QMCI 10-K & 10-Q changes, risk factors and insider trading

Catastrophic events outside of our control may impact on our business. The U.S. and global markets have, from time to time, experienced periods of disruptions due to a natural disaster, such as a tsunami, power shortage, or flood; public health crises, such as a pandemic or epidemic; political crises, such as terrorism, war, or other conflict; or other events outside of our control that may occur and adversely impact our business and operating results. The conflictconflicts in the Middle East and Ukraine hashave caused instability in global economies. We will closely monitor the impact of thethese conflict in Ukraineconflicts on all aspects of our business, including how it will impact team members, customers, suppliers, and global markets. The extent to which Ukrainethese conflictconflicts may impact our business will depend on future developments, which are highly uncertain and cannot be predicted.

Events in Ukrainethe Middle East and RussiaUkraine have continued to cause disruptions in the global financial markets. While we do not have any operations orin customersthe inMiddle East, Ukraine or Russia, we will continue to monitor the situation as a prolonged conflict could impact our business.

Our revenue decreasedincreased 1%8% in 20242025 versus the comparative 20232024 year. For fiscal 2025,2026, based on revenue already under contract we expect toan returnincrease to positivein revenue growth and expect a significant improvement to the net loss we incurred in 2024.2025.

For 20252026 we plan to continue to expand our product lines and improve our infrastructure. We plan to continue to add more features and data to our existing products and release newer versions with improved performance and flexibility for client integration. We plan to continue to leverage artificial intelligence (AI) tools, where possible, to automate this process. This expansion is expected to result in both increased revenue and costs for the fiscal year 2025.2026.

For the years ended December 31, 2024,2025, and 2023,2024, the Company capitalized $3,399,893$1,314,804 and $ 3,203,045$3,399,893 of costs, respectively, related to upgrades and enhancements made to existing software applications. Software applications are used by the Company’s subscribers to access, manage and analyze information in the Company’s databases. For the years ended December 31, 2024,2025, and 2023,2024, amortization expenses associated with the internally developed application software were $2,911,259$2,950,464 and $2,448,510,$2,911,259, respectively. At December 31, 20242025 and 2023,2024, the remaining book value of the capitalized application software was $5,041,544$3,405,884 and $4,552,910.$5,041,544.

In July 2025, the FASB issued Accounting Standards Update 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-05). This accounting standard provides a practical expedient allowing entities to assume that current conditions as of the balance sheet date remain unchanged over the remaining life of the asset when estimating expected credit losses. ASU 2025-05 is effective for annual reporting periods, including interim reporting periods within those annual periods, beginning after December 15, 2025, with early adoption permitted and should be applied prospectively. The Company is evaluating the impact of ASU 2025-05 and expects the standard will not have a material impact on the consolidated financial statements and related disclosures In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The ASU requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses, including purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. Additionally, the amendment requires a qualitative description of the amounts remaining in the relevant expense captions that are not separately disaggregated quantitatively, and to disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. For public business entities, the new guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. An entity may apply the amendments prospectively for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. The Company does not expect that the adoption of ASU 2023-09 will have a significant impact on the Company’s consolidated financial statements other than the additional disclosures.statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosure (“ASU 2023-09”). This standard provides transparency to income tax disclosures related to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 for public entities with early adoption permitted. The amendments in ASU 2023-09 will be applied prospectively in the consolidated financial statements. The Company does not expect that the adoption of ASU 2023-09 will have a significant impact on the Company’s consolidated financial statements.statements other than the additional disclosures.

Total licensing revenue decreasedincreased by 1%8% when comparing the years ended December 31, 2024,2025, and 2023.2024.

Total Portfolio Management System revenue decreasedincreased by 1%11% when comparing the years ended December 31, 2024,2025, and 2023.2024. Corporate Quotestream decreasedincreased by 1%14% due to a decreaseincreases in the number of customers offset by an increase inand average revenue per customer. Individual Quotestream revenue was flat for the year ended December 31, 2025, from the comparative period in 2024.

Interactive Content and Data APIs revenue decreasedincreased by 1%5% for the year ended December 31, 2024,2025, from the comparative period in 20232024 due mainly to aan decreaseincrease in the average revenue per client.

Our cost of revenue increased 7%9% for the year ended December 31, 2024,2025, from the comparative period in 2023.2024. ThisThe increase was mainly due to increased amortizationvariable expensesstock associatedexchange withfees internallyrelated developedto applicationour softwareincrease resultingin revenue, as well as price increases for fixed stock exchange fees from our major growth initiative, which included investing in infrastructure, new product development, data collection, and the expansioncomparative of our global market coverage.period.

Overall, the cost of revenue increasedremained unchanged as a percentage of sales, as evidenced by our gross margin percentage whichremained decreased towas 47% infor 2024the fromyears 51%ended inDecember 2023.31, 2025 and 2024.

Sales and marketing expenses consist primarily of sales and customer service salaries, investor relations, travel, and advertising expenses. Sales and marketing expenses increasedwere 7%relatively flat when comparing the years ended December 31, 2024,2025, and 2023.2024, Theincreasing 1%. An increase isin astock-based resultcompensation expense related to extension of additional sales personnel hired since the comparative period to support our product growth initiativesoptions and salarywarrants increasesin for existing personnel. The increase2025 was offset by thea 2%decrease depreciation of the Canadian dollar from the comparative period as most of ourin sales personneland aremarketing insalary Canada.expenses.

General and administrative expenses consist primarily of salaries expense, office rent, insurance premiums, and professional fees. General and administrative increaseddecreased 9%12% when comparing the years ended December 31, 2024,2025, and 2023.2024. The increasedecrease iswas mainly due to an increasedecreases in bad debt and office rent expenses. We downsized our office space in Vancouver, Canada effective September 1, 2025 when our existing lease terminated, as our development staff now primarily work remotely.

Interest expense relates primarily to the interest expense associated with our financeoperating leases and wasvendor relativelyfinance unchanged from the comparative period.charges. Interest expense of $2,508$53,955 was incurred for the year ended December 31, 2024,2025, compared to $1,846$2,508 incurred for the year ended December 31, 2023.2024. The increase was due to increased vendor finance charges.

As a result of the foregoing, our net loss for the year ended December 31, 2024,2025, was $1,327,037$2,317,424 compared to a net incomeloss of $361,584$1,327,037 for the year ended December 31, 2023.2024. Basic and diluted (loss) earnings per share were ($0.01$0.03) and $0.00($0.01) for the years ended December 31, 2024,2025, and 2023,2024, respectively.

Our cash totaled $319,889 at December 31, 2025, as compared with $585,319 at December 31, 2024, asa compared with $342,014 at December 31, 2023, an increasedecrease of $243,305.$265,430. Net cash of $3,680,860$1,105,936 was provided by operations for the year ended December 31, 2024,2025, primarily due to adjustments for non-cash charges and the increase in accounts payable and accrued liabilities and deferred revenue, offset by our net loss and an increase in accounts receivable. Net cash used in investing activities for the year ended December 31, 2024,2025, was $3,437,555$1,371,366 resulting primarily from capitalized application software costs. If circumstances dictate, however, we have the flexibility to reduce development spending to maintain a strong liquidity position.

We typically operate with a working capital deficit. As of December 31, 2024,2025, our working capital deficit is $ 3,476,362,$4,369,484, however current liabilities include $1,704,743$1,589,900 in deferred revenue and the expected costs necessary to realize the deferred revenue are minimal.

BasedThe onCompany has incurred losses since inception resulting in an accumulated deficit of $23,505,303 and further losses are anticipated in the factorsdevelopment discussedof above,its webusiness. believeThe thatCompany ourdoes not have sufficient cash on hand and cash generated from operations will be sufficient to fund our currentnormal operations and meet debt obligations for at least the next 12 months.months However,without implementingdeferring ourpayment businesson plancertain current liabilities and/or raising additional funds. In order to continue to meet its fiscal obligations in the current fiscal year and beyond, the Company may requireneed to seek additional financing. Additional financing 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 that could reduce our financial flexibility.

For the remainder of 2026 we plan to continue to expand our product lines and improve our infrastructure. We plan to continue to add more features and data to our existing products and release newer versions with improved performance and flexibility for client integration. We plan to continue to leverage artificial intelligence (AI) tools, where possible, to automate this process. This expansion is expected to result in both increased revenue and costs for the fiscalremainder yearof 2026.

Total licensing revenue increased 15%11% and 13% for the three-monthsthree and six-months ended MarchJune 31,30, 2026 from the comparative 2025 period.periods.

IndividualTotal QuotestreamPortfolio Management Systems revenue wasincreased relatively7% flat,and decreasing 1%10% for the three-monthsthree and six-months ended MarchJune 31,30, 2026 from the comparative 2025 period.periods.

InteractiveCorporate Content and Data APIsQuotestream revenue increased 16%9% and 13% for the three-monthsthree and six-months ended MarchJune 31,30, 2026 from the comparative period2025 inperiods. 2025The increases were due to increases in both the number of customers and the average revenue per customer from the comparative period.periods.

Our cost of revenue increased 11%2% for the three-months ended MarchJune 31,30, 2026 from the comparative period in 2025. This was2025, mainly due to someincreased one-time,data non-recurringstorage fees related to our growth, offset by a decrease in amortization expenses related to datadevelopment licensing, processing and delivery, that amounted to approximately $230,000.costs.

Notwithstanding impact of the one-time fee noted above, ourOur cost of revenue decreased as a percentage of sales, as evidenced by our gross margin percentage that increased to 46%50% and 48% for the three-monthsthree and six-months ended MarchJune 31,30, 2026 from 44%46% and 45% in the comparative 2025periods period.in 2025, respectively.

Sales and marketing consist primarily of sales and customer service salaries, investor relations, travel and advertising expenses. Sales and marketing expenses increaseddecreased 5%4% for the three-months ended MarchJune 31,30, 2026, when compared to the same period in 2025. The increasedecrease was mainly due to additionalstock-based salescompensation personnelexpenses addedincurred sincein the comparative quarter.Q2 2025 period. Sales and marketing expenses for the six-months ended June 30, 2026 were relatively flat when compared to the same period in 2025, increasing by 1%.

General and administrative expenses consist primarily of salaries expense, office rent, insurance premiums, and professional fees. General and administrative expenses increaseddecreased 17%10% for the three-months ended MarchJune 31,30, 2026,2026 when compared to the same period in 2025. The increasedecrease is mainly a result of ana increasedecreases in bad debt expense, office rent expense, and professional fees from the comparative period, offset by a decrease in office rent expense.period. We downsized our office space in Vancouver, Canada effective September 1, 2025 when our existing lease terminated, as our development staff now primarily work remotelyremotely. We also changed principal accountants effective Q1 2026 which lowered our professional fee expense during the quarter. The decreases were offset by an increase in fees related to artificial intelligence (AI) tools.

Software development expenses increased 42%17% and 28% for the three-monthsthree and six-months ended MarchJune 31,30, 2026 when compared to the same periodperiods in 2025, due to lower capitalization of development costs and therefore higher immediate expense recognition. We capitalized 9%8% of development costs thisfor quarterthe three and six-months ended June 30, 206 versus 27%16% and 21% in the comparative period.2025 periods.

We capitalized $173,683$162,696 and $523,599$314,519 of development costs for the three-monththree-months periods ended MarchJune 31,30, 2026 and 2025, respectively. We capitalized $336,379 and $838,118 of development costs for the six-months periods ended June 30, 2026 and 2025, respectively. 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 their estimated economic life of three years.

We incurred foreign exchange gains of $30,074$24,393 and $5,962$54,467 for the three-monthsthree periodsand six-months ended MarchJune 31,30, 20262026. We incurred foreign exchange losses of $107,865 and 2025,$101,903 respectively.for the three and six-months ended June 30, 2025. Foreign exchange gains and losses arise from the re-measurement of Canadian dollar monetary assets and liabilities into U.S. dollars and from exchange rate fluctuations between transaction and settlement dates for foreign currency denominated transactions.

Interest expense is netted against interest earned on cash balances. Net interest expense of $25,246$10,797 and $2,387$36,043 were incurred for the three-monthsthree and six-months periods ended MarchJune 31,30, 20262026. Net interest expense of $13,380 and 2025,$15,767 respectively.were incurred for the three and six-months periods ended June 30, 2026 The increase was due to increased vendor finance charges.

For the three-monthsthree and six-months periods ended MarchJune 31,30, 20262026, the Company recorded $(25) and $529 in income tax expense (recovery). For the three and six-months periods ended June 30, 2025, the Company recorded $554$2,770 and $66,151$68,921 in income tax expenses, respectively.expenses.

As a result of the foregoing, our net losses for the three-months periods ended MarchJune 31,30, 2026 and 2025 were $620,612$362,447 and $499,811,$853,582, respectively. The basic and diluted loss per share was $(0.00) and $(0.01) for the three-months periods ended June 30, 2026 and 2025, respectively. Our net losses for the six-months periods ended June 30, 2026 and 2025 were $983,059 and $1,353,393, respectively. The basic and diluted loss per share was $(0.01) for the three-monthssix-months periods ended MarchJune 31,30, 2026 and 2025, respectively.

Our cash totaled $521,684$186,986 at MarchJune 31,30, 2026, as compared with $319,889 at December 31, 2025, ana increasedecrease of $201,795.$132,903. Net cash of $ 384,672$236,568 was provided by operations for the three-monthssix-months ended MarchJune 31,30, 2026, primarily due to adjustments for non-cash charges and an increase in accounts payable and accrued liabilities and a decrease in accounts receivable. This was offset by our net loss.loss and a decrease in deferred revenue. Net cash used in investing activities for the three-monthssix-months ended MarchJune 31,30, 2026 was $182,877,$369,471, due to capitalized application software costs and purchases of computer equipment.

We typically operate with a working capital deficit. As of MarchJune 31,30, 2026, our working capital deficit was $4,646,488,$4,643,639, however current liabilities include $1,691,713$1,500,198 in deferred revenue. The expected costs necessary to realize the deferred revenue are minimal. If circumstances dictate, we have the flexibility to reduce development spending to maintain a strong liquidity position.

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 through MarchJune 2027. However, implementing our business plan may require additional financing. Additional financing 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 that could reduce our financial flexibility.

At MarchJune 31,30, 2026 and December 31, 2025, we did not have any unconsolidated entities or financial partnerships, or other off-balance sheet arrangements.