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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10QSB



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



| | For the quarterly period ended March 31, 2004
| | ---------------------------------------------



Commission File Number: 0-28599



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QUOTEMEDIA, INC.

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



Nevada

(State or other jurisdiction of incorporation or organization)



91-2008633

(IRS Employer Identification Number)



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

(Address of principal executive offices)



85268

(Zip Code)



(480) 905-7311

(Issuers Telephone Number)



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Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days:    Yes  x    No ̈.



On April 30, 2004, the Registrant had 58,664,204 shares of common stock
outstanding.



---



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QUOTEMEDIA, INC.

INDEX TO QUARTERLY REPORT

ON FORM 10-QSB



|                              |  |                                                     |  |     
|----------------------------- |  | --------------------------------------------------- |  | ----
|                              |  |                                                     |  | Page
|                              | 
|Part I. Financial Information |  |                                                    
|                              |  |                                                    
|Item 1.                       |  | Consolidated Financial Statements                   |  | 3   
|                              |  |                                                    
|                              |  | Consolidated Balance Sheet                          |  | 3   
|                              |  |                                                    
|                              |  | Consolidated Statements of Operations               |  | 4   
|                              |  |                                                    
|                              |  | Consolidated Statements of Cash Flows               |  | 5   
|                              |  |                                                    
|                              |  | Notes to Consolidated Financial Statements          |  | 6   
|                              |  |                                                    
|Item 2.                       |  | Managements Discussion and Analysis                |  | 8   
|                              |  |                                                    
|Item 3.                       |  | Controls and Procedures                             |  | 11  
|                              | 
|Part II. Other Information    |  |                                                    
|                              |  |                                                    
|Item 1.                       |  | Legal Proceedings                                   |  | 12  
|                              |  |                                                    
|Item 2.                       |  | Changes in Securities                               |  | 12  
|                              |  |                                                    
|Item 3.                       |  | Defaults Upon Senior Securities                     |  | 12  
|                              |  |                                                    
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders |  | 12  
|                              |  |                                                    
|Item 5.                       |  | Other Information                                   |  | 12  
|                              |  |                                                    
|Item 6.                       |  | Exhibits and Reports on Form 8-K                    |  | 12  
|                              | 
|Signatures                    |  | 13                                                 



2



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QUOTEMEDIA, INC.

CONSOLIDATED BALANCE SHEET

(Unaudited)



|                                                                                                        |  |               |            |  
|------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | -
|                                                                                                        |  | March 31,2004 |           
|ASSETS                                                                                                  |  |               |            |  
|                                                                                                        | 
|CURRENT ASSETS                                                                                          |  |               |            |  
|                                                                                                        | 
|Cash                                                                                                    |  | $             | 41,502     |  
|Accounts receivable                                                                                     |  |               | 45,832     |  
|Deposits                                                                                                |  |               | 15,869     |  
|                                                                                                        |  |               |            |  
|Total current assets                                                                                    |  |               | 103,203    |  
|                                                                                                        | 
|Equipment, net                                                                                          |  |               | 52,636     |  
|                                                                                                        |  |               |            |  
|                                                                                                        |  | $             | 155,839    |  
|                                                                                                        |  |               |            |  
|                                                                                                        | 
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                   |  |               |            |  
|                                                                                                        | 
|CURRENT LIABILITIES                                                                                     |  |               |            |  
|Accounts payable                                                                                        |  | $             | 113,218    |  
|Note payable                                                                                            |  |               | 130,056    |  
|Deferred revenue                                                                                        |  |               | 30,599     |  
|Due to related parties                                                                                  |  |               | 246,746    |  
|                                                                                                        |  |               |            |  
|                                                                                                        |  |               | 520,619    |  
|                                                                                                        |  |               |            |  
|                                                                                                        | 
|STOCKHOLDERS DEFICIT                                                                                   |  |               |            |  
|                                                                                                        | 
|Preferred stock, non designated, 10,000,000 shares authorized, none issued                              |  |               |           |  
|Common stock, $0.001 par value, 100,000,000 shares authorized, 58,664,204 shares issued and outstanding |  |               | 58,665     |  
|Additional paid-in capital                                                                              |  |               | 6,504,367  |  
|Accumulated deficit                                                                                     |  |               | (6,927,812 | )
|                                                                                                        |  |               |            |  
|                                                                                                        |  |               | (364,780   | )
|                                                                                                        |  |               |            |  
|                                                                                                        |  | $             | 155,839    |  
|                                                                                                        |  |               |            |  



SEE ACCOMPANYING NOTES





3



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QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                    |  |                                   |            |   |                                   |   |            |  
|----------------------------------- |  | --------------------------------- | ---------- | - | --------------------------------- | - | ---------- | -
|                                    |  | Three months ended March 31, 2004 |            |   | Three months ended March 31, 2003 |  
|OPERATING REVENUE                   |  |                                   |            |   |                                   |   |            |  
|                                    |  |                                  
|Licensing fees                      |  | $                                 | 171,028    |   |                                   | $ | 16,830     |  
|Advertising                         |  |                                   |           |   |                                   |   | 1,330      |  
|                                    |  |                                   |            |   |                                   |   |            |  
|                                    |  |                                   | 171,028    |   |                                   |   | 18,160     |  
|                                    |  |                                  
|OPERATING EXPENSES                  |  |                                   |            |   |                                   |   |            |  
|                                    |  |                                  
|Sales and Marketing                 |  |                                   | 4,479      |   |                                   |   | 8,854      |  
|General and Administrative          |  |                                   | 88,150     |   |                                   |   | 146,055    |  
|Professional fees                   |  |                                   | 10,562     |   |                                   |   | 10,563     |  
|Research and development            |  |                                   | 73,481     |   |                                   |   | 131,768    |  
|Financial content                   |  |                                   | 90,135     |   |                                   |   | 66,656     |  
|                                    |  |                                   |            |   |                                   |   |            |  
|                                    |  |                                   | 266,807    |   |                                   |   | 363,896    |  
|                                    |  |                                   |            |   |                                   |   |            |  
|                                    |  |                                  
|NET LOSS                            |  |                                   | (95,779    | ) |                                   |   | (345,736   | )
|                                    |  |                                   |            |   |                                   |   |            |  
|LOSS PER SHARE                      |  |                                   |            |   |                                   |   |            |  
|                                    |  |                                  
|Basic and diluted loss per share    |  | $                                 | (0.00      | ) |                                   | $ | (0.01      | )
|                                    |  |                                   |            |   |                                   |   |            |  
|                                    |  |                                  
|WEIGHTED AVERAGE SHARES OUTSTANDING |  |                                   |            |   |                                   |   |            |  
|                                    |  |                                  
|Basic and diluted                   |  |                                   | 58,664,204 |   |                                   |   | 50,872,166 |  
|                                    |  |                                   |            |   |                                   |   |            |  



SEE ACCOMPANYING NOTES





4



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QUOTEMEDIA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                        |  |                                  |          |   |                                  |   |          |  
|----------------------------------------------------------------------- |  | -------------------------------- | -------- | - | -------------------------------- | - | -------- | -
|                                                                        |  | Three months endedMarch 31, 2004 |          |   | Three months endedMarch 31, 2003 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                   |  |                                  |          |   |                                  |   |          |  
|                                                                        |  |                                 
|Net loss                                                                |  | $                                | (95,779  | ) |                                  | $ | (345,736 | )
|                                                                        |  |                                 
|Adjustments to reconcile loss to net cash used in operating activities: |  |                                  |          |   |                                  |   |          |  
|Depreciation expense                                                    |  |                                  | 3,934    |   |                                  |   | 3,429    |  
|Issuance of capital stock for services                                  |  |                                  |         |   |                                  |   | 213,738  |  
|Changes in assets and liabilities:                                      |  |                                  |          |   |                                  |   |          |  
|Accounts receivable                                                     |  |                                  | (17,744  | ) |                                  |   | (1,566   | )
|Deposits                                                                |  |                                  | 2,931    |   |                                  |   | 87       |  
|Accounts payable                                                        |  |                                  | 37,269   |   |                                  |   | (48,072  | )
|Deferred revenue                                                        |  |                                  | (9,434   | ) |                                  |   | 1,390    |  
|Due from related parties, net                                           |  |                                  | (14,474  | ) |                                  |   | (14,383  | )
|                                                                        |  |                                  |          |   |                                  |   |          |  
|Net cash used in operating activities                                   |  |                                  | (93,297  | ) |                                  |   | (191,113 | )
|                                                                        |  |                                  |          |   |                                  |   |          |  
|                                                                        |  |                                 
|CASH FLOWS FROM INVESTING ACTIVITIES:                                   |  |                                  |          |   |                                  |   |          |  
|                                                                        |  |                                 
|Purchase of equipment                                                   |  |                                  | (8,235   | ) |                                  |   | (1,449   | )
|                                                                        |  |                                  |          |   |                                  |   |          |  
|Net cash used in investing activities                                   |  |                                  | (8,235   | ) |                                  |   | (1,449   | )
|                                                                        |  |                                  |          |   |                                  |   |          |  
|                                                                        |  |                                 
|CASH FLOWS FROM FINANCING ACTIVITIES:                                   |  |                                  |          |   |                                  |   |          |  
|                                                                        |  |                                 
|Issuance of common stock for cash, net                                  |  |                                  |         |   |                                  |   | 96,000   |  
|                                                                        |  |                                  |          |   |                                  |   |          |  
|Net cash provided by financing activities                               |  |                                  |         |   |                                  |   | 96,000   |  
|                                                                        |  |                                  |          |   |                                  |   |          |  
|                                                                        |  |                                 
|Net decrease in cash                                                    |  |                                  | (101,532 | ) |                                  |   | (96,562  | )
|                                                                        |  |                                 
|Cash, beginning of period                                               |  |                                  | 143,034  |   |                                  |   | 190,200  |  
|                                                                        |  |                                  |          |   |                                  |   |          |  
|                                                                        |  |                                 
|Cash, end of period                                                     |  | $                                | 41,502   |   |                                  | $ | 93,638   |  
|                                                                        |  |                                  |          |   |                                  |   |          |  



See supplementary information (note 3)



SEE ACCOMPANYING NOTES





5



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



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



The accompanying unaudited consolidated financial statements have been prepared in accordance with the generally accepted accounting principles for
interim financial statements and instructions for Form 10  QSB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or
for a full year.



These financial statements should be read in
conjunction with our financial statements and the notes thereto for the fiscal year ended December 31, 2003 contained in our Form 10-KSB filed with the Securities and Exchange Commission dated February 17, 2004.



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



These interim financial statements follow the same accounting policies and methods of application as our annual financial statements.



a) Stock based compensation



We have elected under FAS No. 123, Accounting for Stock-based
Compensation, to account for employee stock options using the intrinsic value method. This method is described in Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. As we grant all stock options with an exercise price equal to the market value of the underlying common shares on the date of the grant, no compensation expense is required to be recognized under APB 25. FAS No. 123 uses a fair
value method of calculating the cost of stock option grants. Had compensation cost for our employee stock option plan been determined by this method, our net loss and loss per share would have been as follows:



|                                                                                                              |  |      |          |   |      |   |          |  
|------------------------------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|Three months ended March 31,                                                                                  |  | 2004 |          |   | 2003 |  
|Net income:                                                                                                   |  |      |          |   |      |   |          |  
|As reported                                                                                                   |  | $    | (95,779  | ) |      | $ | (345,736 | )
|Less: Total stock-based employee compensation expense determined under fair value based method for all awards |  |      | (44,143  | ) |      |   | (234,173 | )
|                                                                                                              |  |      |          |   |      |   |          |  
|Pro forma                                                                                                     |  | $    | (139,922 | ) |      | $ | (579,909 | )
|Basic and diluted earnings per share:                                                                         |  |      |          |   |      |   |          |  
|As reported                                                                                                   |  |      | (0.00    | ) |      |   | (0.01    | )
|Pro forma                                                                                                     |  |      | (0.00    | ) |      |   | (0.01    | )



6



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



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



|                                               |  |      |        |   |      |   |        |  
|---------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|Three months ended March 31,                   |  | 2004 |        |   | 2003 |  
|Expected dividend yield                        |  |      |       |   |      |   |       |  
|Expected stock price volatility                |  |      | 132    | % |      |   | 173    | %
|Risk-free interest rate                        |  |      | 4      | % |      |   | 4      | %
|Expected life of options                       |  |      | 1 year |   |      |   | 1 year |  
|Weighted average fair value of options granted |  | $    | 0.18   |   |      | $ | 0.03   |  



|3. | SUPPLEMENTARY CASH FLOW INFORMATION
|-- | -----------------------------------



|                             |  |      |  |     
|---------------------------- |  | ---- |  | ----
|Three months ended March 31, |  | 2004 |  | 2003
|Cash paid for interest       |  |     |  |    
|Cash paid for taxes          |  |     |  |    



|4. | COMPARATIVE FIGURES
|-- | -------------------



Certain figures in the comparative period have been reclassified to conform to the current years presentation.





7



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



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



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



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



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



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



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



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



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



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



This report should be read in conjunction with our Form 10-KSB for the fiscal year ended December 31, 2003 filed with the Securities and Exchange
Commission.



Overview



We are a developer and distributor of Web-based financial data services to a
global marketplace. We are a financial software developer, content provider, and financial data supplier specializing in the collection, aggregation, and delivery of both delayed and real-time financial data content via the Internet. We develop and
license Web-based software components that deliver dynamic content to websites of customers, which include brokerage firms, financial institutions, mutual fund companies, online information and financial portals, media outlets, public companies, and
corporate Intranets.



We have two categories of product lines:
Quotestream Real-Time Portfolio Management and Corporate Financial Data Products. Quotestream is a Web-based streaming online portfolio management system that delivers instant market data to both consumer and corporate markets. Financial Data
Products are a suite of software applications that deliver company and market information to corporate clients over the Web. These Financial Data Products include stock and market quotes, fundamentals, historical and interactive charts, company
news, filings, option chains,



8



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insider transactions, corporate financials, corporate profiles, investor relations provisions, level 2, watch lists, and XML data feeds.



We generate revenue from Quotestream by licensing it to financial
institutions and Web portals for private branding. We also license Quotestream to individual investors for a monthly subscription fee. We generate revenue from the Financial Data Products line by licensing our components for a monthly, quarterly, or
annual subscription fee.



Results of Operations



Revenue



Licensing revenue for the three month period ended March 31, 2004 was $171,028 compared to $18,160 for the three month
period ended March 31, 2003. The increase is due to the increased market acceptance of our Quotestream and Financial Data Products launched in 2002 and 2003 respectively.



Operating Expenses



Financial Content



Financial content expenses consist primarily of fees paid to our strategic partners for providing financial content such as news, stock quotes, charts,
company background data, and general information. Financial content expenses for the three month period ended March 31, 2004 were $90,135 compared with $66,656 for the three month period ending March 31, 2003. The increase is due to additional
financial content offered with our products compared to the prior period, and increased stock exchange fees associated with an increase in the number of customers receiving real-time financial information.



Professional fees



Professional fees consist primarily of legal and accounting fees.
Professional fees for the three month period ended March 31, 2004 were $10,562 compared with $10,563 for the three month period ending March 31, 2003.



Research and Development



Research and development expenses consist primarily of costs associated with the design, programming, and testing of our software applications. Research
and development expenses for the three month period ended March 31, 2004 were $73,481 compared with $131,768 for the three month period ended March 31, 2003. The decrease is due to $86,250 in non-recurring development costs incurred in 2003 and paid
for by the issuance of 1,125,000 shares of our common stock.



9



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Sales and Marketing



Sales and marketing consists primarily of marketing, investor relations,
travel, and printing expenses. Sales and marketing expenses for the three month period ended March 31, 2004 were $4,479 compared to $8,854 for the three month period ended March 31, 2003. The decrease is due to investor relation expenses associated
with the Annual Meeting of Stockholders held in February 2003. We did not hold an Annual Meeting of Stockholders during the comparative period in 2004.



General and Administrative



General and administrative expenses consist primarily of rent, computer equipment leases, computer maintenance and storage and salary expenses. Office
expenses for the three month period ended March 31, 2004 were $88,150 compared to $146,055 for the three month period ended March 31, 2003. The decrease is due to $63,488 in non-recurring office expenses incurred in 2003 and paid for by the issuance
of 793,600 shares of our common stock.



Loss for the period



As a result of the foregoing, we incurred a loss for the three months ended March 31,
2004 of $95,779 or approximately $(0.00) per share compared to a loss of $345,736 and $(0.01) per share for the three months ended March 31, 2003.



Liquidity and Capital Resources



Our cash totaled $41,502 at March 31, 2004, as compared with $143,034 at December 31, 2003, a decrease of $101,532. Net cash of $93,297 was used in operations for the
three months ended March 31, 2004, primarily resulting from our net loss for the period offset by an increase in accounts payable. Net cash used in investing activities for the three months ended March 31, 2004 was $8,235 resulting from the purchase
of fixed assets. No cash was provided by or used in financing activities for the three months ended March 31, 2004.



Based on current revenue trends, we anticipate that we will start to generate positive cash flow from operations in the third quarter of 2004 and we believe that cash on
hand will be sufficient to fund our current operations through fiscal 2004. Current revenue trends may not continue, however, and we may require additional equity or debt financing in order to carry on our operations. Additional financings, which
may come from future equity or debt offerings that could result in dilution to our stockholders. Adequate working capital may not be available and the lack of such working capital could adversely affect our ability to continue business operations.



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.



10



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



We have evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of March 31, 2004. Based on this evaluation, our Chief Executive Officer
and Chief Financial Officer have each concluded that our disclosure controls and procedures are effective to ensure that we record, process, summarize, and report information required to be disclosed by us in our quarterly reports filed under the
Securities Exchange Act within the time periods specified by the Securities and Exchange Commissions rules and forms. During the quarterly period covered by this report, there have not been any changes in our internal controls over financial
reporting that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



11



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PART II OTHER INFORMATION



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



|ITEM 2. | CHANGES IN SECURITIESNONE
|------- | --------------------------



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIESNONE
|------- | ------------------------------------



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSNONE
|------- | --------------------------------------------------------



|ITEM 5. | OTHER INFORMATIONNONE
|------- | ----------------------



|ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K
|------- | --------------------------------



| | (a) | Exhibits
| | --- | --------



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



| | (b) | Reports on Form 8-KNone
| | --- | ------------------------



12



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SIGNATURES



Pursuant to the
requirements of Section 12 of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



QUOTEMEDIA, INC.Dated: May 11, 2004By: /s/    David M. ShworanDavid M. Shworan, President (Principal Executive Officer)


By: /s/    Keith J. RandallKeith J. Randall, C.A., Chief Financial
Officer (Principal Accounting Officer)




13