##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



---



FORM 10  QSB



---



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



For the quarterly period ended September 30, 2004



Commission File Number: 0-28599



---



QUOTEMEDIA, INC.

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



---



Nevada

(State or other jurisdiction of incorporation or organization)



91-2008633

(IRS Employer Identification Number)



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

(Address of principal executive offices)



85268

(Zip Code)



(480) 905-7311

(Issuers Telephone Number)



---



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



On November 11, 2004, the Registrant had 58,664,204 shares of common stock outstanding.



---



---

##### Table of Contents

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                |  | 9   
|                              |  |            | 
|                              |  | Item 3.    |  | Controls and Procedures                             |  | 14  
|                              | 
|Part II.
Other Information    |  |           
|                              |  |            | 
|                              |  | Item 1.    |  | Legal Proceedings                                   |  | 15  
|                              |  |            | 
|                              |  | Item 2.    |  | Changes in Securities                               |  | 15  
|                              |  |            | 
|                              |  | Item 3.    |  | Defaults Upon Senior Securities                     |  | 15  
|                              |  |            | 
|                              |  | Item 4.    |  | Submission of Matters to a Vote of Security Holders |  | 15  
|                              |  |            | 
|                              |  | Item 5.    |  | Other Information                                   |  | 15  
|                              |  |            | 
|                              |  | Item 6.    |  | Exhibits and Reports on Form 8-K                    |  | 15  
|                              |  |           
|                              |  | Signatures |  | 16                                                 



2



---

##### Table of Contents

ITEM 1. Consolidated Financial Statements



QUOTEMEDIA, INC.

CONSOLIDATED BALANCE SHEET

(Unaudited)



|                                                                                                        |  |                    |             |  
|------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | -
|                                                                                                        |  | September 30, 2004 |            
|ASSETS                                                                                                  |  |                    |             |  
|                                                                                                        | 
|Current assets:                                                                                         |  |                    |             |  
|Cash                                                                                                    |  | $                  | 140,882     |  
|Accounts receivable Prepaid expenses                                                                    |  |                    | 88,0935,634 |  
|Deposits                                                                                                |  |                    | 14,320      |  
|                                                                                                        |  |                    |             |  
|Total current assets                                                                                    |  |                    | 248,929     |  
|                                                                                                        | 
|Equipment, net                                                                                          |  |                    | 41,581      |  
|Intangible assets                                                                                       |  |                    | 34,995      |  
|                                                                                                        |  |                    |             |  
|Total assets                                                                                            |  | $                  | 325,505     |  
|                                                                                                        |  |                    |             |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                   |  |                    |             |  
|                                                                                                        | 
|Current liabilities:                                                                                    |  |                    |             |  
|Accounts payable and accrued liabilities                                                                |  | $                  | 170,978     |  
|Deferred revenue                                                                                        |  |                    | 120,989     |  
|Current portion of amounts due to related parties                                                       |  |                    | 306,792     |  
|                                                                                                        |  |                    |             |  
|Total current liabilities                                                                               |  |                    | 598,759     |  
|                                                                                                        |  |                    |             |  
|Other long-term liabilities                                                                             |  |                    | 22,911      |  
|Long-term portion of amounts due to related parties                                                     |  |                    | 231,570     |  
|                                                                                                        | 
|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                                                                                     |  |                    | (7,090,767  | )
|                                                                                                        |  |                    |             |  
|Total stockholders deficit                                                                             |  |                    | (527,735    | )
|                                                                                                        |  |                    |             |  
|Total liabilities and stockholders deficit                                                             |  | $                  | 325,505     |  
|                                                                                                        |  |                    |             |  



SEE ACCOMPANYING NOTES



3



---

##### Table of Contents

QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                    |  |                                   |            |   |                                   |   |            |                                    |  |   |                                     |   |  |   |            |  
|----------------------------------- |  | --------------------------------- | ---------- | - | --------------------------------- | - | ---------- | ---------------------------------- |  | - | ----------------------------------- | - |  | - | ---------- | -
|                                    |  | Nine monthsendedSeptember 30,2004 |            |   | Nine monthsendedSeptember 30,2003 |   |            | Three monthsendedSeptember 30,2004 |  |   | Three monthsended September 30,2003 |  
|OPERATING REVENUE                   |  |                                   |            |   |                                   |   |            |                                    |  |   |                                     |   |  |   |            |  
|Licensing fees                      |  | $                                 | 646,282    |   |                                   | $ | 162,815    |                                    |  | $ | 267,315                             |   |  | $ | 88,888     |  
|Advertising                         |  |                                   |           |   |                                   |   | 3,730      |                                    |  |   |                                    |   |  |   | 1,200      |  
|                                    |  |                                   |            |   |                                   |   |            |                                    |  |   |                                     |   |  |   |            |  
|                                    |  |                                   | 646,282    |   |                                   |   | 166,545    |                                    |  |   | 267,315                             |   |  |   | 90,088     |  
|                                    |  |                                   |            |  
|OPERATING EXPENSES                  |  |                                   |            |   |                                   |   |            |                                    |  |   |                                     |   |  |   |            |  
|                                    |  |                                   |            |  
|Sales and Marketing                 |  |                                   | 21,744     |   |                                   |   | 37,920     |                                    |  |   | 6,653                               |   |  |   | 27,894     |  
|General and Administrative          |  |                                   | 313,838    |   |                                   |   | 309,877    |                                    |  |   | 127,236                             |   |  |   | 93,941     |  
|Professional fees                   |  |                                   | 30,599     |   |                                   |   | 23,879     |                                    |  |   | 4,868                               |   |  |   | 887        |  
|Research and development            |  |                                   | 249,467    |   |                                   |   | 219,205    |                                    |  |   | 95,582                              |   |  |   | 39,460     |  
|Financial data                      |  |                                   | 279,059    |   |                                   |   | 200,151    |                                    |  |   | 89,214                              |   |  |   | 69,492     |  
|                                    |  |                                   |            |   |                                   |   |            |                                    |  |   |                                     |   |  |   |            |  
|                                    |  |                                   | 894,707    |   |                                   |   | 791,032    |                                    |  |   | 323,553                             |   |  |   | 231,674    |  
|                                    |  |                                   |            |   |                                   |   |            |                                    |  |   |                                     |   |  |   |            |  
|OPERATING LOSS                      |  |                                   | (248,425   | ) |                                   |   | (624,487   | )                                  |  |   | (56,238                             | ) |  |   | (141,586   | )
|                                    |  |                                   |            |  
|OTHER INCOME AND EXPENSES           |  |                                   |            |   |                                   |   |            |                                    |  |   |                                     |   |  |   |            |  
|Loss on disposal of equipment       |  |                                   | (10,309    | ) |                                   |   |           |                                    |  |   |                                    |   |  |   |           |  
|                                    |  |                                   |            |   |                                   |   |            |                                    |  |   |                                     |   |  |   |            |  
|NET LOSS                            |  |                                   | (258,734   | ) |                                   |   | (624,487   | )                                  |  |   | (56,238                             | ) |  |   | (141,586   | )
|                                    |  |                                   |            |   |                                   |   |            |                                    |  |   |                                     |   |  |   |            |  
|LOSS PER SHARE                      |  |                                   |            |   |                                   |   |            |                                    |  |   |                                     |   |  |   |            |  
|                                    |  |                                   |            |  
|Basic and diluted loss per share    |  | $                                 | (0.00      | ) |                                   | $ | (0.01      | )                                  |  | $ | (0.00                               | ) |  | $ | (0.00      | )
|                                    |  |                                   |            |   |                                   |   |            |                                    |  |   |                                     |   |  |   |            |  
|WEIGHTED AVERAGE SHARES OUTSTANDING |  |                                   |            |   |                                   |   |            |                                    |  |   |                                     |   |  |   |            |  
|                                    |  |                                   |            |  
|Basic and diluted                   |  |                                   | 58,664,204 |   |                                   |   | 57,806,644 |                                    |  |   | 58,664,204                          |   |  |   | 57,379,720 |  
|                                    |  |                                   |            |   |                                   |   |            |                                    |  |   |                                     |   |  |   |            |  



SEE ACCOMPANYING NOTES



4



---

##### Table of Contents

QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                        |  |                                     |          |   |                                     |   |          |  
|----------------------------------------------------------------------- |  | ----------------------------------- | -------- | - | ----------------------------------- | - | -------- | -
|                                                                        |  | Nine months endedSeptember 30, 2004 |          |   | Nine months endedSeptember 30, 2003 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                   |  |                                     |          |   |                                     |   |          |  
|                                                                        |  |                                    
|Net loss                                                                |  | $                                   | (258,734 | ) |                                     | $ | (699,487 | )
|                                                                        |  |                                    
|Adjustments to reconcile loss to net cash used in operating activities: |  |                                     |          |   |                                     |   |          |  
|Depreciation expense                                                    |  |                                     | 13,102   |   |                                     |   | 10,509   |  
|Loss on disposal of equipment                                           |  |                                     | 10,309   |   |                                     |   |         |  
|Issuance of capital stock for services                                  |  |                                     |         |   |                                     |   | 246,988  |  
|Changes in assets and liabilities:                                      |  |                                     |          |   |                                     |   |          |  
|Accounts receivable                                                     |  |                                     | (60,005  | ) |                                     |   | (21,350  | )
|Prepaid expenses                                                        |  |                                     | (5,634   | ) |                                     |   |         |  
|Deposits                                                                |  |                                     | 4,480    |   |                                     |   | (2,783   | )
|Accounts payable, accrued and other liabilities                         |  |                                     | 189,599  |   |                                     |   | (75,146  | )
|Deferred revenue                                                        |  |                                     | 80,956   |   |                                     |   | 31,671   |  
|                                                                        |  |                                     |          |   |                                     |   |          |  
|Net cash used in operating activities                                   |  |                                     | (25,927  | ) |                                     |   | (509,598 | )
|                                                                        |  |                                     |          |   |                                     |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                   |  |                                     |          |   |                                     |   |          |  
|                                                                        |  |                                    
|Proceeds from disposal of equipment                                     |  |                                     | 3,133    |   |                                     |   |         |  
|Purchase of equipment and intangible assets                             |  |                                     | (54,786  | ) |                                     |   | (3,411   | )
|                                                                        |  |                                     |          |   |                                     |   |          |  
|Net cash used in investing activities                                   |  |                                     | (51,653  | ) |                                     |   | (3,411   | )
|                                                                        |  |                                     |          |   |                                     |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                   |  |                                     |          |   |                                     |   |          |  
|                                                                        |  |                                    
|Repayment of amounts due to related parties                             |  |                                     | (42,707  | ) |                                     |   |         |  
|Loans from related parties                                              |  |                                     | 250,000  |   |                                     |   |         |  
|Repayment of note payable                                               |  |                                     | (131,865 | ) |                                     |   |         |  
|Issuance of common stock for cash, net                                  |  |                                     |         |   |                                     |   | 559,000  |  
|                                                                        |  |                                     |          |   |                                     |   |          |  
|Net cash provided by financing activities                               |  |                                     | 75,428   |   |                                     |   | 559,000  |  
|                                                                        |  |                                     |          |   |                                     |   |          |  
|Net increase (decrease) in cash                                         |  |                                     | (2,152   | ) |                                     |   | 45,991   |  
|                                                                        |  |                                    
|Cash, beginning of period                                               |  |                                     | 143,034  |   |                                     |   | 190,200  |  
|                                                                        |  |                                     |          |   |                                     |   |          |  
|Cash, end of period                                                     |  | $                                   | 140,882  |   |                                     | $ | 236,191  |  
|                                                                        |  |                                     |          |   |                                     |   |          |  



See supplementary information (note 3)



SEE ACCOMPANYING NOTES



5



---

##### Table of Contents

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 endedSeptember 30, |          |   | Nine months endedSeptember 30, |  
|                                                                                                              |  | 2004                            |          |   | 2003                           |   |          | 2004 |  |   | 2003     |  
|Net loss:                                                                                                     |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |            |  
|                                                                                                              |  |                                 |          |  
|As reported                                                                                                   |  | $                               | (56,238  | ) |                                | $ | (152,586 | )    |  | $ | (258,734 | ) |  | $ | (699,487   | )
|Less: Total stock-based employee compensation expense determined under fair value based method for all awards |  |                                 | (114,500 | ) |                                |   | (190,811 | )    |  |   | (178,760 | ) |  |   | (631,915   | )
|                                                                                                              |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |            |  
|Pro forma                                                                                                     |  |                                 | (170,738 | ) |                                |   | (343,397 | )    |  |   | (437,494 | ) |  |   | (1,331,402 | )
|Basic and diluted loss per share:                                                                             |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |            |  
|As reported                                                                                                   |  | $                               | (0.00    | ) |                                | $ | (0.00    | )    |  | $ | (0.00    | ) |  | $ | (0.01      | )
|Pro forma                                                                                                     |  |                                 | (0.00    | ) |                                |   | (0.01    | )    |  |   | (0.01    | ) |  |   | (0.02      | )



6



---

##### Table of Contents

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 endedSeptember 30, |        | Nine months endedSeptember 30, |     
|                                               |  | 2004                            |        |                                | 2003 |     | 2004 |   |        | 2003 | 
|Expected dividend yield                        |  |                                 |       |                                |      | n/a |      |   |       |      |  |   |       |  
|Expected stock price volatility                |  |                                 | 68     | %                              |      | n/a |      |   | 132    | %    |  |   | 121    | %
|Risk-free interest rate                        |  |                                 | 4      | %                              |      | n/a |      |   | 4      | %    |  |   | 4      | %
|Expected life of options                       |  |                                 | 1 year |                                |      | n/a |      |   | 1 year |      |  |   | 1 year |  
|Weighted average fair value of options granted |  | $                               | 0.11   |                                |      | n/a |      | $ | 0.12   |      |  | $ | 0.03   |  



b) Recent
accounting pronouncements



In March 2004, the Financial
Accounting Standards Board (FASB) issued an Exposure Draft of a proposed Statement of Financial Accounting Standards entitled Share-Based Payment. This proposed statement addresses accounting for stock-based compensation and
would result in the fair value of all stock-based compensation arrangements, including options, being recognized as an expense in a companys financial statements as opposed to supplemental disclosure in the notes to financial statements. The
proposed Statement would eliminate the ability to account for stock-based compensation transactions using APB Opinion No. 25. If approved, the proposed statement, as amended, currently provides that it would be applied to public entities,
prospectively, for interim or annual periods beginning after June 15, 2005.



In December 2003, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 132 (revised 2003), Employers Disclosures about Pensions and Other Postretirement Benefits
(FAS 132). This statement establishes standards that require companies to provide more details about their plan assets, benefit obligations, cash flows, benefit costs and other relevant information. In addition to expanded annual
disclosures, companies are required to report the various elements of pension and other postretirement benefit costs on a quarterly basis. This statement is effective for fiscal years ending after December 15, 2003. We have adopted FAS 132, as
revised in 2003, which had no effect on our consolidated financial statements.



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



|                                |  |       |  |     
|------------------------------- |  | ----- |  | ----
|Nine months ended September 30, |  | 2004  |  | 2003
|Cash paid for interest          |  | 5,606 |  |    
|Cash paid for taxes             |  |      |  |    



7



---

##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



|4. | INTANGIBLE ASSETS
|-- | -----------------



During the quarter we purchased a perpetual software license and a domain name. These intangible assets have indefinite useful lives and will not be
amortized but rather will be tested annually for impairment in accordance with FAS No. 142.



|5. | RELATED PARTY TRANSACTIONS
|-- | --------------------------



In May 2004 we entered into a loan agreement with Bravenet Web Services, Inc. (Bravenet). We borrowed $250,000 from Bravenet with interest
calculated at the rate of 10% per annum. It is anticipated that the loan will repaid in 12 equal monthly installments beginning in the first quarter of 2005. Our Chief Executive Officer is a control person of Bravenet.



|6. | COMPARATIVE FIGURES
|-- | -------------------



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



8



---

##### Table of Contents

ITEM 2. Managements Discussion and Analysis



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



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



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



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



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



| |  | 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, aggregator, and global distributor of financial data
services. We license access to our software and data provisions to both corporate customers and individual consumers. Our clients include brokerage and clearing firms, banks and financial institutions, mutual fund companies, online information and
financial portals, media outlets, public companies, corporate intranets, brokers, financial advisors, and individual investors.



QuoteMedia has three categories of product lines: Quotestream desktop and wireless real-time and delayed portfolio management and market analysis
software; a broad array of Corporate Financial Data Products or quote tools; and Packaged Data Feeds.



Quotestream is a Web-based streaming online portfolio management system that delivers real-time and delayed market data to both consumer and corporate
markets. Quotestream is available to customers in both a desktop version accessible via personal computer, and a wireless version accessible via wireless handheld devices.



9



---

##### Table of Contents

We are currently in discussions with a number of wireless communication companies regarding the licensing
and distribution of our Quotestream Wireless application. We have recently entered into an agreement with the brokerage arm of a major international bank to license Quotestream for its clients, and are actively engaged in negotiations with other
international banks and brokerage firms to license similar services.



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



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



We generate recurring revenue from each product line by
licensing them to financial institutions and websites. We also generate revenue through individual end-user licenses of Quotestream desktop and wireless for a monthly subscription fee. Financial Data Products and Packaged Data Feeds are licensed for
a monthly, quarterly, annual or biannual subscription fee.



Results of
Operations



Revenue



Revenue consists of fees generated from licensing our software applications.
Revenue for the three month period ended September 30, 2004 was $267,315 compared to $90,088 for the three month period ended September 30, 2003. Revenue for the nine month period ended September 30, 2004 was $646,282 compared to $166,545 for the
nine month period ended September 30, 2003. The increase is due primarily to an increased number of clients licensing our corporate financial data products. The increase in clients is due in part to the introduction of new financial data products in
2004. The increase in revenue is also due to a significant increase in the number of subscriptions for our Quotestream delayed and real-time portfolio management and market analysis software.



10



---

##### Table of Contents

Operating Expenses



Financial Data



Financial data 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 data expenses for the three month period ended September 30, 2004 were $89,214 compared with $69,492 for the three month period ending September 30, 2003. Financial data expenses for the
nine month period ended September 30, 2004 were $279,059 compared with $200,151 for the nine month period ending September 30, 2003. The increase is due primarily to increased stock exchange fees associated with an increase in the number of
customers receiving real-time financial information. The increase is also due to added financial content expenses associated with new financial data products launched in 2004.



Professional fees



Professional fees consist primarily of legal and accounting fees. Professional fees for the three month period ended September 30, 2004 were $4,868
compared with $887 for the three month period ending September 30, 2003. Professional fees for the nine month period ended September 30, 2004 were $30,599 compared with $23,879 for the nine month period ending September 30, 2003. The increase is
primarily due to professional fees incurred to comply with additional legal and auditing procedures required by the Sarbanes-Oxley Act.



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 September 30, 2004 were $95,582 compared with $39,460 for the three month period ended September 30, 2003. Research and development expenses for the nine month period ended September 30, 2004
were $249,467 compared to $219,205 for the nine month period ended September 30, 2003. In the first quarter of 2003 we incurred $86,250 in non-recurring development costs. Recurring research and development costs for the nine month period ended
September 30, 2004 therefore increased $116,512 over the comparable period in 2003. This increase is due to the cost of hiring of additional web developers in 2004.



Sales and Marketing



Sales and marketing expenses consist primarily of investor relations, travel, and printing expenses. Sales and marketing expenses for the three month
period ended September 30, 2004 were $6,653 compared to $27,894 for the three month period ended September 30, 2003. Sales and marketing expenses for the nine month period ended September 30, 2004 were $21,744 compared to $37,920 for the nine month
period ended September 30, 2003. In the third quarter of 2003 we incurred $22,250 in non-recurring marketing expenses. Recurring sales and marketing expenses, for the nine month period ended September 30, 2004, therefore increased $6,074 over the
comparable period in 2003. This increase was primarily due to increased travel expenses incurred in 2004 associated with selling our financial data products.



11



---

##### Table of Contents

General and Administrative



General and administrative expenses consist primarily of rent, computer equipment leases, computer maintenance and storage
and salary expenses. General and administration expenses for the three month period ended September 30, 2004 were $127,236 compared to $93,941 for the three month period ended September 30, 2003. General and administration expenses for the nine
month period ended September 30, 2004 were $313,383 compared to $309,877 for the nine month period ended September 30, 2003. In 2003 we incurred $63,488 in non-recurring office expenses. Therefore, recurring general and administrative expenses for
the nine month period ended September 30, 2004 increased $66,994 over the comparable period in 2003. This increase was primarily due to increased web server and bandwidth costs incurred in 2004



Loss on disposal of equipment



During June 2004, we sold obsolete computer equipment for proceeds of
$3,133. The equipment had a net book value of $13,442 resulting in a loss on disposal of $10,309.



Loss for the period



As a result of the
foregoing, we incurred a loss for the three months ended September 30, 2004 of $56,238 or approximately $(0.00) per share compared to a loss of $141,586 and $(0.00) per share for the three months ended September 30, 2003. The Company incurred a loss
for the nine months ended September 30, 2004 of $258,734 or approximately $(0.00) per share compared to a loss of $624,487 and $(0.01) per share for the nine months ended September 30, 2003.



Liquidity and Capital Resources



Our cash totaled $140,882 at September 30, 2004, as compared with $143,034 at December 31,
2003, a decrease of $2,152. Net cash of $25,927 was used in operations for the nine months ended September 30, 2004, primarily resulting from our net loss for the period and an increase in accounts receivable, offset by an increase in accounts
payable and deferred revenue. Net cash used in investing activities for the nine months ended September 30, 2004 was $51,653 resulting from the purchase of equipment and intangible assets, offset by proceeds from the disposal of equipment. Net cash
provided by financing activities for the nine months ended September 30, 2004 was $75,428 resulting from loans from related parties, offset by the repayment of a note payable and repayment of amounts due to related parties.



We generated positive cash flows from operations for the three months ended September 30,
2004 and expect to continue to generate positive cash flows from operations in the foreseeable future. Cash flows from operating activities together with cash presently on hand are believed to be sufficient, for the foreseeable future, to enable us
to meet our obligations and fund capital expenditures.



12



---

##### Table of Contents

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.



13



---

##### Table of Contents

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 September 30, 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.



14



---

##### Table of Contents

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



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



15



---

##### Table of Contents

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: November 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)




16