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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-KSB



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



For
fiscal year ended December 31, 2003



Commission file
number 0-28599



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QUOTEMEDIA, INC.

(Name of Small
Business Issuer in Its Charter)



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Nevada

(State of incorporation)



91-2008633

(I.R.S. Employer Identification No.)



17100 East Shea Boulevard, Suite 230, Fountain Hills, Arizona 85268 (480) 905-7311

(Address, zip code, and telephone number, including area code, of issuers principal executive offices)



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Securities registered pursuant to Section 12(b) of the Exchange Act: None



Securities registered pursuant to Section 12(g) of the Exchange Act:



Common Stock, par value $.001 per share



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Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d)
of the Exchange Act 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 ̈



Check if there is no disclosure of delinquent filers in response to item 405 of Regulation S-B in this form, and no disclosure will be
contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.  x



Issuers revenue for its most recent fiscal year: $286,379.



As of February 17, 2004, there were outstanding 58,664,204 shares of the issuers
common stock, par value $.001 per share. The aggregate market value of common stock held by non-affiliates of the issuer (47,773,804 shares) based on the closing price of the issuers common stock as reported on the NASD Over the Counter
Bulletin Board, or OTCBB, on February 17, 2004, was $23,409,164. For purposes of this computation, all executive officers, directors, and 10% beneficial owners of the issuer are deemed to be affiliates. Such determination should not be deemed an
admission that such officers, directors, or 10% beneficial owners are, in fact, affiliates of the issuer.



Documents incorporated by reference: None



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##### Table of Contents

QUOTEMEDIA.COM, INC.

ANNUAL REPORT ON FORM 10-KSB

FISCAL YEAR ENDED DECEMBER 31, 2003



TABLE OF CONTENTS



|                                           |  |                                                                                                                |  |     
|------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------- |  | ----
|                                           |  |                                                                                                               
|                                           |  |                                                                                                                |  | Page
|PART I                                    
|                                           |  |                                                                                                               
|ITEM 1.                                    |  | DESCRIPTION OF BUSINESS                                                                                        |  | 1   
|                                           |  |                                                                                                               
|ITEM 2.                                    |  | DESCRIPTION OF PROPERTY                                                                                        |  | 10  
|                                           |  |                                                                                                               
|ITEM 3.                                    |  | LEGAL PROCEEDINGS                                                                                              |  | 10  
|                                           |  |                                                                                                               
|ITEM 4.                                    |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                            |  | 10  
|                                          
|PART II                                   
|                                           |  |                                                                                                               
|ITEM 5.                                    |  | MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES |  | 11  
|                                           |  |                                                                                                               
|ITEM 6.                                    |  | MANAGEMENTS DISCUSSION AND ANALYSIS                                                                           |  | 11  
|                                           |  |                                                                                                               
|ITEM 7.                                    |  | FINANCIAL STATEMENTS                                                                                           |  | 14  
|                                           |  |                                                                                                               
|ITEM 8.                                    |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                           |  | 14  
|                                           |  |                                                                                                               
|ITEM 8A.                                   |  | CONTROLS AND PROCEDURES                                                                                        |  | 14  
|                                          
|PART III                                  
|                                           |  |                                                                                                               
|ITEM 9.                                    |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                                             |  | 15  
|                                           |  |                                                                                                               
|ITEM 10.                                   |  | EXECUTIVE COMPENSATION                                                                                         |  | 17  
|                                           |  |                                                                                                               
|ITEM 11.                                   |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS                 |  | 24  
|                                           |  |                                                                                                               
|ITEM 12.                                   |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                 |  | 25  
|                                           |  |                                                                                                               
|ITEM 13.                                   |  | EXHIBITS AND REPORTS ON FORM 8-K                                                                               |  | 26  
|                                           |  |                                                                                                               
|ITEM 14.                                   |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                         |  | 27  
|                                           | 
|SIGNATURES                                 |  | 28                                                                                                            
|                                           | 
|INDEX TO CONSOLIDATED FINANCIAL STATEMENTS |  | F-1                                                                                                           



STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS



The statements contained in
this report on Form 10-KSB that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding our
expectations, anticipation, intentions, beliefs, or strategies regarding the future. Our actual results could differ materially from those in the forward-looking statements. Among the
factors that could cause actual results to differ materially are the factors discussed in Item 1, Risk Factors.



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PART I



ITEM 1. DESCRIPTION OF BUSINESS



General



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.



Our unique
product capabilities provide a competitive advantage to Internet sites by offering a cost effective and simple alternative to the complex and expensive data feed model employed by most websites today. The flexibility and ease of deployment of
QuoteMedia data solutions make our products unique within the financial data services industry. Our streaming wealth management software, Quotestream, is an advanced consumer and professional portfolio-based tracking software application that offers
multiple integration options to maximize efficiency on a per client basis.



To facilitate effective information delivery, we have created an efficient, scalable model that manages and streams information to multiple entities from data centers and content feeds across the Web. This means that
a website can license financial information software applications, for monthly or annual subscription fees, at significantly reduced costs to the user.



Our Web-delivered components are lightweight, reliable, and easy to embed on a Website. They require fewer content updates and data feeds, have fewer
maintenance issues than competitors products, and they are highly customizable, allowing for seamless integration into a clients website. Any necessary assistance with implementation is included in our guarantee of ongoing full technical
support for our clients.



In March of 2003, we changed the name
of our company to QuoteMedia, Inc. from Quotemedia.com, Inc., to better reflect the business climate in which we operate. We maintain our executive offices at 17100 East Shea Boulevard, Suite 230, Fountain Hills, Arizona 85268, and our telephone
number is (480) 905-7311. All references to our business operations in this report include the operations of QuoteMedia, Inc. and our operating divisions.



Our website is located at www.quotemedia.com. Through our website, we make available free of charge our annual report on Form 10-KSB, our quarterly
reports on Form 10-QSB, our current reports on From 8-K, our proxy statements, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. These reports are available as soon as
reasonably practicable after we electronically file those reports with the Securities and Exchange Commission. We also post on our website the charters of our Audit Committee; our Corporate Governance Guidelines, Code of Business Conduct and Ethics,
and Code of Ethics for the CEO and Senior Financial Officers, and any amendments or waivers thereto; and any other corporate governance materials contemplated by SEC or applicable regulations. These documents are also available in print to any
stockholder requesting a copy from our corporate secretary at our principal executive offices.



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Strategy



Our business strategy utilizes a multi-level approach to generate revenues. The first of these strategies includes engaging in the online financial
services market by focusing on private labeling of our streaming stock quote software, Quotestream, for a monthly licensing fee to established Web portals, brokerages, and other financial services firms which currently do not offer or offer
inadequate online financial information and trading tools to their clients. The second strategy involves charging users directly monthly subscription fees for our Real-Time streaming stock information. The third strategy involves offering other
fee-based financial tools to a broad spectrum of websites, enabling them to offer their users a wider range of financial reporting information than just portfolio-based stock information. In our view, these new financial tool applications provide us
with a competitive advantage in a lucrative market due to their exceptional capacity for customization, extreme ease of implementation, and very attractive pricing.



We are implementing all strategies simultaneously. By means of this model, we believe site usage of our products will
increase significantly, accelerating our revenue growth and expansion as a company. We believe that the subscription/licensing-based products will comprise the majority of our revenue base over the long term. Our goal is to generate revenue from the
new Internet model of streaming information syndication. Under the syndication model, information is customized to suit the needs of our customers websites without the typical high up-front cost of customization involved in packaged software
or specific content feeds.



We currently target businesses
worldwide and offer our comprehensive suite of information software applications at a cost that we believe will be less than the cost these sites would otherwise incur. Potential markets for our products include the following:



| |  | Brokerage firms, banks, and other financial institutions;
| | - | ---------------------------------------------------------



| |  | Large, established Web portals;
| | - | -------------------------------



| |  | Corporate Intranets;
| | - | --------------------



| |  | Small to mid-sized websites;
| | - | ----------------------------



| |  | Public companies;
| | - | -----------------



| |  | Mutual fund companies;
| | - | ----------------------



| |  | Content Publishers; and
| | - | -----------------------



| |  | Individual investors.
| | - | ---------------------



Our financial and news applications can be seamlessly integrated onto an existing website regardless of its size. Adding business information, trading,
and other financial capabilities to a companys website through QuoteMedia enables businesses to provide comprehensive news and financial content and retain their visitors without linking them to another site.



Through turnkey branded applications, clients can monitor
investments in real-time through customizable portfolio trackers, research investment opportunities, watch live video, and view streaming financial data. In order to develop a comprehensive financial Web portal, a company could expend as much as
$100,000 plus monthly content fees, which alone can reach $20,000 per month.



Our integrated financial applications and in-depth, business-related data offer a comprehensive and easily integrated solution at a significantly reduced cost than our competitors.



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Products



Our software applications comprise a suite of customizable Java Applets, Javascript Inserts, and Java Servlets, which combine the depth and variety of
established financial databases with the flexibility and efficiency of the Web to deliver customized content to clients around the globe.



Our lightweight and fast-loading applications deliver a multi-faceted array of information in a variety of delivery vehicles. Services may be purchased on
a subscription basis for a wide range of products, from fully integrated backend-compliant systems, to highly portable and user friendly scripts that can be deployed in minutes to deliver robust and timely data across the Web.



We believe our software applications can provide extremely cost effective
content solutions to large-scale portals, smaller websites, and Fortune 500 companies, allowing them to present dynamic, customizable, and interactive Web-based content without the cost and time of internally developing the necessary applications
and feeds.



With our turnkey solutions, users can monitor
investments in real time through customizable portfolio trackers, and research investment opportunities via comprehensive streaming financial data. For the online investor, our financial software applications provide a wide array of interactive
tools, products, and services via the Internet.



Our product lines include the
following:



Quotestream



Quotestream is a unique, Web-based streaming online portfolio management
system that delivers instant market data to both consumer and corporate markets. A platform-independent solution, it can be easily integrated with existing back-end databases and provides streaming market data to end users through a flexible
interface that can be fully customized by the publisher.



Quotestream is available in several modes, which include Delayed Data, Real-Time Data, and Level II Data. Within the application, users may customize their portfolios and gather important information via dynamic charting, symbol-based news,
corporate filings, and up-to-the-second market reports.



Our
Quotestream product line comprises four products (Quotestream Bronze, Quotestream Silver, Quotestream Gold, and Quotestream Professional), all based on our revolutionary, proprietary application technology that delivers a broad range of value-added
financial information and services, such as: market indices; stock watch lists; static and interactive charts; and both delayed and real-time streaming (dynamically updated) content in a small (under 100k), Web-delivered application that requires no
downloads or user-resident software.



We have designed our
Quotestream products specifically for private branding by brokerages, financial institutions, and Web portals, which we refer to as corporate partners, and to meet the individual needs of their customers. Quotestream enables a corporate partner to
complement their existing product offering, differentiate themselves from their competition, and generate substantial recurring revenue.



The Quotestream application generates revenue streams for our clients through a dynamic syndication process. Under the syndication model, information is
customized to suit the needs of the customer without the usual high up-front cost of specific content feeds and integration. This comprehensive application allows corporate partners to offer their own privately branded Quotestream Bronze product at
little cost to the corporate partner and no cost to their customer. In addition, corporate partners can offer and up-sell the enhanced Quotestream Bronze, Silver, Gold and Professional products. Corporate partners may even elect to offer our
Quotestream line of products to their client-bases at no cost to themselves, while enjoying ongoing revenue shares on generated subscriptions.



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Financial Tools



We have developed a full range of aggressively priced financial data applications to serve an expanding market for timely
market data delivered over the Web. Clients may choose from full tool packages or an array of individual components to add dynamic, real-time financial information to their websites. Our tools offer businesses maintenance-free applications that will
retain traffic and increase overall customer activity, while seamlessly integrating into their current site layouts and product offerings.



Our Financial Tools software applications constitute a suite of customizable services that combine the depth of a variety of established databases with
the flexibility and efficiency of the Web to deliver financial and news information. These information applications are typically licensed for a monthly subscription fee.



Our publishing partners benefit from access to simple, low-cost, locally hosted and fully customizable applications that are
subscription-based and tailored to individual needs. Our Financial Tools packages and components include:



| |  | Charts  Markets and equity charting is available in a variety of formats. Static thumbnails or dynamic interactive charting is available to allow full market coverage
charting or individual stock performance displays.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Stock Tickers  Vertical or horizontally displayed tickers bring instant market information alive.
| | - | --------------------------------------------------------------------------------------------------



| |  | Market Indices  At-a-glance display of market conditions, fed directly from the major exchanges.
| | - | -------------------------------------------------------------------------------------------------



| |  | News Headlines  Equity-based lookup of news stories relating to individual companies, or broader, demographic-specific feeds in over 400 categories.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Watch Lists Current values and trends for a group of user-defined equities.
| | - | ----------------------------------------------------------------------------



| |  | Market Statistics  Top gainers and losers on the day for a variety of exchanges. Detailed statistical analysis of most actively traded stocks.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  | Investor Relations  Information on current value, historical data, and news related to individual public companies, generating a turnkey and self-updating investor
relations page.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Quote Modules - Completely customizable and intuitive quote modules allow visitors to enter a stock symbol and return a wide range of market data, including charts, news,
historical data, market indices, Level II, Current Price, Change, Bid-Ask, Insider Reports, SEC filings, and more.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Value Priced Premium Packages  Our Professional, Executive, Enterprise, and Investor Relations Packages include various bundling of some or all of the above financial
tools, and include the Quotestream portfolio management system.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Customized Packages  Because of the flexibility and scalability of our software applications, we are able to accommodate any unique requirements with specifically
tailored solutions.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Employees



We currently have seven full time employees: (1) Mr. David M. Shworan, who
is our Chief Executive Officer, President, and director; (2) Mr. R. Keith Guelpa, our Chief Operating Officer and Director; (3) Mr. Duane Nelson, our head of business development; (4) Keith Randall, our Chief Financial Officer; (5) Jeff Kadanoff,
our lead technical administrator; (6) Madhu Acharya, our lead software programmer and (7) Christian Amott our lead developer.



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In addition, we employ nine contract employees consisting of three programmers, four sales/marketing
personnel, and two customer service/administration staff. Our employees are not members of any union, nor have we entered into any collective bargaining agreements. We believe that our relationship with our employees is good. With a successful
implementation of our business plan, we may retain additional employees in the next year to handle anticipated growth. We anticipate that we will hire additional employees in the areas of administration, programming, sales, marketing, and customer
care.



Competition



We believe there is a small group of competitors for our core market
competency as a developer of proprietary Web-based software for the brokerage and financial institution marketplace. There are over 13,000 brokerage firms and nearly 10,000 financial firms and insurance institutions in the United States today, and
very few of those have a streaming product that is similar to our product, thus leaving a large market for us to explore. In addition, many of these companies websites that do currently feature competitors financial tools
will realize significant savings by switching to our more customizable, faster-loading, more easily implemented, and less expensive financial tool applications.



Many financial information companies license information to Web businesses and feed the information to them through industry standard FTP feeds or
links, a business model that syndicates content. We believe we offer a notably different product from these companies, by virtue of our focus on the development of software for the delivery of information. We package information into flexible
software applications to meet the specific needs of our clients. We have created application technology that we believe is unique and revolutionary in the marketplace in terms of both features and functionality. Our products offer significant
technological advantages through our delivery of an unparalleled feature aggregate, including the following:



| |  | Dynamic real-time information onto the desktop with no need to launch the Web browser (Active Desktop Mode);
| | - | ------------------------------------------------------------------------------------------------------------



| |  | Solutions easily embedded directly onto a website;
| | - | --------------------------------------------------



| |  | Complete customization by end users of content and appearance of content delivery;
| | - | ----------------------------------------------------------------------------------



| |  | No requirement for any bandwidth, software, or back-end infrastructure from clients web sites to run our technology;
| | - | ---------------------------------------------------------------------------------------------------------------------



| |  | Extremely lightweight, fast-loading applications;
| | - | -------------------------------------------------



| |  | Integrated satellite feed and database for all North American securities;
| | - | -------------------------------------------------------------------------



| |  | Open architecture Oracle database systems;
| | - | ------------------------------------------



| |  | UNIX server farm with Arrowpoint load balancing;
| | - | ------------------------------------------------



| |  | Comprehensive statistical logs and tracking systems;
| | - | ----------------------------------------------------



| |  | User-friendly, premium product registration and order system;
| | - | -------------------------------------------------------------



| |  | Quotestream (Streaming Delayed and Real-time Quotation application);
| | - | --------------------------------------------------------------------



| |  | Firewall-friendly dynamic Java Applets;
| | - | ---------------------------------------



| |  | Real-time registration and order interfaces;
| | - | --------------------------------------------



We do not attempt to compete in the pure financial information marketplace as a raw information provider such as S&P, Reuters, and Comtex. Rather, we
offer reliable, real-time financial and stock information delivered via our own proprietary software information applications. We believe this makes our products and services distinct from other products currently in the marketplace.



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Other companies provide stock quotes and related information. Thousands of websites offer stock quotes
and charts on the Web today. The most popular and largest of these websites include MSN Investor, YAHOO Finance, Quicken, CBS MarketWatch, The Street.com, and PC Quote. Many online brokerages also offer detailed market information to their clients,
such as E*Trade, Ameritrade, Charles Schwab, and many others.



We believe that our business model offers strong market differentiation through our strategy of offering private labeled financial solutions to established Web portals and brokerages. This should allow us to take advantage of existing brand
recognition and loyalties already established between our customers and their clients



Risk Factors



You
should consider carefully the following factors, in addition to those discussed elsewhere in this report, in evaluating our company and our business.



Our independent auditors have expressed a going concern opinion.



As a result of our lack of revenue and accumulated deficit of $6,757,033 at December 31, 2003, the financial statements accompanying this report have been
prepared assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The financial statements do not include any adjustment that might result from
the outcome of this uncertainty. We have had a limited operating history and have generated limited revenues or earnings to date. We cannot make any assurances that these trends will continue and that we will generate profits from operations. Our
short operating history makes it difficult to predict our future financial results. If we do not begin generating profits, the price of our common stock may suffer and our stockholders may not be able to recover their initial investment.



We may need additional capital with which to implement our business plan and there is
no agreement with any third party to provide such capital.



Based on current revenue trends, we anticipate that we will generate positive cash flow from operations in 2004. Current revenue trends may not continue, however, and we may require additional equity or debt financing in order to continue
our operations. In addition, if we require additional funding or determine it appropriate to raise additional funding in the future, there is no assurance that adequate funding, whether through additional equity financing, debt financing, or other
sources, will be available when needed or on terms acceptable to us. Further, any such funding may result in significant dilution to existing stockholders. The inability to obtain sufficient funds from operations and external sources when needed
would have a material adverse affect on our business, results of operations, and financial condition.



Our proposed operations are speculative. We have not conducted any market research, nor do we have a marketing organization other than our current management.



The success of our proposed plan of operation will depend largely on the
acceptance of our business model by the markets and customers targeted by us. We neither have conducted, nor have made available to the market, results of market research indicating that market demand exists for our contemplated business plan.
Moreover, we do not yet have a formal marketing organization. Even if demand is identified for our contemplated business plan, there is no assurance that our operations will generate profits. Without the ability to generate profits, our stockholders
may not be able to recover their investment.



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We have a limited operating history.



We have only a limited operating history upon which investors can evaluate our company and prospects. Our prospects must be
evaluated with a view to the risks encountered by a company in an early stage of development, particularly in light of the uncertainties relating to the new and evolving markets in which we have begun to operate and whether there will be acceptance
of our business model. We will incur costs as we continue to develop software applications, establish marketing and distribution relationships, acquire additional hardware and software, and enhance our existing administrative organization. To the
extent that such expenses are not subsequently followed by commensurate revenue, our business, results of operations, and financial condition will be materially adversely affected. There can be no assurance that we will be able to generate
sufficient revenue from our business to achieve or maintain profitability on a quarterly or an annual basis in the future. If cash generated by operations is insufficient to satisfy our liquidity requirements, we may be required to sell debt or
additional equity securities. The sale of additional equity or convertible debt securities would result in additional dilution to our stockholders. Further, there can be no assurances that we will successfully be able to sell our securities in order
to obtain additional capital.



We are subject to risks related to changes in
technology.



Our success will also depend upon our ability
to develop and provide new products and services. The delivery of our products and services online is, and will continue to be, like the Internet, characterized by rapidly changing technology, evolving industry standards, changes in customer
requirements, and frequent new service and product introductions. Our future success will depend, in part, on our ability to effectively use leading technologies, continue our technological expertise, enhance our current services, develop services
that meet changing customer requirements, and influence and respond to emerging industry standards and other technological changes on a timely and cost-effective basis. There can be no assurance that we will respond to these changing technological
conditions. Our failure to respond to changing technological conditions would have a material adverse effect on our business.



We are subject to competition in certain service areas.



The market for Internet content providers is new, highly competitive, and rapidly changing. Since the Internets commercialization in the early
1990s, the number of web sites on the Internet competing for consumers attention and spending has proliferated. With no substantial barriers to entry, we expect that competition will continue to intensify. Currently, there are hundreds
of real-time data information, research, and trading services web sites on the Internet. With respect to competing for consumers attention, in addition to intense competition from Internet content providers, we also face competition from
traditional brokerage institutions.



We believe that the
primary competitive factors in providing our services via the Internet are name recognition, content availability on an exclusive basis, the variety of value-added services, ease of use, price, quality of service, availability of customer support,
reliability, technical expertise, and experience. Our success in this market will depend heavily upon our ability to provide high-quality content, cutting-edge technology, and value-added Internet services. Our failure to compete effectively will
have a material adverse effect on our business.



Our industry
is highly competitive. Many of our current and potential competitors in the Internet and financial industry have longer operating histories, significantly greater financial, technical, and marketing resources, greater name recognition, and larger
existing customer bases than we do. These competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements and to devote greater resources to the development, promotion, and sale of their services.
There can be no assurance that we will be able to compete successfully against current or future competitors. Failure to adequately compete will have a negative impact on our business.



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In addition, the market in which we compete is characterized by frequent new product introductions,
rapidly changing technology, and the emergence of new industry standards. The rapid development of new technologies increases the risk that current or new competitors will develop products or services that reduce the competitiveness of and are
superior to our products and services. Our future success will depend to a substantial degree upon our ability to develop and introduce in a timely fashion new products, services, and enhancements to our existing products and services that meet
changing customer requirements and emerging industry standards. The development of new, technologically advanced products and services is a complex and uncertain process requiring high levels of innovation, as well as the accurate anticipation of
technological and market trends. There is a potential for product development delay due to the need to comply with new or modified standards. We cannot provide any assurance that we will be able to identify, develop, market, support, or manage the
transition to new or enhanced products or services successfully, provide new products and services, that will be responsive to technological changes or that new products and services will gain market acceptance, or respond effectively to
announcements by competitors, technological changes, or emerging industry standards. Our business, results of operations, and financial condition would be materially adversely affected if we were to be unsuccessful, or to incur significant delays,
in developing and introducing new products, services, or enhancements.



Our
quarterly operating results may fluctuate significantly.



Our quarterly operating results may fluctuate significantly in the future as a result of a variety of factors, most of which are outside of our control, including, but not limited to, the following:



| |  | the level of use of the Internet;
| | - | ---------------------------------



| |  | number of licenses sold;
| | - | ------------------------



| |  | Internet advertising;
| | - | ---------------------



| |  | seasonal trends in Internet use, purchases, and advertising placements;
| | - | -----------------------------------------------------------------------



| |  | the level of traffic on our Internet sites;
| | - | -------------------------------------------



| |  | the amount and timing of capital expenditures and other costs relating to the expansion of our Internet operations;
| | - | -------------------------------------------------------------------------------------------------------------------



| |  | the introduction of new software applications or services by us or our competitors;
| | - | -----------------------------------------------------------------------------------



| |  | price competition or pricing changes in the industry;
| | - | -----------------------------------------------------



| |  | technical difficulties or system downtime;
| | - | ------------------------------------------



| |  | general economic conditions; and
| | - | --------------------------------



| |  | economic conditions specific to the Internet and Internet media.
| | - | ----------------------------------------------------------------



Due to the foregoing factors, among others, it is likely that our operating results will fall below our expectations or our stockholders or
analysts expectations in future quarters.



We depend on key personnel
and expect to hire additional personnel.



Our performance
is substantially dependent on the services of David M. Shworan, our Chief Executive Officer and President, and R. Keith Guelpa, our Chief Operating Officer. The loss of Mr. Shworan or Mr. Guelpa, or other key employees, could have a material adverse
affect on our business.



Our future success will also depend in
large part upon our ability to attract and retain highly skilled management, technical engineers, sales and marketing personnel, and finance and technical personnel. Competition for such personnel is intense and there can be no assurance that we
will be able to attract and retain such personnel. The loss of the services of any key personnel, the inability to attract or retain qualified personnel in the future, or any delays in hiring required personnel, particularly technical engineers and
sales personnel, could have a material adverse affect on our business, results of operations, and financial condition.



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We depend on third parties for Internet operations and product deliveries.



Our ability to license financial software applications for use on other
Internet sites and the willingness of the owners of such sites to direct users to our Internet site through hypertext links is critical to the success of our Internet operations. We rely on the cooperation of owners of copyrighted materials and
Internet search services and on our relationships with third party vendors of Internet development tools and technologies. There can be no assurance that the necessary cooperation from third parties will be available on acceptable commercial terms
or at all. If we are unable to develop and maintain satisfactory relationships with such third parties on acceptable commercial terms, or if our competitors are better able to leverage such relationships, our business, results of operations, and
financial condition will be materially adversely affected.



We may spend
significant amounts of money to protect against security breaches.



A party who is able to circumvent our security measures could misappropriate proprietary information or cause interruptions in our Internet operations. We may be required to expend significant capital and resources to protect against the
threat of such security breaches or to alleviate problems caused by such breaches. Consumer concern over Internet security has been, and could continue to be, a barrier to commercial activities requiring consumers to send their credit card
information over the Internet. Computer viruses, break-ins, or other security problems could lead to misappropriation of proprietary information and interruptions, delays, or cessation in service to our customers. Moreover, until more comprehensive
security technologies are developed, the security and privacy concerns of existing and potential customers may inhibit the growth of the Internet as a merchandising medium. Were these risks to occur, our business, results of operations, and
financial condition could be materially adversely affected.



The success of
our anticipated future growth depends upon our ability to successfully manage the growth of our proposed operations.



We expect to experience significant growth in our number of employees and scope of operations. Our future success will depend upon our ability to manage
successfully the expansion of our operations. Our ability to manage and support our growth effectively will depend on our ability to implement adequate improvements to financial and management controls, reporting, order entry systems, and other
procedures and hire sufficient numbers of financial, accounting, administrative, and management personnel. Our expansion and the resulting growth in the number of our employees will result in increased responsibility for both existing and new
management personnel. There can be no assurance that we will be able to identify, attract, and retain experienced accounting and financial personnel. Our future operating results will depend on the ability of our management and other key employees
to implement and improve our systems for operations, financial control, and information management and to recruit, train, and manage our employee base. There can be no assurance that we will be able to achieve or manage any such growth successfully
or to implement and maintain adequate financial and management controls and procedures. Any inability to do so would have a material adverse effect on our business, results of operations, and financial condition.



Our future success depends upon our ability to address potential market
opportunities while managing our expenses to match our ability to finance operations. This need to manage our expenses will place a significant strain on our management and operational resources. If we are unable to manage our expenses effectively,
our business, results of operations, and financial condition will be adversely affected.



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Penny stock rules may make buying or selling our common stock difficult.



Our common stock in the past has been, and from time to time in the future
may be, subject to the penny stock rules as promulgated under the Securities Exchange Act of 1934. In the event that no exclusion from the definition of a penny stock under the Exchange Act is available, then any broker
engaging in a transaction in our common stock will be required to provide each customer with



| |  | a risk disclosure document;
| | - | ---------------------------



| |  | disclosure of market quotations, if any;
| | - | ----------------------------------------



| |  | disclosure of the compensation of the broker-dealer and its salesperson in the transaction; and
| | - | -----------------------------------------------------------------------------------------------



| |  | monthly account statements showing the market values of our securities held in the customers accounts.
| | - | -------------------------------------------------------------------------------------------------------



The bid and offer quotation and compensation information must be provided
prior to effecting the transaction and must be contained on the customers confirmation. Certain brokers are less willing to engage in transactions involving penny stocks as a result of the additional disclosure requirements
described above, which may make it more difficult for holders of our common stock to dispose of their shares.



Investors should not expect to receive a dividend in the future.



We have never paid any cash dividends on our common stock and do not currently anticipate that we will pay dividends in the foreseeable future. Instead,
we intend to apply earnings to the expansion and development of our business.



ITEM 2. DESCRIPTION OF PROPERTY.



We lease executive office space in Fountain Hills, Arizona. The term of this lease expires in May 2005.



We lease office space for technical staff in Vancouver, British Columbia, Canada. The term of this lease expires in November 2005. We also have office
space located in Parksville, British Columbia for contract sales and customer service staff. The term for this space expires in November 2004.



We believe that our current leased space is sufficient to meet our needs for the next 12 months and that property is currently in acceptable condition.
Beyond that, we anticipate the need to expand our lease facilities in all locations as our company grows. We have no other properties and have no agreements to acquire any properties.



ITEM 3. LEGAL PROCEEDINGS.



Not applicable.



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.



Not applicable.



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##### Table of Contents

PART II



ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS PURCHASES OF EQUITY SECURITIES.



Our common stock is quoted on the OTCBB under the symbol QMCI. The following table sets forth the high and low
sales prices for our common stock for the calendar quarters indicated.



|                                        |  |      |      |     |   |     
|--------------------------------------- |  | ---- | ---- | --- | - | ----
|                                        |  | High |      | Low
|Year ended December 31, 2002:           |  |      |      |     |   |     
|First Quarter                           |  | $    | 0.50 |     | $ | 0.19
|Second Quarter                          |  |      | 0.25 |     |   | 0.14
|Third Quarter                           |  |      | 0.16 |     |   | 0.07
|Fourth Quarter                          |  |      | 0.14 |     |   | 0.04
|                                        |  |     
|Year ended December 31, 2003:           |  |      |      |     |   |     
|First Quarter                           |  | $    | 0.09 |     | $ | 0.05
|Second Quarter                          |  |      | 0.31 |     |   | 0.06
|Third Quarter                           |  |      | 0.42 |     |   | 0.18
|Fourth Quarter                          |  |      | 0.78 |     |   | 0.31
|                                        |  |     
|Year ended December 31, 2004:           |  |      |      |     |   |     
|First Quarter (as of February 17, 2004) |  | $    | 0.51 |     | $ | 0.34



As of February 17,
2004, there were approximately 358 holders of record of our common stock. As of February 17, 2004, the closing price for our common stock was $0.49.



Dividend Policy



For the foreseeable future, we intend to retain any future earnings to finance our operations and do not anticipate paying cash dividends with respect to
our common stock. Subject to the preferences that may be applicable to any then-outstanding preferred stock, the holders of our common stock will be entitled to receive such dividends, if any, as may be declared by our board of directors from time
to time out of legally available funds. Payments of any cash dividends in the future will depend on our financial condition, results of operations, and capital requirements as well as other factors deemed relevant by our board of directors.



ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS



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 main product lines: Quotestream and Financial Tools. Quotestream is a Web-based streaming online portfolio management system that delivers instant market data to both consumer and corporate markets. Financial Tools are a suite
of software applications that deliver financial and news information over the Web.



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 via our website.
We generate revenue from Financial Tools by licensing our products for a monthly or annual subscription fee.



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During 2003, we achieved positive revenue growth compared to the prior year. We successfully launched our
new line of Financial Tools during the year which contributed to the revenue increase. We anticipate that our revenue will continue to grow during 2004. Our expenses during 2003 were slightly higher than 2002. We anticipate that our expenses will
increase slightly in 2004 due to the addition of new personnel and increased financial content fees associated with an increasing number of customers.



Our plan of operation over the next 12 months will focus primarily on marketing our streaming, real-time financial software applications. In addition, we
will focus on completing other financial software applications in the development stage and bringing those products to market. These activities may give rise to additional products that may be commercialized by our company. There can be no
assurance, however, that our efforts will result in marketable products or products that can be produced at commercially acceptable costs.



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 successfully market
our products and technology. There can be no assurance that we will be able to successfully implement a marketing strategy, generate significant revenue, or achieve profitable operations. In addition, because our company has had only limited
operations to date, there can be no assurance that our estimates will prove to be accurate or that unforeseen events will not occur.



Critical Accounting Policies and Estimates



Managements Discussion and Analysis discusses our financial statements, which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the
balance sheet date and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition. We base our estimates and judgments on
historical experience and on various other factors that are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different assumptions or conditions.



We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial
statements.



Revenue recognition



Revenue consists primarily of licensing fees generated from our software
applications. Revenues from software license fees are recognized when all of the following criteria are met: the written agreement is executed; the software is delivered; the license fee is fixed and determinable; and collectibility of the license
fee is probable. We record deferred revenue when we receive cash in advance of the revenue recognition criteria being met



Results of Operations



Revenue



Revenue
consists primarily of licensing fees generated from our software applications. We also earn ancillary revenues generated from sponsorship advertisements. Revenue for the year ended December 31, 2003 was $286,379 compared to $43,871 for the year
ended December 31, 2002. The increase is due to the increased market acceptance of our subscription-based streaming products launched in 2002, and the introduction of new financial tools in 2003.



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Financial Content Fees



Financial content fees 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 fees for the year ended December 31, 2003, were $234,181 compared with $157,510 for the year ended December 31, 2002. The increase is due primarily to 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 year ended December 31, 2003 were $36,529 compared with $(369) for the year ending December 31, 2002. The increase in 2003 is due to the legal costs associated with our Annual Meeting
of Stockholders held in February 2003. The negative expense amount in 2002 is due to $10,626 in expenses that were recovered resulting from the cancellation of 8,929 shares of our common stock previously issued for professional services rendered.



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 year ended December 31, 2003, were $255,929 compared with $167,178 for the year ended December 31, 2002. The increase in 2003 is primarily
due to stock bonuses paid to developers.



Sales and Marketing



Sales and marketing consists primarily of business
development, investor relations, travel, and printing expenses. Sales and marketing expenses for the year ended December 31, 2003 were $55,742 compared to $(161,512) for the year ended December 31, 2002. The increase is due to investor relation
expenses associated with the Annual Meeting of Stockholders held in February 2003 and increased travel expenses in 2003. The negative expense amount in 2002 is due to $276,750 in expenses that were recovered in 2002 resulting from the cancellation
of 1,835,000 shares of our common stock previously issued for sales and marketing services rendered.



General and administrative



General and administrative expenses consist primarily of salaries, rent, computer equipment leases, computer maintenance and storage expenses. General and administrative expenses for the year ended December 31, 2003, were $429,808 compared
to $709,440 for the year ended December 31, 2002. The decrease is due primarily to financing expenses incurred in 2002.



Loss for the period



As a result of the foregoing, we incurred a loss for the year ended December 31, 2003, of $725,810 or approximately $(0.013) per share, compared to a loss
of $828,376 or approximately $(0.022) per share, for the year ended December 31, 2002.



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Liquidity and Capital Resources



Our cash totaled $143,034 at December 31, 2003, compared to $190,200 at December 31, 2002, a decrease of $47,166. Net cash
of $511,360 was used in operations for the year ended December 31, 2003, primarily resulting from our net loss for the year and the decrease in accounts payable, offset by the increase in deferred revenue and the issuance of capital stock for
services. Net cash used in investing activities for the year ended December 31, 2003, was $19,806, resulting from the purchase of equipment. Net cash provided by financing activities for the year ended December 31, 2003 was $484,000 resulting from
the issuance of new capital stock.



Based on current revenue
trends, we anticipate that we will generate positive cash flow from operations in 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.



ITEM 7. FINANCIAL STATEMENTS.



Reference is made to the Financial Statements, the Notes thereto, and the Report of Independent Public Accountants thereon commencing at page F-1 of this Report, which Financial Statements, Notes, and report are incorporated herein by
reference.



ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.



Not applicable.



ITEM 8A. CONTROLS AND PROCEDURES



Based on their evaluation, as of a date within 90 days prior to the date of the filing of this report, of the effectiveness of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer have each
concluded that our disclosure controls and procedures are effective and sufficient to ensure that we record, process, summarize, and report information required to be disclosed by us in our periodic reports filed under the Securities Exchange Act
within the time periods specified by the Securities and Exchange Commissions rules and forms.



Subsequent to the date of their evaluation, there have not been any significant changes in our internal controls or in other factors that could
significantly affect these controls, including any corrective action with regard to significant deficiencies and material weaknesses.



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##### Table of Contents

PART III



ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.



The following table sets forth certain information regarding our directors and executive officers:



|                   |  |     |  |                                                  
|------------------ |  | --- |  | -------------------------------------------------
|Name               |  | Age |  | Position                                         
|Robert J. Thompson |  | 61  |  | Chairman of the Board                            
|David M. Shworan   |  | 36  |  | President, Chief Executive Officer, and Director 
|R. Keith Guelpa    |  | 56  |  | Chief Operating Officer and Director             
|Keith J. Randall   |  | 37  |  | Treasurer, Chief Financial Officer, and Secretary



Our listed officers
and directors will serve until the next annual meeting of stockholders or until their death, resignation, retirement, removal, disqualification, or until their successors have been duly elected and qualified. Vacancies in our existing Board of
Directors are filled by majority vote of the remaining directors. Our officers serve at the will of our Board of Directors. There is no family relationship between any executive officer and director.



Robert J. Thompson has served as our Chairman of the Board since
February 2000. Mr. Thompson is President of Corpus Investments Inc., a private holding company which manages investments in a wide range of enterprises. Since 1996, Mr. Thompson has also served as the President of BIMSI Marketing Services Inc., a
privately held company that manages the worldwide marketing activities on behalf of suppliers of web-based, human resource management software products used by management consulting firms and large corporations. Mr. Thompson, until recently, was
Chairman of the Board of C.M. Oliver Inc., a Canadian regulated, publicly traded investment dealer/broker involved in investment banking activities throughout North America and in Europe. As an independent director, Mr. Thompson also chaired the
Audit and Compensation Committees of the Board. Mr. Thompson presently acts as a Director of several privately owned corporations including PreSenSys, Inc., Selex LLC and PW Strategy Management Inc. For almost 30 years, Mr. Thompson practiced as a
Chartered Accountant and Certified Management Consultant. He was a Partner of KPMG LLP (formerly Peat Marwick Mitchell & Co.), Woods Gordon/Clarkson Gordon (Arthur Young & Co.) and Ernst & Whinney. In 1989, he withdrew from public
practice after serving for 5 years as the National Partner in Charge of the Senior Management Services Division of Stevenson Kellogg Ernst & Whinney. Subsequently, he formed The Robert Thompson Partnership through which, from time to time, he
continues to provide strategic and management counsel to select Chief Executive Officers and other senior executive level managers.



David M. Shworan has served as our President, Chief Executive Officer, and a director since November 2002. Mr. Shworan is a veteran of online
marketing and Internet business. Mr. Shworan is the founder of Bravenet Web Services, Inc., a webmaster tools and services site for over 5 million web developers, and has served as the Chief Executive Officer of Bravenet since September 1997. Mr.
Shworan is the founder of several Internet companies, and has been a consultant to Internet companies for the past five years.



R. Keith Guelpa has served as our Chief Operating Officer since November 2002 and as a director since July 1999. Mr. Guelpa served as our President
and Chief Executive Officer from July 1999 until November 2002. From March 1999 until June 1999, Mr. Guelpa served as President of R.K. Guelpa & Associates, a private consulting company. From January 1998 until February 1999, Mr. Guelpa was
Chairman and Chief Executive Officer of Mailbank.com, Inc., a privately held Canadian Internet-based corporation that owned the largest registration of top-level domain names in the world. Mr. Guelpa received a Bachelor of Commerce degree from the
University of British Columbia in 1970.



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Keith J. Randall has served as our Vice President, Treasurer, and Chief Financial Officer since
September 1999 and Secretary since July 2000. Mr. Randall served as Vice President and Chief Financial Officer of Datawest Solutions, Inc. (formerly C.M. Oliver, Inc.) from August 1999 until March 2000. From August 1998 until August 1999, Mr.
Randall served as controller of C.M. Oliver & Company Ltd., a publicly held Canadian corporation offering brokerage/financial planning and investment banking services. From April 1998 until August 1998, Mr. Randall served as a consultant with
KPMG LLP. Mr. Randall is a licensed chartered accountant in Canada and a licensed Certified Public Accountant in the United States. He received a Bachelor of Commerce degree with Honors from Queens University in May 1991.



Compliance with Section 16(a) of the Exchange Act



Section 16(a) of the Exchange Act requires our directors, officers, and
persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. Directors, officers, and greater than 10% stockholders are required by SEC regulations to furnish us
with copies of all Section 16(a) forms they file. Based solely upon our review of the copies of such forms that we received during the fiscal year ended December 31, 2003, and written representations that no other reports were required, we believe
that each person who at any time during the fiscal year was a director, officer, or beneficial owner of more than 10% of our common stock complied with all Section 16(a) filing requirements during such fiscal year.



Information Relating to Our Audit Committee of the Board of Directors



The purpose of the Audit Committee is to assist our board of directors in
the oversight of the integrity of the consolidated financial statements of our company, our companys compliance with legal and regulatory matters, the independent auditors qualifications and independence, and the performance of our
companys independent auditors. The primary responsibilities of the Audit Committee are set forth in its charter, and include various matters with respect to the oversight of our companys accounting and financial reporting process and
audits of the consolidated financial statements of our company on behalf of our board of directors. The Audit Committee also selects the independent certified public accountants to conduct the annual audit of the consolidated financial statements of
our company; reviews the proposed scope of such audit; reviews accounting and financial controls of our company with the independent public accountants and our financial accounting staff; and reviews and approves transactions between us and our
directors, officers, and their affiliates.



Code of Ethics



Our Board of Directors has adopted Corporate Governance Guidelines, a
Code of Conduct, a Code of Ethics for the CEO and Senior Financial Officers, an Audit Committee Charter, and any other corporate governance materials contemplated by SEC or applicable regulations. We post on our website at www.quotemedia.com,
these corporate governance materials. These documents are also available in print to any stockholder who requests by contacting our corporate secretary at our executive offices.



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##### Table of Contents

ITEM 10. EXECUTIVE COMPENSATION.



Summary
of Cash and Other Compensation



The following table sets
forth certain information concerning the compensation for the fiscal years ended December 31, 2001, 2002, and 2003 earned by our Chief Executive Officer and one other officer who served as our Chief Executive Officer during fiscal 2001 and 2002.
None of our other executive officers cash salary and bonus exceeded $100,000 during fiscal 2003.



SUMMARY COMPENSATION TABLE



|                                                                   |  |              |  |              |                     |        |                           |   |          |                                                                |  |                     |                           |  |   |               |       
|------------------------------------------------------------------ |  | ------------ |  | ------------ | ------------------- | ------ | ------------------------- | - | -------- | -------------------------------------------------------------- |  | ------------------- | ------------------------- |  | - | ------------- | ------
|Name and Principal Position                                        |  | Year         |  | Salary($)(1) |                     |        | RestrictedStockAwards ($) |   |          | Long Term Compensation Awards Securities Underlying Options(#) |  |                     | All Other Compensation($) | 
|David M. ShworanChief Executive Officer (2)                        |  | 20032002     |  | $            | 58,600             | (3)(3) |                           |   |        |                                                                |  | 5,000,00020,000,000 | (3)(3)                    |  |   |             |       
|R. Keith GuelpaChief Operating Officer,President, and Director (4) |  | 200320022001 |  |              | 60,00036,458125,000 | (6)    |                           | $ | 63,488 | (5)                                                            |  | 871,875           | (6)                       |  | $ | 30,00050,000 | (7)(7)

---

|(1) | The executive officers listed also received certain perquisites, the value of which did not exceed 10% of his salary during any year presented.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Mr. Shworan was named our Chief Executive Officer effective November 13, 2002.
|--- | ------------------------------------------------------------------------------

|(3) | Pursuant to his employment agreement, we started accruing salary payable to Mr. Shworan in June 2003. The salary accrued remains unpaid as of December 31, 2003. Mr. Shworan received
no salary prior to June 2003. In connection with his 2002 employment agreement, we granted to Mr. Shworan as a signing bonus five-year warrants to purchase 4,000,000 shares of common stock, which were vested as of the date of grant, and warrants to
purchase an additional 16,000,000 shares of common stock, which vest pursuant to our company achieving various monthly net revenue targets and common stock price targets. In 2003, Mr. Shworans employment agreement was amended and he received
an additional 2,000,000 warrants that vested as of the date of grant, and an additional 3,000,000 warrants to purchase shares of common stock, which vest pursuant to our company achieving various monthly net revenue targets and common stock price
targets. See Item 10. Executive Compensation  Employment Agreements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Mr. Guelpa served as our Chief Executive Officer from July 1999 to November 2002. Effective November 13, 2002, Mr. Guelpa was named our Chief Operating Officer.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Mr. Guelpa elected to take 798,688 shares of common stock in lieu of $63,488 of unpaid salary. The amount of shares was determined using the current market price of $0.08 per share
as of that date. The fair market value of the common shares was $367,396 as at December 31, 2003.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | During 2001, $73,983 of Mr. Guelpas salary was accrued but remained unpaid at December 31, 2001. During 2002, Mr. Guelpa forgave $23,983 of the salary payable. The remaining
$50,000 was paid to Mr. Guelpa and loaned back to us. During 2002, Mr. Guelpa also agreed to receive a reduced salary of $36,458 in exchange for receiving warrants to purchase 871,875 shares of common stock at an average exercise price of $0.09. See
Executive Compensation  Option Grants.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(7) | In May 2000, we loaned Mr. Guelpa $80,000 to provide relocation assistance. During 2001, our Board of Directors approved forgiving $50,000 of the loan. During 2002, our Board of
Directors approved forgiving the remaining $30,000 of loan and the accrued interest.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Option Grants



The
following table provides information on stock options granted to the officers listed during the fiscal year ended December 31, 2003.



OPTION GRANTS IN LAST FISCAL YEAR



|                 |  |                                                  |           |  |                                        |     |  |                          |               |                |                         
|---------------- |  | ------------------------------------------------ | --------- |  | -------------------------------------- | --- |  | ------------------------ | ------------- | -------------- | ------------------------
|                 |  | Individual Grants                               
|Name             |  | Number ofSecuritiesUnderlyingOptions Granted (#) |           |  | % of TotalOptionsGranted inFiscal Year |     |  | Exercise Price ($/Sh)(1) |               | ExpirationDate
|David M. Shworan |  | 2,000,0003,000,000200,000                        | (2)(3)(4) |  | 30453                                  | %%% |  | $$$                      | 0.050.0750.05 |                | 05/08/0805/08/0802/28/08
|R. Keith Guelpa  |  |                                                 |           |  |                                       |     |  |                          |              |                |                        

---

|(1) | The exercise prices of all options and warrants granted were equal to or greater than the fair market value of our common stock on the date of grant.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The warrants were vested immediately upon grant. See Item 10. Executive Compensation  Employment Agreements.
|--- | ---------------------------------------------------------------------------------------------------------------

|(3) | The warrants vest pursuant to our company achieving various monthly net revenue targets and common stock price targets. See Executive Compensation  Employment
Agreements.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | The options were vested immediately upon grant.
|--- | -----------------------------------------------



Option Values



The following table provides information respecting the options held by the officers listed as of December 31, 2003. The officers listed did not exercise
options during fiscal 2003.



OPTIONS HELD AND VALUES AS OF
DECEMBER 31, 2003



|                 |  |                                                                         |  |                                                                    |  |             |           |               |   |          
|---------------- |  | ----------------------------------------------------------------------- |  | ------------------------------------------------------------------ |  | ----------- | --------- | ------------- | - | ---------
|                 |  | Number of SecuritiesUnderlying UnexercisedOptions at Fiscal Year-End(#) |  | Value of Unexercised In-the Money Options At Fiscal Year-End($)(1)
|Name             |  | Exercisable                                                             |  | Unexercisable                                                      |  | Exercisable |           | Unexercisable
|David M. Shworan |  | 14,200,000                                                              |  | 11,000,000                                                         |  | $           | 6,532,000 |               | $ | 5,060,000
|R. Keith Guelpa  |  | 7,964,703                                                               |  |                                                                   |  | $           | 2,679,323 |               | $ |         

---

|(1) | Calculated based upon the closing price of our common stock as reported on the OTCBB on December 31, 2003 of $0.46 per share.
|--- | -----------------------------------------------------------------------------------------------------------------------------



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1999 Stock Option Plan



During March 1999, we adopted, and our stockholders approved, the 1999 Stock Option Plan to advance the interests of our company by encouraging and
enabling key employees to acquire a financial interest in our company and link their interests and efforts to the long-term interests of our stockholders. A total of 400,000 shares of common stock was initially reserved for issuance under the 1999
plan. In September 1999, this number was increased to 2,500,000. As of December 31, 2003, 183,333 shares of our common stock had been issued upon exercise of options granted under the 1999 plan, and there were outstanding options to acquire
2,280,000 shares of our common stock under the 1999 plan.



The
1999 plan is administered by our board of directors or a committee appointed by our board. Our board or the committee has the authority to grant options, determine the purchase price of shares of our common stock covered by each option, determine
the persons who are eligible under the 1999 plan, interpret the 1999 plan, determine the terms and provisions of an option agreement, and make all other determinations deemed necessary for the administration of the 1999 plan. Options may be granted
to any director, officer, key employee, or any advisory board member of our company. Incentive stock options may not be granted to a director, consultant, or advisory board member that is not an employee of our company.



The price of any incentive stock options may not be less than 100% of the
fair market value of our common stock on the date of grant. The price of any incentive stock options granted to a person who owns more than 10% of our common stock may not be less than 110% of the fair market value of our common stock on the date of
grant. The option price for non-incentive stock options may not be less than 50% of the fair market value of our common stock on the date of grant. Options may be granted for terms of up to but not exceeding ten years from the date of grant,
however, in the case of an incentive stock option granted to an individual who beneficially owns 10% more of the stock of our company, the exercise period shall not exceed five years from the date of grant. Our board of directors may accelerate the
exerciseability of any outstanding options at any time for any reason.



In the event of any change in the number of shares of our common stock, the number of shares of common stock covered by outstanding options and the price per share of such options will be adjusted accordingly to reflect any such changes.
Similar changes will also be made if our company engages in any merger, consolidation, or reclassification in which is it the surviving entity. In the event that we are not the surviving entity, each option shall terminate provided that each holder
will have the right to exercise during a ten period ending on the fifth day prior to such corporate transaction. In the event of a change of control, our board or the committee may terminate each option, provided that each holder receive the amount
of cash equal to the difference between the exercise price of the each option and the fair market value of each share of stock subject to such option.



Our board may suspend, terminate, modify, or amend the 1999 plan provided that, in certain instances, the holders of a majority of our common stock issued
and outstanding approve the amendment.



2003 Equity Incentive Compensation
Plan



Our Board of Directors has approved our 2003 Equity
Incentive Compensation Plan, or the 2003 plan, approved by our stockholders at the annual meeting held on February 14, 2003. The purpose of the 2003 plan is to assist our company in attracting, motivating, retaining, and rewarding high-quality
executives and other employees, directors, officers, and independent contractors by enabling such persons to acquire or increase a proprietary interest in our company in order to strengthen the mutuality of interests between such persons and our
stockholders, and providing such persons with annual and long-term performance incentives to expend their maximum efforts in the creation of stockholder value.



Presently, the number of shares of common stock that may be issued under the 2003 plan is equal to 10,000,000. As of December 31, 2003, no shares of
common stock had been issued upon exercise of options granted under the 2003 plan and there were 2,835,000 options outstanding under the 2003 plan.



19



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##### Table of Contents

Eligibility and Administration



The persons eligible to receive awards under the 2003 plan are the officers, directors, employees, and independent
contractors of our company. The 2003 plan is to be administered by a committee designated by our Board of Directors consisting of not less than two directors, each member of which must be a non-employee director as defined under Rule
16b-3 under the Exchange Act and an outside director for purposes of Section 162(m) of the Code. However, except as otherwise required to comply with Rule 16b-3 of the Exchange Act, or Section 162(m) of the Code, our Board of Directors
may exercise any power or authority granted to the committee. Subject to the terms of the 2003 plan, the committee or our Board of Directors is authorized to select eligible persons to receive awards, determine the type and number of awards to be
granted and the number of shares of common stock to which awards will relate, specify times at which awards will be exercisable or settleable (including performance conditions that may be required as a condition thereof), set other terms and
conditions of awards, prescribe forms of award agreements, interpret and specify rules and regulations relating to the 2003 plan, and make all other determinations that may be necessary or advisable for the administration of the 2003 plan.



Stock Options and SARs



The committee or our Board of Directors is authorized to grant stock
options, including both incentive stock options, or ISOs, which can result in potentially favorable tax treatment to the participant, and nonqualified stock options, and SARs entitling the participant to receive the amount by which the fair market
value of a share of common stock on the date of exercise (or defined change in control price following a change in control) exceeds the grant price of the SAR. The exercise price per share subject to an option and the grant price of an
SAR are determined by the committee, but in the case of an ISO must not be less than the fair market value of a share of common stock on the date of grant. For purposes of the 2003 plan, the term fair market value means the fair market
value of common stock, awards, or other property as determined by the committee or our Board of Directors or under procedures established by the committee or our Board of Directors. Unless otherwise determined by the committee or our Board of
Directors, the fair market value of common stock as of any given date shall be the closing sales price per share of common stock as reported on the principal stock exchange or market on which common stock is traded on the date as of which such value
is being determined or, if there is no sale on that date, then on the last previous day on which a sale was reported. The maximum term of each option or SAR, the times at which each option or SAR will be exercisable, and provisions requiring
forfeiture of unexercised options or SARs at or following termination of employment generally are fixed by the committee or our Board of Directors, except that no option or SAR may have a term exceeding ten years. Options may be exercised by payment
of the exercise price in cash, shares that have been held for at least six months, outstanding awards, or other property having a fair market value equal to the exercise price, as the committee or our Board of Directors may determine from time to
time. Methods of exercise and settlement and other terms of the SARs are determined by the committee or our Board of Directors. SARs granted under the 2003 plan may include limited SARs exercisable for a stated period of time following a
change in control of our company, as discussed below.



Restricted and
Deferred Stock



The committee or our Board of Directors is
authorized to grant restricted stock and deferred stock. Restricted stock is a grant of shares of common stock that may not be sold or disposed of, and that may be forfeited in the event of certain terminations of employment, prior to the end of a
restricted period specified by the committee or our Board of Directors. A participant granted restricted stock generally has all of the rights of a stockholder of our company, unless otherwise determined by the committee or the Board. An award of
deferred stock confers upon a participant the right to receive shares of common stock at the end of a specified deferral period, subject to possible forfeiture of the award in the event of certain terminations of employment prior to the end of a
specified restricted period. Prior to settlement, an award of deferred stock carries no voting or dividend rights or other rights associated with share ownership, although dividend equivalents may be granted, as discussed below.



20



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##### Table of Contents

Bonus Stock and Awards in Lieu of Cash Obligations



The committee or our Board of Directors is authorized to grant shares of
common stock as a bonus free of restrictions, or to grant shares of common stock or other awards in lieu of company obligations to pay cash under the 2003 plan or other plans or compensatory arrangements, subject to such terms as the committee or
our Board of Directors may specify.



Acceleration of Vesting; Change in Control



The committee or our Board of Directors may in the case of a change of control of our company, as defined in the 2003 plan, in its discretion, accelerate the exercisability, the lapsing of restrictions, or the expiration of
deferral or vesting periods of any award (including the cash settlement of SARs and limited SARs which may be exercisable in the event of a change in control). In addition, the committee or our Board of Directors may provide in an award
agreement that the performance goals relating to any performance based award will be deemed to have been met upon the occurrence of any change in control. Upon the occurrence of a change in control, if so provided in the award agreement,
stock options and limited SARs (and other SARs which so provide) may be cashed out based on a defined change in control price, which will be the higher of



| |  | the cash and fair market value of property that is the highest price per share paid (including extraordinary dividends) in any reorganization, merger, consolidation, liquidation,
dissolution, or sale of substantially all assets of our company; or
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the highest fair market value per share (generally based on market prices) at any time during the 60 days before and 60 days after a change in control.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------



For purposes of the 2003 plan, the term change in control generally means



| |  | approval by stockholders of any reorganization, merger, or consolidation or other transaction or series of transactions if persons who were shareholders immediately prior to such
reorganization, merger, or consolidation or other transaction do not, immediately thereafter, own more than 50% of the combined voting power of the reorganized, merged, or consolidated companys then outstanding, voting securities, or a
liquidation or dissolution of our company or the sale of all or substantially all of the assets of our company (unless the reorganization, merger, consolidation or other corporate transaction, liquidation, dissolution or sale is subsequently
abandoned),
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | a change in the composition of our Board of Directors such that the persons constituting the Board of Directors on the date the award is granted, or the Incumbent Board, and
subsequent directors approved by the Incumbent Board (or approved by such subsequent directors), cease to constitute at least a majority of our Board of Directors, or
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the acquisition by any person, entity or group, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act, of more than 50% of either the then
outstanding shares of our common stock or the combined voting power of our companys then outstanding voting securities entitled to vote generally in the election of directors excluding, for this purpose, any acquisitions by (1) our company,
(2) any person, entity, or group that as of the date on which the award is granted owns beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of a controlling interest, or (3) any employee
benefit plan of our company.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Amendment and Termination



Our Board of Directors may amend, alter, suspend, discontinue, or terminate
the 2003 plan or the committees authority to grant awards without further stockholder approval, except stockholder approval must be obtained for any amendment or alteration if such approval is required by law or regulation or under the rules
of any stock exchange or quotation system on which shares of common stock are then listed or quoted. Thus, stockholder approval may not necessarily be required for every amendment to the 2003 plan which might increase the cost of the 2003 plan or
alter the eligibility of persons to receive awards. Stockholder approval will not be deemed to be required under laws or regulations, such as those relating to ISOs, that condition favorable treatment of participants on such approval, although our
Board of Directors may, in its discretion, seek stockholder approval in any circumstance in which it deems such approval advisable. Unless earlier terminated by our Board of Directors, the 2003 plan will terminate at such time as no shares of common
stock remain available for issuance under the 2003 plan and we have no further rights or obligations with respect to outstanding awards under the 2003 plan.



Equity Compensation Plan Information



The following table sets forth information with respect to our common stock that may be issued upon the exercise of outstanding options, warrants, and
rights to purchase shares of our common stock as of December 31, 2003.



|                                                       |  |                                                                                            |     |  |                                                                             |      |                                                                                                                                           |          
|------------------------------------------------------ |  | ------------------------------------------------------------------------------------------ | --- |  | --------------------------------------------------------------------------- | ---- | ----------------------------------------------------------------------------------------------------------------------------------------- | ---------
|Plan Category                                          |  | (a) Number ofSecurities to beIssued UponExercise ofOutstandingOptions, Warrants,and Rights |     |  | (b)Weighted AverageExercise Price ofOutstandingOptions, Warrants,and Rights |      | (c) Number of SecuritiesRemaining Available forFuture Issuance UnderEquity CompensationPlans (ExcludingSecurities Reflected inColumn (a))
|Equity Compensation Plans approved by stockholders     |  | 5,115,000                                                                                  |     |  | $                                                                           | 0.22 |                                                                                                                                           | 7,201,667
|Equity Compensation Plans not approved by stockholders |  | 38,626,812                                                                                 | (1) |  | $                                                                           | 0.07 |                                                                                                                                           | N/A      
|                                                       |  |                                                                                            |     |  |                                                                             |      |                                                                                                                                           |          
|Total                                                  |  | 43,741,812                                                                                 |     |  |                                                                             |      |                                                                                                                                           | 7,201,667
|                                                       |  |                                                                                            |     |  |                                                                             |      |                                                                                                                                           |          

---

|(1) | Includes 19,000,000 warrants that vest pursuant to our company achieving various monthly net revenue targets and common stock price targets. See Item 10. Executive
Compensation  Employment Agreements.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Employment Agreements



We have an employment agreement with Mr. Shworan, our Chief Executive Officer and President. Upon his employment with our company during fiscal 2002, we
granted to Mr. Shworan five-year warrants to purchase 4,000,000 shares of our common stock at an exercise price of $0.05 per share, vesting immediately. On May 8, 2003, we revised the original employment agreement with Mr. Shworan. Under the
agreement, as amended, we agreed to accrue cash compensation to Mr. Shworan of $8,000 per month effective June 1, 2003. We will continue to accrue but not pay Mr. Shworans salary until such time that the Board of Directors determines that we
have sufficient financial resources. In connection with this amendment, we granted to Mr. Shworan warrants to purchase 2,000,000 shares of our common stock at an exercise price of
$ per share, vesting immediately. In addition, we granted to Mr. Shworan warrants to purchase an additional 19,000,000 warrants at exercise prices ranging from $0.05 to
$0.075 per share, which vest pursuant to our company achieving various monthly net revenue targets and common stock price targets, as follows:



|                                |  |                 |    
|------------------------------- |  | --------------- | ---
|Monthly Net Revenue Targets (1) |  | Warrants Vested |    
|$  40,000                       |  | 3,000,000       |    
|$  60,000                       |  | 2,000,000       | (3)
|$  100,000                      |  | 2,000,000       | (3)
|$  200,000                      |  | 2,000,000       | (3)
|                                | 
|Share Price Targets (2)         |  | Warrants Vested |    
|$0.25                           |  | 1,000,000       |    
|$0.35                           |  | 1,000,000       |    
|$0.50                           |  | 3,000,000       |    
|$0.75                           |  | 5,000,000       |    

---

|(1) | The respective warrants will vest at such time as our company records an average of the indicated target level during a three-month period. The warrants will not vest until a
three-month average of a target level is achieved. All of the warrants will vest in the event of a change of control of our company at a price equal to or greater than $0.75 per share, or if our common stock is quoted on the OTCBB at a price equal
to or greater than $1.00 for at least a three-month period.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The respective warrants will vest at such time as the market value of our common stock as quoted on the OTCBB achieves a one-month average of the indicated target level.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | One million of such warrants may only be exercised by Mr. Shworan if there is sufficient authorized common stock available for issuance on a fully diluted basis, subject to further
limitation at our discretion. Such warrants have an exercise price of $0.075 per share. Pursuant to the monthly revenue targets and common stock price targets set forth above, 8,000,000 of the 19,000,000 warrants vested during fiscal 2003 and are
currently exercisable.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We have a five-year
employment agreement with Mr. Guelpa, our Chief Operating Officer, terminating in July 2004. The employment agreement was amended on November 13, 2002 and provides for a base salary of $60,000 per year. The agreement provides for incentive based
compensation based upon our company achieving various profitability levels. In the event we record net income of $10.0 million, we will grant to Mr. Guelpa options to purchase 500,000 shares of our common stock. If we terminate Mr. Guelpas
employment without cause, we have agreed to pay Mr. Guelpa a lump sum payment of two years salary and all perquisites. If we terminate Mr. Guelpa following a merger, takeover, or any other event that changes more than 25% ownership of our
company, we have agreed to pay Mr. Guelpa a lump sum payment of three years salary and all perquisites. Such lump sum payment will equal one years salary and perquisities in the event Mr. Guelpa terminates his employment following such
transaction.



We offer our employees, including officers,
medical benefits. Our executive officers and other key personnel are eligible to receive discretionary bonuses, and are eligible to receive stock options under our stock option plans.



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##### Table of Contents

Director Compensation and Other Information



Directors do not receive cash compensation for service on our board of directors. All directors receive from us a grant of
options to purchase 200,000 shares of common stock upon joining our board of directors, which are vested on the date of grant. From time to time, we grant to our directors options to purchase additional shares of common stock.



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS



The following table sets forth certain information regarding the shares of our outstanding common stock beneficially owned as of February 17, 2004 by (i)
each of our directors and executive officers, (ii) all directors and executive officers as a group, and (iii) each other person who is known by us to beneficially own or to exercise voting or dispositive control over more than 5% of our common
stock.



|                                                               |  |                      |     |  |         |  
|-------------------------------------------------------------- |  | -------------------- | --- |  | ------- | -
|Name and Address of Beneficial
Owner(1)                        |  | Number of Shares (2) |     |  | Percent |  
|Directors and Executive Officers                               |  |                      |     |  |         |  
|David M. Shworan                                               |  | 22,751,800           | (3) |  | 30.8    | %
|R. Keith Guelpa                                                |  | 11,278,303           | (4) |  | 16.9    | %
|Keith J. Randall                                               |  | 991,792              | (5) |  | 1.7     | %
|Robert J. Thompson                                             |  | 1,100,000            | (6) |  | 1.8     | %
|All executive officers and directors as a group (four persons) |  | 36,121,895           |     |  | 43.1    | %
|                                                               |  |                     
|5% Stockholders                                                |  |                      |     |  |         |  
|                                                               |  |                      |     |  |         |  
|Duane Nelson                                                   |  | 4,057,317            | (7) |  | 6.5     | %

---

|(1) | Each person named in the table has sole voting and investment power with respect to all common stock beneficially owned by him or her, subject to applicable community property law,
except as otherwise indicated. Except as otherwise indicated, each person may be reached through us at 17100 E. Shea Blvd., Suite 230, Fountain Hills, Arizona 85268.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The percentages shown are calculated based upon 58,664,204 shares of common stock outstanding on February 17, 2004. The numbers and percentages shown include the shares of common
stock actually owned as of February 17, 2004 and the shares of common stock that the identified person or group had the right to acquire within 60 days of such date. In calculating the percentage of ownership, all shares of common stock that the
identified person or group had the right to acquire within 60 days of February 17, 2004 upon the exercise of options are deemed to be outstanding for the purpose of computing the percentage of the shares of common stock owned by such person or
group, but are not deemed to be outstanding for the purpose of computing the percentage of the shares of common stock owned by any other person.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Represents 1,011,800 shares of common stock owned by Mr. Shworan and 6,502,500 shares owned by Mr. Shworans wife. Also includes 37,500 shares of common stock owed by Bravenet
Web Services, Inc., of which Mr. Shworan is a control person. Mr. Shworan disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein. Also includes vested options and warrants to acquire directly 14,200,000
shares of common stock and vested warrants for Bravenet Web Services, Inc. to acquire 1,000,000 shares of common stock. Does not include warrants to purchase 11,000,000 shares of common stock at exercise prices ranging from $0.05 to $0.075 per share
that may vest upon the achievement of various monthly net revenue targets and common stock price targets. See Item 10. Executive Compensation  Employment Agreements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|(4) | Represents 1,313,600 shares of our common stock owned directly and 2,000,000 shares of our common stock owned by Mr. Guelpas wife. Also includes 7,964,703 shares of common
stock issuable upon exercise of stock options and warrants held by Mr. Guelpa. Mr. Guelpa disclaims ownership of any shares of common stock or warrants held by his wife.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Represents 25,000 shares of common stock and vested options and warrants to acquire 966,762 shares of common stock.
|--- | -------------------------------------------------------------------------------------------------------------------

|(6) | Represents vested options to acquire 1,100,000 shares of common stock.
|--- | ----------------------------------------------------------------------

|(7) | Represents 137,000 shares of common stock and vested options to acquire 3,920,317 shares of common stock.
|--- | ---------------------------------------------------------------------------------------------------------



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.



On May 8, 2003, we revised Mr. Shworans original employment agreement dated November 13, 2002. We agreed to accrue cash compensation to Mr. Shworan of $8,000 per month effective June 1, 2003. In connection with
his employment, we granted to Mr. Shworan five-year warrants to purchase 6,000,000 shares of our common stock at an exercise price of $0.05 per share, vesting immediately. In addition, we granted to Mr. Shworan warrants to purchase an additional
19,000,000 warrants at an exercise prices ranging from $0.05 to $0.075 per share, which vest pursuant to our company achieving various monthly net revenue targets and common stock price targets, as described under Executive Compensation 
Employment Agreements.



During fiscal 2003, Mr. Shworan,
our Chief Executive Officer, President, and Director, purchased from us an aggregate of 3,302,500 shares of common stock at prices equal to the fair market value of our common stock as quoted on the OTCBB on the dates of purchase. Specifically,
during fiscal 2003 Mr. Shworan purchased 3,100,000 shares of common stock at $0.05 per share and 202,500 at $0.20 per share.



As at December 31, 2003, we owed Mr. Shworan $58,600 related to unpaid salary for 2003. We owed Bravenet Web Services Inc., a company controlled by Mr.
Shworan, $30,000 related to equipment and other expenses paid by Bravenet on our behalf. This amount owing was repaid in January 2004. We also owed Mr. Keith Guelpa, our Chief Operating Officer, $176,000 related to loans made to the company in 2000
and 2001.



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##### Table of Contents

ITEM 13. EXHIBITS, LIST, AND REPORTS ON FORM 8-K.



(a) Exhibits



|              |  |                                                                                                                                                           
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                                                    
|3.1           |  | Second Amended and Restated Articles of Incorporation (2)                                                                                                 
|              | 
|3.2           |  | Amended and Restated Bylaws (2)                                                                                                                           
|              | 
|4.1           |  | Form of Pooling Agreement executed by certain of the Companys shareholders (1)                                                                           
|              | 
|10.2          |  | Employment Agreement between the Registrant and R. Keith Guelpa (1)                                                                                       
|              | 
|10.3          |  | Employment Agreement between the Registrant and Keith Randall (1)                                                                                         
|              | 
|10.4          |  | Employment Agreement between the Registrant and Duane Nelson (1)                                                                                          
|              | 
|10.5          |  | Amended 1999 Equity Incentive Compensation Plan (3)                                                                                                       
|              | 
|10.6          |  | Employment Agreement between the Registrant and David M. Shworan (2)                                                                                      
|              | 
|10.7          |  | Amended Employment Agreement between the Registrant and David M. Shworan (3)                                                                              
|              | 
|10.8          |  | 2003 Equity Incentive Compensation Plan (2)                                                                                                               
|              | 
|21            |  | List of Subsidiaries                                                                                                                                      
|              | 
|23.1          |  | Consent of Allan Hutchison, CPA, Independent Auditors                                                                                                     
|              | 
|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.        

---

|(1) | Incorporated by reference to the Registrants Registration Statement on Form 10-SB filed with the Commission on December 21, 1999.
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference to the Annual Report on Form 10-KSB filed with the Commission on March 10, 2003.
|--- | ----------------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference to the Quarterly Report on Form 10-QSB filed with the Commission on August 8, 2003.
|--- | -------------------------------------------------------------------------------------------------------------



(b) Reports on Form 8-K.



Not applicable.



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##### Table of Contents

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES



Aggregate fees billed to our company for the fiscal years ended December 31, 2003 and 2002 by our principal accountant, Allan Hutchison, CPA, are as follows:



|                   |  |      |        |      |   |      
|------------------ |  | ---- | ------ | ---- | - | -----
|                   |  | 2003 |        | 2002
|Audit Fees         |  | $    | 12,490 |      | $ | 7,670
|Audit-Related Fees |  | $    |       |      | $ |     
|Tax Fees           |  | $    |       |      | $ |     
|All Other Fees     |  | $    |       |      | $ |     



Audit Committee Pre-Approval
Policies



The duties and responsibilities of our Audit
Committee include the pre-approval of all audit, audit related, tax, and other services permitted by law or applicable SEC regulations (including fee and cost ranges) to be performed by our independent auditor. Any pre-approved services that will
involve fees or costs exceeding pre-approved levels will also require specific pre-approval by the Audit Committee. Unless otherwise specified by the Audit Committee in pre-approving a service, the pre-approval will be effective for the 12-month
period following pre-approval. The Audit Committee will not approve any non-audit services prohibited by applicable SEC regulations or any services in connection with a transaction initially recommended by the independent auditor, the purpose of
which may be tax avoidance and the tax treatment of which will not be supported by the Internal Revenue Code and related regulations.



To the extent deemed appropriate, the Audit Committee may delegate pre-approval authority to the Chairman of the Board or any one or more other members of
the Audit Committee provided that any member of the Audit Committee who has exercised any such delegation must report any such pre-approval decision to the Audit Committee at its next scheduled meeting. The Audit Committee will not delegate the
pre-approval of services to be performed by the independent auditor to management.



Our Audit Committee requires that our independent auditor, in conjunction with our Chief Financial Officer, be responsible for seeking pre-approval for providing services to us and that any request for pre-approval
must inform the Audit Committee about each service to be provided and must provide detail as to the particular service to be provided.



All of the services provided by Allan Hutchison, CPA described above under the captions Audit Fees, and were approved by our Audit Committee



27



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##### Table of Contents

SIGNATURES



In accordance with
Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                        |  |                      |  |                                      
|----------------------- |  | -------------------- |  | -------------------------------------
|Date: February 17, 2004 |  | QUOTEMEDIA.COM, INC.
|                        |  |                     
|                        |  | By:                  |  | /s/ David M. Shworan                 
|                        |  |                      |  | David M. Shworan                     
|                        |  |                      |  | President and Chief Executive Officer



In accordance with the
Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                                         |  |                                                                                                                |  |                  
|---------------------------------------- |  | -------------------------------------------------------------------------------------------------------------- |  | -----------------
|                                         |  |                                                                                                               
|/s/ Robert J. ThompsonRobert J. Thompson |  | Chairman of the Board                                                                                          |  | February 17, 2004
|                                         |  |                                                                                                               
|/s/ R. Keith GuelpaR. Keith Guelpa       |  | Chief Operating Officer, and Director                                                                          |  | February 17, 2004
|                                         |  |                                                                                                               
|/s/ Keith J. RandallKeith J. Randall     |  | Vice President, Treasurer, Secretary, and Chief Financial Officer (Principal Financial and Accounting Officer) |  | February 17, 2004
|                                         |  |                                                                                                               
|/s/ David M. ShworanDavid M. Shworan     |  | Chief Executive Officer, President and Director (Principal Executive Officer)                                  |  | February 17, 2004



28



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##### Table of Contents

Quotemedia, Inc.



Index to Consolidated Financial Statements



|                                                 |  |           
|------------------------------------------------ |  | ----------
|Independent Auditors Report                     |  | F-2       
|                                                 | 
|Consolidated Balance Sheet                       |  | F-3       
|                                                 | 
|Consolidated Statements of Operations            |  | F-4       
|                                                 | 
|Consolidated Statements of Stockholders Deficit |  | F-5       
|                                                 | 
|Consolidated Statements of Cash Flows            |  | F-6       
|                                                 | 
|Notes to Consolidated Financial Statements       |  | F-7  F-15



F-1



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##### Table of Contents

Allan G. Hutchison, CPA

Paradise Village Office Park

11811 North Tatum Blvd., #P-199

Phoenix, Arizona 85028-1616

Telephone: (602) 953-6996

Facsimile: (602) 953-6993



INDEPENDENT AUDITORS REPORT



The
Stockholders and Board of Directors

QUOTEMEDIA, INC.



We have audited the consolidated balance sheet of QUOTEMEDIA, INC. (a Nevada Corporation) as at December 31, 2003 and the consolidated statements of operations,
stockholders deficit, and cash flows for the years ended December 31, 2003 and December 31, 2002. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these
financial statements based on our audit.



We conducted our audit in accordance
with generally accepted auditing standards accepted in the United States of America applied on a consistent basis. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe our audit report provides a reasonable basis for our opinion.



In our opinion, the consolidated financial statements, referred to above, present fairly, in all material respects, the financial position of the Company as at December
31, 2003 and the results of its operations and its cash flows for the years ended December 31, 2003 and December 31, 2002, in conformity with generally accepted accounting principals accepted in the United States of America.



The accompanying consolidated financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency, which raises substantial doubt about its ability
to continue as a going concern. Managements plans regarding these matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



|                  |  |                        
|----------------- |  | -----------------------
|Phoenix, Arizona  |  | Allan G. Hutchison, CPA
|February 27, 2004 |  |                        



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##### Table of Contents

QUOTEMEDIA, INC.

CONSOLIDATED BALANCE SHEET



|                                                                                                           |  |                   |            |  
|---------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | -
|                                                                                                           |  | DECEMBER 31, 2003 |           
|ASSETS                                                                                                     |  |                   |            |  
|                                                                                                           | 
|CURRENT ASSETS                                                                                             |  |                   |            |  
|Cash and cash equivalents                                                                                  |  | $                 | 143,034    |  
|Accounts receivable                                                                                        |  |                   | 28,088     |  
|Deposits                                                                                                   |  |                   | 18,800     |  
|                                                                                                           |  |                   |            |  
|Total current assets                                                                                       |  |                   | 189,922    |  
|                                                                                                           | 
|Equipment, net (Note 3)                                                                                    |  |                   | 48,335     |  
|                                                                                                           |  |                   |            |  
|                                                                                                           |  | $                 | 238,257    |  
|                                                                                                           |  |                   |            |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                      |  |                   |            |  
|                                                                                                           | 
|CURRENT LIABILITIES                                                                                        |  |                   |            |  
|Note payable (Note 4)                                                                                      |  | $                 | 126,259    |  
|Accounts payable                                                                                           |  |                   | 79,746     |  
|Deferred revenue                                                                                           |  |                   | 40,033     |  
|Due to related parties (Note 5)                                                                            |  |                   | 261,220    |  
|                                                                                                           |  |                   |            |  
|                                                                                                           |  |                   | 507,258    |  
|                                                                                                           |  |                   |            |  
|Commitments (Note 8)                                                                                       |  |                   |            |  
|                                                                                                           | 
|STOCKHOLDERS DEFICIT                                                                                      |  |                   |            |  
|Preferred stock, non designated, 10,000,000 shares authorized, none issued. (Note 6)                       |  |                   |           |  
|Common stock, $0.001 par value, 100,000,000 shares authorized, 58,664,204 shares issued for 2003. (Note 6) |  |                   | 58,665     |  
|Additional paid-in capital                                                                                 |  |                   | 6,429,367  |  
|Accumulated deficit                                                                                        |  |                   | (6,757,033 | )
|                                                                                                           |  |                   |            |  
|                                                                                                           |  |                   | (269,001   | )
|                                                                                                           |  |                   |            |  
|                                                                                                           |  | $                 | 238,257    |  
|                                                                                                           |  |                   |            |  



See accompanying notes



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##### Table of Contents

QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS



|                                          |  |                             |            |   |                              |   |            |  
|----------------------------------------- |  | --------------------------- | ---------- | - | ---------------------------- | - | ---------- | -
|                                          |  | Year endedDECEMBER 31, 2003 |            |   | Year ended DECEMBER 31, 2002 |  
|Operating revenue                         |  |                             |            |   |                              |   |            |  
|Licensing fees                            |  | $                           | 281,449    |   |                              | $ | 31,330     |  
|Advertising                               |  |                             | 4,930      |   |                              |   | 12,541     |  
|                                          |  |                             |            |   |                              |   |            |  
|                                          |  |                             | 286,379    |   |                              |   | 43,871     |  
|                                          |  |                             |            |   |                              |   |            |  
|Operating expenses                        |  |                             |            |   |                              |   |            |  
|Sales and Marketing (Note 6 (b))          |  |                             | 55,742     |   |                              |   | (161,512   | )
|General and Administrative (Note 6 (b))   |  |                             | 429,808    |   |                              |   | 709,440    |  
|Professional fees (Note 6 (b))            |  |                             | 36,529     |   |                              |   | (369       | )
|Research and development                  |  |                             | 255,929    |   |                              |   | 167,178    |  
|Financial content                         |  |                             | 234,181    |   |                              |   | 157,510    |  
|                                          |  |                             |            |   |                              |   |            |  
|                                          |  |                             | 1,012,189  |   |                              |   | 872,247    |  
|                                          |  |                             |            |   |                              |   |            |  
|Net loss                                  |  | $                           | (725,810   | ) |                              | $ | (828,376   | )
|                                          |  |                             |            |   |                              |   |            |  
|Loss per share                            |  |                             |            |   |                              |   |            |  
|Basic and diluted loss per share (Note 7) |  | $                           | (0.01      | ) |                              | $ | (0.02      | )
|                                          |  |                             |            |   |                              |   |            |  
|Weighted average shares outstanding       |  |                             |            |   |                              |   |            |  
|Basic and diluted                         |  |                             | 55,734,866 |   |                              |   | 38,396,310 |  
|                                          |  |                             |            |   |                              |   |            |  



See accompanying notes



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##### Table of Contents

QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT

Years Ended December 31, 2003 and 2002



|                              |  |                 |   |  |                          |        |   |                               |   |           |                     |  |         |                             |  |   |            |   |  |   |          |  
|----------------------------- |  | --------------- | - |  | ------------------------ | ------ | - | ----------------------------- | - | --------- | ------------------- |  | ------- | --------------------------- |  | - | ---------- | - |  | - | -------- | -
|                              |  | Common Stock    |   |  | AdditionalPaid-inCapital |        |   | Share Subscription Receivable |   |           | Accumulated Deficit |  |         | Total Stockholders Deficit | 
|                              |  | Number ofShares |   |  | Amount                   |        |   |                               |   |          
|Balance, December 31, 2001    |  | 33,714,529      |   |  |                          | 33,715 |   |                               |   | 4,740,955 |                     |  | (20,000 | )                           |  |   | (5,202,847 | ) |  |   | (448,177 | )
|Shares issued - for cash      |  | 12,180,004      |   |  |                          | 12,180 |   |                               |   | 671,820   |                     |  |        |                             |  |   |           |   |  |   | 684,000  |  
|Shares issued  for services  |  | 5,105,000       |   |  |                          | 5,105  |   |                               |   | 651,645   |                     |  |        |                             |  |   |           |   |  |   | 656,750  |  
|Shares issued  for debt      |  | 1,912,500       |   |  |                          | 1,913  |   |                               |   | 171,087   |                     |  |        |                             |  |   |           |   |  |   | 173,000  |  
|Shares cancelled (Note 6(b))  |  | (3,943,929      | ) |  |                          | (3,944 | ) |                               |   | (527,432  | )                   |  |        |                             |  |   |           |   |  |   | (531,376 | )
|Share subscription receivable |  |                |   |  |                          |       |   |                               |   |          |                     |  | 20,000  |                             |  |   |           |   |  |   | 20,000   |  
|Net loss                      |  |                |   |  |                          |       |   |                               |   |          |                     |  |        |                             |  |   | (828,376   | ) |  |   | (828,376 | )
|                              |  |                 |   |  |                          |        |   |                               |   |           |                     |  |         |                             |  |   |            |   |  |   |          |  
|Balance, December 31, 2002    |  | 48,968,104      |   |  | $                        | 48,969 |   |                               | $ | 5,708,075 |                     |  |        |                             |  | $ | (6,031,223 | ) |  | $ | (274,179 | )
|                              |  |                 |   |  |                          |        |   |                               |   |           |                     |  |         |                             |  |   |            |   |  |   |          |  
|Shares issued - for cash      |  | 6,852,500       |   |  |                          | 6,852  |   |                               |   | 477,148   |                     |  |        |                             |  |   |           |   |  |   | 484,000  |  
|Shares issued  for services  |  | 2,918,600       |   |  |                          | 2,919  |   |                               |   | 256,819   |                     |  |        |                             |  |   |           |   |  |   | 259,738  |  
|Shares cancelled (Note 6(b))  |  | (75,000         | ) |  |                          | (75    | ) |                               |   | (12,675   | )                   |  |        |                             |  |   |           |   |  |   | (12,750  | )
|Net loss                      |  |                |   |  |                          |       |   |                               |   |          |                     |  |        |                             |  |   | (725,810   | ) |  |   | (725,810 | )
|                              |  |                 |   |  |                          |        |   |                               |   |           |                     |  |         |                             |  |   |            |   |  |   |          |  
|Balance, December 31, 2003    |  | 58,664,204      |   |  | $                        | 58,665 |   |                               | $ | 6,429,367 |                     |  |        |                             |  | $ | (6,757,033 | ) |  | $ | (269,001 | )
|                              |  |                 |   |  |                          |        |   |                               |   |           |                     |  |         |                             |  |   |            |   |  |   |          |  



See accompanying notes



F-5



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##### Table of Contents

QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                        |  |                             |          |   |                             |   |          |  
|----------------------------------------------------------------------- |  | --------------------------- | -------- | - | --------------------------- | - | -------- | -
|                                                                        |  | Year endedDECEMBER 31, 2003 |          |   | Year endedDECEMBER 31, 2002 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                   |  |                             |          |   |                             |   |          |  
|                                                                        |  |                            
|Net loss                                                                |  | $                           | (725,810 | ) |                             | $ | (828,376 | )
|                                                                        |  |                            
|Adjustments to reconcile loss to net cash used in operating activities: |  |                             |          |   |                             |   |          |  
|Depreciation                                                            |  |                             | 16,470   |   |                             |   | 16,599   |  
|Issuance of capital stock for services, net of cancelled shares         |  |                             | 246,988  |   |                             |   | 125,374  |  
|Changes in assets and liabilities:                                      |  |                             |          |   |                             |   |          |  
|Accounts receivable                                                     |  |                             | (15,403  | ) |                             |   | (12,685  | )
|Deposits                                                                |  |                             | (2,854   | ) |                             |   | (542     | )
|Accounts payable                                                        |  |                             | (92,570  | ) |                             |   | (158,585 | )
|Deferred revenue                                                        |  |                             | 38,673   |   |                             |   | 1,360    |  
|Due from related parties                                                |  |                             | 23,146   |   |                             |   | 170,321  |  
|                                                                        |  |                             |          |   |                             |   |          |  
|Net cash used in operating activities                                   |  |                             | (511,360 | ) |                             |   | (686,534 | )
|                                                                        |  |                             |          |   |                             |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                   |  |                             |          |   |                             |   |          |  
|Purchase of equipment                                                   |  |                             | (19,806  | ) |                             |   | (12,534  | )
|                                                                        |  |                             |          |   |                             |   |          |  
|Net cash used in investing activities                                   |  |                             | (19,806  | ) |                             |   | (12,534  | )
|                                                                        |  |                             |          |   |                             |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                   |  |                             |          |   |                             |   |          |  
|Repayment of note payable                                               |  |                             |         |   |                             |   | (15,752  | )
|Share subscription receivable                                           |  |                             |         |   |                             |   | 20,000   |  
|Issuance of capital stock for cash                                      |  |                             | 484,000  |   |                             |   | 684,000  |  
|                                                                        |  |                             |          |   |                             |   |          |  
|Net cash provided by financing activities                               |  |                             | 484,000  |   |                             |   | 688,248  |  
|                                                                        |  |                             |          |   |                             |   |          |  
|Net decrease in cash                                                    |  |                             | (47,166  | ) |                             |   | (10,820  | )
|                                                                        |  |                            
|Cash, beginning of period                                               |  |                             | 190,200  |   |                             |   | 201,020  |  
|                                                                        |  |                             |          |   |                             |   |          |  
|Cash, end of period                                                     |  | $                           | 143,034  |   |                             | $ | 190,200  |  
|                                                                        |  |                             |          |   |                             |   |          |  



See supplementary information (note 9)



See accompanying notes



F-6



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003



|1. | GOING CONCERN
|-- | -------------



Our consolidated financial statements are prepared using generally accepted accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of business. However, we have had limited revenues to date. We may require additional financing, which may come from future equity or debt offerings. Financing may not be
available, however, and without realization of additional capital the Company may not continue as a going concern.



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



a) Nature of operations



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.



b) Cash and cash equivalents



Cash equivalents include money market investments that are redeemable on
demand. We maintain our accounts primarily at one financial institution. At times throughout the year, our cash and cash equivalents balances may exceed amounts insured by the Federal Deposit Insurance Corporation.



c) Allowances for doubtful accounts



When management determines that an allowance is necessary, we maintain an
allowance for doubtful accounts for estimated losses resulting from the inability of the Companys customers to make required payments. As at December 31, 2003, no allowance for doubtful accounts was required as we determined that collection of
our accounts receivables was reasonably assured. 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. If the financial
condition of our customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required.



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003



d) Equipment



Equipment is recorded at cost less accumulated depreciation. Depreciation is
calculated on a declining-balance basis at a rate of 30%. In the years of acquisition and disposal, depreciation is calculated at one-half the normal rate. Management believes that this method approximates the equipments useful lives.



e) Loss per share



Financial Accounting Standards No. 128 Earnings Per Share
requires the presentation of basic and diluted earnings per share. Basic earnings per share are computed by dividing income by the weighted average number of shares outstanding during the year. Diluted earnings per share takes into account shares
outstanding (computed under basic earnings per share) and potentially dilutive common shares (such as stock options outstanding). The effect of a stock split or reverse split is applied retroactively to preceding periods. For the years ended 2003
and 2002, all common stock equivalents were anti-dilutive.



f) 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. These pro forma disclosures are provided as required under SFAS No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure. 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:



|                                                                                                          |  |      |            |   |      |   |            |  
|--------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                                          |  | 2003 |            |   | 2002 |  
|Net income:                                                                                               |  |      |            |   |      |   |            |  
|As reported                                                                                               |  | $    | (725,810   | ) |      | $ | (828,376   | )
|Deduct: Total stock-based employee compensation expense determined under fair value method for all awards |  |      | (721,761   | ) |      |   | (942,822   | )
|                                                                                                          |  |      |            |   |      |   |            |  
|Pro forma                                                                                                 |  | $    | (1,447,571 | ) |      | $ | (1,771,198 | )
|                                                                                                          |  |      |            |   |      |   |            |  
|Basic and diluted loss per share:                                                                         |  |      |            |   |      |   |            |  
|As reported                                                                                               |  | $    | (0.01      | ) |      | $ | (0.02      | )
|Pro forma                                                                                                 |  | $    | (0.03      | ) |      | $ | (0.05      | )



F-8



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003



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:



|                                               |  |      |        |   |      |   |        |  
|---------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                               |  | 2003 |        |   | 2002 |  
|Expected dividend yield                        |  |      |       |   |      |   |       |  
|Expected stock price volatility                |  |      | 121    | % |      |   | 116    | %
|Risk-free interest rate                        |  |      | 4      | % |      |   | 5      | %
|Expected life of options                       |  |      | 1 year |   |      |   | 1 year |  
|Weighted average fair value of options granted |  | $    | 0.03   |   |      | $ | 0.17   |  



g) Income taxes



Income taxes are provided in accordance with Statement of
Financial Accounting Standards No. 109 Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between income for financial statement purposes and income for tax purposes as well as
operating loss carry forwards. Deferred tax expenses or recovery result from the net change during the year of deferred tax assets and liabilities.



Deferred tax assets are reduced by a valuation allowance, when, in the opinion of management, it is likely that some portion of the deferred tax asset
will not be realized. Deferred taxes are adjusted for the effects of changes in tax laws and rates. No income taxes were paid in 2003.



h) Use of estimates



The preparation of financial statements in conformity with generally accepted accounting principals requires management to make estimates and assumptions
that effect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities as at the year end and the reported amount of revenues and expenses during the year. Actual results may vary from the estimates.



i) Research and development



We expense research and development costs as they are incurred. To date we
have had no significant software development costs that would be required to be capitalized pursuant to Financial Accounting Standards (FAS) No. 86, Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise
Marketed.



F-9



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003



j) Revenue recognition



Revenue consists primarily of licensing fees generated from our software
applications. Revenues from software license fees are recognized when all of the following criteria are met: the written agreement is executed; the software is delivered; the license fee is fixed and determinable; and collectibility of the license
fee is probable. We record deferred revenue when we receive cash in advance of the revenue recognition criteria being met.



k) New accounting standards



In May 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (FAS) No. 150,
Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (FAS No. 150), which establishes standards for how an issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. FAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003. We have adopted FAS No. 150, which had no effect on our financial statements.



In April 2003, the FASB issued FAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities (FAS No. 149), which amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts, and for
hedging activities under FAS No. 133. FAS No.149 is to be applied prospectively for certain contracts entered into or modified after June 30, 2003. We have adopted FAS No. 149, which had no effect on our financial statements.



In January 2003, the FASB issued FASB Interpretation No. 46,
Consolidation of Variable Interest Entities (FIN 46), which requires the consolidation of a variable interest entity by the primary beneficiary. FIN 46 also requires additional disclosure by both the primary beneficiary and
enterprises that hold a significant variable interest in a variable interest entity. FIN 46 is applicable to variable interest entities created after January 31, 2003. Entities created prior to February 1, 2003 must be consolidated effective July 1,
2003. However, because we do not have any variable interest entities, there is no impact on our financial statements.



In November 2002, the Emerging Issues Task Force (EITF) reached a consensus regarding EITF Issue 00-21. The consensus addresses not only when
and how an arrangement involving multiple deliverables should be divided into separate elements of accounting, but also how the arrangements consideration should be allocated among separate units. The pronouncement is effective for revenue
arrangements entered into on or after July 1, 2003. We have adopted EITF Issue 00-21, which had no effect on our financial statements.



F-10



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003



In November 2002, the Financial Accounting Standards Board (FASB)
issued FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45). FIN 45 expands on previously issued accounting
guidance and requires additional disclosure by a guarantor to recognize, at the inception of a guarantee, a liability for the fair value of an obligation assumed by issuing a guarantee. The provision for initial recognition and measurement of the
liability is applied on a prospective basis to guarantees issued or modified after December 31, 2002. The standard was adopted on January 1, 2003, and is not expected to have a material effect on the financial statements



l) Reclassification



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



|3. | EQUIPMENT
|-- | ---------



|                         |  |   |         |  
|------------------------ |  | - | ------- | -
|Cost                     |  | $ | 110,681 |  
|Accumulated Depreciation |  |   | (62,346 | )
|                         |  |   |         |  
|Net                      |  | $ | 48,335  |  
|                         |  |   |         |  



|4. | NOTE PAYABLE
|-- | ------------



At December 31, 2003, we had a $126,259 unsecured promissory note payable to an individual. The note carries an annual effective interest rate of 12.68%
and is due on demand.



|5. | RELATED PARTIES
|-- | ---------------



At December 31, 2003, we owed a total of $261,220 to officers of the Company for amounts advanced to the company and for unpaid salary. We do not accrued
interest on amounts due to related parties.



F-11



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003



|6. | STOCKHOLDERS DEFICIT
|-- | ---------------------



a) Preferred shares



We are authorized to issue up to 10,000,000 non-designated preferred shares. As at December 31, 2003 no preferred shares have been issued.



b) Cancelled shares of common stock



During 2003, we cancelled 75,000 shares of our common stock that resulted in
the reversal of $12,750 in business development expenses previously recognized. The shares were cancelled due to non-performance. During 2002, we cancelled a total of 3,943,929 shares of our common stock which resulted in the reversal of $531,376 in
expenses previously recognized. The shares were cancelled due to non-performance. Of the shares cancelled in 2002, 1,000,000 shares were cancelled resulting in the reversal of $100,000 of general and administrative expenses, 8,929 shares were
cancelled resulting in the reversal of $10,626 of professional fees, and 2,935,000 shares were cancelled resulting in the reversal of $420,750 of sales and marketing expenses.



c) Stock option plan



We have a stock option plan 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 fair market
value but in no event less than 50% of fair market value. The options generally vest after one year unless, at the discretion of the Board of Directors, alternative vesting methods are allowed. The term of each option is determined at the time it is
granted and may extend to a maximum of ten years. At December 31, 2003, 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 five years. We may grant an unlimited number of options outside our stock option plan at the discretion of the Board of Directors.





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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003



The following table sets forth certain stock option and warrant information:



|                                          |  |                     |   |  |                                |     
|----------------------------------------- |  | ------------------- | - |  | ------------------------------ | ----
|                                          |  | Options andWarrants |   |  | Weighted-AverageExercise Price
|Outstanding at December 31, 2001          |  | 12,939,764          |   |  | $                              | 0.19
|Granted under company stock option plan   |  | 250,000             |   |  | $                              | 0.13
|Granted outside company stock option plan |  |                    |   |  |                                |     
|Warrants granted                          |  | 28,704,900          |   |  | $                              | 0.07
|Exercised                                 |  | (500,000            | ) |  | $                              | 0.10
|Cancelled                                 |  | (1,727,852          | ) |  | $                              | 0.18
|                                          |  |                     |   |  |                                |     
|Outstanding at December 31, 2002          |  | 39,666,812          |   |  | $                              | 0.10
|                                          |  |                     |   |  |                                |     
|Granted under company stock option plan   |  | 900,000             |   |  | $                              | 0.05
|Granted outside company stock option plan |  |                    |   |  |                                |     
|Warrants granted                          |  | 5,625,000           |   |  | $                              | 0.06
|Exercised                                 |  | (50,000             | ) |  | $                              | 0.17
|Expired                                   |  | (600,000            | ) |  | $                              | 0.18
|Cancelled                                 |  | (1,800,000          | ) |  | $                              | 0.17
|                                          |  |                     |   |  |                                |     
|Outstanding at December 31, 2003          |  | 43,741,812          |   |  | $                              | 0.09
|                                          |  |                     |   |  |                                |     



|                        |  |                                    |  |                                          |  |                               |      |                                     |            |                               |   |     
|----------------------- |  | ---------------------------------- |  | ---------------------------------------- |  | ----------------------------- | ---- | ----------------------------------- | ---------- | ----------------------------- | - | ----
|                        |  | Options and Warrants Outstanding   |  | Options and WarrantsExercisable         
|Range of Exercise Price |  | NumberOutstanding at Dec. 31, 2003 |  | WeightedAverageRemainingContractual Life |  | WeightedAverageExercise Price |      | Number Exercisable at Dec. 31, 2003 |            | WeightedAverageExercise Price
|$0.05-1.68              |  | 43,741,812                         |  | 3.50                                     |  | $                             | 0.09 |                                     | 29,741,812 |                               | $ | 0.08



As at December 31,
2003 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 therefore no compensation expense has been recognized for grants of stock
options and warrants in the statement of operations.



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003



|7. | LOSS PER SHARE
|-- | --------------



Basic loss per share is calculated by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding
during the period. Diluted loss per share is calculated by dividing net loss applicable to common stockholders, adjusted to exclude potentially dilutive securities, by the weighted average number of common shares outstanding during the period, plus
any additional common shares that would have been outstanding if potentially dilutive common shares had been issued during the period. Due to the net loss incurred in each of the periods presented, the diluted loss per share is the same as basic,
because any potentially dilutive securities would reduce the loss per share. The following tables summarize the components of the loss per share and potentially dilutive securities:



|                                                                                                                                                                              |  |                          |            |   |      |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ---- | - | ---------- | -
|                                                                                                                                                                              |  | Years ended December 31, |           
|                                                                                                                                                                              |  | 2003                     |            |   | 2002 |  
|Loss per share  basic and diluted                                                                                                                                            |  | $                        | (0.01      | ) |      | $ | (0.02      | )
|                                                                                                                                                                              |  |                          |            |   |      |   |            |  
|Weighted average shares outstanding  basic and diluted                                                                                                                       |  |                          | 55,734,866 |   |      |   | 38,396,310 |  
|                                                                                                                                                                              |  |                          |            |   |      |   |            |  
|                                                                                                                                                                              | 
|                                                                                                                                                                              |  | Years ended December 31, |           
|                                                                                                                                                                              |  | 2003                     |            |   | 2002 |  
|Stock Options                                                                                                                                                                 |  |                          | 3,565,000  |   |      |   | 1,990,000  |  
|Warrants                                                                                                                                                                      |  |                          | 38,626,812 |   |      |   | 33,305,175 |  
|                                                                                                                                                                              |  |                          |            |   |      |   |            |  
|Total potentially dilutive shares                                                                                                                                             |  |                          | 42,191,812 |   |      |   | 35,295,175 |  
|                                                                                                                                                                              |  |                          |            |   |      |   |            |  
|Stock options and warrants excluded from the calculation of dilutive loss per share because the exercise price was greater than the average
market price of the common shares |  |                          | 1,550,000  |   |      |   | 4,461,637  |  
|                                                                                                                                                                              |  |                          |            |   |      |   |            |  



|8. | COMMITMENTS
|-- | -----------



We have office and equipment leases, and web server storage commitments of $42,056 in 2004 and $3,840 in 2005.



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003



|9. | SUPPLEMENTARY INFORMATION
|-- | -------------------------



|                                   |  |      |  |        
|---------------------------------- |  | ---- |  | -------
|                                   |  | 2003 |  | 2002   
|Cash flow information:             |  |      |  |        
|                                   |  |     
|Non-cash financing activities      |  |      |  |        
|Issuance of capital stock for debt |  |     |  | 173,000
|Cash paid for Interest             |  | 708  |  | 1,196  
|Cash received for Interest         |  | 97   |  | 126    



F-15