |                                  | (61,388    | ) |                                 |   | (67,141    | )    |  |   | (174,671   | ) |  |   | (175,915   | )
|                                    |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|                                    |  |                                  | (49,735    | ) |                                 |   | (102,463   | )    |  |   | (154,225   | ) |  |   | (253,735   | )
|                                    |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|NET LOSS BEFORE INCOME TAXES        |  |                                  | (145,083   | ) |                                 |   | (415,336   | )    |  |   | (846,864   | ) |  |   | (1,212,323 | )
|Provision for income taxes          |  |                                  | (8,790     | ) |                                 |   |           |      |  |   | (22,686    | ) |  |   |           |  
|                                    |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|NET LOSS                            |  |                                  | (153,873   | ) |                                 |   | (415,336   | )    |  |   | (869,550   | ) |  |   | (1,212,323 | )
|                                    |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|LOSS PER SHARE                      |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Basic and diluted loss per share    |  | $                                | (0.00      | ) |                                 | $ | (0.01      | )    |  | $ | (0.01      | ) |  | $ | (0.02      | )
|                                    |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|WEIGHTED AVERAGE SHARES OUTSTANDING |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Basic and diluted                   |  |                                  | 89,371,320 |   |                                 |   | 66,907,945 |      |  |   | 89,043,483 |   |  |   | 66,286,926 |  
|                                    |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  

See accompanying notes



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QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                |  |                                 |          |   |      |   |            |  
|------------------------------------------------------------------------------- |  | ------------------------------- | -------- | - | ---- | - | ---------- | -
|                                                                                |  | Nine months ended September 30, |         
|                                                                                |  | 2008                            |          |   | 2007 |  
|OPERATING ACTIVITIES                                                            |  |                                 |          |   |      |   |            |  
|Net loss                                                                        |  | $                               | (869,550 | ) |      | $ | (1,212,323 | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                                 |          |   |      |   |            |  
|Depreciation and amortization                                                   |  |                                 | 308,406  |   |      |   | 161,141    |  
|Bad debt expense                                                                |  |                                 | 64,190   |   |      |   | 72,454     |  
|Stock-based compensation expense                                                |  |                                 | 334,011  |   |      |   | 196,980    |  
|Noncash advertising revenue                                                     |  |                                 | (270,000 | ) |      |   | (270,000   | )
|Noncash barter advertising expense                                              |  |                                 | 270,000  |   |      |   | 240,000    |  
|Changes in assets and liabilities:                                              |  |                                 |          |   |      |   |            |  
|Accounts receivable                                                             |  |                                 | (297,282 | ) |      |   | (267,879   | )
|Prepaid expenses                                                                |  |                                 | (13,982  | ) |      |   | (35,046    | )
|Deposits                                                                        |  |                                 | (17,546  | ) |      |   | 2,584      |  
|Accounts payable and amounts due to related parties                             |  |                                 | 854,249  |   |      |   | 378,577    |  
|Deferred revenue                                                                |  |                                 | 16,950   |   |      |   | 74,978     |  
|                                                                                |  |                                 |          |   |      |   |            |  
|Net cash provided by (used in) operating activities                             |  |                                 | 379,446  |   |      |   | (658,534   | )
|                                                                                |  |                                 |          |   |      |   |            |  
|INVESTING ACTIVITIES                                                            |  |                                 |          |   |      |   |            |  
|Purchase of fixed and intangible assets                                         |  |                                 | (82,648  | ) |      |   | (58,923    | )
|Capitalized application software                                                |  |                                 | (417,466 | ) |      |   | (282,756   | )
|                                                                                |  |                                 |          |   |      |   |            |  
|Net cash used in investing activities                                           |  |                                 | (500,114 | ) |      |   | (341,679   | )
|                                                                                |  |                                 |          |   |      |   |            |  
|FINANCING ACTIVITIES                                                            |  |                                 |          |   |      |   |            |  
|Proceeds from exercise of stock options                                         |  |                                 | 27,500   |   |      |   | 7,500      |  
|Repayment of amounts due to related parties                                     |  |                                 |         |   |      |   | (35,278    | )
|Loans from related parties                                                      |  |                                 |         |   |      |   | 500,000    |  
|                                                                                |  |                                 |          |   |      |   |            |  
|Net cash provided by financing activities                                       |  |                                 | 27,500   |   |      |   | 472,222    |  
|                                                                                |  |                                 |          |   |      |   |            |  
|Net decrease in cash                                                            |  |                                 | (93,168  | ) |      |   | (527,991   | )
|Cash, beginning of period                                                       |  |                                 | 357,316  |   |      |   | 886,251    |  
|                                                                                |  |                                 |          |   |      |   |            |  
|Cash, end of period                                                             |  | $                               | 264,148  |   |      | $ | 358,260    |  
|                                                                                |  |                                 |          |   |      |   |            |  

See supplementary information (note 6)



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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 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.

The Balance Sheet at December 31,
2007 has been derived from the audited financial statements as of that date but does not include all of the information and footnotes included in the Companys Annual Report on Form 10-KSB for the year end December 31, 2007.

These financial statements should be read in conjunction with our financial statements and the notes thereto for the fiscal year ended December 31, 2007 contained
in our Form 10-KSB filed with the Securities and Exchange Commission dated April 3, 2008.

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) 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

(Unaudited)



d) 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, 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, 2008 and 2007:



|                         |  |                                 |        |                                |   |        |  |      |         |  |   |        
|------------------------ |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------- |  | - | -------
|                         |  | Three months endedSeptember 30, |        | Nine months endedSeptember 30,
|                         |  | 2008                            |        | 2007                           |   | 2008   |  | 2007
|Barter revenue earned    |  | $                               | 90,000 |                                | $ | 90,000 |  | $    | 270,000 |  | $ | 270,000
|Advertising credits used |  |                                 | 90,000 |                                |   | 90,000 |  |      | 270,000 |  |   | 240,000

e) Property and equipment



|                                 |  |      |           |                         |   |               |  |   |        
|-------------------------------- |  | ---- | --------- | ----------------------- | - | ------------- |  | - | -------
|                                 |  | Cost |           | AccumulatedDepreciation |   | Net BookValue
|As at September 30, 2008:        |  |      |           |                         |   |               |  |   |        
|Computer equipment               |  | $    | 339,945   |                         | $ | 147,247       |  | $ | 192,698
|Office furniture and equipment   |  |      | 68,559    |                         |   | 35,627        |  |   | 32,932 
|Leasehold improvements           |  |      | 33,868    |                         |   | 18,111        |  |   | 15,757 
|Capitalized application software |  |      | 1,227,217 |                         |   | 469,138       |  |   | 758,079
|                                 |  |      |           |                         |   |               |  |   |        
|                                 |  | $    | 1,669,589 |                         | $ | 670,123       |  | $ | 999,466
|                                 |  |      |           |                         |   |               |  |   |        

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

(Unaudited)



For the three and nine months ended September 30, 2008, the Company capitalized $149,937 and $417,466 of costs,
respectively, related to the development of new software applications and 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, 2008 and 2007, amortization expenses associated with the internally developed application software was $93,771 and $44,900 respectively. For the nine months ended September 30, 2008 and 2007, amortization
expenses associated with the internally developed application software was $246,851 and $109,827 respectively. At September 30, 2008, the remaining book value of the application software was $758,079.

Depreciation expense for equipment and leaseholds for the three months ended September 30, 2008 and 2007 was $20,372 and $17,255 respectively. Depreciation expense
for the nine months ended September 30, 2008 and 2007 was $56,914 and $49,707 respectively.

f) Intangible assets



|                                                   |  |      |         |                         |   |               |  |   |        
|-------------------------------------------------- |  | ---- | ------- | ----------------------- | - | ------------- |  | - | -------
|                                                   |  | Cost |         | AccumulatedAmortization |   | Net BookValue
|As at September 30, 2008:                          |  |      |         |                         |   |               |  |   |        
|Amortized intangible assets:                       |  |      |         |                         |   |               |  |   |        
|Purchase option for office building                |  | $    | 10,000  |                         | $ | 4,464         |  | $ | 5,536  
|Software licenses                                  |  |      | 70,256  |                         |   | 2,635         |  |   | 67,621 
|Domain names                                       |  |      | 10,651  |                         |   | 399           |  |   | 10,252 
|                                                   |  |      |         |                         |   |               |  |   |        
|                                                   |  |      | 90,907  |                         |   | 7,498         |  |   | 83,409 
|                                                   |  |      |         |                         |   |               |  |   |        
|Unamortized intangible assets:                     |  |      |         |                         |   |               |  |   |        
|Goodwill associated with purchase of business unit |  |      | 110,000 |                         |   |              |  |   | 110,000
|                                                   |  |      |         |                         |   |               |  |   |        
|Total intangible assets                            |  | $    | 200,907 |                         | $ | 7,498         |  | $ | 193,409
|                                                   |  |      |         |                         |   |               |  |   |        

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 software licenses and domain names is estimated to be 20 years. For the three months ended September 30, 2008 and 2007,
amortization expense for amortized intangible assets was $1,547 and $(107) respectively. For the nine months ended September 30, 2008 and 2007, amortization expense for amortized intangible assets was $4,641 and $1,607 respectively.

The Company assesses potential impairments to its unamortized intangible assets on an annual basis, or when there is evidence that events or changes in circumstances
indicate that the carrying amount of an asset may not be recovered. An impairment loss is recognized when the carrying amount of the unamortized intangible asset is not recoverable and exceeds its fair value. The carrying amount of an unamortized
intangible asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of an
unamortized intangible asset exceeds its fair value and is recorded as a reduction in the carrying value of the related asset and a charge to operating results.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



In accordance with SFAS 142, we evaluate goodwill for impairment on a reporting unit basis. Reporting units are
operating segments or components of operating segments for which discrete financial information is available. The evaluation of goodwill for each reporting unit is based upon the following approach. We compare the fair value of a reporting unit to
its carrying value. Where the carrying value is greater than the fair value, the implied fair value of the reporting unit goodwill is determined by allocating the fair value of the reporting unit to all the assets and liabilities of the reporting
unit with any of the remainder being allocated to goodwill. The implied fair value of the reporting unit goodwill is then compared to the carrying value of that goodwill to determine the impairment loss.

g) Stock-based compensation

SFAS No. 123 (revised),
Share-Based Payments requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense over the service period (generally the vesting period) in the consolidated
financial statements based on their fair values. The impact of forfeitures that may occur prior to vesting is also estimated and considered in the amount recognized.

Total estimated stock-based compensation expense, related to all of the Companys stock-based awards, recognized for the three and nine month periods ended September 30, 2008 and 2007 was comprised as
follows:



|                               |  |                                 |        |                                |   |        |  |      |         |  |   |        
|------------------------------ |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------- |  | - | -------
|                               |  | Three months endedSeptember 30, |        | Nine months endedSeptember 30,
|                               |  | 2008                            |        | 2007                           |   | 2008   |  | 2007
|Sales and marketing            |  | $                               | 22,284 |                                | $ | 28,737 |  | $    | 217,172 |  | $ | 54,637 
|General and administrative     |  |                                 | 4,284  |                                |   | 2,514  |  |      | 14,572  |  |   | 5,829  
|Software development           |  |                                 | 34,089 |                                |   | 63,667 |  |      | 102,267 |  |   | 136,514
|                               |  |                                 |        |                                |   |        |  |      |         |  |   |        
|Total stock-based compensation |  | $                               | 60,657 |                                | $ | 94,918 |  | $    | 334,011 |  | $ | 196,980
|                               |  |                                 |        |                                |   |        |  |      |         |  |   |        

At September 30, 2008 there was $240,462 of unrecognized compensation cost related to non-vested share-based
payments which is expected to be recognized over a weighted-average period of 1.35 years.

We calculate the fair value of stock options granted under the
provisions of FAS No. 123R using the Black-Scholes valuation model with the following assumptions:



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



|                                               |  |                                 |  |      |                                |   |      |   |           |      |  |   |           |  
|---------------------------------------------- |  | ------------------------------- |  | ---- | ------------------------------ | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                               |  | Three months endedSeptember 30, |  |      | Nine months endedSeptember 30, |  
|                                               |  | 2008                            |  | 2007 |                                |   | 2008 |   |           | 2007 | 
|Expected dividend yield                        |  | n/a                             |  |      |                               |   |      |   |          |      |  |   |          |  
|Expected stock price volatility                |  | n/a                             |  |      | 93                             | % |      |   | 103       | %    |  |   | 93        | %
|Risk-free interest rate                        |  | n/a                             |  |      | 4                              | % |      |   | 4         | %    |  |   | 4         | %
|Expected life of options                       |  | n/a                             |  |      | 4.6 years                      |   |      |   | 5.2 years |      |  |   | 4.7 years |  
|Weighted average fair value of options granted |  | n/a                             |  | $    | 0.14                           |   |      | $ | 0.14      |      |  | $ | 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 as allowed under the provisions of the Securities and Exchange Commissions Staff Accounting Bulletins
No. 107 and No. 110, and represents the period of time that options granted are expected to be outstanding. We believe that it is appropriate to use this simplified method as there is not sufficient historical exercise data to provide a
reasonable basis upon which to estimate an expected term. 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.

h) 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 $249,538 and $299,713 in software development
costs during the three months ended September 30, 2008 and 2007, respectively. The Company expensed $767,472 and $710,940 in software development costs during the nine months ended September 30, 2008 and 2007, respectively.

i) New accounting standards

In February 2007, FASB issued SFAS
No. 159 entitled The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an amendment of FASB Statement No. 115 (FAS No. 159). FAS No. 159 permits companies to choose to measure
many financial instruments and certain other items at fair value that are not currently required to be measured at fair value and establishes presentation and disclosure requirements. Unrealized gains and losses on items for which the fair value
option has been elected will be reported in earnings. FAS No. 159 is effective for fiscal years beginning after November 15, 2007. The implementation of FAS No. 159 did not have a material impact on our consolidated financial
statements.

In September 2006, FASB issued SFAS No. 157 entitled Fair Value Measurements (FAS No. 157). In February
2008, the FASB issued FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157, which provides a one year deferral of the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except
those that are recognized or disclosed



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



in the financial statements at fair value at least annually. Therefore, the Company has adopted the provisions of SFAS 157 with respect to its financial
assets and liabilities only. This statement clarifies the definition of fair value to provide greater consistency and clarity on existing accounting pronouncements that require fair value measurements, provides a framework for using fair value to
measure assets and liabilities and expands disclosures about fair value measurements. FAS No. 157 is required to be applied for fiscal years beginning after November 15, 2007 and interim periods within that year. The implementation of FAS
No. 157 did not have a material impact on our consolidated financial statements.

On December 4, 2007, the FASB issued Statement of Financial
Accounting Standards No. 141 (revised 2007), Business Combinations (Statement 141R). Statement 141R requires that, upon a business combination, the acquired assets, assumed liabilities, contractual contingencies and
contingent liabilities, be recognized and measured at their fair value at the acquisition date. Statement 141R also requires that acquisition-related costs be recognized separately from the acquisition and expensed as incurred. In addition,
Statement 141R requires that acquired in-process research and development be measured at fair value and capitalized as an indefinite-lived intangible asset, and it is therefore not subject to amortization until the project is completed or abandoned.
Moreover, Statement 141R requires changes in deferred tax asset valuation allowances and acquired income tax uncertainties that are recognized after the measurement period be recognized in income tax expense. Statement 141R is to be applied
prospectively and is effective for fiscal years beginning on or after December 15, 2008, which for us will be our fiscal 2009. We are currently evaluating the impact Statement 141R may have on our financial position, results of operations and
cash flows.

On December 4, 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in
Consolidated Financial Statements  an amendment of ARB No. 51 (Statement 160). Statement 160 requires that noncontrolling interests (previously referred to as minority interests) be clearly identified and presented as a
component of equity, separate from the parents equity. Statement 160 also requires that the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the
consolidated statement of income; that changes in ownership interest be accounted for as equity transactions; and that when a subsidiary is deconsolidated, any retained noncontrolling equity investment in that subsidiary and the gain or loss on the
deconsolidation of that subsidiary be measured at fair value. Statement 160 is to be applied prospectively, except for the presentation and disclosure requirements (which are to be applied retrospectively for all periods presented) and is effective
for fiscal years beginning after December 15, 2008, which for us will be our fiscal 2009. We do not believe that the implementation of Statement 160 will impact our consolidated financial statements.

j) Reclassification

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



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



3. RELATED PARTIES

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, 2008,
the remaining loan balance due to Bravenet including accrued interest at 10% is $164,860.

From January 1, 2005 to November 30, 2006, Bravenet
provided the Company customer promotion and lead generation services. At September 30, 2008, all amounts due to Bravenet for customer promotion and lead generation services have been accrued in amounts due to related parties, and total $622,918
including accrued interest at 10% per annum.

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, 2008. At September 30, 2008,
the balance due to Bravenet for the unpaid purchase price is $143,835 which includes interest accrued at 10%.

Bravenet provides computer hosting and
maintenance services to the Company for approximately $7,500 per month. At September 30, 2008, the balance due to Bravenet for unpaid computer hosting and maintenance services is $138,852. This amount includes interest accrued at 10%.

The Company leases office space from Harrison Avenue Holdings Ltd. (Harrison) for approximately $11,000 per month. The President and Chief
Executive Officer of Quotemedia, Ltd., a wholly owned subsidiary, is a control person of Harrison. At September 30, 2008, all amounts due to Harrison related to the leased office space have been accrued in amounts due to related parties. As at
September 30, 2008, the balance due to Harrison for unpaid office rent is $344,125. This amount includes interest accrued at 10%.

At
September 30, 2008, the Company owed $1,137,790 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.

4. 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, 2008 no preferred shares have been issued.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



b) Common stock

In February 2008, a former director of the Company exercised 75,000 warrants at an exercise price of $0.05. A net of 57,955 shares of common stock were issued, as the Company repurchased 17,045 shares of common stock to pay the total
exercise cost of $3,750. The repurchased common stock was valued at a stock price of $0.22 per share which was the closing price of our common stock on the date of the transaction. Pursuant to the terms of the option agreements, the Companys
Board of Director is required to approve the repurchase of the shares.

In June 2008, the Company issued 550,000 shares of common stock to a director of
the Company pursuant to the exercise of warrants at an exercise price of $0.05. The Company received $27,500 in proceeds as a result of the exercise.

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, 2008, 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, 2008:



|                                        |  |                     |   |  |                                |     
|--------------------------------------- |  | ------------------- | - |  | ------------------------------ | ----
|                                        |  | Options andWarrants |   |  | Weighted-AverageExercise Price
|Outstanding at December 31, 2007        |  | 14,565,803          |   |  | $                              | 0.16
|                                        |  |                     |   |  |                                |     
|Granted under company stock option plan |  | 400,000             |   |  | $                              | 0.09
|Warrants granted                        |  | 5,300,000           |   |  | $                              | 0.09
|Stock options exercised                 |  |                    |   |  |                                | n/a 
|Warrants exercised                      |  | (625,000            | ) |  | $                              | 0.05
|Stock options forfeited/expired         |  | (913,000            | ) |  | $                              | 0.21
|Warrants forfeited/expired              |  | (5,000,000          | ) |  | $                              | 0.07
|                                        |  |                     |   |  |                                |     
|Outstanding at September 30, 2008       |  | 13,727,803          |   |  | $                              | 0.17
|                                        |  |                     |   |  |                                |     



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



The following table summarizes our non-vested stock option activity for the nine months ended September 30,
2008:



|                                         |  |                     |   |  |                                       |     
|---------------------------------------- |  | ------------------- | - |  | ------------------------------------- | ----
|                                         |  | Options andWarrants |   |  | Weighted-Average GrantDate Fair Value
|Non-vested stock options and warrants at |  |                     |   |  |                                       |     
|December 31, 2007                        |  | 4,525,952           |   |  | $                                     | 0.20
|                                         |  |                     |   |  |                                       |     
|Granted during the period                |  | 400,000             |   |  | $                                     | 0.18
|Vested during the period                 |  | (2,143,009          | ) |  | $                                     | 0.20
|Forfeited during the period              |  | (270,000            | ) |  | $                                     | 0.24
|Non-vested stock options and warrants at |  |                     |   |  |                                       |     
|                                         |  |                     |   |  |                                       |     
|September 30, 2008                       |  | 2,512,943           |   |  | $                                     | 0.19
|                                         |  |                     |   |  |                                       |     



|           |  |                                        |  |                                          |  |                              |      |                                        |           |                              |   |     
|---------- |  | -------------------------------------- |  | ---------------------------------------- |  | ---------------------------- | ---- | -------------------------------------- | --------- | ---------------------------- | - | ----
|           |  | Options and Warrants Outstanding       |  | Options and WarrantsExercisable         
|           |  | NumberOutstanding atSeptember 30, 2008 |  | WeightedAverageRemainingContractual Life |  | WeightedAverageExercisePrice |      | NumberExercisable atSeptember 30, 2008 |           | WeightedAverageExercisePrice
|$0.05-0.10 |  | 5,300,000                              |  | 1.68                                     |  | $                            | 0.08 |                                        | 5,300,000 |                              | $ | 0.08
|$0.11-0.30 |  | 6,927,803                              |  | 6.95                                     |  | $                            | 0.19 |                                        | 4,506,527 |                              | $ | 0.19
|$0.31-0.50 |  | 1,500,000                              |  | 2.62                                     |  | $                            | 0.40 |                                        | 1,475,000 |                              | $ | 0.40

On June 5, 2008, the Companys Board of Directors and Compensation Committee authorized extending the
term of a total of 5,300,000 options and warrants held by certain executives of the Company. The expiry dates of the options and warrants were extended by two years, and the exercise prices of the options and warrants were increased by $0.02. The
extension of the options and warrants was accounted for as an exchange of the original awards for new awards. The incremental increase in fair value of the new awards resulted in additional stock-based compensation expenses totaling $106,280 that
was recognized in full in June 2008.

As at September 30, 2008 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, 2008 the aggregate intrinsic value of options
and warrants outstanding was $46,000 and the aggregate intrinsic value of options and warrants exercisable was $46,000. Total intrinsic value of options exercised during the nine months ended September 30, 2008 was $73,250. 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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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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 for the three months ended September 30, 2008 and 2007 was $(0.00) per
share and $(0.01) per share, respectively. The basic and diluted net loss per share for the nine months ended September 30, 2008 and 2007 was $(0.01) per share and $(0.02) per share, respectively. Stock options and warrants excluded from the
calculation of dilutive loss per share because they were anti-dilutive were 13,727,803 and 36,198,253, respectively, for the three and nine months ended September 30, 2008 and 2007.

5. INCOME TAXES

On January 1, 2007, the Company adopted the provisions of the Financial Accounting Standards
Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), an interpretation of Financial Accounting Standards Board No. 109, Accounting for Income Taxes (FASB 109). FIN 48 prescribes a
recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken in a tax return. The Company must determine whether it is more-likely-than-not that a tax position will
be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Once it is determined that a position meets the more-likely-than-not recognition threshold, the
position is measured to determine the amount of benefit to recognize in the financial statements. FIN 48 applies to all tax positions related to income taxes subject to FASB 109. Based on the analysis performed, the Company did not record any
unrecognized tax positions as of September 30, 2008.

The Company is subject to income taxes in the United States and Canada. Tax regulations within
each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. Tax years ranging from 2000 to 2007 remain subject to examination in the United States and Canada. We recognize
potential interest and penalties related to income tax matters in income tax expense. In the three and nine months ended September 30, 2008, we recorded Canadian income tax expense of $8,790 and $22,686, respectively.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



6. SUPPLEMENTARY CASH FLOW INFORMATION



|                                                             |  |                                |       |      |   |        
|------------------------------------------------------------ |  | ------------------------------ | ----- | ---- | - | -------
|                                                             |  | Nine months endedSeptember 30,
|                                                             |  | 2008                           |       | 2007
|Cash paid for                                                |  |                                |       |      |   |        
|Interest                                                     |  | $                              | 7,352 |      | $ | 10,422 
|                                                             |  |                                |       |      |   |        
|Cash received for                                            |  |                                |       |      |   |        
|Interest                                                     |  |                                | 3,612 |      |   | 15,302 
|                                                             |  |                                |       |      |   |        
|Cash paid for taxes                                          |  |                                |      |      |   |       
|                                                             |  |                                |       |      |   |        
|Exercise of stock options with mature shares of common stock |  |                                |      |      |   | 345,085
|                                                             |  |                                |       |      |   |        

As discussed in Note 4 b), in February 2008, a former director of the Company exercised 75,000 warrants at an
exercise price of $0.05. A net of 57,955 shares of common stock were issued as the Company repurchased 17,045 shares of common stock to pay the total exercise cost of $3,750. The repurchased common stock was valued at a stock price of $0.22 per
share which was the closing price of our common stock on the date of the transaction. Pursuant to the terms of the option agreements, the Companys Board of Director is required to approve the repurchase of the shares.

7. COMMITMENTS

Commencing July 1, 2008, we subleased larger
office space for our software development team located in Vancouver, British Columbia. Rent for the new office space is $15,000 per month and required a deposit of $22,000 that was paid to the sublandlord in June 2008. The new sublease expires
May 31, 2010.



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ITEM 2. Managements Discussion and Analysis

The following discussion should be read in conjunction with our financial statements and notes thereto included elsewhere in this report. We caution readers regarding
certain forward looking statements in the following discussion, elsewhere in this report, and in any other statements, made by, or on behalf of our company, whether or not in future filings with the Securities and Exchange Commission.
Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are necessarily based upon estimates and
assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, our company. Uncertainties and contingencies that
might cause such differences include those risk factors disclosed in our annual report on Form 10-KSB for the year ended December 31, 2007 and other reports filed from time to time with the SEC.

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

This report should be read in conjunction with our Form 10-KSB for the
fiscal year ended December 31, 2007 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 world wide. 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, as well as
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 Desktop, Quotestream II, 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 II is our next generation portfolio
management system, with enhanced features and functionality compared to our original Quotestream product  most notably tick-by-tick true streaming data, significantly enhanced charting features, and a broad range of additional research and
analytical content and functionality  offering 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 (including Quotestream Desktop, Quotestream II 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 two 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 two years and are automatically renewed unless notice is given 90 days prior to the expiry of the
contract term.

During the three and nine month periods ended September 30, 2008 we achieved 26% and 33% revenue growth from the comparative periods
in 2007. The growth resulted from an increased customer base and increased per customer revenue for our Interactive Content and Data Applications as we continue to expand our line of financial data products and the depth of our data offerings.
Increased subscriptions to Quotestream during the period also contributed to our revenue growth. We expect revenue growth for the remainder of 2008 to be primarily driven by our Interactive Content and Data Applications and our new Quotestream II
and Quotestream Professional product offerings. We also anticipate growth in revenue from our expanded Market Data Feed product line.



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##### Table of Contents

Our plan of operation for the remainder of 2008 will focus on marketing Quotestream II for deployments by brokerage firms
to their 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. Finally, we also plan to add new data content to expand our line of Data Feeds and Interactive Content and Data Applications, as we continue to grow our client base for these products.

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 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 economic downturns 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



|                                 |  |      |           |      |   |            |  |            |           |  |    |  
|-------------------------------- |  | ---- | --------- | ---- | - | ---------- |  | ---------- | --------- |  | -- | -
|                                 |  | 2008 |           | 2007 |   | Change ($) |  | Change (%) |          
|Three months ended September 30, |  |      |           |      |   |            |  |            |           |  |    |  
|Licensing revenue                |  | $    | 1,888,279 |      | $ | 1,501,097  |  | $          | 387,182   |  | 26 | %
|Nine months ended September 30,  |  |      |           |      |   |            |  |            |           |  |    |  
|Licensing revenue                |  | $    | 5,300,350 |      | $ | 3,993,202  |  | $          | 1,307,148 |  | 33 | %

Licensing revenue has increased 26% and 33% when comparing the three and nine month periods ended
September 30, 2008 from the comparative periods in 2007. This increase reflects sales growth for both our Interactive Content and Data Applications and our Portfolio Management Systems.

We have continued to expand our line of Interactive Content and Data Applications, which includes XML market data feeds. The number of clients and the average revenue
per client increased during the periods, resulting in a $312,767 (30%) and $1,016,035 (39%) increase in Interactive Content and Data Application revenue for the three and nine month periods ended September 30, 2008 from the
comparative periods. The number of Quotestream subscribers also increased during the periods; resulting in a $74,415 (16%) and $291,113 (21%) increase in Portfolio Management System revenue, respectively, when comparing the three and nine
month periods ended September 30, 2008 to the comparative periods in 2007. Included in Portfolio Management System



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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, 2008, unchanged from the comparative periods in 2007.

Cost of Revenue and Gross Profit Summary



|                                 |  |      |           |   |      |   |           |            |  |            |         |  |    |  
|-------------------------------- |  | ---- | --------- | - | ---- | - | --------- | ---------- |  | ---------- | ------- |  | -- | -
|                                 |  | 2008 |           |   | 2007 |   |           | Change ($) |  | Change (%) |        
|Three months ended September 30, |  |      |           |   |      |   |           |            |  |            |         |  |    |  
|Cost of revenue                  |  | $    | 802,757   |   |      | $ | 627,023   |            |  | $          | 175,734 |  | 28 | %
|Gross profit                     |  | $    | 1,085,522 |   |      | $ | 874,074   |            |  | $          | 211,448 |  | 24 | %
|Gross margin %                   |  |      | 57        | % |      |   | 58        | %          |  |            |         |  |    |  
|Nine months ended September 30,  |  |      |           |   |      |   |           |            |  |            |         |  |    |  
|Cost of revenue                  |  | $    | 2,267,709 |   |      | $ | 1,739,882 |            |  | $          | 527,827 |  | 30 | %
|Gross profit                     |  | $    | 3,032,641 |   |      | $ | 2,253,320 |            |  | $          | 779,321 |  | 35 | %
|Gross margin %                   |  |      | 57        | % |      |   | 56        | %          |  |            |         |  |    |  

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 28% and 30% when comparing the three and nine month periods ended September 30, 2008 and 2007. 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, data feed, and bandwidth usage charges resulting from the growth in the number of clients from the comparable period.

Our gross profit margin
decreased to 57% for the three month period ended September 30, 2008 from 58% in the comparative period in 2007. Our gross profit margin increased to 57% for the nine month period ended September 30, 2008 from 56% in the comparative period
in 2007. During 2008 we incurred increases in fixed financial content costs to support the new products developed during the period, including Quotestream II, Quotestream Professional, and new Market Data Feeds. Amortization also increased
significantly from the comparative periods as a result of the increase in capitalized application software costs related to the new products noted above. The increases in financial content and amortization expenses have offset our increases in
revenue; therefore gross margin percentages have remained relatively unchanged from the same periods in 2007.



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Operating Expenses Summary



|                                 |  |      |           |      |   |            |  |   |            |   |  |     |   
|-------------------------------- |  | ---- | --------- | ---- | - | ---------- |  | - | ---------- | - |  | --- | --
|                                 |  | 2008 |           | 2007 |   | Change ($) |  |   | Change (%) |  
|Three months ended September 30, |  |      |           |      |   |            |  |   |            |   |  |     |   
|Sales and marketing              |  | $    | 458,668   |      | $ | 499,975    |  | $ | (41,307    | ) |  | (8  | %)
|General and administrative       |  |      | 472,664   |      |   | 387,259    |  |   | 85,405     |   |  | 22  | % 
|Software development             |  |      | 249,538   |      |   | 299,713    |  |   | (50,175    | ) |  | (17 | %)
|                                 |  |      |           |      |   |            |  |   |            |   |  |     |   
|Total operating expenses         |  | $    | 1,180,870 |      | $ | 1,186,947  |  | $ | (6,077     | ) |  | (1  | %)
|                                 |  |      |           |      |   |            |  |   |            |   |  |     |   
|Nine months ended September 30,  |  |      |           |      |   |            |  |   |            |   |  |     |   
|Sales and marketing              |  | $    | 1,587,405 |      | $ | 1,362,708  |  | $ | 224,697    |   |  | 16  | % 
|General and administrative       |  |      | 1,370,403 |      |   | 1,138,260  |  |   | 232,143    |   |  | 20  | % 
|Software development             |  |      | 767,472   |      |   | 710,940    |  |   | 56,532     |   |  | 8   | % 
|                                 |  |      |           |      |   |            |  |   |            |   |  |     |   
|Total operating expenses         |  | $    | 3,725,280 |      | $ | 3,211,908  |  | $ | 513,372    |   |  | 16  | % 
|                                 |  |      |           |      |   |            |  |   |            |   |  |     |   

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 $41,307 (8%) for the three month period ended September 30, 2008 when compared to the same period in 2007. The decrease was due primarily to a reduction in travel and investor relations expenses, offset by
increased salary expenses associated with additional sales personnel hired since the comparative period.

Sales and marketing expenses increased $224,697
(16%) for the nine month period ended September 30, 2008 when compared to the same period in 2007. The increase was due to additional sales personnel hired since the comparative period and stock based compensation expenses resulting from
the grant of new stock options and modifications to existing stock options during the current period.

Included in sales and marketing expense is $90,000
and $270,000 in non-cash advertising costs incurred in the three and nine month periods ended September 30, 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. We used $90,000 and $240,000 in advertising credits during the comparative period in 2007.



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General and Administrative

General and administrative expenses consist primarily of salaries expense, office rent, insurance premiums, and professional fees. General and administrative expenses increased $85,405 (22%) and $232,143 (20%) for the three and
nine month periods ended September 30, 2008 when compared to fiscal 2007. The increases are 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 decreased $50,175 (17%) for the three months ended September 30, 2008 when compared to the same period in 2007.
The decrease is due mainly to a decrease in stock based compensation expense from the comparative period.

Software development expenses increased $56,532
(8%) for the nine months ended September 30, 2008 when compared to the same period in 2007. The increase was due to increased salary expense for software development personnel from the comparative period, as we made competitive salary
adjustments for existing employees, and added new software development personnel. Additional software development personnel were required to develop our Quotestream II 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 during the period was offset by decreased stock based compensation expense from the comparative period.

Software development expenses noted above were offset by software development costs capitalized during the period. We capitalized $149,937 and $417,466 of development
costs for the three and nine month periods ended September 30, 2008, compared to $89,864 and $282,756 same periods in 2007. 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 three years which is their estimated economic life.



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Other Income and (Expense) Summary



|                                  |  |      |          |   |      |   |          |  
|--------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|                                  |  | 2008 |          |   | 2007 |  
|Three months ended September 30,  |  |      |          |   |      |   |          |  
|Foreign exchange gain (loss)      |  | $    | 11,653   |   |      | $ | (35,322  | )
|Interest expense                  |  |      | (61,388  | ) |      |   | (67,141  | )
|                                  |  |      |          |   |      |   |          |  
|Total other income and (expenses) |  | $    | (49,735  | ) |      | $ | (102,463 | )
|                                  |  |      |          |   |      |   |          |  
|Nine months ended September 30,   |  |      |          |   |      |   |          |  
|Foreign exchange gain (loss)      |  | $    | 20,446   |   |      | $ | (77,820  | )
|Interest expense                  |  |      | (174,671 | ) |      |   | (175,915 | )
|                                  |  |      |          |   |      |   |          |  
|Total other income and (expenses) |  | $    | (154,225 | ) |      | $ | (253,735 | )
|                                  |  |      |          |   |      |   |          |  

Foreign Exchange Gain (Loss)

Exchange gains and losses arise from the re-measurement of Canadian dollar monetary assets and liabilities into U.S. dollars. Exchange gains and losses vary with the change in associated exchanges rates. The foreign
exchange gain for the three month period ended September 30, 2008 was due to an increase in the value of U.S. dollar relative to the Canadian dollar at September 30, 2007 compared to June 30, 2008. The foreign exchange gain for the
nine month period ended September 30, 2008 was due to an increase in the value of U.S. dollar relative to the Canadian dollar at September 30, 2007 compared to December 31, 2007.

Interest Expense

Interest is accrued on certain amounts owed to
related parties. Interest expense decreased for the three and nine months ended September 30, 2008 as interest was calculated on decreased related party balances from the comparative periods in 2007. Interest is accrued at 10% per annum.
Interest income earned on cash balances is netted against interest income.

Provision for Income Taxes

For the three month and nine month periods ended September 30, 2008, the Company recorded Canadian income tax expense of $8,790 and $22,686. No income tax expense
was recorded the comparative period.

Net Income (Loss) for the Period

As a result of the foregoing, net loss for the three months ended September 30, 2008 was $(153,873) or $(0.00) per share compared to a net loss of $(415,336) or $(0.01) per share for the three months ended
September 30, 2007. The net loss for the nine months ended September 30, 2008 was $(869,550) or $(0.01) per share compared to a net loss of $(1,212,323) or $(0.02) per share for the nine months ended September 30, 2007.



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Liquidity and Capital Resources

Our cash totaled $264,148 at September 30, 2008, as compared with $357,316 at December 31, 2007, a decrease of $93,168. Net cash of $379,446 was provided by operations for the nine months ended
September 30, 2008, primarily due to the increase in accounts payable and amounts due to related parties, offset by the net loss for the period. Net cash used in investing activities for the nine months ended September 30, 2008 was
$500,114 resulting from capitalized application software costs and the purchase of new computer equipment. Net cash provided by financing activities for the nine month period ended September 30, 2008 was $27,500 resulting from the proceeds from
the exercise of stock options.

Our current liabilities include $644,089 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 $450,580 is also included in our current liabilities. The
costs incurred to realize the deferred revenue in the next 12 months are minimal.

Based on the factors discussed above, we believe that our cash on hand
and cash generated from operations will be sufficient to fund our current operations for the next 12 months. However, to implement our business plan may require additional financing. Additional financings may come from future equity or debt
offerings that could result in dilution to our stockholders.

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

ITEM 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,
2008 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. During the quarterly
period covered by this report, 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.



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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.        

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 14, 2008By:

/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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