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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K





(Mark one)

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

For the fiscal year ended December 31, 2008

OR



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

For the transition period              to

Commission File Number: 0-28599





QUOTEMEDIA, INC.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Nevada                                                         |  | 91-2008633                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (IRS Employer Identification Number)

17100 East Shea Boulevard, Suite 230, Fountain Hills, AZ 85268

(Address of Principal Executive Offices)

(480) 905-7311

(Registrants Telephone Number, Including Area Code)





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



|                                        |  |                                      
|--------------------------------------- |  | -------------------------------------
|Title of each class                     |  | Name of exchange on which registered 
|Common stock, par value $.001 per share |  | FINRA Over the Counter Bulletin Board

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





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section15(d) of the Act.    Yes   ̈     No  x

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

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not 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-K or any amendment to this Form 10-K.  x

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



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

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

As of March 13, 2009, there were outstanding 89,371,320 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 (51,310,636 shares) based on
the closing price of the issuers common stock as reported on the FINRA Over the Counter Bulletin Board, or OTCBB, on March 13, 2009, was $3,078,638. 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, INC.

ANNUAL REPORT ON FORM 10-K

FISCAL YEAR ENDED DECEMBER 31, 2008

TABLE OF CONTENTS



|                                           |  |                                                                                                               |  |     
|------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------- |  | ----
|                                           |  |                                                                                                               |  | Page
|PART I                                    
|                                           |  |                                                                                                              
|ITEM 1.                                    |  | BUSINESS                                                                                                      |  | 1   
|                                           |  |                                                                                                              
|ITEM 1A.                                   |  | RISK FACTORS                                                                                                  |  | 7   
|                                           |  |                                                                                                              
|ITEM 1B.                                   |  | UNRESOLVED STAFF COMMENTS                                                                                     |  | 10  
|                                           |  |                                                                                                              
|ITEM 2.                                    |  | PROPERTIES                                                                                                    |  | 10  
|                                           |  |                                                                                                              
|ITEM 3.                                    |  | LEGAL PROCEEDINGS                                                                                             |  | 10  
|                                           |  |                                                                                                              
|ITEM 4.                                    |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                           |  | 10  
|                                          
|PART II                                   
|                                           |  |                                                                                                              
|ITEM 5.                                    |  | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY
SECURITIES |  | 11  
|                                           |  |                                                                                                              
|ITEM 6.                                    |  | SELECTED FINANCIAL DATA                                                                                       |  | 11  
|                                           |  |                                                                                                              
|ITEM 7.                                    |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                         |  | 11  
|                                           |  |                                                                                                              
|ITEM 7A.                                   |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                    |  | 18  
|                                           |  |                                                                                                              
|ITEM 8.                                    |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                   |  | 19  
|                                           |  |                                                                                                              
|ITEM 9.                                    |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                          |  | 19  
|                                           |  |                                                                                                              
|ITEM 9A(T).                                |  | CONTROLS AND PROCEDURES                                                                                       |  | 19  
|                                           |  |                                                                                                              
|ITEM 9B.                                   |  | OTHER INFORMATION                                                                                             |  | 20  
|                                          
|PART III                                  
|                                           |  |                                                                                                              
|ITEM 10.                                   |  | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                        |  | 21  
|                                           |  |                                                                                                              
|ITEM 11.                                   |  | EXECUTIVE COMPENSATION                                                                                        |  | 23  
|                                           |  |                                                                                                              
|ITEM 12.                                   |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS                |  | 25  
|                                           |  |                                                                                                              
|ITEM 13.                                   |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                                     |  | 29  
|                                           |  |                                                                                                              
|ITEM 14.                                   |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                        |  | 30  
|                                          
|PART IV                                   
|                                           |  |                                                                                                              
|ITEM 15.                                   |  | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                                    |  | 31  
|                                           |  |                                                                                                              
|SIGNATURES                                 |  |                                                                                                               |  | 32  
|                                           | 
|INDEX TO CONSOLIDATED FINANCIAL STATEMENTS |  |                                                                                                              

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The statements contained in this report on Form 10-K 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 1A.
Risk Factors.



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PART I



|ITEM 1. | BUSINESS.
|------- | ---------

General

QuoteMedia, Inc. (OTCBB: QMCI) is a leading provider of financial data, news feeds, market research information, and financial software solutions to
online brokerages, clearing firms, banks, financial service companies, media portals, and public corporations. We are a single source for a wide array of market information and services, including streaming stock market data feeds, research and
analysis information, content applications, portfolio management systems, software products, corporate investor relations provisioning, news services, wireless applications, and custom development.

We have created a scalable system that aggregates, manages, and streams information from the stock exchanges, and from other information and content
feeds, across both the Web and dedicated telecommunication lines. Because QuoteMedia is a comprehensive single source market data provider, our clients are not required to deal with multiple data vendors, many of which continue to employ outdated
infrastructures and delivery technologies. This allows our clients to license comprehensive financial information applications and raw data feeds more efficiently and cost-effectively.

QuoteMedia offers clients the advantages of a single source for a broad range of data, information, and services, including:



| |  |  | Streaming Real-time Data Feeds
| | - |  | ------------------------------



| |  |  | Mobile/PDA Wireless Solutions
| | - |  | -----------------------------



| |  |  | News Feed Aggregation and Delivery
| | - |  | ----------------------------------



| |  |  | Streaming, Dynamic Content
| | - |  | --------------------------



| |  |  | Complete Portfolio Management
| | - |  | -----------------------------



| |  |  | Corporate Investor Relations Solutions
| | - |  | --------------------------------------



| |  |  | Internet Data and Content Provisioning
| | - |  | --------------------------------------



| |  |  | Custom Software Application Development
| | - |  | ---------------------------------------



| |  |  | Research Information Supply
| | - |  | ---------------------------

Our
array of data-delivery solutions are fast, lightweight, reliable, and easy to implement across all platforms. Our products are technologically advanced, providing a framework for quick implementation, seamless client integration and complete
customization.

We are a United States reporting public company which was incorporated in the State of Nevada in 1999. Our shares are
listed on the FINRA OTCBB under the trading symbol QMCI. Our corporate head office is located 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 and subsidiaries.

Our website is located
at www.quotemedia.com. Through our website we make available free of charge the following company information: our annual reports on Form 10-K; our quarterly reports on Form 10-QSB; our current reports on Form 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 practical after we electronically file these reports with the SEC. We
also post on our website the charter of our Audit Committee; our Corporate Governance Guidelines; our Code of Business Conduct/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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Products and Services

QuoteMedia has developed a full range of financial data and market information solutions which are licensed to our clients on a monthly, quarterly, or annual basis. Our products and services are divided into three
main categories: Data Feed Services; Interactive Content and Data Applications; and Portfolio Management and Real-Time Quote Systems.

Data Feed Services

QuoteMedia offers comprehensive, ultra low latency, tick-by-tick enterprise level streaming
market data feeds delivered over the Internet or via dedicated telecommunication lines, as well as supplemental fundamental, historical, and analytical data, keyed to the same symbology which provides a complete market data solution to our
customers. Currently, QuoteMedias Data Feed services include complete coverage of North American exchanges and over 70 exchanges worldwide. Data Feeds coverage includes equities, options, futures, commodities, currencies, mutual funds, and
indices. The data is normalized for ease of use, and is provided in a wide range of formats and delivery methods. Data is available in real-time, delayed, as well as end of day format.

Interactive Content and Data Applications

QuoteMedias proprietary financial software applications comprise a unique suite of custom Web technologies that combine the power and depth of established financial databases with the flexibility and efficiency
of the Web to deliver customized high quality content to clients around the world. QuoteMedia financial data delivery application products and components make up an extensive product line that spans the spectrum of Quote Modules, Charts, Market
Movers, News, Watch Lists, Tickers, Market Summaries, Option Chains, SEC Filings, Investor Relations Solutions, Component Fundamentals and much more. Our lightweight and fast-loading applications provide an extensive array of information in a
variety of delivery vehicles. All of our content solutions are completely customizable, embed directly into client web pages for seamless integration with existing content, and are licensed to our Clients on a recurring subscription basis. Our
Interactive Content and Data Applications include the following:

Quote Modules  allow users to enter information and look up
various data points on equities, funds, rates, currencies and the markets. Our Quote Modules provide complete market data and supplemental data coverage. This comprehensive coverage consists of fundamental data (EPS, P/E ratio, dividends, yield,
shares outstanding, market cap, etc.), analytical statistics (52 week high/low, moving averages, average volumes, moving performance numbers), historical EOD data (fully adjusted and keyed historical data), market updates, North American indices,
market movers, actives, gainers, losers, company information (business description, address, phone, fax, auditors, officers, etc.), classification codes (sector, industry, NAICS, SIC, CIK, etc.), share statistics (shares outstanding, float,
holdings, profitability, management effectiveness, short interest, short interest ratio), as well as broader market information such as bank rates and currency values. The data returned is compact, customizable, and incorporates comprehensive
information, including charts, news, historical stock prices, market depth, SEC filings, insiders, financials, and other information.

Real-Time Snap Quotes  Cost-effective, customizable, instant Real-Time Quotes and Market data, Real-Time Charts, Real-Time Level II, and Real-Time Options. The Real-Time Snap Quote Service features client-controlled
entitlements, comprehensive online tracking, detailed reporting capabilities, and North American Exchange Fee Capping. These features are unique to our company and result in greater efficiency and cost savings for our clients.

Market Indices  At-a-glance display of market conditions, fed directly from the major North American and international exchanges and index
providers.

Charts  Markets and equity charting are available in a variety of formats. Static thumbnails or dynamic
interactive charting is available to allow full market charting or individual stock performance displays, including comparisons to other equities or indices, as well as the ability to plot a wide range of technical studies.

Stock Tickers  Fully customizable vertical or horizontally scrolling tickers supply instant market information.



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Stock Screeners  Allow users to filter stocks based on a wide variety of selection criteria,
including sector/industry, share price, market cap, exchange, EPS, P/E ratio, etc.

News  Topic-based, sector-based and
equity-based lookup of news stories and commentary relating to the markets, individual companies, or specific areas of interest.

Watch
Lists  Display current values and trends for a group of user-defined equities and indices.

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

Investor
Relations  Information on current value, historical data, charting and news, and other data related to individual public companies for investor relations information provisioning. These products provide a turnkey and self-updating investor
relations solution for corporate websites and their investors.

Portfolio Management Systems

QuoteMedia offers four leading edge portfolio managements systems: Quotestream Desktop; Quotestream Wireless; Quotestream Professional;
and a Web Portfolio Management product. Each of these systems can be implemented independently, or they can be employed in conjunction with each other to provide a complete portfolio management solution for both non-professionals and professionals.

Quotestream Desktop

QuoteMedias proprietary software, Quotestream, is our unique, web-delivered, embedded application providing real-time, tick-by-tick, streaming market quotes and research information. Quotestream is the next generation portfolio
management system for non-professional users, with enhanced features and functionality compared to our original Quotestream product  most notably tick-by-tick true streaming data, significantly enhanced charting features, and a broad range of
additional research and analytical content and custom functionality. Quotestream is geared towards providing a professional level experience to non-professional users. Coverage includes North American and LSE real-time data, NASDAQ, TSX, TSXV and
LSE Level 2 data (market depth), market indices, dynamic and interactive charts, options, news and research information, and end of day quote data for over 35 international exchanges, in an easy-to-use and highly configurable interface.

No downloads or installations are required with this quick, lightweight and robust application. It is a sophisticated streaming portfolio management
solution that can readily be embedded in any web environment, allowing users to track investments and access research data with ease.

Quotestream has been designed specifically for syndication and private branding by brokerage, banking, and other corporate clients. It can be fully integrated into existing user registration databases, portfolio systems and on-line trading
systems, thus enabling any brokerage, clearing firm, bank or other corporation to seamlessly complement their existing product offerings and differentiate themselves from their competition.

QuoteMedia corporate clients purchase volume licenses for their customers, gaining significant increases in customer attraction, retention and activity,
and increased revenues as a result.

Quotestream offers the user ten portfolios, market summaries, NASDAQ Level 2 data, a last-ten-trade
trend meter, volume leaders, top gainers and losers, company news, insider activity, SEC filings, research, analysts and opinions, earnings forecasts, news, stock ticker, intraday through twenty year historical charting, interactive charting,
desktop pop-up alerts, and email alerts. Users may fully customize their workspaces to suit their needs. The design also offers a very simple point-and-click and drag-and-drop navigation with little or no typing involved. Quotestream
displays in full screen mode, providing a comprehensive professional trade terminal-style interface.



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Quotestream Wireless

QuoteMedias Quotestream Wireless is a revolutionary wireless companion to the desktop product that allows users to access financial data, news, and
charting in real time or delayed modes, from many different handheld devices. Users are able to access and manage their Quotestream portfolios wirelessly through a cellular telephone or PDA. Quotestream Wireless offers an extensive array of features
and advanced functionality, and supports a large selection of Web based phone/PDAs, including RIM BlackBerry, PalmOne, Apple iPhone, Sony Ericsson, Motorola, Nokia and several other handheld devices and
cellular telephones.

Quotestream Wireless can be integrated with any brokerage/clearing firms existing on-line trading platform
without the installation of expensive Business Enterprise Servers. Additionally, the application is designed to allow private branding by brokerage, banking, and other corporate clients.

Quotestream Wireless and Quotestream Desktop are true companion products as any changes made to portfolios in either application are automatically
reflected in the other.

Quotestream Professional

Quotestream Professional is designed specifically for use by financial services professionals, offering exceptional coverage and functionality at
extremely aggressive pricing. Quotestream Professional features broad market coverage, reliability, complete flexibility, ultra low-latency tick-by-tick data, as well as completely customizable screens, advanced charting, comprehensive technical
analysis, news and research data.

Quotestream Professional was created with the latest technology, making QuoteMedias professional
application one of the most sophisticated, user friendly and dependable market data and technical analysis solution available to market professionals today. It provides true thin client access as there is no software to download, no upgrades to
install, and no technical staff required. QuoteMedia Professional is accessed via the Internet, avoiding expensive server and circuit infrastructure requirements.

Quotestream Professional also features wireless access to the same portfolios and market data entitlements through mobile devices. The desktop and wireless applications work in a co-companion relationship, where any
changes made on one device immediately transfer to the other.

Web Portfolio Manager

The Web Portfolio Manager is a user friendly yet powerful solution allowing users to track their holdings, conduct in-depth research and analyze
performance for all stocks, mutual funds and indices listed on any of the major global exchanges.

The Web Portfolio Manager provides
immediate web access to detailed Quote Data, Market and Company News, Charting, Depth / Level II, Filings, Historical Data, Snap Quotes and more, the Web Portfolio Manager is an efficient and economical solution for both the new and experienced
investor.

The Web Portfolio Manager offers corporate clients such as banks, wealth management companies, brokerages, clearing firms and
web portals an ideal opportunity to cost-effectively provide premium online portfolio management services for their investor customers.

The Web Portfolio Manager can be integrated with the Quotestream products so that changes in any one platform are reflected across the other systems, and real-time data entitlements are consistent across the board.



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Products Competitive Advantage

Our products attract a broad market base, targeting corporate clients worldwide and providing comprehensive financial data services in a wide selection of
custom packages. Markets for our services include:



|                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                     
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     Online brokerages       Full service brokerage
firms       Banks and other financial institutions       Financial web sites       Web portals
      Public
companies       Investor relations firms |  |      Corporate financial intranets and extranets       Mutual fund companies       Internet
service providers       Media companies       publishers       Wealth management companies       Individual traders and investors

Our financial data services provide a sensible solution to the high up-front cost of in-house
developed software. We leverage our technical talent and innovative infrastructure across multiple client platforms, thus creating an economical, efficient and scalable system that can manage and deliver information application capabilities to an
unlimited number of entities from data centers and content feeds across the worldwide web and over telecommunications lines. Our data feeds have among the lowest latency of any available in the market and are developed and delivered using technology
that is more current than that used by many major competitors in this market. Our marketing strategy is based on the following key competitive advantages:

Superior Products  Our goal has always been to create the best products on the market. We develop all of our products in-house and take pride in creating quality applications. Our products stand out for
their superior design, user-friendliness, and ease of implementation, customizability, reliability, data speed, accuracy and comprehensiveness.

Custom Development  QuoteMedias ability to provide complete custom design and development services differentiates us from our competitors. We are able to create custom market data applications and software architected
precisely to our clients specifications, and the speed with which we are able to take a product from concept to deliverable, truly sets us apart.

Data Speed and Quality  Our connections to the worlds exchanges for equities and derivatives have most sources of latency removed. This allows us to deliver extremely fast, accurate, and reliable
data.

Single Source Provider  Clients are eager to acquire premium market data feeds, financial applications, streaming
solutions, and news and research information from a single source provider. Rather than having to license applications, information and market data from multiple sources, our clients enjoy the benefits of dealing with a single comprehensive market
data supplier.

Cutting Edge Data Delivery Technology  We use state-of-the-art hardware and software systems for
maximum speed and efficiency. This provides us with a distinct advantage over our competitors, most of whom use outdated data delivery technologies based on legacy style data networks.

Effective Marketing  We have implemented a marketing strategy that focuses on multiple markets for our products and services, from
individual non-professional end users to corporate and institutional clients and their customer bases. In furtherance of our marketing strategy, we have entered into agreements with Forbes Magazine and Equities Magazine which have resulted in the
recent launch of extensive marketing and advertising campaigns, as well as online advertising on select websites.

Low Infrastructure
Costs  Because of the unique technological advancements in data delivery developed by our company, our distribution model and the strategic partnerships that are in place, we have maintained very low corporate overhead. All of our
development is completed in-house, resulting in significant cost efficiencies. This allows us to focus our resources on data management, data acquisition, customer satisfaction, and business development activities. Our low cost base of development
and operation also allows us to maintain very competitive pricing.



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Competition

Many companies provide financial market data and related information. Companies such as Bloomberg, Thompson Reuters and Interactive Data (IDC) are some of the data providers in this highly competitive market place.

While there are many financial data providers, what mainly differentiates us from others is that we offer clients a comprehensive solution for stock
market related information provisioning with more advanced technologies than employed by our competitors. Our diversity of technical expertise, agile responsiveness to custom corporate requirements and development needs, and proven commitment to
superior delivery technologies have established QuoteMedia as a frontrunner in the financial market data industry.

QuoteMedias array
of products benefit clients with an exceptional number of strong technical differentiators in embedded, fully private-labeled and seamlessly integrated environments which combine to offer strong market differentiation.

Trademarks, Domain Names and Intellectual Property

We own the trademarks for Quotemedia and Quotestream and the domain names www.quotemedia.com; www.quotestream.com; www.quotestream.ca; and www.quotemedia.co.uk. We will continue to own and protect
these key assets into the future.

We protect our other intellectual property by a combination of copyrights, trademarks and
confidentiality agreements with our employees, customers and other agents.

Regulatory Issues

We are not subject to any special governmental regulation concerning our supplying of products and services to the market place and we believe we are in
compliance in all material respects with all existing regulations governing other aspects of our businesses.

Employees

We currently have 50 full time employees. Our employees are not members of any union, nor have we entered into any collective bargaining agreements. We
believe that we have a good relationship with our employees. With the successful implementation of our business plan, we may hire additional employees during fiscal 2009 to handle anticipated growth in the areas of administration, programming,
sales, marketing, and customer care.



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|ITEM 1A. | 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.

Declining activity levels in the securities markets, or the failure of market participants, could lower demand for our services. Our business is dependent upon the health of the financial markets as well as the financial health
of the participants in those markets. The current financial crisis has resulted in lower activity levels, including lower trading volumes and a substantial reduction in the number of issuances of new securities. It has also led to the collapse of
some market participants. Some of the demand for financial market data is dependent upon activity levels in the securities markets while other demand is static and is not dependent on activity levels. In the event the current downturn in the global
financial markets results in a prolonged, significant decline in activity levels or continues to have an adverse impact on the financial condition of our customers, our revenue could be materially adversely affected

The impact of cost-cutting pressures across the industries we serve could lower demand for our services.We are seeing customers intensify their
focus on containing or reducing costs as a result of the more challenging market conditions and expect this trend to continue throughout 2009. Customers within the financial services industry that strive to reduce their operating costs may seek to
reduce their spending on financial market data and related services. If customers elect to reduce their spending with us, our results of operations could be materially adversely affected. Alternatively, customers may use other strategies to reduce
their overall spending on financial market data services, by consolidating their spending with fewer vendors, by selecting vendors with lower-cost offerings or by self-sourcing their need for financial market data. If customers elect to consolidate
their spending on financial market data services with other vendors instead of us, if we cannot price our services as aggressively as the competition, or if customers elect to self-source their needs, our results of operations could be materially
adversely affected.

Consolidation of financial services within and across industries, or the failure of financial services
firms, could lower demand for our services.The current financial crisis has resulted in consolidation among some participants in the financial markets and the collapse of others. We continue to deliver services to a number of customers
currently involved in the process of a merger or acquisition. As consolidation occurs and synergies are achieved, there may be fewer potential customers for our services. There are two types of consolidations: consolidations within an industry, such
as banking; and across industries, such as consolidations of insurance, banking and brokerage companies. When two companies that separately subscribe to or use our services combine, they may terminate or reduce duplicative subscriptions for our
services, or if they are billed on a usage basis, usage may decline due to synergies created by the business combination. A large number of cancellations, or lower utilization on an absolute dollar basis resulting from consolidations, could have a
material adverse effect on our revenue. In addition, if financial services firms accounting for a material percentage of our revenues or profit cease operations as a result of bankruptcy, and the assets of such customers are not acquired by
successor entities, such event could have a material adverse effect on our results of operations.

Adverse capital and credit market
conditions could limit our access to capital.The capital and credit markets have been experiencing extreme volatility and disruption for more than twelve months. Disruptions, uncertainty or volatility in the capital and credit markets may limit
our access to capital required to operate and grow our business. As such, we may be unable to raise capital or bear an unattractive cost of capital which could reduce our financial flexibility.

If we are unable to maintain relationships with key suppliers and providers of market data, we would not be able to provide our services to our
customers. We depend on key suppliers for the data we provide to our customers. Some of this data is exclusive to particular suppliers, such as national stock exchanges, and cannot be obtained from other suppliers. In other cases, although the
data may be available from secondary sources, the secondary source may not be as adequate or reliable as the primary or preferred source, or we may not be able to obtain replacement data from an alternative supplier without undue cost and expense,
if at all. We generally obtain data via license agreements. The disruption of any license agreement with a major data supplier, such as Nexa Technologies, Inc., could disrupt our operations and lead to an adverse impact on our results of operations.



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A prolonged outage at one of our data centers that we share could result in reduced revenue and the
loss of customers. Our customers rely on us for time-sensitive, up-to-date data that is reliably delivered. Our business is dependent on our ability to rapidly and efficiently process substantial quantities of data and transactions on our
computer-based networks and systems. Our computer operations and those of our suppliers and customers are vulnerable to interruption by fire, natural disaster, power loss, telecommunications failure, terrorist attacks, acts of war, Internet
failures, computer viruses and other events beyond our reasonable control. We maintain a back-up facility for our major data center that we share with Nexa Technologies, Inc. to seek to minimize the risk that any such event will disrupt operations.
In addition, we maintain insurance for such events. However, the business interruption insurance we carry may not be sufficient to compensate us fully for losses or damages that may occur as a result of such events. Any such losses or damages
incurred by us could have a material adverse effect on our business. Although we seek to minimize these risks through security measures, controls and a back-up data center, there can be no assurance that such efforts will be successful or effective.

We compete against companies with greater financial resources. We operate in highly competitive markets in which we compete with
other distributors of financial and business information and related services. We expect competition to continue to be rigorous. Some of our competitors and potential competitors have significantly greater financial, technical and marketing
resources than we have. These competitors may be able to expand product offerings and data content more effectively, and to respond more rapidly than us to new or emerging technologies, changes in the industry or changes in customer needs. They may
also be in a position to devote greater resources to the development, promotion and sale of their products. Increased competition in the future could limit our ability to maintain or increase our market share or maintain our margins, and could have
a material adverse effect on our business, financial condition or operating results.

New product offerings by competitors or new
technologies could cause our services to become obsolete. We operate in an industry that is characterized by rapid and significant technological change, frequent new services, data content and coverage enhancements, and evolving industry
standards. Without the timely introduction of new services and data content and coverage enhancements, our services could become technologically obsolete or inadequate over time, in which case our revenue and operating results would suffer. We
expect our competitors to continue to improve the performance of their current services, to enhance data content and coverage and to introduce new services and technologies. These competitors may adapt more quickly to new technologies, changes in
the industry and changes in customers requirements than we can. If we fail to adequately anticipate customers needs and technological trends accurately, we will be unable to introduce new services into the market and our ability to
compete would be materially adversely impacted. Further, if we are unsuccessful at developing and introducing new services that are appealing to customers, with acceptable prices and terms, or if any such new services are not made available in a
timely manner, our ability to compete would be materially adversely impacted. In both cases our ability to generate revenue could suffer and our business and operating results could be materially adversely affected. We will need to successfully
enhance or add to current services in order to effectively expand into new geographic areas. In addition, new services, data content and coverage that we may develop and introduce may not achieve market acceptance and would result in lower revenue.

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. Implementing our business plan may require additional equity or debt financing. 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.

We depend on key personnel and expect to hire additional personnel.Our performance substantially depends on the services of R. Keith Guelpa, our Chief Executive Officer and President, and David M. Shworan,
President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary of our company. The loss of Mr. Guelpa or Mr. Shworan, or our 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 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 manage successfully 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 may 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.

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.



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|ITEM 1B. | UNRESOLVED STAFF COMMENTS.
|-------- | --------------------------

None.



|ITEM 2. | PROPERTIES.
|------- | -----------

We lease executive office space
in Fountain Hills, Arizona. The term of this lease expires in July 2010.

We lease office space for technical staff in Vancouver, British
Columbia, Canada. The term of this lease expires in May 2010. We lease office space for sales and customer support staff in Parksville, British Columbia, Canada. The term of this lease expires April 2011.

We believe that our current leased space is sufficient to meet our needs for the next 12 months and that the 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. We do own a right of first refusal to purchase the
building we currently lease for our sales and customer support staff in Parksville, British Columbia, Canada. This right expires in April 2011.



|ITEM 3. | LEGAL PROCEEDINGS.
|------- | ------------------

None.



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

Not applicable.



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PART II



|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.
|------- | --------------------------------------------------------------------------------------------------------------

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



|                                       |  |      |      |     |   |     
|-------------------------------------- |  | ---- | ---- | --- | - | ----
|                                       |  | High |      | Low
|Year ended December 31, 2007:          |  |      |      |     |   |     
|First Quarter                          |  | $    | 0.40 |     | $ | 0.29
|Second Quarter                         |  |      | 0.32 |     |   | 0.23
|Third Quarter                          |  |      | 0.25 |     |   | 0.18
|Fourth Quarter                         |  |      | 0.22 |     |   | 0.18
|                                       |  |     
|Year ended December 31, 2008:          |  |      |      |     |   |     
|First Quarter                          |  | $    | 0.22 |     | $ | 0.13
|Second Quarter                         |  |      | 0.20 |     |   | 0.14
|Third Quarter                          |  |      | 0.15 |     |   | 0.07
|Fourth Quarter                         |  |      | 0.15 |     |   | 0.04
|                                       |  |     
|Year ended December 31, 2009:          |  |      |      |     |   |     
|First Quarter (through March 13, 2009) |  | $    | 0.08 |     | $ | 0.04

As of March 13, 2009, there were approximately 309 holders of record of our common stock. As
of March 13, 2009, the closing price for our common stock was $0.06.

Dividend Policy

We have never paid any cash dividends to holders of our common stock, and for the foreseeable future, we intend to retain any 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.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the fourth quarter of 2008.



|ITEM 6. | SELECTED FINANCIAL DATA.
|------- | ------------------------

Not required.



|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|------- | --------------------------------------------------------------------------------------

Overview

We are a financial software developer and a distributor of market data and research
information to online brokerages, clearing firms, banks, media properties, public companies and financial service corporations worldwide. Through the aggregation of information from many direct data, news, and research sources, we offer a
comprehensive range of solutions for all market related information provisioning requirements.



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We have three general product lines: Data Feed Services, Interactive Content and Data Applications, and
Portfolio Management Systems.

Our Data Feed Services consist of raw streaming real-time market data delivered over the Internet or via
dedicated telecommunication lines, and supplemental fundamental, historical, and analytical data, keyed to the same symbology which provides a complete market data solution to be offered to our customers. Currently, QuoteMedias Data Feed
services include complete coverage of North American exchanges and over 70 exchanges worldwide.

Our Interactive Content and Data
Applications consist of a suite of software applications that provide publicly traded company and market information to corporate clients via the Internet. Products include stock market quotes, fundamentals, historical and interactive charts,
company news, filings, option chains, insider transactions, corporate financials, corporate profiles, screeners, market research information, investor relations provisions, level II, watch lists, and real-time quotes. All of our content solutions
are completely customizable, and embed directly into client web pages for seamless integration with existing content.

Our Portfolio
Management Systems consist of Quotestream, Quotestream Professional, Quotestream Wireless, and our Web Portfolio Management systems. Quotestream Desktop is an Internet-based streaming online portfolio management system that delivers real-time and
delayed market data to both consumer and corporate markets. Quotestream has been designed for syndication and private branding by brokerage, banking, and web portal companies. Quotestreams enhanced features and functionality  most
notably tick-by-tick true streaming data, significantly enhanced charting features, and a broad range of additional research and analytical content and functionality  offer a professional level experience to non-professional users.

Quotestream Professional is designed specifically for use by financial services professionals, offering exceptional coverage and functionality at
extremely aggressive pricing. Quotestream Professional features broad market coverage, reliability, complete flexibility, ultra low-latency tick-by-tick data, as well as completely customizable screens, advanced charting, comprehensive technical
analysis, news and research data.

Quotestream Wireless is a true companion product to the Quotestream desktop products (Quotestream and
Quotestream Professional)  any changes made to portfolios in either the desktop or wireless application are automatically reflected in the other.

A key feature of QuoteMedias business model is that all of our product lines generate recurring monthly licensing revenue from each client. Contracts to license Quotestream to our corporate clients, for example,
typically have a term of one to three years and are automatically renewed unless notice is given at least 90 days prior to the expiration of the current license term. We also generate Quotestream revenue through individual end-user licenses on a
monthly or annual subscription fee basis. Interactive Content and Data Applications and Market Data Feeds are licensed for a monthly, quarterly, annual, or biannual subscription fee. Contracts to license our Financial Data Products and Data
Feeds typically have a term of one to two years and are automatically renewed unless notice is given 90 days prior to the expiration of the contract term.

Business environment and trends

In recent months, global markets have been negatively impacted by a variety of factors, and
the financial services industry in particular has been adversely affected by losses in the mortgage and credit markets. While we are not immune to an economic downturn, our business is subscription-based with many of our customers contracted to
multi-year commitments for our market data. Further, our low cost base of development and operation allows us to maintain very competitive pricing, which attracts new customers looking for more cost efficient financial data. We believe these factors
have helped mitigate the impact of the recent downturn in global markets as, despite volatile world financial markets and weakness in the global economy, we achieved 31% revenue growth in 2008 compared to the previous year. The growth resulted from
an increased customer base and increased per customer revenue for our Interactive Content and Data Applications as we continue to expand our line of financial data products and the depth of our data offerings. Increased subscriptions to Quotestream
during the period also contributed to our revenue growth.



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We expect to continue to encounter uncertain market conditions in 2009, which may result in lower sales
growth compared to 2008. We expect that customers will continue their focus on containing or reducing costs while adapting to industry trends affecting their businesses. It remains unclear at this time what impact the recent events in the global
financial markets will have on the overall financial market data services spending in 2009 and subsequent years. In the event the current downturn in the global financial markets results in a prolonged, significant decline in activity levels or
continues to have an adverse impact on the financial condition of our customers, our revenue could be adversely affected.

Plan of operation

Our plan of operation for 2009 will focus on marketing Quotestream for deployments by brokerage firms to their retail clients, and
moving strongly into the investment professional market with Quotestream Professional. Licensing Quotestream Wireless, both as a companion to the Quotestream desktop products, and as a stand-alone solution, will also continue to be a focal point.

We expect to achieve significant cost savings in 2009 due to the recent strengthening of the U.S. dollar compared to the Canadian dollar.
A significant portion of our expenses are paid in Canadian dollars; therefore changes to the exchange rate between the U.S. and Canadian dollar affect our operating results. To manage this exchange rate risk, we have utilized forward contracts to
purchase Canadian dollars. At December 31, 2008, we have forward contracts to purchase a total of $1,678,014 Canadian dollars ($US 1,375,000) at an average exchange rate of 1.2204, with maturities ranging from one to 12 months. In comparison,
the average exchange rate during 2008 was 1.0667.

Opportunistically, efforts will be made to evaluate and pursue the development of
additional new products that may eventually be commercialized by our company. Although not currently anticipated, we may require additional capital to execute our proposed plan of operation. There can be no assurance that such additional capital
will be available to our company, on commercially reasonable terms or at all.

Our future performance will be subject to a number of
business factors, including those beyond our control, such as a continued economic downturn and evolving industry needs and preferences as well as the level of competition and our ability to continue to successfully market our products and
technology. There can be no assurance that we will be able to successfully implement our marketing strategy, continue our revenue growth, or achieve profitable operations.

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. 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 policy affects our more significant judgments and estimates used in the preparation of our financial statements.

Revenue recognition

Revenue
is recognized over contractual periods as services are performed and when collection of the amount due is reasonably assured. Amounts recognized as revenue are determined based upon contractually agreed upon fee schedules with our customers. We
account for subscription revenues received in advance of services being



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performed by deferring such amounts until the related services are performed. We consider 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.

We exercise judgment in assessing the
credit worthiness of our customers and therefore in our determination of whether collectability is reasonably assured. Should changes in conditions cause us to determine these criteria are not met for future transactions, revenue recognized for
future reporting periods could be adversely affected.

Commencing in October 2005, the Company licensed one of its portfolio management
applications in exchange for advertising services of a customer, referred to as barter revenue, whereby advertising credits were received in exchange for subscription services. This revenue is recognized in the period in which the
applications are licensed based on the fair market value of the services delivered. The Company determines the fair market value of the service delivered based upon amounts charged for similar services in non-barter arrangements within the previous
six-month period. The Company also ensures that the value of barter delivered does not exceed the value of cash based revenue in any period. Unused advertising credits are reflected as prepaid expenses. As at December 31, 2008, $180,000 in
unused advertising credits was included in prepaid expenses.

The following table summarizes our barter revenue transactions for the years
ended December 31, 2008 and 2007:



|                         |  |      |         |      |   |        
|------------------------ |  | ---- | ------- | ---- | - | -------
|                         |  | 2008 |         | 2007
|Barter revenue earned    |  | $    | 360,000 |      | $ | 360,000
|                         |  |     
|Advertising credits used |  | $    | 360,000 |      | $ | 330,000

Capitalized Application Software

Capitalized software costs include costs incurred in connection with the development of software and purchased software. These costs relate to software
used by subscribers to access, manage and analyze information in the Companys databases. Capitalized costs associated with internally developed software are amortized over three years which is their estimated economic life.

We exercise significant judgment in determining that capitalized application software costs meet the criteria established in FASB Statement no. 86,
Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed. Software production costs for computer software that is to be used as an integral part of a product or process shall not be capitalized until both
(a) technological feasibility has been established for the software and (b) all research and development activities for the other components of the product or process have been completed.

For the years ended December 31, 2008 and 2007, the Company capitalized $539,563 and $492,625 of costs, respectively, related to the development of
new software applications and enhancements made to existing software applications. Software applications are used by our subscribers to access, manage and analyze information in our databases. For the years ended December 31, 2008 and 2007,
amortization expenses associated with the internally developed application software was $351,324 and $169,265 respectively. At December 31, 2008, the remaining book value of the application software was $775,704.



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Recent Accounting Pronouncements

Effective January 1, 2007, the Company adopted FASB Interpretation No. 48 entitled Accounting for Uncertainty in Income TaxesAn Interpretation of FASB Statement No. 109 (FIN
48). This interpretation prescribes a recognition threshold and measurement method for the recognition of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance related to uncertain tax positions on the
derecognition, measurement (according to the more likely than not criterion), classification, interest and penalties, accounting in interim periods and disclosure. We have evaluated all tax positions in accordance with FIN 48, and have concluded
that there is no impact to our consolidated financial statements.

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

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

Results of Operations

Revenue



|                  |  |                          |           |            |   |            |  |   |           |  |    |  
|----------------- |  | ------------------------ | --------- | ---------- | - | ---------- |  | - | --------- |  | -- | -
|                  |  | Years ended December 31, |           | Change ($) |   | Change (%) | 
|                  |  | 2008                     |           | 2007       |   |           
|Licensing revenue |  | $                        | 7,276,980 |            | $ | 5,569,107  |  | $ | 1,707,873 |  | 31 | %

Licensing revenue has increased 31% when comparing the years ended December 31, 2008 and
2007. This increase reflects sales growth for both our Interactive Content and Data Applications and our Portfolio Management Systems.

We
expanded our line of Interactive Content and Data Applications, which includes XML market data feeds. This resulted in a $1,184,837 (32%) increase in Interactive Content and Data Application revenue when comparing the years ended
December 31, 2008 and 2007. The number of Quotestream subscribers and the average subscription revenue per user increased during the year; resulting in a $523,036 (28%) increase in Portfolio Management System revenue when comparing the
years ended December 31, 2008 and 2007. Included in Portfolio



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##### Table of Contents

Management System revenue is revenue earned from licensing of one of our portfolio management applications in exchange for advertising services, referred to
as barter revenue whereby advertising credits were received for subscription services. This barter revenue amounted to $360,000 for the year ended December 31, 2008, compared to $360,000 earned in 2007.

Cost of Revenue and Gross Profit Summary



|                |  |                          |           |   |            |   |            |   |  |   |           |  |    |  
|--------------- |  | ------------------------ | --------- | - | ---------- | - | ---------- | - |  | - | --------- |  | -- | -
|                |  | Years ended December 31, |           |   | Change ($) |   | Change (%) |  
|                |  | 2008                     |           |   | 2007       |   |            |  
|Cost of revenue |  | $                        | 3,053,275 |   |            | $ | 2,386,925  |   |  | $ | 666,350   |  | 28 | %
|                |  |                          |           |  
|Gross profit    |  | $                        | 4,223,705 |   |            | $ | 3,182,182  |   |  | $ | 1,041,523 |  | 33 | %
|                |  |                          |           |  
|Gross margin %  |  |                          | 58        | % |            |   | 57         | % |  |   |           |  |    |  

Our cost of revenue consists of fixed and variable stock exchange fees and data feed provisioning
costs. Cost of revenue also includes amortization of capitalized application software costs. We capitalize the costs associated with developing new products once technological feasibility has been established.

Cost of revenue increased 28% when comparing the years ended December 31, 2008 and 2007. The increase is primarily due to the acquisition of data
content required to support the new products and features that we have recently developed and the amortization expense related to additional capitalized application software costs. We also incurred increases in variable stock exchange, data feed,
and bandwidth usage charges resulting from the growth in the number of clients from the comparable period.

During 2008 we incurred
increases in fixed financial content costs to support the new products developed during the period, including Quotestream, Quotestream Professional, and new Market Data Feeds. Amortization also increased significantly from the comparative periods as
a result of the increase in capitalized application software costs related to the new products noted above. The increase in financial content and amortization expenses offset our increase in revenue; therefore our gross margin percentage increased
only slightly to 58% in 2008 compared to 57% in 2007.

Operating Expenses Summary



|                           |  |                          |           |            |   |            |  |   |         |  |    |  
|-------------------------- |  | ------------------------ | --------- | ---------- | - | ---------- |  | - | ------- |  | -- | -
|                           |  | Years ended December 31, |           | Change ($) |   | Change (%) | 
|                           |  | 2008                     |           | 2007       |   |           
|Sales and marketing        |  | $                        | 2,026,063 |            | $ | 1,854,400  |  | $ | 171,663 |  | 9  | %
|General and administrative |  |                          | 1,917,482 |            |   | 1,588,744  |  |   | 328,738 |  | 21 | %
|Software development       |  |                          | 1,013,011 |            |   | 917,861    |  |   | 95,150  |  | 10 | %
|                           |  |                          |           |            |   |            |  |   |         |  |    |  
|Total operating expenses   |  | $                        | 4,956,556 |            | $ | 4,361,005  |  | $ | 595,551 |  | 14 | %
|                           |  |                          |           |            |   |            |  |   |         |  |    |  

Sales and Marketing

Sales and marketing consists primarily of sales and customer service salaries, investor relations, travel, and advertising expenses. Sales and marketing
expenses increased $171,663 (9%) for the year ended December 31, 2008 when compared to fiscal 2007. The increase was due to additional sales personnel hired since the comparative year and stock-based compensation expenses resulting from
the grant of new stock options and modifications to existing stock options during the current period.

Included in sales and marketing
expense is $360,000 in non-cash advertising costs incurred in the year ended December 31, 2008. We receive advertising credits with a large national magazine in exchange for subscription services. The advertising credits are expensed as used,
and unused advertising credits are reflected as prepaid expenses. We used $330,000 in advertising credits during the comparative period in 2007.



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General and Administrative

General and administrative expenses consist primarily of salaries expense, office rent, insurance premiums, and professional fees. General and
administrative expenses increased $328,738 (21%) for year ended December 31, 2008 when compared to fiscal 2007. The increase is primarily due to the hiring of new personnel and competitive salary adjustments to existing personnel from the
comparative periods.

Software Development

Software development expenses consist primarily of costs associated with the design, programming, and testing of our software applications prior to the establishment of technological feasibility. Software development
expenses also include costs incurred to maintain our software applications. Software development expenses increased $95,150 (10%) for the year ended December 31, 2008 when compared to fiscal 2007. The increase was due to increased salary
expense for software development personnel from the comparative period, as we made competitive salary adjustments for existing employees and added new software development personnel. Additional software development personnel were required to develop
our next generation Quotestream and Quotestream Professional products, as well as our new and upgraded versions of our Web-based applications and market data feeds. The increase in salary expense during the period was offset by decreased stock-based
compensation expense from the comparative period.

The increase in software development expenses noted above was offset by software
development costs capitalized during the period. We capitalized $539,563 of development costs for the year ended December 31, 2008, compared to $492,625 in 2007. These costs relate to the development of application software used by subscribers
to access, manage and analyze information in our databases. Capitalized costs associated with application software are amortized over three years which is their estimated economic life.

Other Income and (Expense) Summary



|                                  |  |                          |          |   |      |   |          |  
|--------------------------------- |  | ------------------------ | -------- | - | ---- | - | -------- | -
|                                  |  | Years ended December 31, |         
|                                  |  | 2008                     |          |   | 2007 |  
|Foreign exchange gain (loss)      |  | $                        | 75,535   |   |      | $ | (91,532  | )
|Interest expense                  |  |                          | (238,542 | ) |      |   | (239,663 | )
|Loss on disposal of equipment     |  |                          | (3,075   | ) |      |   |         |  
|                                  |  |                          |          |   |      |   |          |  
|Total other income and (expenses) |  | $                        | (166,082 | ) |      | $ | (331,195 | )
|                                  |  |                          |          |   |      |   |          |  

Foreign Exchange Loss

We recognized a foreign exchange gain of $75,535 in 2008, compared to a foreign exchange loss of $91,532 in 2007. Exchange gains and losses arise from the
re-measurement of Canadian dollar monetary assets and liabilities into U.S. dollars. The change in fair value for foreign exchange forward contracts is also included in foreign exchanges gains and losses. The foreign exchange gain of $75,535 in 2008
was due to an increase in the value of U.S. dollar relative to the Canadian dollar when comparing the exchange rate at December 31, 2008 to December 31, 2007, as we have net Canadian dollar liability at December 31, 2008. The loss of
$2,728 resulting from the change in fair value for foreign exchange forward contracts was netted against the gain arising from the re-measurement of Canadian dollar monetary assets and liabilities into U.S. dollars.



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Interest Expense

Interest expense in 2008 was $238,542, compared to $239,663 in 2007. Interest is accrued at 10% per annum on certain amounts owed to related parties. Interest income earned on cash balances is netted against
interest income.

Loss on Disposal of Equipment

In December 2008, we wrote off obsolete computer equipment that had a net book value of $3,075.

Provision for Income
Taxes

In 2008, the Company recorded Canadian income tax benefit of $26,249, compared to a Canadian income tax expense of $51,191 in
2007.

Net Income (Loss) for the Period

As a result of the foregoing, net loss for the year ended December 31, 2008 was $(872,684) or $(0.01) per share compared to a net loss of $(1,561,209) or $(0.02) per share for the year ended December 31, 2007.

Liquidity and Capital Resources

Our cash totaled
$536,624 at December 31, 2008, as compared with $357,316 at December 31, 2007, an increase of $179,308. Net cash of $856,703 was provided by operations for the year ended December 31, 2008, primarily due to the increase in accounts
payable and amounts due to related parties, offset by the net loss for the period and an increase in accounts receivable. Net cash used in investing activities for the year ended December 31, 2008 was $704,895 resulting from capitalized
application software costs, the purchase of new computer equipment, and an increase in forward contract margin deposits. Net cash provided by financing activities for the year ended December 31, 2008 was $27,500, resulting from the exercise of
stock options.

Our current liabilities include $626,729 due to related parties. All repayments of amounts due to related parties must be
approved by our Board of Directors. Repayments are subject to our company having sufficient cash on hand and are intended not to impair continuing business operations. Deferred revenue of $447,246 is also included in our current liabilities. The
costs incurred to realize the deferred revenue in the next 12 months are minimal.

Based on the factors discussed above, we believe that
our cash on hand and cash generated from operations will be sufficient to fund our current operations for at least the next 12 months. However, to implement our business plan may require additional financing. Additional financings may come from
future equity or debt offerings that could result in dilution to our stockholders. Further, current adverse capital and credit market conditions could limit our access to capital. We may be unable to raise capital or bear an unattractive cost of
capital which could reduce our financial flexibility.

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.

Off-Balance Sheet Arrangements

Other than office lease commitments discussed in Note 9 to our
financial statements, we do not have any off-balance sheet arrangements.



|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|-------- | -----------------------------------------------------------

Not required.



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##### Table of Contents

|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|------- | --------------------------------------------

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 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|------- | -------------------------------------------------------------------------------------

None.



|ITEM 9A(T). | CONTROLS AND PROCEDURES.
|----------- | ------------------------

Disclosure Controls and
Procedures

We have evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of
our disclosure controls and procedures as of December 31, 2008. Based on this evaluation, our CEO and CFO have each concluded that our disclosure controls and procedures are effective to ensure that we record, process, summarize, and report
information required to be disclosed by us in our periodic reports filed under the Exchange Act within the time periods specified by the Securities and Exchange Commissions rules and forms, and that such information is accumulated and
communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Managements
Report on Internal Control over Financial Reporting

The management of QuoteMedia, Inc. is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed by, or under the supervision or our CEO and CFO, and affected by our
Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles
generally accepted in the United States of America.

Our internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of our management
and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control systems, no
matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance
with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

Our management assessed the effectiveness of the Companys internal control over
financial reporting as of December 31, 2008. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our
assessment, we believe that, as of December 31, 2008, the Companys internal control over financial reporting was effective based on those criteria.



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This annual report does not include an attestation report of our registered public accounting firm
regarding internal control over financial reporting. Managements report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide
only managements report in this annual report.

Changes in Internal Control over Financial Reporting

During the last quarter of the fiscal year covered by this report, there have not been any changes in our internal controls over financial reporting that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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.



|ITEM 9B. | OTHER INFORMATION.
|-------- | ------------------

Not applicable.



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##### Table of Contents

PART III



|ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
|-------- | -------------------------------------------------------

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



|                   |  |     |  |                                                                        
|------------------ |  | --- |  | -----------------------------------------------------------------------
|Name               |  | Age |  | Position                                                               
|Robert J. Thompson |  | 66  |  | Chairman of the Board                                                  
|                   |  |    
|R. Keith Guelpa    |  | 62  |  | President, Chief Executive Officer, and Director                       
|                   |  |    
|David M. Shworan   |  | 41  |  | President and Chief Executive Officer of QuoteMedia, Ltd., and Director
|                   |  |    
|Keith J. Randall   |  | 42  |  | Vice President, Treasurer, Chief Financial Officer, and Secretary      

Our listed 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. Since December 2002, Mr. Thompson has been 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. Mr. Thompson also acts as a Director of several privately owned corporations. 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.

R. Keith Guelpa served as our President and
Chief Executive Officer from July 1999 until November 2002, and again was appointed President and Chief Executive Officer in December 2004. He served as our Chief Operating Officer from November 2002 until December 2004. Mr. Guelpa has served
as a director of our company since 1999. Prior to 1999, Mr. Guelpa served as President and Chief Executive Officer of a number of companies in the technology and financial areas.

David M. Shworan has served as President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary of our company, since December
2004. Mr. Shworan has served as a director of our company since November 2000. Mr. Shworan served as our President and Chief Executive Officer from November 2002 to December 2004. 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 8 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 a number of other Internet companies.



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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. 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.

Section 16(a) Beneficial Ownership Reporting Compliance

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, 2008, 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.

Code of Ethics

Our Board of Directors
has adopted Corporate Governance Guidelines; a Code of Business Conduct/Ethics, Code of Ethics for the CEO and Senior Financial Officers, and any amendments or waivers thereto; 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/qmci/investors.php, 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.

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. The Audit Committee currently consists
solely of Robert J. Thompson. The Board of Directors has determined that Mr. Thompson qualifies as an audit committee financial expert in accordance with the applicable rules and regulations of the SEC.



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|ITEM 11. | 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, 2008 and 2007 earned by our Chief Executive Officer and one other executive officer (collectively, the Named Executive Officers). None of our other executive officers cash salary and bonus exceeded $100,000 during
fiscal 2008.

Summary Compensation Table



|                                                              |      |      |   |            |         |           |   |                             |        |                              |   |           |   |         |        
|------------------------------------------------------------- | ---- | ---- | - | ---------- | ------- | --------- | - | --------------------------- | ------ | ---------------------------- | - | --------- | - | ------- | -------
|Name and Principal Position                                   |      | Year |   | Salary ($) |         | Bonus ($) |   | OptionAwards($) (1),(4),(5) |        | All OtherCompensation($) (2) |   | Total ($)
|R. Keith Guelpa (3)Chief Executive Officer, QuoteMedia, Inc.  |      | 2008 |   | $          | 192,000 |           |  |                             |        |                             |   |          |   | $       | 192,000
|                                                              | 2007 |      | $ | 192,000    |         |          |   |                             |       |                              |  |           | $ | 192,000
|                                                              |      |      |   |            |         |          
|David M. Shworan (4)Chief Executive Officer, QuoteMedia, Ltd. |      | 2008 |   | $          | 300,000 |           |  |                             | $      | 105,220                      |   |          |   | $       | 405,220
|                                                              | 2007 |      | $ | 300,000    |         |          |   | $                           | 96,000 |                              |  |           | $ | 396,000
|                                                              |      |      |   |            |         |          
|Keith J. Randall (5)Chief Executive Officer, QuoteMedia, Inc. |      | 2008 |   | $          | 132,000 |           |  |                             | $      | 1,060                        |   |          |   | $       | 133,060
|                                                              | 2007 |      | $ | 108,000    |         |          |   | $                           | 19,000 |                              |  |           | $ | 127,000



|(1) | Options Awards represent the fair value of option awards granted, repriced, or otherwise modified, computed in accordance with FAS 123R.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------

|(2) | The executive officers listed also received certain perquisites, the aggregate value of which did not exceed $10,000 for any year presented.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Mr. Guelpa is our President and Chief Executive Officer, and serves as our Principal Executive Officer. During 2007, we repaid amounts due to Mr. Guelpa for
loans made to the company in 2000 and 2001.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Mr. Shworan is President and Chief Executive Officer of QuoteMedia, Ltd., a wholly owned subsidiary of QuoteMedia, Inc. Pursuant to his employment agreement, we started
accruing salary payable to Mr. Shworan in June 2003. From June 2003 to December 31, 2006 we did not pay a salary to Mr. Shworan, however amounts due were accrued and expensed. During 2007 we paid $175,000 in salary to
Mr. Shworan, and accrued and expensed the remaining $125,000 salary due to him. Unpaid salary owed to Mr. Shworan accrues interest at the prime bank rate minus 1%. In September 2007, we cancelled 2,400,000 warrants held by Mr. Shworan
with an exercise price of $0.465, and reissued warrants to Mr. Shworan with an exercise price of $0.19. The fully vested warrants previously held by Mr. Shworan were exchanged for warrants that vest in equal monthly installments over a two
year period beginning September 2007. The expiry date of the warrants remained unchanged. In June 2008, we extended the term of a total of 5,200,000 options and warrants held by Mr. Shworan. The expiry dates of the options and warrants were
extended by two years, and the exercise prices of the options and warrants were increased by $0.02.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Mr. Randall is our Chief Financial Officer, and serves as our Principal Financial and Accounting Officer. In April 2007, we granted Mr. Randall 50,000 of stock
options. The options vest equally over five years and had an exercise price of $0.27. The options expire in April 2017. In September 2007, we cancelled the 50,000 options granted to Mr. Randall in April 2007, as well as 50,000 options granted
to Mr. Randall in 2005 that had an exercise price of $0.39. The options were reissued to Mr. Randall with exercise prices of $0.19. The vesting period and the expiry dates of the repriced options remained unchanged. In December 2007, we
granted Mr. Randall 50,000 warrants. The warrants were fully vested and had an exercise price of $0.19. The options expire in December 2017. In June 2008, we extended the term of 100,000 options held by Mr. Randall. The expiry dates of the
options and warrants were extended by two years, and the exercise prices of the options and warrants were increased by $0.02.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Outstanding Equity Awards at Fiscal Year End



|                 |  |                                                    |  |               |                          |  |                     |       |  |            
|---------------- |  | -------------------------------------------------- |  | ------------- | ------------------------ |  | ------------------- | ----- |  | -----------
|                 |  | Number of Securities UnderlyingUnexercised Options |  |               | Option ExercisePrice ($) |  | Option ExerciseDate
|Name             |  | Exercisable                                        |  | Unexercisable |                          |  |                    
|David M. Shworan |  | 200,000                                            |  |              |                          |  | $                   | 0.07  |  | 5-Jun-2010 
|                 |  | 2,000,000                                          |  |              |                          |  | $                   | 0.07  |  | 5-Jun-2010 
|                 |  | 3,000,000                                          |  |              |                          |  | $                   | 0.095 |  | 5-Jun-2010 
|                 |  | 1,500,000                                          |  | 900,000       | (1)                      |  | $                   | 0.19  |  | 01-Aug-2015
|                 |  |                                                    |  |              
|Keith J. Randall |  | 100,000                                            |  |              |                          |  | $                   | 0.07  |  | 5-Jun-2010 
|                 |  | 50,000                                             |  |              |                          |  | $                   | 0.19  |  | 31-Jan-2015
|                 |  | 20,000                                             |  | 30,000        | (2)                      |  | $                   | 0.19  |  | 12-Apr-2017
|                 |  | 50,000                                             |  |              |                          |  | $                   | 0.19  |  | 21-Dec-2017



|(1) | Warrants vest equally over two years and will be fully vested September 2009.
|--- | -----------------------------------------------------------------------------

|(2) | Options vest equally over five years and will be fully vested December 2011.
|--- | ----------------------------------------------------------------------------

Employment Agreements

The employment agreement with Mr. Guelpa, our President and Chief Executive Officer
expired in July 2004. We expect that a new employment agreement for Mr. Guelpa will be executed in 2009. Mr. Shworan has served as President and Chief Executive Officer of QuoteMedia Ltd., a wholly owned subsidiary of QuoteMedia, Inc.,
since December 30, 2004. Mr. Shworan does not currently have an employment agreement. We expect that an employment agreement for Mr. Shworan will be executed in 2009. We also have no compensatory plan or arrangement with respect to
any executive officer where such plan or arrangement will result in payments to such officer upon or following his resignation, retirement, or other termination of employment with us and our subsidiaries, or as a result of a change-in-control of our
company or a change in the executive officers responsibilities following a change-in-control.

Director Compensation and Other Information

The following table shows the amount of compensation earned by our independent director in 2008. We compensate our independent director
with directors fees and stock options. Options Awards represent the fair value of option awards granted in 2008, computed in accordance with FAS 123R.



|                   |  |                                |        |                  |   |                           |   |           |   |       
|------------------ |  | ------------------------------ | ------ | ---------------- | - | ------------------------- | - | --------- | - | ------
|Name               |  | Fees Earned orPaid in Cash ($) |        | Option Awards($) |   | All OtherCompensation ($) |   | Total ($)
|Robert J. Thompson |  | $                              | 82,020 |                  |  |                           |  |           | $ | 82,020
|                   |  |                                |        |                  |   |                           |   |           |   |       

The Chairman of the Board, Robert J. Thompson, receives a monthly retainer of $6,835. Directors
who are also employees do not receive additional cash compensation for service on our board of directors. All directors receive a grant of 200,000 options to purchase 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 or warrants to purchase additional shares of common stock.



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##### Table of Contents

|ITEM 12. | 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 March 13, 2009 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 of Beneficial Owner (1)                    |  | Number of Shares ofCommon Stock Owned (2) |  | Percentage of Common StockBeneficially Owned (2) |  
|Directors and Executive Officers                |  |                                           |  |                                                  |  
|David M. Shworan (3)                            |  | 35,451,800                                |  | 36.8                                             | %
|R. Keith Guelpa (4)                             |  | 8,241,061                                 |  | 9.2                                              | %
|Robert J. Thompson (5)                          |  | 1,376,136                                 |  | 1.5                                              | %
|Keith J. Randall (6)                            |  | 682,006                                   |  | 0.8                                              | %
|                                                |  |                                          
|All directors and executive officers as a group |  | 45,751,003                                |  | 47.1                                             | %
|                                                |  |                                          
|5% Stockholders (7)                             |  |                                          |  |                                                 |  



|(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 89,371,320 shares of common stock outstanding on March 13, 2009. The numbers and percentages shown include the shares of common
stock actually owned as of March 13, 2009 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 March 13, 2009 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 10,511,800 shares of common stock owned by Mr. Shworan and 17,002,500 shares owned by Mr. Shworans wife. Also includes 1,037,500 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 6,900,000 shares of common stock. See Item 10, Executive Compensation  Employment Agreements.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Represents 6,241,061 shares of our common stock owned directly and 2,000,000 shares of our common stock owned by Mr. Guelpas wife. Mr. Guelpa disclaims ownership of
any shares of common stock or warrants held by his wife.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Represents 807,483 shares of common stock and vested options and warrants to acquire 568,653 shares of common stock.
|--- | --------------------------------------------------------------------------------------------------------------------

|(6) | Represents 460,340 shares of common stock and vested options and warrants to acquire 221,666 shares of common stock.
|--- | --------------------------------------------------------------------------------------------------------------------

|(7) | We are unaware of any stockholders who beneficially own or exercise voting or dispositive control over more than 5% of our common stock.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

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, 2008.



|                                                       |  |                                                                                              |  |                                                                              |      |                                                                                                                                          |          
|------------------------------------------------------ |  | -------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------- | ---- | ---------------------------------------------------------------------------------------------------------------------------------------- | ---------
|Plan Category                                          |  | Number of Securities tobe Issued Upon Exerciseof Outstanding Options,Warrants,
and Rights(a) |  | Weighted AverageExercise Price
ofOutstanding Options,Warrants, and Rights(b) |      | Number of SecuritiesRemaining Available forFuture Issuance UnderEquity CompensationPlans
(ExcludingSecurities Reflected inColumn (a))(c)
|Equity Compensation Plans approved by stockholders     |  | 4,175,000                                                                                    |  | $                                                                            | 0.21 |                                                                                                                                          | 5,902,653
|Equity Compensation Plans not approved by stockholders |  | 9,552,803                                                                                    |  | $                                                                            | 0.16 |                                                                                                                                          | N/A      
|                                                       |  |                                                                                              |  |                                                                              |      |                                                                                                                                          |          
|Total                                                  |  | 13,727,803                                                                                   |  |                                                                              |      |                                                                                                                                          | 5,902,653
|                                                       |  |                                                                                              |  |                                                                              |      |                                                                                                                                          |          

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 were initially reserved for issuance under the 1999 plan. In September 1999, this number was increased to 2,500,000. As of
December 31, 2008, 1,144,817 shares of our common stock had been issued upon exercise of options granted under the 1999 plan, and there were outstanding options to acquire 1,355,183 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.



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##### Table of Contents

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, 2008, 1,277,530 shares of common stock had been issued upon exercise of options granted under the 2003 plan and there were 4,175,000 options outstanding under the 2003
plan.

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



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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.

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
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | 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.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.



|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
|-------- | --------------------------------------------------------------------------

Certain Relationships and Related Parties

The Company has a loan agreement with Bravenet Web
Services, Inc. (Bravenet). The President and Chief Executive Officer of Quotemedia, Ltd., a wholly owned subsidiary, is a control person of Bravenet. At December 31, 2008, the remaining loan balance due to Bravenet including accrued
interest at 10% is $169,016.

From January 1, 2005 to November 30, 2006, Bravenet provided the Company customer promotion and
lead generation services. At December 31, 2008, all amounts due to Bravenet for customer promotion and lead generation services have been accrued in amounts due to related parties, and total $638,621 including accrued interest at 10% per
annum.

On September 29, 2006, Quotemedia, Ltd. purchased the Bravenet business unit that was responsible for providing the Company
customer promotion and lead generation services. The $110,000 purchase price due to Bravenet has been accrued in amounts due to related parties, and remains unpaid as at December 31, 2008. At December 31, 2008, the balance due to Bravenet
for the unpaid purchase price is $125,200 which includes interest accrued at 10%.

Bravenet provides computer hosting and maintenance
services to the Company for approximately $6,000 per month. At December 31, 2008, the balance due to Bravenet for unpaid computer hosting and maintenance services is $139,218. This amount includes interest accrued at 10%.

The Company leases office space from Harrison Avenue Holdings Ltd. (Harrison) for approximately $9,500 per month. The President and Chief
Executive Officer of Quotemedia, Ltd., a wholly owned subsidiary, is a control person of Harrison. At December 31, 2008, all amounts due to Harrison related to the leased office space have been accrued in amounts due to related parties. As at
December 31, 2008, the balance due to Harrison for unpaid office rent is $327,659. This amount includes interest accrued at 10%.



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At December 31, 2008, the Company owed $1,242,100 to an officer of the Company for accrued salary.
This amount includes interest accrued at 10%.

As a matter of policy, all related party transactions are subject to review, approval, or
ratifcation by the Companys Board of Directors. All repayments of amounts due to related parties must be approved by our Board of Directors. Repayments are subject to our company having sufficient cash on hand and are intended not to impair
continuing business operations.

Director Independence

Our Board of Directors has determined, after considering all the relevant facts and circumstances, that Mr. Thompson is an independent director as such term is defined by NASDAQ.



|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES.
|-------- | ---------------------------------------

Aggregate fees billed to our company for the fiscal years ended December 31, 2008 and 2007 by Hein & Associates LLP, our principal accountants, are as follows:



|                   |  |      |        |      |   |       
|------------------ |  | ---- | ------ | ---- | - | ------
|                   |  | 2008 |        | 2007
|Audit Fees         |  | $    | 58,540 |      | $ | 63,890
|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.

All of the
services provided by Hein & Associates LLP described above under the captions Audit Fees, and were approved by our Audit Committee.



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PART IV



|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|-------- | -------------------------------------------

(a) The
following documents are filed as a part of the report:



|(1) | Financial Statements
|--- | --------------------

Financial Statements are listed in
the Index to Consolidated Financial Statements of this report.



|(2) | Financial Statement Schedules
|--- | -----------------------------

No financial statement
schedules are included because such schedules are not applicable, are not required, or because required information is included in the consolidated financial statements or notes thereto.



|(3) | Exhibits
|--- | --------



|              |  |                                                                                                                                                           
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                                                    
|3.1           |  | Second Amended and Restated Articles of Incorporation (2)                                                                                                 
|              | 
|3.2           |  | Amended and Restated Bylaws (2)                                                                                                                           
|              | 
|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          |  | Amended 1999 Equity Incentive Compensation Plan (3)                                                                                                       
|              | 
|10.5          |  | Employment Agreement between the Registrant and David M. Shworan (2)                                                                                      
|              | 
|10.6          |  | Amended Employment Agreement between the Registrant and David M. Shworan (3)                                                                              
|              | 
|10.7          |  | 2003 Equity Incentive Compensation Plan (2)                                                                                                               
|              | 
|21            |  | List of Subsidiaries                                                                                                                                      
|              | 
|23.1          |  | Consent of Hein & Associates LLP, 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.
|--- | -------------------------------------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of 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: March 31, 2009 |  | QUOTEMEDIA, INC.
|                     |  |                 
|                     |  | By:              |  | /s/ R. Keith Guelpa                  
|                     |  |                  |  | R. Keith Guelpa                      
|                     |  |                  |  | President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, 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. Thompson Robert J. Thompson |  | Chairman of the Board                                                                                          |  | March 31, 2009
|                                          |  |                                                                                                               
|/s/ David M. Shworan David M. Shworan     |  | Director                                                                                                       |  | March 31, 2009
|                                          |  |                                                                                                               
|/s/ Keith J. Randall Keith J. Randall     |  | Vice President, Treasurer, Secretary, and Chief Financial Officer (Principal Financial and Accounting Officer) |  | March 31, 2009
|                                          |  |                                                                                                               
|/s/ R. Keith Guelpa R.
Keith Guelpa       |  | Chief Executive Officer, President and Director (Principal Executive Officer)                                  |  | March 31, 2009



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Quotemedia, Inc.

Index to Consolidated Financial Statements



|                                                 |  |           
|------------------------------------------------ |  | ----------
|Report of Independent Registered Accounting Firm |  | F-1       
|                                                 | 
|Consolidated Balance Sheet                       |  | F-2       
|                                                 | 
|Consolidated Statements of Operations            |  | F-3       
|                                                 | 
|Consolidated Statements of Stockholders Deficit |  | F-4       
|                                                 | 
|Consolidated Statements of Cash Flows            |  | F-5       
|                                                 | 
|Notes to Consolidated Financial Statements       |  | F-6  F-20



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REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM

Board of Directors

Quotemedia, Inc.

Fountain Hills, Arizona

We have audited the accompanying consolidated
balance sheet of Quotemedia Inc. and subsidiary as of December 31, 2008 and December 31, 2007 and the related consolidated statements of operations, changes in stockholders deficit and cash flows for the years then ended. 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 audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance
about 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 significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide 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 Quotemedia, Inc. and
Subsidiary as of December 31, 2008 and December 31, 2007, and the results of their operations and their cash flows for the years ending December 31, 2008 and December 31, 2007 in conformity with accounting principles generally
accepted in the United States of America.

We were not engaged to examine managements assertion about the effectiveness of Quotemedia Inc.s
internal control over financial reporting as of December 31, 2008 included in the accompanying Managements Report on Internal Control of Financial reportingand, accordingly, we do not express an opinion thereon.

/s/ HEIN & ASSOCIATES LLP

Denver, Colorado

March 27, 2009



F-1



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##### Table of Contents

QUOTEMEDIA, INC.

CONSOLIDATED BALANCE SHEET

As of
December 31,



|                                                                                                                       |  |      |             |   |      |   |            |  
|---------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ---------- | -
|                                                                                                                       |  | 2008 |             |   | 2007 |  
|ASSETS                                                                                                                 |  |      |             |   |      |   |            |  
|                                                                                                                       |  |     
|Current assets:                                                                                                        |  |      |             |   |      |   |            |  
|Cash                                                                                                                   |  | $    | 536,624     |   |      | $ | 357,316    |  
|Accounts receivable, net                                                                                               |  |      | 370,221     |   |      |   | 299,806    |  
|Forward contract margin deposit                                                                                        |  |      | 68,750      |   |      |   |           |  
|Prepaid expenses                                                                                                       |  |      | 281,929     |   |      |   | 265,868    |  
|                                                                                                                       |  |      |             |   |      |   |            |  
|Total current assets                                                                                                   |  |      | 1,257,524   |   |      |   | 922,990    |  
|                                                                                                                       |  |     
|Deposits                                                                                                               |  |      | 22,998      |   |      |   | 9,027      |  
|Property and equipment, net                                                                                            |  |      | 1,006,693   |   |      |   | 803,117    |  
|Intangible assets                                                                                                      |  |      | 191,862     |   |      |   | 198,050    |  
|                                                                                                                       |  |      |             |   |      |   |            |  
|                                                                                                                       |  |     
|Total assets                                                                                                           |  | $    | 2,479,077   |   |      | $ | 1,933,184  |  
|                                                                                                                       |  |      |             |   |      |   |            |  
|                                                                                                                       |  |     
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                                  |  |      |             |   |      |   |            |  
|                                                                                                                       |  |     
|Current liabilities:                                                                                                   |  |      |             |   |      |   |            |  
|Accounts payable and accrued liabilities                                                                               |  | $    | 939,387     |   |      | $ | 560,333    |  
|Deferred revenue                                                                                                       |  |      | 447,246     |   |      |   | 433,630    |  
|Current portion of amounts due to related parties                                                                      |  |      | 626,729     |   |      |   | 501,642    |  
|                                                                                                                       |  |      |             |   |      |   |            |  
|Total current liabilities                                                                                              |  |      | 2,013,362   |   |      |   | 1,495,605  |  
|                                                                                                                       |  |      |             |   |      |   |            |  
|                                                                                                                       |  |     
|Long-term portion of amounts due to related parties                                                                    |  |      | 2,049,737   |   |      |   | 1,571,085  |  
|                                                                                                                       |  |     
|Stockholders deficit:                                                                                                 |  |      |             |   |      |   |            |  
|Preferred stock, nondesignated, 10,000,000 shares authorized, none issued                                              |  |      |            |   |      |   |           |  
|Common stock, $0.001 par value, 100,000,000 shares authorized; 89,371,320 and 88,763,365 shares issued and outstanding |  |      | 89,372      |   |      |   | 88,764     |  
|Additional paid-in capital                                                                                             |  |      | 8,384,859   |   |      |   | 7,963,299  |  
|Accumulated deficit                                                                                                    |  |      | (10,058,253 | ) |      |   | (9,185,569 | )
|                                                                                                                       |  |      |             |   |      |   |            |  
|Total stockholders deficit                                                                                            |  |      | (1,584,022  | ) |      |   | (1,133,506 | )
|                                                                                                                       |  |     
|Total liabilities and stockholders deficit                                                                            |  | $    | 2,479,077   |   |      | $ | 1,933,184  |  
|                                                                                                                       |  |      |             |   |      |   |            |  

See accompanying notes



F-2



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##### Table of Contents

QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For each of the years ended December 31,



|                                    |  |      |            |   |      |   |            |  
|----------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                    |  | 2008 |            |   | 2007 |  
|LICENSING FEES                      |  | $    | 7,276,980  |   |      | $ | 5,569,107  |  
|                                    |  |     
|COST OF REVENUE                     |  |      | 3,053,275  |   |      |   | 2,386,925  |  
|                                    |  |      |            |   |      |   |            |  
|                                    |  |     
|GROSS PROFIT                        |  |      | 4,223,705  |   |      |   | 3,182,182  |  
|                                    |  |     
|OPERATING EXPENSES                  |  |      |            |   |      |   |            |  
|                                    |  |     
|Sales and marketing                 |  |      | 2,026,063  |   |      |   | 1,854,400  |  
|General and administrative          |  |      | 1,917,482  |   |      |   | 1,588,744  |  
|Software development                |  |      | 1,013,011  |   |      |   | 917,861    |  
|                                    |  |      |            |   |      |   |            |  
|                                    |  |      | 4,956,556  |   |      |   | 4,361,005  |  
|                                    |  |      |            |   |      |   |            |  
|                                    |  |     
|OPERATING LOSS                      |  |      | (732,851   | ) |      |   | (1,178,823 | )
|                                    |  |     
|OTHER INCOME AND (EXPENSE)          |  |      |            |   |      |   |            |  
|                                    |  |     
|Foreign exchange gain (loss)        |  |      | 75,535     |   |      |   | (91,532    | )
|Interest expense (related party)    |  |      | (238,542   | ) |      |   | (239,663   | )
|Loss on disposal of equipment       |  |      | (3,075     | ) |      |   |           |  
|                                    |  |      |            |   |      |   |            |  
|                                    |  |      | (166,082   | ) |      |   | (331,195   | )
|                                    |  |      |            |   |      |   |            |  
|                                    |  |     
|NET LOSS BEFORE INCOME TAXES        |  |      | (898,933   | ) |      |   | (1,510,018 | )
|                                    |  |      |            |   |      |   |            |  
|                                    |  |     
|Income tax benefit (expense)        |  |      | 26,249     |   |      |   | (51,191    | )
|                                    |  |      |            |   |      |   |            |  
|                                    |  |     
|NET LOSS                            |  | $    | (872,684   | ) |      | $ | (1,561,209 | )
|                                    |  |      |            |   |      |   |            |  
|                                    |  |     
|LOSS PER SHARE                      |  |      |            |   |      |   |            |  
|                                    |  |     
|Basic and diluted loss per share    |  | $    | (0.01      | ) |      | $ | (0.02      | )
|                                    |  |      |            |   |      |   |            |  
|                                    |  |     
|WEIGHTED AVERAGE SHARES OUTSTANDING |  |      |            |   |      |   |            |  
|                                    |  |     
|Basic and diluted                   |  |      | 89,125,890 |   |      |   | 69,183,701 |  
|                                    |  |      |            |   |      |   |            |  

See accompanying notes



F-3



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##### Table of Contents

QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT

For the years ended December 31, 2008 and 2007



|                                                                       |  |                 |   |  |                          |        |   |                    |   |           |                           |  |   |             |   |  |   |            |  
|---------------------------------------------------------------------- |  | --------------- | - |  | ------------------------ | ------ | - | ------------------ | - | --------- | ------------------------- |  | - | ----------- | - |  | - | ---------- | -
|                                                                       |  | Common Stock    |   |  | AdditionalPaid-inCapital |        |   | AccumulatedDeficit |   |           | TotalStockholdersDeficit | 
|                                                                       |  | Number ofShares |   |  | Amount                   |        |   |                    |  
|Balance, January 1, 2007                                               |  | 65,223,733      |   |  | $                        | 65,223 |   |                    | $ | 6,652,387 |                           |  | $ | (7,624,360  | ) |  | $ | (906,750   | )
|                                                                       |  |                 |   |  |                         
|Stock options and warrants exercised                                   |  | 24,849,226      |   |  |                          | 24,851 |   |                    |   | 1,396,128 |                           |  |   |            |   |  |   | 1,420,979  |  
|                                                                       |  |                 |   |  |                         
|Shares returned to the Company for exercise of stock option, cancelled |  | (1,309,594      | ) |  |                          | (1,310 | ) |                    |   | (362,169  | )                         |  |   |            |   |  |   | (363,479   | )
|                                                                       |  |                 |   |  |                         
|Stock-based compensation                                               |  |                |   |  |                          |       |   |                    |   | 276,953   |                           |  |   |            |   |  |   | 276,953    |  
|                                                                       |  |                 |   |  |                         
|Net loss                                                               |  |                |   |  |                          |       |   |                    |   |          |                           |  |   | (1,561,209  | ) |  |   | (1,561,209 | )
|                                                                       |  |                 |   |  |                          |        |   |                    |   |           |                           |  |   |             |   |  |   |            |  
|                                                                       |  |                 |   |  |                         
|Balance, December 31, 2007                                             |  | 88,763,365      |   |  | $                        | 88,764 |   |                    | $ | 7,963,299 |                           |  | $ | (9,185,569  | ) |  | $ | (1,133,506 | )
|                                                                       |  |                 |   |  |                          |        |   |                    |   |           |                           |  |   |             |   |  |   |            |  
|                                                                       |  |                 |   |  |                         
|Stock options and warrants exercised                                   |  | 607,955         |   |  |                          | 608    |   |                    |   | 26,892    |                           |  |   |            |   |  |   | 27,500     |  
|                                                                       |  |                 |   |  |                         
|Stock-based compensation                                               |  |                |   |  |                          |       |   |                    |   | 394,668   |                           |  |   |            |   |  |   | 394,668    |  
|                                                                       |  |                 |   |  |                         
|Net loss                                                               |  |                |   |  |                          |       |   |                    |   |          |                           |  |   | (872,684    | ) |  |   | (872,684   | )
|                                                                       |  |                 |   |  |                          |        |   |                    |   |           |                           |  |   |             |   |  |   |            |  
|                                                                       |  |                 |   |  |                         
|Balance, December 31, 2008                                             |  | 89,371,320      |   |  | $                        | 89,372 |   |                    | $ | 8,384,859 |                           |  | $ | (10,058,253 | ) |  | $ | (1,584,022 | )
|                                                                       |  |                 |   |  |                          |        |   |                    |   |           |                           |  |   |             |   |  |   |            |  

See accompanying notes



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##### Table of Contents

QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For each of the years ended December 31,



|                                                                                |  |      |          |   |      |   |            |  
|------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | ---------- | -
|                                                                                |  | 2008 |          |   | 2007 |  
|OPERATING ACTIVITIES                                                            |  |      |          |   |      |   |            |  
|                                                                                |  |     
|Net loss                                                                        |  | $    | (872,684 | ) |      | $ | (1,561,209 | )
|                                                                                |  |     
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |      |          |   |      |   |            |  
|Depreciation and amortization                                                   |  |      | 435,682  |   |      |   | 238,702    |  
|Loss on disposal of equipment                                                   |  |      | 3,075    |   |      |   |           |  
|Bad debt expense                                                                |  |      | 157,487  |   |      |   | 144,977    |  
|Stock-based compensation expense                                                |  |      | 394,668  |   |      |   | 276,953    |  
|Noncash barter revenue                                                          |  |      | (360,000 | ) |      |   | (360,000   | )
|Noncash barter advertising expense                                              |  |      | 360,000  |   |      |   | 330,000    |  
|Changes in assets and liabilities:                                              |  |      |          |   |      |   |            |  
|Accounts receivable                                                             |  |      | (227,902 | ) |      |   | (274,750   | )
|Prepaid expenses                                                                |  |      | (16,061  | ) |      |   | (29,661    | )
|Deposits                                                                        |  |      | (13,971  | ) |      |   | 2,532      |  
|Accounts payable and amounts due to related parties                             |  |      | 982,793  |   |      |   | 725,758    |  
|Deferred revenue                                                                |  |      | 13,616   |   |      |   | 69,845     |  
|                                                                                |  |      |          |   |      |   |            |  
|Net cash provided by (used in) operating activities                             |  |      | 856,703  |   |      |   | (436,853   | )
|                                                                                |  |      |          |   |      |   |            |  
|                                                                                |  |     
|INVESTING ACTIVITIES                                                            |  |      |          |   |      |   |            |  
|                                                                                |  |     
|Purchase of fixed assets                                                        |  |      | (96,582  | ) |      |   | (64,946    | )
|Purchase of intangible assets                                                   |  |      |         |   |      |   | (6,733     | )
|Capitalized application software                                                |  |      | (539,563 | ) |      |   | (492,625   | )
|Forward contract margin deposit                                                 |  |      | (68,750  | ) |      |   |           |  
|                                                                                |  |      |          |   |      |   |            |  
|Net cash used in investing activities                                           |  |      | (704,895 | ) |      |   | (564,304   | )
|                                                                                |  |      |          |   |      |   |            |  
|                                                                                |  |     
|FINANCING ACTIVITIES                                                            |  |      |          |   |      |   |            |  
|                                                                                |  |     
|Proceeds from exercise of stock options                                         |  |      | 27,500   |   |      |   | 7,500      |  
|Repayment of amounts due to related parties                                     |  |      |         |   |      |   | (35,278    | )
|Loans from related parties                                                      |  |      |         |   |      |   | 500,000    |  
|                                                                                |  |      |          |   |      |   |            |  
|Net cash provided by financing activities                                       |  |      | 27,500   |   |      |   | 472,222    |  
|                                                                                |  |      |          |   |      |   |            |  
|                                                                                |  |     
|Net increase (decrease) in cash                                                 |  |      | 179,308  |   |      |   | (528,935   | )
|                                                                                |  |     
|Cash, beginning of period                                                       |  |      | 357,316  |   |      |   | 886,251    |  
|                                                                                |  |      |          |   |      |   |            |  
|                                                                                |  |     
|Cash, end of period                                                             |  | $    | 536,624  |   |      | $ | 357,316    |  
|                                                                                |  |      |          |   |      |   |            |  

See supplementary information (note 10)

See accompanying notes



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.
SIGNIFICANT ACCOUNTING POLICIES

a) Nature of operations

We are a software developer and distributor of financial market data and related services to a global marketplace. We specialize in the collection, aggregation, and delivery of both delayed and real-time financial data content via the
Internet. We develop and license software components that deliver dynamic content to banks, brokerage firms, financial institutions, mutual fund companies, online information and financial portals, media outlets, public companies, and corporate
Intranets.

b) Basis of consolidation

The consolidated
financial statements include the operations of Quotemedia, Ltd., a wholly owned subsidiary of Quotemedia, Inc. All intercompany transactions and balances have been eliminated.

c) Foreign currency translation and transactions

The U.S. dollar is the functional currency of all our
companys operations. Foreign currency asset and liability amounts are remeasured into U.S. dollars at end-of-period exchange rates, except for equipment and intangible assets, which are remeasured at historical rates. Foreign currency income
and expenses are remeasured at average exchange rates in effect during the year, except for expenses related to balance sheet amounts remeasured at historical exchange rates. Exchange gains and losses arising from remeasurement of foreign
currency-denominated monetary assets and liabilities are included in income in the period in which they occur.

d) Foreign Exchange Forward Contracts

A significant portion of our expenses are paid in Canadian dollars, therefore changes to the exchange rate between the U.S. and Canadian dollar affect
our operating results. To manage this exchange rate risk, we utilize forward contracts to purchase Canadian dollars. We do not enter into foreign exchange forward contracts for trading purposes. Changes in fair value for these instruments are
immediately recognized in earnings and included in our foreign exchange gain (loss). At December 31, 2008, we have forward contracts to purchase a total of $1,678,014 Canadian dollars ($US 1,375,000) at an average exchange rate of 1.2204, with
maturities ranging from one to 12 months. The change in fair value recognized in earnings for the year ended December 31, 2008 is a loss of $2,728. This fair value was determined to be a level 2 fair value as that term is defined in SFAS
No. 157. We are required to maintain a margin deposit with a foreign exchange corporation equal to 5% of the value of each forward contract outstanding. We have margin deposits totaling $68,750 related to forward contracts outstanding at
December 31, 2008.

e) 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.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



f) Allowances for doubtful accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of the Companys customers to make required payments. The Company determines the allowance by reviewing the age of
the receivables and assessing the anticipated ability of customers to pay. No collateral is required for any of the receivables. If the financial condition of our customers were to deteriorate, adversely affecting their ability to make payments,
additional allowances would be required. The allowance for doubtful accounts was $73,430 and $52,585, respectively, as at December 31, 2008 and 2007.

g) Property and equipment

Fixed assets are recorded at cost less accumulated depreciation. Furniture and equipment are depreciated using
the straight-line method over their estimated useful lives of five years. Leasehold improvements are amortized using the straight-line method over the terms of the respective leases or useful lives, whichever is shorter. Retirements, sales and
disposals of assets are recorded by removing the cost and accumulated depreciation from the asset and accumulated depreciation accounts with the resulting gain or loss reflected in income.

Capitalized software costs include costs incurred in connection with the development of software and purchased software. These costs relate to software used by
subscribers to access, manage and analyze information in the Companys databases. Capitalized costs associated with internally developed software are amortized over three years which is their estimated economic life.

h) Earnings 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 2008 and 2007 all common stock equivalents were anti-dilutive.

i) Stock-based compensation

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



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Total estimated stock-based compensation expense, related to all of the Companys stock-based awards, recognized
for the years ended December 31, 2008 and 2007 was comprised as follows:



|                               |  |      |         |      |   |        
|------------------------------ |  | ---- | ------- | ---- | - | -------
|                               |  | 2008 |         | 2007
|Sales and marketing            |  | $    | 239,456 |      | $ | 85,722 
|General and administrative     |  |      | 18,856  |      |   | 17,709 
|Software development           |  |      | 136,356 |      |   | 173,522
|                               |  |      |         |      |   |        
|Total stock-based compensation |  | $    | 394,668 |      | $ | 276,953
|                               |  |      |         |      |   |        

At December 31, 2008 there was $179,790 of unrecognized compensation cost related to non-vested share-based
payments which is expected to be recognized over a weighted-average period of 1.21 years.

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



|                                               |  |      |      |   |      |   |           |  
|---------------------------------------------- |  | ---- | ---- | - | ---- | - | --------- | -
|                                               |  | 2008 |      |   | 2007 |  
|Expected dividend yield                        |  |      |     |   |      |   |          |  
|Expected stock price volatility                |  |      | 103  | % |      |   | 93        | %
|Risk-free interest rate                        |  |      | 4    | % |      |   | 4         | %
|Expected life of options                       |  |      | 5.2  |   |      |   | 4.7 years |  
|Weighted average fair value of options granted |  | $    | 0.14 |   |      | $ | 0.14      |  

Expected volatility is based on the historical volatility of the Companys share price in the period prior to
option grant equivalent to the expected life of the options. The expected term is determined under the simplified method as allowed under the provisions of the Securities and Exchange Commissions Staff Accounting Bulletins
No. 107 and No. 110, and represents the period of time that options granted are expected to be outstanding. We believe that it is appropriate to use this simplified method as there is not sufficient historical exercise data to provide a
reasonable basis upon which to estimate an expected term. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

j) 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.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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. In 2008, the Company recorded Canadian income tax benefit of $26,249. In 2007 the Company recorded an expense of
$51,191 (see note 6).

k) Use of estimates

The
preparation of financial statements in conformity with generally accepted accounting principals requires management to make estimates and assumptions that affect 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.

l)
Software development expenses

Software development costs incurred prior to establishing the technological feasibility of our software application
products, and costs incurred to maintain existing products and services are expensed as incurred. The Company expensed $1,013,011 and $917,861 in software development costs during the years ended December 31, 2008 and 2007, respectively.

m) Revenue recognition

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

n) Barter revenue

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



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The following table summarizes our barter revenue transactions for the years ended December 31, 2008 and 2007:



|                         |  |      |         |      |   |        
|------------------------ |  | ---- | ------- | ---- | - | -------
|                         |  | 2008 |         | 2007
|Barter revenue earned    |  | $    | 360,000 |      | $ | 360,000
|Advertising credits used |  |      | 360,000 |      | $ | 330,000

o) Financial instruments

Financial instruments consist principally of cash, accounts receivables, foreign exchange forward contracts, accounts payable and notes payable. We believe that the fair value of financial instruments approximates the
recorded book value of those instruments due to the short term nature of the instruments, or stated interest rates that approximate market interest rates. Forward contract fair value is disclosed above in Note 1 d).

p) New accounting standards

In September 2006, FASB issued SFAS
No. 157 entitled Fair Value Measurements (FAS No. 157). In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157, which provides a one year
deferral of the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. Therefore, the Company has adopted the
provisions of SFAS 157 with respect to its financial assets and liabilities only. This statement clarifies the definition of fair value to provide greater consistency and clarity on existing accounting pronouncements that require fair value
measurements, provides a framework for using fair value to measure assets and liabilities and expands disclosures about fair value measurements. FAS No. 157 is required to be applied for fiscal years beginning after November 15, 2007 and
interim periods within that year. The implementation of FAS No. 157 did not have a material impact on our consolidated financial statements.

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



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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

q) Reclassification

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

2. LIQUIDITY

The Company has an accumulated deficit of $10,058,253, and for the year ended December 31, 2008 had a net loss of $872,684. As a result, there are concerns about
the liquidity of our company at December 31, 2008. The following discussion addresses those concerns.

Net cash of $856,703 was provided by operating
activities, and although we have a working capital deficit of $755,838 as at December 31, 2008, current liabilities include $626,729 in amounts due to related parties and $447,246 in deferred revenue. All repayments of amounts due to related
parties must be approved by our Board of Directors. Repayments are subject to our company having sufficient cash on hand and are intended not to impair continuing business operations. The expected costs necessary to realize the deferred revenue in
2009 are minimal.

Implementation of our business plan may require additional financing. Additional financings may come from future equity or debt
offerings that could result in dilution to our stockholders. Although the Company must ultimately achieve profitable operations, based on the factors discussed above, management believes that our cash on hand and cash to be generated from operations
will be sufficient to fund operations through fiscal 2009.



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



3. PROPERTY AND EQUIPMENT



|                                 |  |      |           |   |      |   |           |  
|-------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|As at December 31,               |  | 2008 |           |   | 2007 |  
|Computer equipment               |  | $    | 341,674   |   |      | $ | 265,241   |  
|Office furniture and equipment   |  |      | 64,079    |   |      |   | 65,004    |  
|Leasehold improvements           |  |      | 33,868    |   |      |   | 29,478    |  
|Capitalized application software |  |      | 1,349,314 |   |      |   | 809,751   |  
|                                 |  |      |           |   |      |   |           |  
|Total property and equipment     |  |      | 1,788,935 |   |      |   | 1,169,474 |  
|Less: accumulated depreciation   |  |      | (782,242  | ) |      |   | (366,357  | )
|                                 |  |      |           |   |      |   |           |  
|Property and equipment, net      |  | $    | 1,006,693 |   |      | $ | 803,117   |  
|                                 |  |      |           |   |      |   |           |  

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



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

For the years ended December 31, 2008 and 2007, the Company capitalized $539,563 and $492,625 of costs,
respectively, related to the development of new software applications and enhancements made to existing software applications. Software applications are used by our subscribers to access, manage and analyze information in our databases. For the
years ended December 31, 2008 and 2007, amortization expenses associated with the internally developed application software was $351,324 and $169,265 respectively. At December 31, 2008, the remaining book value of the capitalized
application software was $775,704.

Depreciation expense for equipment and leaseholds for the years ended December 31, 2008 and 2007 was $78,170 and
$67,294 respectively.



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##### Table of Contents

QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



4. INTANGIBLE ASSETS



|                                                   |  |      |         |   |      |   |         |  
|-------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|As at December 31,                                 |  | 2008 |         |   | 2007 |  
|Amortized intangible assets:                       |  |      |         |   |      |   |         |  
|Purchase option for office building                |  | $    | 10,000  |   |      | $ | 10,000  |  
|Software licenses                                  |  |      | 70,256  |   |      |   | 70,256  |  
|Domain names                                       |  |      | 10,652  |   |      |   | 10,652  |  
|                                                   |  |      |         |   |      |   |         |  
|                                                   |  |      | 90,908  |   |      |   | 90,908  |  
|                                                   |  |      |         |   |      |   |         |  
|Unamortized intangible assets:                     |  |      |         |   |      |   |         |  
|Goodwill associated with purchase of business unit |  |      | 110,000 |   |      |   | 110,000 |  
|                                                   |  |      |         |   |      |   |         |  
|Total intangible assets                            |  |      | 200,908 |   |      |   | 200,908 |  
|Less: accumulated amortization                     |  |      | (9,046  | ) |      |   | (2,858  | )
|                                                   |  |      |         |   |      |   |         |  
|Intangible assets, net                             |  | $    | 191,862 |   |      | $ | 198,050 |  
|                                                   |  |      |         |   |      |   |         |  

Amortization for amortized intangible assets is calculated on a straight-line basis over the assets estimated
useful lives. The useful life of the purchase option is 5 years which is the term of the option. The useful life of the software licenses and domain names is estimated to be 20 years. For the years ended December 31, 2008 and 2007, amortization
expense for amortized intangible assets was $6,188 and $2,143 respectively. In accordance with SFAS 142, we evaluate goodwill for impairment. Through December 31, 2008 we have not had any goodwill impairment.

5. RELATED PARTIES

The following table summarizes amounts due to
related parties at December 31, 2008:



|                          |  |         |         |             |   |          
|------------------------- |  | ------- | ------- | ----------- | - | ---------
|                          |  | Current |         | Non current
|Purchase of business unit |  | $       | 125,200 |             | $ |         
|Computer hosting services |  |         | 139,218 |             |   |         
|Office rent               |  |         | 327,659 |             |   |         
|Other                     |  |         | 34,652  |             |   |         
|Loan                      |  |         |        |             |   | 169,016  
|Lead generation services  |  |         |        |             |   | 638,621  
|Accrued salary            |  |         |        |             |   | 1,242,100
|                          |  |         |         |             |   |          
|                          |  | $       | 626,729 |             | $ | 2,049,737
|                          |  |         |         |             |   |          



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



On September 29, 2006, Quotemedia, Ltd. purchased the Bravenet business unit that was responsible for providing
the Company customer promotion and lead generation services. The $110,000 purchase price due to Bravenet has been accrued in amounts due to related parties, and remains unpaid as at December 31, 2008. At December 31, 2008, the balance due
to Bravenet for the unpaid purchase price is $125,200 which includes interest accrued at 10%.

Bravenet provides computer hosting and maintenance services
to the Company for approximately $6,000 per month. At December 31, 2008, the balance due to Bravenet for unpaid computer hosting and maintenance services is $139,218. This amount includes interest accrued at 10%.

The Company leases office space from Harrison Avenue Holdings Ltd. (Harrison) for approximately $9,500 per month. The President and Chief Executive Officer
of Quotemedia, Ltd., a wholly owned subsidiary, is a control person of Harrison. At December 31, 2008, all amounts due to Harrison related to the leased office space have been accrued in amounts due to related parties. As at December 31,
2008, the balance due to Harrison for unpaid office rent is $327,659. This amount includes interest accrued at 10%.

The Company has a loan agreement with
Bravenet Web Services, Inc. (Bravenet). The President and Chief Executive Officer of Quotemedia, Ltd., a wholly owned subsidiary, is a control person of Bravenet. At December 31, 2008, the remaining loan balance due to Bravenet
including accrued interest at 10% is $169,016.

From January 1, 2005 to November 30, 2006, Bravenet provided the Company customer promotion and
lead generation services. At December 31, 2008, all amounts due to Bravenet for customer promotion and lead generation services have been accrued in amounts due to related parties, and total $638,621 including accrued interest at 10% per
annum.

At December 31, 2008, the Company owed $1,242,100 to an officer of the Company for accrued salary. This amount includes interest accrued at
10%.

As a matter of policy, all related party transactions are subject to review and approval by the Companys Board of Directors. All repayments of
amounts due to related parties must be approved by our Board of Directors. Repayments are subject to our company having sufficient cash on hand and are intended not to impair continuing business operations.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



6. INCOME TAXES

We account for income taxes according to the provisions of Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. SFAS No. 109 prescribes an asset and liability approach for computing
deferred income taxes.

Reconciliations of income taxes computed at the statutory federal rate to income tax expense (benefit) for the years ended
December 31, 2008 and 2007 are as follows:



|                                                     |  |      |          |   |      |   |          |  
|---------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|                                                     |  | 2008 |          |   | 2007 |  
|Tax provision (benefit) at the statutory rate of 34% |  | $    | (303,562 | ) |      | $ | (523,668 | )
|State income taxes, net of federal income tax        |  |      | (27,283  | ) |      |   | (50,827  | )
|Stock-based compensation                             |  |      | 134,187  |   |      |   | 94,164   |  
|Change in NOL                                        |  |      | 565,875  |   |      |   |         |  
|Change in valuation allowance and other              |  |      | (369,217 | ) |      |   | 480,331  |  
|Canadian income tax expense (benefit)                |  |      | (26,249  | ) |      |   | 51,191   |  
|                                                     |  |      |          |   |      |   |          |  
|Income tax expense (benefit)                         |  | $    | (26,249  | ) |      | $ | 51,191   |  
|                                                     |  |      |          |   |      |   |          |  

In 2008, the Company recorded Canadian income tax benefit of $26,249. The Company does not have any material
Canadian deferred tax assets or deferred tax liabilities.

As of December 31, 2008, we had net operating loss carryforwards for federal and state
income tax reporting purposes amounting to approximately $7,900,000 and $2,500,000 which expire in varying amounts through the year 2027.

The components
of our deferred tax asset (liabilities) at December 31, 2008 were as follows:



|                                              |  |   |            |  
|--------------------------------------------- |  | - | ---------- | -
|Tax effect of net operating loss carryforward |  | $ | 2,761,000  |  
|Accrued liabilities                           |  |   | 767,000    |  
|Property & equipment                          |  |   | (19,000    | )
|Capitalized software                          |  |   | (288,000   | )
|Other                                         |  |   | 27,000     |  
|Less valuation allowance                      |  |   | (3,248,000 | )
|                                              |  |   |            |  
|Net deferred tax asset                        |  | $ |           |  
|                                              |  |   |            |  

A valuation allowance has been recognized to offset the entire effect of the Companys net deferred tax asset
as the realization of this deferred tax benefit is uncertain.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



7. STOCKHOLDERS DEFICIT

a) Preferred shares

We are authorized to issue up to 10,000,000 non-designated preferred shares at the Board of
Directors discretion. As at December 31, 2008 no preferred shares have been issued.

b) Common stock

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

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

c) Stock option plan

We have stock option plans whereby shares of
our common stock may be issued pursuant to the exercise of stock options granted to employees, officers, directors, advisors, and our independent contractors. The exercise price of the common stock underlying an option will be determined by the
Board of Directors or compensation committee and may be equal to, greater than, or less than the market value of our common stock at the date of grant but in no event less than 50% of such market value. The options generally vest in one to four
years unless, at the discretion of the Board of Directors, alternative vesting methods are allowed. The term of each option is determined at the time of grant and may extend to a maximum of ten years. At December 31, 2008, we had reserved
12,500,000 options for issuance under the stock option plan. Options may also be granted outside our stock option plan. Options granted outside the plan generally contain terms that are more restrictive in nature and have a maximum expiration term
of ten years. We may grant an unlimited number of options outside our stock option plan at the discretion of the Board of Directors.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The following table represents stock option and warrant activity for the year ended December 31, 2008:



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

The following table summarizes our non-vested stock option activity for the year ended December 31, 2008:



|                                                           |  |                     |   |  |                                      |     
|---------------------------------------------------------- |  | ------------------- | - |  | ------------------------------------ | ----
|                                                           |  | Options andWarrants |   |  | Weighted-AverageGrant DateFair
Value
|Non-vested stock options and warrants at December 31, 2007 |  | 4,525,952           |   |  | $                                    | 0.20
|                                                           |  |                     |   |  |                                      |     
|                                                           |  |                    
|Granted during the period                                  |  | 400,000             |   |  | $                                    | 0.18
|Vested during the period                                   |  | (2,746,485          | ) |  | $                                    | 0.20
|Forfeited during the period                                |  | (270,000            | ) |  | $                                    | 0.24
|                                                           |  |                     |   |  |                                      |     
|                                                           |  |                    
|Non-vested stock options and warrants at December 31, 2008 |  | 1,909,467           |   |  | $                                    | 0.19
|                                                           |  |                     |   |  |                                      |     



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|           |  |                                      |  |                                          |  |                              |      |                                      |           |                              |   |     
|---------- |  | ------------------------------------ |  | ---------------------------------------- |  | ---------------------------- | ---- | ------------------------------------ | --------- | ---------------------------- | - | ----
|           |  | Options and Warrants Outstanding     |  | Options and WarrantsExercisable         
|           |  | NumberOutstanding atDecember 31,2008 |  | WeightedAverageRemainingContractual Life |  | WeightedAverageExercisePrice |      | NumberExercisable atDecember 31,2008 |           | WeightedAverageExercisePrice
|$0.05-0.10 |  | 5,300,000                            |  | 1.43                                     |  | $                            | 0.08 |                                      | 5,300,000 |                              | $ | 0.08
|$0.11-0.30 |  | 6,927,803                            |  | 6.70                                     |  | $                            | 0.19 |                                      | 5,078,753 |                              | $ | 0.19
|$0.31-0.50 |  | 1,500,000                            |  | 2.37                                     |  | $                            | 0.40 |                                      | 1,500,000 |                              | $ | 0.40

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

As at December 31, 2008 all stock options and warrants have been granted with exercise prices equal to or
greater than the market value of the underlying common shares on the date of grant.

At December 31, 2008 the aggregate intrinsic value of options and
warrants outstanding was $23,000 and the aggregate intrinsic value of options and warrants exercisable was $23,000. Total intrinsic value of options exercised during the year ended December 31, 2008 was $73,250. The intrinsic value of stock
options and warrants are calculated as the amount by which the market price of our common stock exceeds the exercise price of the option or warrant.

The
Company is authorized to issue up to 100,000,000 common shares and 10,000,000 non-designated preferred shares. Until such time as the Company is able to increase its authorized number of shares of common stock, in the event that an exercise of
warrants or stock options would result in the number of issued common shares exceeding the authorized limit, the Company would designate the preferred shares with the same rights and preferences as the common shares to accommodate the exercise of
the options or warrants.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



8. LOSS PER SHARE

Basic earnings per share is calculated by dividing the net income applicable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing net
income 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 exercised, using the treasury stock method. Due to the net loss incurred for the years ended 2008 and 2007, 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:



|                                                                                                                    |  |      |            |   |      |   |            |  
|------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                                                    |  | 2008 |            |   | 2007 |  
|Numerator:                                                                                                          |  |      |            |   |      |   |            |  
|Net loss                                                                                                            |  | $    | (872,684   | ) |      | $ | (1,561,209 | )
|                                                                                                                    |  |      |            |   |      |   |            |  
|                                                                                                                    |  |     
|Denominator:                                                                                                        |  |      |            |   |      |   |            |  
|Weighted average shares outstanding - basic and diluted                                                             |  |      | 89,125,890 |   |      |   | 69,183,701 |  
|                                                                                                                    |  |      |            |   |      |   |            |  
|                                                                                                                    |  |     
|Loss per share - basic and diluted                                                                                  |  | $    | (0.01      | ) |      | $ | (0.02      | )
|                                                                                                                    |  |      |            |   |      |   |            |  
|                                                                                                                    |  |     
|Stock options and warrants excluded from the calculation of dilutive loss per share because they were anti-dilutive |  |      | 13,727,803 |   |      |   | 14,565,803 |  
|                                                                                                                    |  |      |            |   |      |   |            |  

9. COMMITMENTS AND CONTINGENCIES

We have office lease commitments totaling $282,643 in 2009, $184,239 in 2010, and $35,119 in 2011.



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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



10. SUPPLEMENTARY CASH FLOW INFORMATION



|                                                             |  |      |       |      |   |        
|------------------------------------------------------------ |  | ---- | ----- | ---- | - | -------
|                                                             |  | 2008 |       | 2007
|Cash paid for Interest                                       |  | $    | 8,364 |      | $ | 10,922 
|                                                             |  |      |       |      |   |        
|                                                             |  |     
|Cash received for Interest                                   |  |      | 3,988 |      |   | 17,697 
|                                                             |  |      |       |      |   |        
|                                                             |  |     
|Cash paid for taxes                                          |  |      |      |      |   |       
|                                                             |  |      |       |      |   |        
|                                                             |  |     
|Exercise of stock options with mature shares of common stock |  |      |      |      |   | 363,479
|                                                             |  |      |       |      |   |        

As discussed in Note 7 b), in February 2008, a former director of the Company exercised 75,000 warrants at an
exercise price of $0.05. A net of 57,955 shares of common stock were issued as the Company repurchased 17,045 shares of common stock to pay the total exercise cost of $3,750. The repurchased common stock was valued at a stock price of $0.22 per
share which was the closing price of our common stock on the date of the transaction. Pursuant to the terms of the option agreements, the Companys Board of Director is required to approve the repurchase of the shares.



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