QUOTEMEDIA INC - Quarter Report: 2008 June (Form 10-Q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

For the quarterly period ended June 30, 2008

OR

For the transition period                          to                         

Commission File Number: 0-28599

QUOTEMEDIA, INC.

(Exact name of registrant as specified in its charter)

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

(Address of Principal Executive Offices)

(480) 905-7311

(Registrant’s Telephone Number, Including Area Code)

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

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

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

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

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QUOTEMEDIA, INC.

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

INDEX

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QUOTEMEDIA, INC.

CONSOLIDATED BALANCE SHEETS

See accompanying notes

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QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

See accompanying notes

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QUOTEMEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

See supplementary information (note 6)

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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

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

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

2. SIGNIFICANT ACCOUNTING POLICIES

a) Nature of operations

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

b) Basis of consolidation

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

c) Revenue recognition

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

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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

d) Barter revenue

The Company licenses one of its portfolio management applications in exchange for advertising services of a customer, referred to as “barter revenue”, whereby advertising credits are received in exchange for subscription services. This revenue is recognized in the period in which the applications are licensed based on the fair market value of the services delivered. The Company determines the fair market value of the service delivered based upon amounts charged for similar services in non-barter arrangements within the previous six-month period. The Company also ensures that the value of barter delivered does not exceed the value of cash based revenue in any period. Unused advertising credits are reflected as prepaid expenses. As at June 30, 2008, $180,000 in unused advertising credits was included in prepaid expenses.

The following table summarizes our barter revenue transactions for the three and six months ended June 30, 2008 and 2007:

e) Property and equipment

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:

For the three and six months ended June 30, 2008, the Company capitalized $139,210 and $267,528 of costs, respectively, related to the development of new software applications and enhancements made to existing software applications. Software applications are used by our subscribers to access, manage and analyze information in our databases. For the three months ended June 30, 2008 and

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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2007, amortization expenses associated with the internally developed application software was $81,967 and $36,245 respectively. For the six months ended June 30, 2008 and 2007, amortization expenses associated with the internally developed application software was $153,080 and $64,927 respectively. At June 30, 2008, the remaining book value of the application software was $701,913.

Depreciation expense for equipment and leaseholds for the three months ended June 30, 2008 and 2007 was $18,762 and $16,815 respectively. Depreciation expense for the six months ended June 30, 2008 and 2007 was $36,541 and $32,452 respectively.

f) Intangible assets

Amortization for amortized intangible assets is calculated on a straight-line basis over the assets estimated useful lives. The useful life of the purchase option is 5 years which is the term of the option. The useful life of software licenses and domain names is estimated to be 20 years. For the three months ended June 30, 2008 and 2007, amortization expense for amortized intangible assets was $1,547 and $1,179 respectively. For the six months ended June 30, 2008 and 2007, amortization expense for amortized intangible assets was $3,094 and $1,715 respectively.

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

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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

g) Stock-based compensation

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

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

At June 30, 2008 there was $301,119 of unrecognized compensation cost related to non-vested share-based payments which is expected to be recognized over a weighted-average period of 1.54 years.

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

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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

h) Software development expenses

Software development costs incurred prior to establishing the technological feasibility of our software application products, and costs incurred to maintain existing products and services are expensed as incurred. The Company expensed $244,875 and $236,574 in software development costs during the three months ended June 30, 2008 and 2007, respectively. The Company expensed $517,934 and $411,227 in software development costs during the six months ended June 30, 2008 and 2007, respectively.

i) New accounting standards

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

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

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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

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

j) Reclassification

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

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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

3. RELATED PARTIES

The Company has a loan agreement with Bravenet Web Services, Inc. (“Bravenet”). The President and Chief Executive Officer of Quotemedia, Ltd., a wholly owned subsidiary, is a control person of Bravenet. At June 30, 2008, the remaining loan balance due to Bravenet including accrued interest at 10% is $160,806.

From January 1, 2005 to November 30, 2006, Bravenet provided the Company customer promotion and lead generation services. At June 30, 2008, all amounts due to Bravenet for customer promotion and lead generation services have been accrued in amounts due to related parties, and total $607,601 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 June 30, 2008. At June 30, 2008, the balance due to Bravenet for the unpaid purchase price is $144,059 which includes interest accrued at 10%.

Bravenet provides computer hosting and maintenance services to the Company for approximately $7,500 per month. At June 30, 2008, the balance due to Bravenet for unpaid computer hosting and maintenance services is $117,414. This amount includes interest accrued at 10%.

The Company leases office space from Harrison Avenue Holdings Ltd. (“Harrison”) for approximately $11,000 per month. The President and Chief Executive Officer of Quotemedia, Ltd., a wholly owned subsidiary, is a control person of Harrison. At June 30, 2008, all amounts due to Harrison related to the leased office space have been accrued in amounts due to related parties. As at June 30, 2008, the balance due to Harrison for unpaid office rent is $322,605. This amount includes interest accrued at 10%.

At June 30, 2008, the Company owed $1,036,046 to an officer of the Company for accrued salary. This amount includes interest accrued at 10%.

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

4. STOCKHOLDERS’ DEFICIT

a) Preferred shares

We are authorized to issue up to 10,000,000 non-designated preferred shares at the Board of Directors’ discretion. As at June 30, 2008 no preferred shares have been issued.

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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

b) Common stock

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

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

c) Stock option plan

We have stock option plans whereby shares of our common stock may be issued pursuant to the exercise of stock options granted to employees, officers, directors, advisors, and our independent contractors. The exercise price of the common stock underlying an option will be determined by the Board of Directors or compensation committee and may be equal to, greater than, or less than the market value of our common stock at the date of grant but in no event less than 50% of such market value. The options generally vest in one to four years unless, at the discretion of the Board of Directors, alternative vesting methods are allowed. The term of each option is determined at the time of grant and may extend to a maximum of ten years. At June 30, 2008, we had reserved 12,500,000 options for issuance under the stock option plan. Options may also be granted outside our stock option plan. Options granted outside the plan generally contain terms that are more restrictive in nature and have a maximum expiration term of ten years. We may grant an unlimited number of options outside our stock option plan at the discretion of the Board of Directors.

The following table represents stock option and warrant activity for the six months ended June 30, 2008:

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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

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 June 30, 2008 all stock options and warrants have been granted with exercise prices equal to or greater than the market value of the underlying common shares on the date of grant.

At June 30, 2008 the aggregate intrinsic value of options and warrants outstanding was $349,000 and the aggregate intrinsic value of options and warrants exercisable was $349,000. Total intrinsic value of options exercised during the six months ended June 30, 2008 was $73,250. The intrinsic value of stock options and warrants are calculated as the amount by which the market price of our common stock exceeds the exercise price of the option or warrant.

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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

d) Loss per share

The basic and diluted net loss per share for the three months ended June 30, 2008 and 2007 was $(0.00) per share and $(0.01) per share, respectively. The basic and diluted net loss per share for the six months ended June 30, 2008 and 2007 was $(0.01) per share and $(0.01) per share, respectively. Stock options and warrants excluded from the calculation of dilutive loss per share because they were anti-dilutive were 13,727,803 and 36,836,829, respectively, for the three and six months ended June 30, 2008 and 2007.

5. INCOME TAXES

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

The Company is subject to income taxes in the United States and Canada. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. Tax years ranging from 2000 to 2007 remain subject to examination in the United States and Canada. We recognize potential interest and penalties related to income taxes matters in income tax expense. In the three and six months ended June 30, 2008, we recorded Canadian income tax expense of $5,933 and $13,896.

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QUOTEMEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6. SUPPLEMENTARY CASH FLOW INFORMATION

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

7. COMMITMENTS

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

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ITEM 2. Management’s Discussion and Analysis

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

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

This report should be read in conjunction with our Form 10-KSB for the fiscal year ended December 31, 2007 filed with the Securities and Exchange Commission.

Overview

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

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

Our Data Feed Services consist of raw streaming real-time market data delivered over the Internet or via dedicated telecommunication lines, as well as supplemental fundamental, historical, and analytical data, keyed to the same symbology which provides a complete market data solution to be offered to our customers.

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

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Our Portfolio Management Systems consist of Quotestream Desktop, Quotestream Wireless, Quotestream Professional, 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 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 both Quotestream Desktop and Quotestream Professional – any changes made to portfolios in either application are automatically reflected in the other. We introduced Quotestream II to the market in limited release in 2007. Quotestream II is our next generation portfolio management system, with enhanced features and functionality compared to our original Quotestream product – most notably tick-by-tick true streaming data, significantly enhanced charting features, and a broad range of additional research and analytical content and functionality.

A key feature of QuoteMedia’s business model is that all of our product lines generate recurring monthly licensing revenue from each client. Contracts to license Quotestream to our corporate clients, for example, typically have a term of two to three years and are automatically renewed unless notice is given within 90 days. 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 within 90 days.

During the three and six month periods ended June 30, 2008 we achieved 30% and 37% revenue growth from the comparative periods in 2007. The growth resulted from an increased customer base and increased per customer revenue for our Interactive Content and Data Applications as we continue to expand our line of financial data products and the depth of our data offerings. Increased subscriptions to Quotestream during the period also contributed to our revenue growth. We expect revenue growth for the remainder of 2008 to be primarily driven by our Interactive Content and Data Applications and our new Quotestream II and Quotestream Professional product offerings. We also anticipate growth as we expand our product line to include international market data consisting of equity quotes from many of the major world exchanges as well as other additional new data sets. We also anticipate acquiring new customers for our Data Feed Services.

Our comparative gross profit margin increased to 57% for the three and six month periods ended June 30, 2008 from 55% in the comparative periods in 2007. During 2007 we incurred a substantial increase in fixed costs to support the new products developed during the period, including Quotestream II, Quotestream Professional, and new Market Data Feeds. During the first half of 2008, cost increases associated with these new products have slowed as they near completion, therefore our increase in revenue from the comparative period has resulted in higher gross margins.

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Our operating expenses increased 19% and 26% for the three and six month periods ended June 30, 2008 from the comparative periods in 2007. This growth was as result of increasing our staffing and operating capacities from the comparative period in 2007 to develop and support the new products we have recently launched, and new products that we plan to introduce to the market in the remaining two quarters of 2008. Our operating expenses are also affected by the U.S./Canadian exchange rate. A significant portion of our software development and sales expenses are incurred in Canadian dollars and converted to U.S. dollars at the average exchange rate during the period. The average Canadian to U.S. dollar exchange rates for the three month periods ended June 30, 2008 and 2007 were 0.9904 and 0.9100 respectively, resulting in a 9% increase in expenses paid in Canadian dollars. The average Canadian to U.S. dollar exchange rates for the six month periods ended June 30, 2008 and 2007 were 0.9932 and 0.8820 respectively, resulting in a 13% increase in expenses paid in Canadian dollars.

Our plan of operation for the remainder of 2008 will focus on marketing Quotestream II for deployments by brokerage firms to their clients, and moving strongly into the investment professional market with Quotestream Professional. We also plan to release new international data sets and market our Data Feed Services. We will continue to add new data content to expand our line of Interactive Content and Data Applications and to license our Quotestream Wireless applications.

Opportunistically, efforts will be made to evaluate and pursue the development of additional new products that may eventually be commercialized by our company. Although not anticipated, we may require additional capital to execute our proposed plan of operation. There can be no assurance that such additional capital will be available to our company, on commercially reasonable terms or at all. Our future performance will be subject to a number of business factors, including those beyond our control, such as economic downturns and evolving industry needs and preferences as well as the level of competition and our ability to continue to successfully market our products and technology. There can be no assurance that we will be able to successfully implement our marketing strategy, continue our revenue growth, or achieve profitable operations.

Results of Operations

Revenue

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Licensing revenue has increased 30% and 37% when comparing the three and six month periods ended June 30, 2008 from the comparative periods in 2007. This increase reflects sales growth for both our Interactive Content and Data Applications and our Portfolio Management Systems.

We have continued to expand our line of Interactive Content and Data Applications, which includes XML market data feeds. The number of clients and the average revenue per client increased during the periods, resulting in a $310,495 (53%) and $703,268 (44%) increase in Interactive Content and Data Application revenue for the three and six month periods ended June 30, 2008 from the comparative periods. The number of Quotestream subscribers also increased during the periods; resulting in a $82,495 (31%) and $216,697 (24%) increase in Portfolio Management System revenue, respectively, when comparing the three and six month periods ended June 30, 2008 to the comparative periods in 2007. Included in Portfolio 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 $90,000 and $180,000 for the three and six months ended June 30, 2008, unchanged from the comparative periods in 2007.

Cost of Revenue and Gross Profit Summary

Our cost of revenue consists of fixed and variable stock exchange fees, data feed provisioning costs and bandwidth charges. Cost of revenue increased 25% and 32% when comparing the three and six month periods ended June 30, 2008 and 2007. The increase is primarily due to the acquisition of data content required to support the new products and features that we have recently launched, and new products that we plan to introduce to the market in the remaining two quarters of 2008. 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. Overall, the cost of revenue has decreased as a percentage of sales, as evidenced by our gross margin percentages which have increased to 57% for the three and six month periods ended June 30, 2008 from 55% in the comparative periods in 2007.

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Operating Expenses Summary

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 $166,163 (39%) and $264,813 (31%) for the three and six month periods ended June 30, 2008 when compared to same period in 2007. The increases are due primarily to stock based compensation expenses resulting from the grant of new stock options and modifications to existing stock options during the current periods. The increases are also due to additional sales personnel hired since the comparative periods.

Included in sales and marketing expense is $90,000 and $180,000 in non-cash advertising costs incurred in the three and six month periods ended June 30, 2008. We receive advertising credits with a large national magazine in exchange for subscription services. The advertising credits are expensed as used, and unused advertising credits are reflected as prepaid expenses. We used $75,000 and $150,000 in advertising credits during the comparative period in 2007.

General and Administrative

General and administrative expenses consist primarily of salaries expense, office rent, insurance premiums, and professional fees. General and administrative expenses increased $26,464 (7%) and $146,738 (20%) for the three and six month periods ended June 30, 2008 when compared to fiscal 2007. The increases are primarily due to the hiring of new personnel and competitive salary adjustments to existing personnel from the comparative periods.

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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 $8,301 (4%) and $106,707 (26%) for the three and six months ended June 30, 2008 when compared to fiscal 2007.

Salary expense for software development personnel increased from the comparative periods, as we made competitive salary adjustments for existing employees, and added new software development personnel. Additional software development personnel were required to develop our Quotestream II and Quotestream Professional products, as well as our new and upgraded versions of our web-based applications and market data feeds.

The increase in software development expenses noted above was offset by software development costs capitalized during the period. We capitalized $139,210 and $267,529 of development costs for the three and six month periods ended June 30, 2008, compared to $110,300 and $192,892 same periods in 2007. These costs relate to the development of application software used by subscribers to access, manage and analyze information in our databases. Capitalized costs associated with application software are amortized over three years which is their estimated economic life.

Other Income and (Expense) Summary

Foreign Exchange Gain (Loss)

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

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Interest Expense

Interest is accrued on certain amounts owed to related parties. Interest expense increased for the six months ended June 30, 2008 due to additional borrowings compared to same period in 2007. Interest is accrued at 10% per annum. Interest income earned on cash balances is netted against interest income.

Provision for Income Taxes

For the three month and six month periods ended June 30, 2008, the Company recorded Canadian income tax expense of $5,933 and $13,896. No income tax expense was recorded the comparative period.

Net Income (Loss) for the Period

As a result of the foregoing, net loss for the three months ended June 30, 2008 was $(360,758) or $(0.00) per share compared to a net loss of $(424,902) or $(0.01) per share for the three months ended June 30, 2007. The net loss for the six months ended June 30, 2008 was $(715,677) or $(0.01) per share compared to a net loss of $(796,987) or $(0.01) per share for the six months ended June 30, 2007.

Liquidity and Capital Resources

Our cash totaled $463,214 at June 30, 2008, as compared with $357,316 at December 31, 2007, an increase of $105,898. Net cash of $377,428 was provided by operations for the six months ended June 30, 2008, primarily due to the increase in accounts payable and amounts due to related parties, offset by the net loss for the period. Net cash used in investing activities for the six months ended June 30, 2008 was $299,030 resulting from capitalized application software costs and the purchase of new computer equipment. Net cash provided by financing activities for the six month period ended June 30, 2008 was $27,500 resulting from the proceeds from the exercise of stock options.

Our current liabilities include $605,074 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 $466,510 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.

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

ITEM 4T. Controls and Procedures

Under the supervision and with the participation of our Chairman of the Board and Chairman of the Audit Committee, Chief Executive Officer and Chief Financial Officer, we completed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) to the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, we and our management have concluded that, our disclosure controls and procedures at June 30, 2008 were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and are designed to ensure that information required to be disclosed by us in these reports is accumulated and communicated to our management, as appropriate to allow timely decisions regarding required disclosures. During the quarterly period covered by this report, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to affect, our internal control over financial reporting.

We will consider further actions and continue to evaluate the effectiveness of our disclosure controls and internal controls and procedures on an ongoing basis, taking corrective action as appropriate. Management does not expect that disclosure controls and procedures or internal controls can prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable and not absolute assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. While management believes that its disclosure controls and procedures provide reasonable assurance that fraud can be detected and prevented, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

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PART II - OTHER INFORMATION

ITEM 6. EXHIBITS

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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