PAYD 10-K
Paid Inc (PAYD)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the fiscal year ended
For the transition period from to
COMMISSION FILE NUMBER
(Exact Name of as Specified in its Charter)
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Securities registered under Section 12(b) of the Act:
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Securities registered under Section 12(g) of the Act:
Indicate by check mark whether the registrant has filed a report on an attestation to its management’s assessment of the effectiveness of its internal control of financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☑
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to tis managements’ assessment of effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The aggregate market value of the common stock held by non-affiliates of the registrant based on the last sale price of such stock as reported by the Over-the-Counter Bulletin Board on June 30, 2024 (the last business day of the Registrant's most recently completed second fiscal quarter) was approximately $
As of March 31, 2025, the registrant had
DOCUMENTS INCORPORATED BY REFERENCE
No documents are incorporated by reference into this Annual Report except those Exhibits so incorporated as set forth in the Exhibit Index.
PAID, INC.
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2024
TABLE OF CONTENTS
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PART I |
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Item 1. |
Business |
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Item 1A. |
Risk Factors |
4 |
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Item 1B. |
Unresolved Staff Comments |
11 |
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| Item 1C. | Cybersecurity | 14 | |
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Item 2. |
Properties |
15 |
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Item 3. |
Legal Proceedings |
15 |
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Item 4. |
Mine Safety Disclosure |
15 |
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PART II |
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Item 5. |
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
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Item 6. |
Reserved |
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Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 7A. |
Quantitative and Qualitative Disclosure about Market Risk |
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Item 8. |
Financial Statements and Supplementary Data |
17 |
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Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
17 |
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Item 9A. |
Controls and Procedures |
17 |
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Item 9B. |
Other Information |
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Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
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PART III |
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Item 10. |
Directors, Executive Officers and Corporate Governance |
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Item 11. |
Executive Compensation |
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Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Item 13. |
Certain Relationships and Related Transactions, and Director Independence |
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Item 14. |
Principal Accountant Fees and Services |
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PART IV |
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Item 15. |
Exhibits and Financial Statement Schedules |
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Item 16. |
Form 10-K Summary |
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Signatures |
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Exhibit Index |
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PART I
Forward Looking Statements
This Annual Report on Form 10-K contains certain 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) regarding the Company and its business, financial condition, results of operations and prospects. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates", "could", "may", "should", "will", "would", and similar expressions or variations of such words are intended to identify forward-looking statements in this report. Additionally, statements concerning future matters such as the development of new services, technology enhancements, purchases of equipment, credit arrangements, possible changes in legislation and other statements regarding matters that are not historical are forward-looking statements.
Although forward-looking statements in this Annual Report reflect the good faith judgment of the Company's management, such statements can only be based on facts and factors currently known by the Company. Consequently, forward-looking statements are inherently subject to risks, contingencies and uncertainties, and actual results and outcomes may differ materially from results and outcomes discussed in this Annual Report. Although the Company believes that its plans, intentions and expectations reflected in these forward-looking statements are reasonable, the Company can give no assurance that its plans, intentions or expectations will be achieved. For a more complete discussion of these risk factors, see Item 1A, "Risk Factors".
For example, the Company's ability to maintain a positive cash flow and to become profitable may be adversely affected as a result of a number of factors that could thwart its efforts. These factors include the Company's inability to successfully implement the Company's business and revenue model, higher costs than anticipated, the Company's inability to sell its products and services to a sufficient number of customers, the introduction of competing products by others, the Company's inability to complete development of its core products, the failure of the Company's operating systems, and the Company's inability to increase its revenues as rapidly as anticipated. If the Company is not profitable in the future, it will not be able to continue its business operations.
Except as required by applicable laws, we do not intend to publish updates or revisions of any forward-looking statements we make to reflect new information, future events or otherwise. Readers are urged to review carefully and to consider the various disclosures made by the Company in this Annual Report, which attempts to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
Item 1. Business
Overview
PAID, Inc. (the “Company” or “PAID”) was incorporated in Delaware on August 9, 1995. The Company has multiple web addresses, including, www.paid.com, which offers updated information on various aspects of our operations and www.shiptime.com which showcases our online label generation software. The information contained in the Company's website shall not be deemed to be a part of this Annual Report. The Company's principal executive offices are located at 225 Cedar Hill Street, Marlborough, Massachusetts 01752 with offices also located at 700 Dorval Drive, Oakville, Ontario, Canada. The Company's telephone number is (617) 861-6050.
We file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K with the Securities and Exchange Commission (the “SEC”). These reports, any amendments to these reports, proxy and information statements and certain other documents we file with the SEC are available through the SEC's website at www.sec.gov or free of charge on our website as soon as reasonably practicable after we file the documents with the SEC. The public may also read and copy these reports and any other materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Our Business
ShipTime Inc. ShipTime’s platform provides its members with the ability to quote, process, generate labels, track and dispatch shipments while getting preferred rates on packages and skidded less than truckload (“LTL”) freight shipments throughout North America and around the world. The application provides customers with a choice of today’s leading couriers and freight carriers, all with discounted pricing allowing members to save on every shipment. In addition to these features, ShipTime also provides what it refers to as “Heroic Multilingual Customer Support.” In this capacity, ShipTime acts as an advocate on behalf of its clients in resolving matters concerning orders and shipping to enhance the customer experience. With an increasing focus and service offering for e-commerce merchants; which include online shopping carts, inventory management, payment services, client prospecting and retention software, ShipTime can help merchants worldwide grow and scale their businesses. ShipTime generates monthly revenue through transactions and “software as a service” (SAAS) offerings. We actively sell directly to small and medium businesses and through long standing partnerships with selected associations throughout Canada and we currently serve in excess of 89,700 members across the world.
BeerRun Software. BeerRun Software is a brewery management and Alcohol and Tobacco Tax and Trade Bureau tax reporting software. Small craft brewers can utilize the product to manage brewery schedules, inventory, packaging, sales and purchasing. Tax reporting can be processed with a single click and is fully customizable by state or province. The software is designed to integrate with QuickBooks accounting platforms by using our powerful sync engine. We currently offer two versions of the software BeerRun and BeerRun Light which excludes some of the enhanced features of BeerRun without disrupting the core functionality of the software.
PAID, Inc. includes the PaidPayment, PaidWeb, PaidCart and PaidShipping products that offers a robust platform enabling small and medium businesses to launch websites via our catalog of templates. Our platform includes a wide array of features such as mobile editing, search engine optimization, collaboration tools, pre-designed templates, and can be integrated with multiple platforms. PaidCart serves as a comprehensive solution for small and medium businesses looking to expand their online sales through multiple channels. It provides a centralized system to manage sales across various platforms, with additional functionalities for currency and language management, promotional sales, and abandoned cart recovery. PaidPayments and PaidShipping seamlessly interface with PaidCart to facilitate the checkout and shipping processes. PaidPayments provides businesses with a secure and efficient way to conduct online transactions including a virtual terminal, invoicing capability, subscriptions processing, checkout pages, and a point-of-sale system with support for USD, CAD, and EUR currencies. PaidShipping delivers a solution to quote, process, generate labels, dispatch and track courier and LTL shipments all from a single interface. We offer savings through partnerships with leading carriers. It includes a multi-courier comparison tool, integrations with eCommerce platforms and branded tracking.
Business Strategy
The Company’s focus in 2024 was to effectively execute the integration of Paid Inc. and ShipTime while ensuring that our vision (“To provide a comprehensive e-commerce platform for small to medium enterprises”) continued to move toward this goal by the adding fundamental tools for our members to compete in today’s on-line marketplace.
While the ShipTime portion of our business is our key revenue driver; our strategy in 2024 was to continue to build out the foundation of the Paid platform of e-commerce products while driving our core business forward. By continuing to offer small to medium enterprises meaningful solutions and an integrated infrastructure platform we can enhance the value proposition to both our channel partners and our growing customer base allowing us to cost effectively break into new markets.
In order to support the Company’s members via our strategic build-out of e-commerce services, our Heroic Support™ team remains focused on a Support and Customer Success mindset. Our Sales and Account Management Teams will be engaging with our prospects and members to provide guidance and support in utilizing Paid platform tools and services. Paid will provide agencies, associations and partners with the infrastructure to help small to medium businesses grow and be more effective with their digital offerings. We continue to focus on clients in both the United States and Canada. Paid products will continue to grow in 2024 with the launch of our PaidShipping, PaidWeb and PaidCart platforms.
BeerRun continues to be a component of the Company and remains effective for the existing clients. Our strategy for 2025 is to continue to wind down this segment of the business as we are no longer investing in new technologies and development in the Craft Brewing industry.
As ShipTime has been cash flow positive we are able to take advantage of the excess cash with long- and short-term investments. During 2022, the Company entered into a Securities Purchase Agreement with respect to a secured $1.875 million convertible note made by Embolx, Inc., a California corporation. Pursuant to the Securities Purchase Agreement, the Company loaned USD $1.5 million to Embolx. The Note was purchased at a 20% ($375,000) original issue discount and was subject to a 9-month maturity, after which, if unpaid, would then carry a 20% interest rate. The Company has the option to convert the note into shares of common stock of Embolx. Under the Securities Purchase Agreement, the Company had the right to purchase additional shares on the same terms. An agreement to extend the Note in 2024 has been authorized which includes an additional $500,000 investment with a 25% original issue discount. Additionally, Management feels that the assets of Embolx are sufficient to satisfy the obligation of the note receivable. Management continues to evaluate the financial status of Embolx and the potential sales of their business.
The business strategy described above is intended to expand our markets, increase revenue per member while enhancing our opportunities in the online ecommerce market. There are always a variety of factors that may impact our plans and inhibit our success. See “Risk Factors” included in Item 1A. Therefore, we have no guarantees and can provide no assurances that our plans will be successful.
Marketing and Sales
The Company continues to successfully nurture and grow relationships with our channel partners and has added new relationships that are global in scope. While much of the growth and success in 2024 was the result of the cooperative efforts of ShipTime sales staff, our channel partners and our marketing strategies play a key role in the Company’s growth. Additions to our sales team have allowed us to continue to pursue opportunities with channel partners.
The Company will continue to market PAID and ShipTime throughout 2025 and beyond. Cross-selling efforts will be enhanced, and new features are being added to our Paid platform. Based on experience and feedback with existing partnerships that promote our product lines, the Company believes that creating additional partnerships in the United States and beyond North America is an effective marketing tool to promote and encourage new registrations. Additional resources and marketing initiatives will be utilized to increase onboarding and convert our members to being active long-time users of the Company’s services in order to accelerate our growth.
Revenue Sources
In 2024, our revenues were primarily derived from our label generation services. This portion of our business has maintained consistent growth since our merger in 2016. In addition to the label generation services we continue to focus on launching our new e-commerce platforms. See “Risk Factors” included in Item 1A. We have no guarantees and can provide no assurances that our plans will be successful.
Competition
Technology within the logistics industry is highly competitive and we have focused a variety of differentiators including our Heroic Support™ to elevate our services beyond those of our competition. Our product offerings may also be available from other companies in our industry, and we continue to emphasize value and quality customer support. The ShipTime trademark has been registered in both Canada and the United States.
We also utilize free open-source technology in certain areas. Unlike proprietary software, open-source software has publicly available source code and can be copied, modified and distributed with minimal restrictions. We use open-source software and technology as well to support the growing social and viral opportunities on the internet. By using 'best-of-breed' products and tools we can maximize our clients’ opportunities while minimizing our costs, which we are able to pass on to our customers.
Research and Development
Over the past years, the Company has made progress developing new integrations with e-commerce shopping cart platforms. The Company now employs several developers who are focused on the growth of the PAID brand and ShipTime products and their technologies. Our technology roadmap has been projected from 2024 through the 2025 calendar year and we have enhancements scheduled for all aspects of our businesses. Our strategy includes continuous user enhancements on our existing platforms, new websites, updates to our e-commerce shopping cart solution, enhancements to our merchant payment processing platform, shipping calculator enhancements and many additional features and upgrades to our online shopping and shipping tools.
Employees
As of March 31, 2025, the Company currently has twenty-six full time equivalent employees and one part-time employee. We have no collective bargaining agreements and consider the relationship with our employees to be excellent.
Government Regulation
We are not currently subject to direct federal, state or local regulations, and laws or regulations applicable to access or commerce on the Internet, other than regulations applicable to businesses generally. However, due to the increasing popularity and use of the Internet and other online services, it is possible that a number of laws and regulations may be adopted with respect to the Internet or other online services covering issues such as user privacy, freedom of expression, pricing, content and quality of products and services, taxation, advertising, intellectual property rights and information security.
Item 1A. Risk Factors
You should carefully consider the risks and uncertainties described below before deciding to invest in shares of our common stock. If any of the following risks or uncertainties actually occur, our business, prospects, financial condition and operating results would likely suffer. In that event, the market price of our common stock could decline, and you could lose all or part of your investment.
Risks Relating to the Company
We have experienced operating losses.
Our business and prospects must be considered in light of the risks, expenses and difficulties that are inherent in our business. The risks include:
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our ability to anticipate and adapt to a developing market; |
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our ability to market, license and enforce our shipping calculator, payment processing platform, shopping cart and other e-commerce tools; |
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development of equal or superior Internet portals, shipping calculators and related services by competitors; and |
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our ability to maintain competitive pricing with our carriers |
To address these risks, we must, among other things, successfully market our e-commerce shopping cart, our merchant payment platform and shipping label generation services, continue to develop new relationships with carriers, e-commerce service providers, maintain our customer base, attract significant numbers of new customers, respond to competitive developments, and continue to develop and upgrade our technologies. We cannot offer any assurances that we will be successful in addressing these risks.
The Company has reported substantial operating losses since 1999. There can be no assurance that we will be profitable in the future.
Our capital is limited, and we may need additional financing to continue operations.
We require substantial working capital to fund our business. If we are unable to obtain additional financing in the amounts desired and on acceptable terms, or at all, or issue stock, we could be required to significantly reduce the scope of our expenditures, which impact our business potential and the market price of our common stock. By raising additional funds by issuing equity securities, our shareholders will be further diluted. Based on our cash position as of December 31, 2024, we believe we have sufficient capital to fund our anticipated operating expenses over the next 12 months.
We are unable to guarantee that the marketplace will accept our software products.
The software markets are characterized by rapid technological change, frequent new product enhancements, uncertain product life cycles, changes in customer demands and evolving industry standards. Our software products could be rendered obsolete if products based on new technologies are introduced or new industry standards emerge, or if we do not obtain adequate intellectual property protection. We are unable to provide any assurances that the marketplace will accept our software products and services, or that we will be able to provide these products and services at a profit.
Our operating results are unpredictable.
You should not rely on the results for any period as an indication of future performance. Our operating results and rate of growth are unpredictable and are expected to fluctuate in the future due to a number of additional factors, many of which are outside our control. These factors beyond our control include:
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our ability to significantly increase our customer base and traffic to our websites, maintain gross margins, and maintain customer satisfaction; |
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our ability to market and sell our software products; |
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consumer confidence in encrypted transactions in the internet environment; |
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the announcement or introduction of new types of services or products by our competitors; |
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technical difficulties with respect to customer use of our technologies; |
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governmental regulation by federal or local governments; and |
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general economic conditions and economic conditions specific to the internet and e-commerce. |
As a strategic response to changes in the competitive environment, we may from time to time make certain service, marketing or supply decisions or acquisitions that could have a material adverse effect on our results of operations and financial condition. In 2024, our revenues were derived from our shipping coordination, shipping label generation services, shipping calculator services, and eCommerce solutions.
The successful operation of our business depends upon the supply of critical technology elements from other third parties, including our internet service provider and technology licensors.
Our operations depend on a number of third parties for internet/telecom access, delivery services, and software services. We have limited control over these third parties and no long-term relationships with many of them. We rely on an internet service provider to connect our websites to the internet. From time to time, we have experienced temporary interruptions in our website’s connection and also our telecommunications access. The Company has migrated our hosted services to a cloud based offsite location in order to mitigate any potential outages. We license technology and related databases from third parties for certain elements of our property. Furthermore, we are dependent on hardware suppliers for prompt delivery, installation, and service of servers and other equipment to deliver our products and services. Our internally developed software depends on the operating system, database and server software that was developed and produced by and licensed from third parties. We have discovered from time-to-time errors and defects in the software from these third parties and, in part, rely on these third parties to correct these errors and defects in a timely manner. Any errors, failures, interruptions, or delays experienced in connection with these third-party technologies and information services could negatively impact on our relationship with users and adversely affect our brand and our business and could expose us to liabilities to third parties.
Our failure to manage growth could place a significant strain on our management, operational and financial resources.
Growth places a significant strain on our management, operational and financial resources, and has placed significant demands on our management, which currently include two executive officers, a director of marketing, a vice president of sales and a vice president of finance. In order to manage growth, we will be required to expand existing operations, particularly with respect to enhanced product offerings, customer service and development, to improve existing and implement new operational, financial systems, procedures and controls. In 2024, the Company added several consultants to assist with development of the Paid platform and operational needs and will continue to add technical and marketing personnel.
We have experienced some strain on our resources because of:
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the need to manage relationships with various technology licensors, other websites and services, and other third parties; |
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pressures for the continued development of our core of software products; and |
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the need for additional operational, finance, development, and technology personnel. |
Difficulties we may encounter in dealing successfully with the above risks could seriously harm our operations. We cannot offer any assurance that our current personnel, systems, procedures and controls will be adequate to support our future operations or that management will be able to identify, hire, train, retain, motivate and manage the required personnel.
Our Company's success still depends upon the continued services of its current management and other relationships.
We are substantially dependent on the continued services of our key personnel, W. Austin Lewis, IV and David Scott. Mr. Lewis has specialized knowledge and skills with respect to our Company and our operations and relationships with our channel partners. As a result, if Mr. Lewis were to leave our Company, we could face some difficulties in hiring qualified successors. Mr. Scott has unique knowledge regarding the technology of the Company and its integrations to other third-party software. If Mr. Scott were to leave the Company, we could face some setbacks in development or possible outages. We do not maintain any key person life insurance.
Our Company's success will depend on our ability to attract and retain qualified personnel.
We believe that our future success will depend upon our ability to identify, attract, hire, train, motivate and retain other highly skilled managerial, accounting, technical consulting, marketing and customer service personnel. The Company has recently been awarded a “Great Place to Work” certification in Canada. We have added five new employees with minimal turnover in the last year. We cannot offer assurances that we will be successful in attracting, assimilating or retaining the necessary personnel, and failure to do so could have an adverse effect on our business.
Our success depends upon market awareness of our brand.
Development and awareness of our Company will depend largely on our success in increasing our customer base, specifically in the United States. To attract and retain customers and to promote and maintain our Company in response to competitive pressures, we may find it necessary to increase our sales, marketing and advertising budgets and otherwise to increase substantially our financial commitment to creating and maintaining brand loyalty among consumers. We will need to continue to devote substantial financial and other resources to increase and maintain the awareness of our online brands among website users, advertisers, affiliate relationships, and e-commerce entities that we have advertising relationships with through:
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web advertising, marketing, and social media; |
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traditional media advertising campaigns; |
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trade shows and exhibitions; and |
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Canadian seller resources. |
Our results of operations could be seriously harmed if our investment of financial and other resources, in an attempt to achieve or maintain a leading position in internet commerce or to promote and maintain our brand, does not generate a corresponding increase in net revenue, or if the expense of developing and promoting our online brands becomes excessive.
System failures could result in interruptions in our service, which could harm our business.
A key element of our strategy is to generate a high volume of traffic to and use of, our products. Accordingly, satisfactory performance, reliability and availability of the shipping calculations, transaction processing systems and network infrastructure are critical to our operating results, as well as our reputation and our ability to attract and retain customers and maintain adequate customer service levels.
We periodically have experienced minor systems interruptions, including internet disruptions. Some of the interruptions are due to upgrading our technology. During these upgrades, the outages generally lasted less than an hour. Any systems interruptions, including internet disruptions, which result in the unavailability of our services, could harm our business. In addition to placing increased burdens on our engineering staff, these outages create a large number of user questions and complaints that need to be responded to by our personnel. We cannot offer assurances that:
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we will be able to accurately project the rate or timing of increases if any, in the use of our services; |
Any disruption in access to our websites and services or any systems failures could significantly reduce consumer demand for our services, diminish the level of traffic to our products, impair our reputation and reduce our e-commerce and advertising revenues.
We currently identify vulnerabilities with our communications hardware and computer hardware.
Our main servers are cloud-based and are located within two separate third party hosting facilities. The virtual servers are spread across North America. ShipTime maintains several non-critical servers which are located in Canada with daily operations conducted in Oakville, Ontario. Neither our Massachusetts facilities nor our Canadian facilities are protected from flood, power loss, telecommunication failure, break-in and similar events however the equipment located at these offices is not considered critical to our service offerings.
As with all servers, our cloud-based servers are also vulnerable to computer viruses, physical or electronic break-ins, attempts by third parties to deliberately exceed the capacity of our systems and similar disruptive problems. Computer viruses, break-ins or other problems caused by third parties could lead to interruptions, delays, loss of data or cessation in service to users of our services and products and could seriously harm our business. Our implementation of redundancies minimizes the risk of loss though there are no guarantees.
There are certain provisions of Delaware law that could have anti-takeover effects.
Certain provisions of Delaware law and our Certificate of Incorporation, and Bylaws could make an acquisition of our Company by means of a tender offer, a proxy contest or otherwise, and the removal of our incumbent officers and directors more difficult. Our Certificate of Incorporation and Bylaws do not provide for cumulative voting in the election of directors. Our Bylaws include advance notice requirements for the submission by stockholders of nominations for election to the Board of Directors and for proposing matters that can be acted upon by stockholders at a meeting.
We are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law (the “DGCL”), which will prohibit us from engaging in a “business combination” with an “interested stockholder” for three years after the date of the transaction in which the person became an interested stockholder unless the business combination is approved in a prescribed manner. Generally, a "business combination" includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an "interested stockholder" is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested stockholder status, did own) 15% or more of a corporation's voting stock. The existence of this provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by the Board of Directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by stockholders. Section 203 could adversely affect the ability of stockholders to benefit from certain transactions, which are opposed by the Board or by stockholders owning 15% of our common stock, even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.
Our success is dependent in part on our ability to obtain and maintain proprietary protection for our technologies and processes.
Our most important intellectual property relates to the software for our shipping calculator, label generation and eCommerce solutions. We do not have any patents or patent applications for our designs or innovations, except for our patent with respect to our online auction shipping and tax calculator. We may not be able to obtain copyright, patent or other protection for our proprietary technologies or for the processes developed by our employees. Legal standards relating to intellectual property rights in computer software are still developing and this area of the law is evolving with new technologies. Our intellectual property rights do not guarantee any competitive advantage and may not sufficiently protect us against competitors with similar technology.
As part of our confidentiality procedures, we generally enter into agreements with our employees and consultants and limit access to and distribution of our software, documentation and other proprietary information. We cannot offer assurances that the steps we have taken will prevent misappropriation of our technology or that agreements entered into for that purpose will be enforceable. Notwithstanding the precautions we have taken, it might be possible for a third party to copy or otherwise obtain and use our software or other proprietary information without authorization or to develop similar software independently. Policing unauthorized use of our technology is difficult, particularly because the global nature of the internet makes it difficult to control the ultimate destination or security of software or other data transmitted. The laws of other countries may afford our Company little or no effective protection of its intellectual property. Because our success in part relies upon our technologies, if proper protection is not available or can be circumvented, our business may suffer.
Intellectual property infringement claims would harm our business.
We may in the future receive notices from third parties claiming infringement by our software or other aspects of our business. Any future claim, with or without merit, could result in significant litigation costs and diversion of resources, including the attention of management, and require us to enter into licensing agreements, which could have a material adverse effect on our business, results of operations and financial condition. Licensing agreements, if required, may not be available on terms acceptable to the Company or at all. In the future, we may also need to file lawsuits to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others. This litigation, whether successful or unsuccessful, could result in substantial costs and diversion of resources, which could have a material adverse effect on our business, results of operations and financial condition.
Our success is dependent on licensed technologies.
We rely on a variety of technologies that we license from third parties. We also rely on encryption and authentication technology licensed from a third party through an online user agreement to provide the security and authentication necessary to effect secure transmission of confidential information.
We cannot make any assurances that these third-party technology licenses will continue to be available to us on commercially reasonable terms. Although no single software vendor licensor provides us with irreplaceable software, the termination of a license and the need to obtain and install new software on our systems would interrupt our operations. Our inability to maintain or obtain upgrades to any of these technology licenses could result in delays in completing our proprietary software enhancements and new developments until equivalent technology could be identified, licensed or developed and integrated. These delays would materially and adversely affect our business, results of operations and financial condition.
We may be exposed to liability for content retrieved from our websites.
Our exposure to liability from providing content on the internet is currently uncertain. Due to third party use of information and content downloaded from our websites, we may be subject to claims relating to:
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the content and publication of various materials based on defamation, libel, negligence, personal injury and other legal theories; |
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copyright, trademark or patent infringement and wrongful action due to the actions of third parties; and |
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other theories based on the nature and content of online materials made available through our websites. |
Our exposure to any related liability could result in us incurring significant costs and could drain our financial and other resources. We do not maintain insurance specifically covering these claims. Liability or alleged liability could further harm our business by diverting the attention and resources of our management and by damaging our reputation in our industry and with our customers.
The Company may be exposed to potential risks relating to our significant deficiencies and material weaknesses in our internal controls over financial reporting.
As directed by Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX 404”), the Securities and Exchange Commission adopted rules requiring public companies to include a report of management on the Company's internal control over financial reporting in their annual reports, including Form 10-K. We have identified deficiencies and material weaknesses in our internal controls and have taken steps to remediate them as cost-effectively as possible. Based on these deficiencies and material weaknesses, investors and others may lose confidence in the reliability of our financial statements and our ability to obtain equity or debt financing could suffer.
Risks Associated With Our Industry
The market for online services is intensely competitive with low barriers to entry.
The market for internet products and services is very competitive. Barriers to entry are relatively low, and current and new competitors can launch new sites at relatively low costs using commercially available software. We currently or potentially compete with a variety of other companies depending on the type of services offered to customers. These competitors include a number of indirect competitors that specialize in e-commerce shipping solutions or derive a substantial portion of their revenue from e-commerce products and those that specialize in brewery management solutions.
It is possible that new competitors or alliances may emerge and rapidly acquire market share. Increased competition is likely to result in reduced operating margins, loss of market share and a diminished brand recognition, any one of which could materially adversely affect our business, results of operations and financial condition. Many of our current and potential competitors have greater financial, marketing, technical and other resources than the Company. As a result, these competitors may be able to provide services on more favorable terms than we can, and they may be able to respond more quickly to changes in customer preferences or to devote greater resources to the development of their products than the Company.
We may be adversely affected by the deterioration in economic conditions, which could affect consumer and corporate spending and our ability to raise capital, and, therefore, significantly adversely impact our operating results.
The impact of slowdowns on our business is difficult to predict, but they may result in reductions in new client registrations and our ability to generate revenue. The risks associated with our businesses may become more acute in periods of a slowing economy or a recession, which may be accompanied by a decrease in e-commerce business. Instability in the financial markets as a result of recession or otherwise, as well as insufficient financial sector liquidity, also could affect the cost of capital and energy suppliers and our ability to raise capital.
Our business depends on discretionary consumer and corporate spending. Many factors related to corporate spending and discretionary consumer spending, including economic conditions affecting disposable consumer income such as employment, fuel prices, interest and tax rates and inflation, can significantly impact our operating results. Business conditions, as well as various industry conditions, including corporate marketing and promotional spending, can also significantly impact our operating results. Negative factors such as challenging economic conditions, public concerns over terrorism and security incidents, particularly when combined, can impact corporate and consumer spending and one negative factor can impact our results more than another. There can be no assurance that consumer and corporate spending will not be adversely impacted by economic conditions, thereby possibly impacting our operating results and growth.
Security breaches and credit card fraud could harm our business.
We rely on encryption and authentication technology licensed from a third party through an online user agreement to provide the security and authentication necessary to effect secure transmission of confidential information. We believe that a significant barrier to e-commerce and communications is the secure transmission of confidential information over public networks. We cannot give assurance that advances in computer capabilities, new discoveries in the field of cryptography or other events or developments will not result in a compromise or breach of the algorithms we use to protect customer transaction data. If this compromise of our security were to occur, it could have a material adverse effect on our business, results of operations and financial condition. A party who is able to circumvent our security measures and those of our third-party providers could misappropriate proprietary information or cause interruptions in our operations. To the extent that the activities of our Company or third-party contractors involve the storage and transmission of proprietary information. Security breaches could expose us to a risk of loss or litigation and possible liability. We may be required to expend significant capital and other resources to protect against the threat of security breaches or to alleviate problems caused by these breaches. We cannot offer assurances that our security measures will prevent security breaches or that failure to prevent these security breaches will not have a material adverse effect on our business.
Our industry may be exposed to increased government regulation.
Our Company is not currently subject to direct regulation by any government agency, other than regulations applicable to businesses generally, and laws or regulations directly applicable to access to, or commerce on, the internet. Today there are relatively few laws specifically directed towards online services, other than to protect user privacy or minors. However, due to the increasing popularity and use of the internet, it is possible that a number of laws and regulations may be adopted with respect to the internet, covering issues such as user privacy, freedom of expression, pricing, content and quality of products and services, fraud, taxation, advertising, intellectual property rights and information security. As the company expands its products, services and geographical scope, it may face new regulatory requirements. Compliance with additional regulation could hinder our growth or prove to be prohibitively expensive.
The applicability to the internet of existing laws in various jurisdictions governing issues such as property ownership, sales tax, libel and personal privacy is uncertain and may take time to resolve. In addition, because our service is available over the internet in multiple states, and we sell to numerous consumers resident in these states, these jurisdictions may claim that we are required to qualify to do business as a foreign corporation in each state. Our failure to qualify as a foreign corporation in a jurisdiction where it is required to do so could subject our Company to taxes and penalties for the failure to qualify. Any new legislation or regulation, or the application of laws or regulations from jurisdictions whose laws do not currently apply to our business, could have a material adverse effect on our business, results of operations and financial condition.
Risks Associated with our Common Stock
Our stock price has been and may continue to be very volatile.
The market price of the shares of our common stock has been, and is likely to be, highly volatile. During the year ended December 31, 2024 our stock price as quoted on the OTC Pink operated by the OTC Markets Group, Inc., on the OTCPINK has ranged from a high of $3.74 per share to a low of $1.29 per share. The variance in our share price makes it difficult to forecast with any certainty the stock price at which you may be able to buy or sell your shares of our common stock. The market price for our stock could be subject to wide fluctuations in response to factors that are out of our control such as:
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actual or anticipated variations in our results of operations; |
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announcements of new products, services or technological innovations by our competitors; |
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short selling our common stock and stock price manipulation; |
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merger, split or issuance; |
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developments in internet regulation; and |
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general conditions and trends on the internet and e-commerce industries. |
The trading prices of many technologies companies' stock have experienced extreme price and volume fluctuations. These fluctuations often have been unrelated or disproportionate to the operating performance of these companies. These broad market factors may adversely affect the market price of our common stock. These market fluctuations, as well as general economic, political and market conditions such as recessions or interest rate fluctuations, may adversely affect the market price of our common stock. Any negative change in the public's perception of the prospects of Internet or e-commerce companies could depress our stock price regardless of our results.
“Penny stock” regulations may impose certain restrictions on marketability of securities.
The SEC adopted regulations which generally define "penny stock" to be an equity security that has a market price of less than $5.00 per share. Our common stock may be subject to rules that impose additional sales practice requirements on broker-dealers who sell these securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of these securities and have received the purchaser's prior written consent to the transaction.
Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the "penny stock" rules may restrict the ability of broker-dealers to sell our common stock and may affect the ability to sell our common stock in the secondary market.
The market for our Company's securities is limited and may not provide adequate liquidity.
Our common stock is currently quoted on the OTCPINK, a regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter equity securities. As a result, an investor may find it more difficult to dispose of, or obtain accurate quotations as to the price of, our securities than if the securities were traded on the Nasdaq Stock market, or another national exchange. There are a limited number of active market makers of our common stock. In order to trade shares of our common stock you must use one of these market makers unless you trade your shares in a private transaction. In the year ended December 31, 2024 the actual daily trading volume ranged from a low of 0 shares of common stock to a high of 13,200 shares of common stock. Selling our shares can be more difficult because smaller quantities of shares are bought and sold and news media coverage about us is limited. These factors result in a limited trading market for our common stock and therefore holders of our Company's stock may be unable to sell shares purchased should they desire to do so.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Disclosure of Risk Management, Strategy, and Governance Regarding Cybersecurity Risks
Cybersecurity Risk Management and Strategy
The designated committee oversees our cybersecurity risk assessment and mitigation strategies through various means, including but not limited to:
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Conducting internal to fortify our cybersecurity posture. |
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Implementing rigorous cybersecurity training for all employees to heighten awareness and preparedness against cyber threats. |
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Ensuring the robustness of our cyber defenses with comprehensive antivirus solutions and adherence to cybersecurity best practices. |
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Our reliance on , such as Google Cloud for server hosting and Stripe for payment processing, incorporates a level of inherited security measures. Nonetheless, our commitment extends to continuously assessing and enhancing our cybersecurity frameworks to align with evolving industry standards and best practices. |
Governance
Incident Response and Readiness
Engagement with Third Parties
Our engagement with third-party service providers incorporates a thorough consideration of cybersecurity risks. Through our diligent evaluation process, we ensure that our partners adhere to stringent cybersecurity standards, safeguarding our data and systems against potential threats. This collaborative approach towards cybersecurity underscores our commitment to maintaining a secure operational environment for our stakeholders.
Item 2. Properties
The Company’s primary offices are located at 700 Dorval Drive, Oakville, Ontario with a principal executive office at 225 Cedar Hill Street, Marlborough, Massachusetts, pursuant to a lease agreement for the Oakville property which expires in August 2028. The agreement for the Marlborough, Massachusetts office is month to month.
Item 3. Legal Proceedings
From time to time we may be a party to various legal proceedings arising in the ordinary course of our business. Our management is not aware of any litigation outstanding, threatened or pending as of the date hereof by or against us or our properties which we believe would be material to our financial condition or results of operations, except with respect to a dispute related to its non-renewal of the employment agreement with Mr. Allan Pratt, the Company's former President and CEO, in which Mr. Pratt appears to be treating it as a termination which would trigger a two-year severance payment in addition to claims of an unpaid bonus. Around the same time that Mr. Pratt’s employment term expired, the Company’s Board of Directors voted to reduce the board from five to three, and Mr. Pratt and Mr. Austin Lewis, CFO, automatically rolled off from the Board of Directors. More than a year later, in 2021, Mr. Pratt filed a claim in Delaware courts to contest that decision and, in November 2023 this claim was dismissed. In July 2022, Mr. Pratt amended the complaint to dispute the proper authorization of a stock bonus that was awarded to the Company’s CEO in March 2021.
Item 4. Mine Safety Disclosure
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock, par value $0.001 per share, is presently quoted on the OTC Pink operated by the OTC Markets Group Inc., on the OTCPINK under the symbol "PAYD".
The following table sets forth the high and low bid information for our common stock as reported by OTCPINK for the eight quarters ended December 31, 2023. The quotations from the OTCPINK reflect inter-dealer prices without retail mark-up, mark-down, or commission and may not represent actual transactions.
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2023 |
High |
Low |
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Quarter ended March 31, 2023 |
$ | 1.80 | $ | 1.15 | ||||
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Quarter ended June 30, 2023 |
$ | 1.85 | $ | 1.60 | ||||
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Quarter ended September 30, 2023 |
$ | 1.74 | $ | 1.34 | ||||
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Quarter ended December 31, 2023 |
$ | 1.70 | $ | 1.20 | ||||
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2024 |
High |
Low |
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Quarter ended March 31, 2024 |
$ | 1.60 | $ | 1.40 | ||||
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Quarter ended June 30, 2024 |
$ | 1.64 | $ | 1.30 | ||||
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Quarter ended September 30, 2024 |
$ | 3.20 | $ | 1.29 | ||||
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Quarter ended December 31, 2024 |
$ | 3.74 | $ | 2.45 | ||||
As of March 31, 2025, there were approximately 868 holders of record of our common stock. Because many of the shares are held by brokers and other institutions on behalf of stockholders, the Company is unable to estimate the total number of individual stockholders represented by these holders of record.
We have not previously paid cash dividends on our common stock, and intend to utilize current resources to operate the business; thus, it is not anticipated that cash dividends will be paid on our common stock in the foreseeable future.
Exchangeable Shares
Holders of our subsidiary’s exchangeable shares have the same dividend and distribution rights as holders of Company shares, and if Company shares are subdivided or in the event of a Company stock dividend, the exchangeable shares will be equally subdivided, as exchangeable shares are intended to be economically the same as shares of common or preferred stock of the Company. The Company will have a “liquidation call right” in the event of proposed liquidation, dissolution or winding up of ShipTime Canada Inc. Absent prior events, the Company could have elected to redeem the exchangeable shares on the fifth anniversary for shares of the Company’s preferred stock and common stock. By agreement, exchangeable shares also may be purchased by ShipTime Canada Inc. for cancellation. The Company also has a right to call the shares in the event of a change in the applicable laws.
The holders of exchangeable shares have an “automatic exchange right” in the event of any bankruptcy or insolvency or in general, related proceedings, of ShipTime Canada Inc. or the Company. The exchangeable shares would at such time be converted automatically into that number of shares of common stock and preferred stock of the Company at the agreed upon conversion ratio. Moreover, Callco will have an overriding call right to purchase some or all of the exchangeable shares. This mechanism will be triggered with the automatic exchange right and is necessary to comply with Canadian tax laws. The exercise of this call right does not alter the outcome of the exchangeable share transaction.
Under a Support Agreement, the Company is required to treat holders of Exchangeable Shares substantially similar, or economically equivalent, to holders of Company stock. As such, under the Support Agreement, the Company cannot declare or pay any dividend or other distribution on Company stock unless ShipTime Inc. simultaneously declares or pays the dividend or distribution on the Exchangeable Shares and has sufficient money or other assets to meet these requirements. In turn, ShipTime Inc. would effect a corresponding dividend or distribution of its securities related to the Exchangeable Shares. The Company also undertakes to advise ShipTime Inc. of the declaration of dividend or distribution, among other similar events, and to cooperate with it to effect the dividend or distribution as of the same record and effective date. The Company is also required in this case to segregate funds to pay for the dividend, and to reserve sufficient number of shares to permit the exchange of the Exchangeable Shares into the required number of Company shares of common stock and preferred stock. The Support Agreement is also binding on any successor to the Company and with respect to any successor transaction.
Equity Compensation Plan Information
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Number of Securities To be Issued Upon Exercise of Outstanding Options, Warrants and Rights |
Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights |
Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a) |
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(a) |
(b) |
(c) |
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Equity Compensation Plans Approved by Security Holders |
- | $ | 0.00 | - | ||||||||
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Equity Compensation Plans Not Approved by Security Holders |
488,860 | $ | 2.75 | 455,640 | ||||||||
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Total |
488,860 | $ | 2.75 | 455,640 | ||||||||
See Note 10, Notes to Consolidated Financial Statements for the years ended December 31, 2024 and 2023 included in Part IV, Item 15, of this Annual Report, for a discussion of the material features of the stock options, warrants and related stock plans.
Item. 6 Reserved
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements
This Annual Report on Form 10-K contains certain 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) regarding the Company and its business, financial condition, results of operations and prospects. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates", "could", "may", "should", "will", "would", and similar expressions or variations of such words are intended to identify forward-looking statements in this report. Additionally, statements concerning future matters such as the development of new services, technology enhancements, purchase of equipment, credit arrangements, possible changes in legislation and other statements regarding matters that are not historical are forward-looking statements.
Although forward-looking statements in this Annual Report reflect the good faith judgment of the Company's management, such statements can only be based on facts and factors currently known by the Company. Consequently, forward-looking statements are inherently subject to risks, contingencies and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in this report. Although the Company believes that its plans, intentions and expectations reflected in these forward-looking statements are reasonable, the Company can give no assurance that its plans, intentions or expectations will be achieved. For a more complete discussion of these risk factors, see Item 1A, "Risk Factors.”
For example, the Company's ability to maintain a positive cash flow and to become profitable may be adversely affected as a result of a number of factors that could thwart its efforts. These factors include the Company's inability to successfully implement the Company's business and revenue model, higher costs than anticipated, the Company's inability to sell its products and services to a sufficient number of customers, the introduction of competing products or services by others, the Company's failure to attract sufficient interest in, and traffic to, its sites, the Company's inability to complete development of its products, the failure of the Company's operating systems, and the Company's inability to increase its revenues as rapidly as anticipated.
Overview
ShipTime Inc. has developed a SaaS based application, which focuses on the small to medium business segment. This offering allows members to quote, process, generate labels, insure, dispatch and track courier and LTL shipments all from a single interface. The application provides customers with a choice of today’s leading couriers and freight carriers, all with discounted pricing allowing members to save on every shipment. ShipTime can also be integrated into on-line shopping carts to facilitate sales via e-commerce. We actively sell directly to small businesses and through long standing partnerships with selected associations throughout Canada. Our focus in 2024 will be to continue to grow this portion of our business.
PAID, Inc. (the “Company”) has developed a full line of SaaS-based business services including PaidPayments, PaidCart, PaidShipping and PaidWeb. These eCommerce services provide commerce solutions to small - and medium-sized businesses by enabling them to use one platform to market their products, sell their goods and services, accept payment, and create repeat sales though an online payment processing solution. This capability also provides cost advantages, rapid response to market needs, simplified processes for boarding business and a seamless interface for our merchant customers.
Critical Accounting Policies
Our significant accounting policies are more fully described in Note 3 to our consolidated financial statements. However, certain of our accounting policies are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management; as a result, they are subject to an inherent degree of uncertainty. In applying these policies, our management makes estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. Those estimates and judgments are based upon our historical experience, the terms of existing contracts, our observance of trends in the industry, information that we obtain from our customers and outside sources, and on various other assumptions that we believe to be reasonable and appropriate 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. Our critical accounting policies include:
Note Receivable
The Company has two notes receivable outstanding that accrue annual interest and penalties for non-payment. The notes are backed by the assets of the debtor and management continues to evaluate the collectability of the notes. The Company has recognized significant gains on interest and penalties, however, as of the year ended 2024, one of the notes is in default. If the Company determines this note is uncollectible, it could result in a significant loss and subsequent litigation for the Company.
Results of Operations
Comparison of the years ended December 31, 2024 and 2023
The following discussion compares the Company's results of operations for the year ended December 31, 2024 with those for the year ended December 31, 2023. The Company's consolidated financial statements and notes thereto included elsewhere in this Annual Report contain detailed information that should be referred to in conjunction with the following discussion.
Revenues
The following table compares total revenue for the periods indicated.
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Years ended December 31, |
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2024 |
2023 |
% Change |
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Client services |
$ | 17,815 | $ | 33,938 | (48 | )% | ||||||
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Shipping coordination and label generation services |
18,499,613 | 16,465,724 | 12 | % | ||||||||
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eCommerce services |
68,097 | 65,167 | 4 | % | ||||||||
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Total revenues |
$ | 18,585,525 | $ | 16,564,829 | 12 | % | ||||||
Revenues increased $2,020,696 or 12% in 2024 primarily from a result of the 32% fourth quarter increase in shipping coordination and label generation services due to the impacts of the Canada Post carrier strike. This event has had a significant impact on the entire Canadian transportation industry.
Client services revenues, which include brewery management software and shipping calculator services decreased $16,123 or 48% to $17,815 compared to $33,938 in 2023. The decrease was attributable to the cancellation of several clients using our brewery management software and the limited marketing of this segment of the business.
Shipping coordination and label generation services revenues increased $2,033,889 or 13% to $18,499,613 in 2024 compared to $16,465,724 in 2023. The increase is largely attributable to impacts of the Canada Post strike and the additional marketing for this segment of the business.
eCommerce services have launched its United States shipping portal which resulted in an increase of $2,930 or 4% to $68,097 in 2024 compared to $65,167 in 2023. The Company continues to increase the product offerings in this segment of the business.
Gross Profit
Gross profit increased $285,768 or 8% to $4,071,417 in 2024 compared to $3,785,648 in 2023. Gross margin remained at 23% for the years ended 2024 and 2023. The increase in gross profit was due to growth of the shipping coordination and label generation service revenues.
Operating Expenses
Total operating expenses in 2024 were $4,564,799 compared to $4,373,471 in 2023, an increase of $191,328 or 4%. The increase is mainly due to the salaries for newly hired employees and consultants in 2024.
Other Income/Expense, net
Net other income in 2024 was $1,215,925 compared to $849,258 in 2023, an increase of $366,667 or 43%. The 2024 amount is made up of a gain of $1,192,182 on the Embolx, Inc. note receivable and an additional gain of $25,884 for the note receivable with 5String Solutions.
(Benefit) Provision for Income Taxes
Total income tax (benefit) provision for 2024 was $(41,049) compared to $(91,779) in 2023. The change of $50,730 is a result of the net effect of the adjustment for long term tax liabilities.
Net Income
The Company reported a net income in 2024 of $763,592 compared to $353,214 for the same period in 2023. The basic income per common share in 2024 is $0.09 compared to $0.04 per common share in 2023.
Inflation
The Company believes that inflation has not had a material effect on its results of operations.
Cash Flows
A summarized reconciliation of the Company's cash flows for the years ended December 31, 2024 and 2023 is as follows:
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2024 |
2023 |
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|
Net income |
$ | 763,592 | $ | 353,214 | ||||
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Depreciation and amortization |
304,797 | 309,972 | ||||||
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Accretion of discount on note receivable |
(1,048,402 | ) | (270,833 | ) | ||||
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Interest and default income accrued on note receivable |
(156,410 | ) | (578,425 | ) | ||||
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Amortization of operating lease right-of-use assets |
13,710 | 29,831 | ||||||
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Deferred income taxes |
(41,504 | ) | (99,914 | ) | ||||
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Share-based compensation |
235,575 | 703,761 | ||||||
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Changes in current assets and liabilities |
376,285 | (212,090 | ) | |||||
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Net cash provided by operating activities |
$ | 447,643 | $ | 235,516 | ||||
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Net cash used in investing activities |
$ | (756,526 | ) | $ | - | |||
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Net cash provided by (used in) financing activities |
$ | 392 | $ | 3,412 | ||||
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Effect of exchange rate on cash and cash equivalents |
$ | (138,537 | ) | $ | 26,245 | |||
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Net change in cash and cash equivalents |
$ | (447,028 | ) | $ | 265,173 | |||
Working Capital and Liquidity
The Company had cash and cash equivalents of $1,284,965 on December 31, 2024 compared to $1,731,993 on December 31, 2023. The Company had working capital of (629,467) on December 31, 2024 compared to $2,592,522 on December 31, 2023, a decrease of (3,221,989). The decrease in working capital is primarily attributed to the reclassification of the short term note receivable to long term.
Management believes that the Company has adequate cash resources to fund operations during the next 12 months. In addition, management continues to explore opportunities and partnerships to grow the Paid platform of services. However, there can be no assurance that the anticipated growth in new business will occur, and that the Company will be successful in launching new products and services. Management continues to seek alternative sources of capital to support the growth of future operations.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk
As a smaller reporting company, the Company is not required to provide the information for this Item 6A.
Item 8. Financial Statements and Supplementary Data
The financial statements listed in Item 15(a) are incorporated herein by reference and are filed as a part of this report and follow the signature pages to this Annual Report on Form 10-K on page 36.
Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company's management, including the Chief Executive Officer /Chief Financial Officer of the Company, as its principal financial officer has evaluated the effectiveness of the Company's “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon this evaluation, the Chief Executive Officer/Chief Financial Officer has concluded that, as of December 31, 2024, the Company's disclosure controls and procedures were not effective, due to material weaknesses in internal control over financial reporting, for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time period specified by the Securities and Exchange Commission's rules and forms, and is accumulated and communicated to the Company's management, including its principal executive/financial officer, as appropriate, to allow timely decisions regarding required disclosure.
As described in our accompanying Management's Annual Report on Internal Control over Financial Reporting, we have identified four remaining material weaknesses in internal controls over financial reporting. Because of these remaining material weaknesses, we concluded that, as of December 31, 2024 our internal control over financial reporting was not effective based on the criteria outlined in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
We continued to review new procedures and controls in 2024 and have taken steps to remediate the material weaknesses at the entity and activity levels, and to review further our procedures and controls in 2024. In addition, we expect to continue improve our infrastructure, personnel and related processes in order to strengthen and materially affect our internal control over financial reporting.
Prior to the complete remediation of these material weaknesses, there remains risk that the processes and procedures on which we currently rely will fail to be sufficiently effective, which could result in material misstatement of our financial position or results of operations and require a restatement. Moreover, because of the inherent limitations in all control systems, no evaluation of controls even where we conclude the controls are operating effectively can provide absolute assurance that all control issues, including instances of fraud, if any have been detected. These inherent limitations include the fact that judgments in decision-making can be faulty, and breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, our control systems, as we develop them, may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be immediately detected and could be material to our financial statements.
The certifications of our principal executive officer/principal financial officer required in accordance with Rule 13a-14(a) under the Exchange Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached as exhibits to this Annual Report on Form 10-K. The disclosures set forth in this Item 9A contain information concerning (i) the evaluation of our disclosure controls and procedures, and changes in internal control over financial reporting, referred to in paragraph 4 of the certifications, and (ii) material weaknesses in the design or operation of our internal control over financial reporting, referred to in paragraph 5 of the certifications. Those certifications should be read in conjunction with this Item 9A for a more complete understanding of the matters covered by the certifications.
Management's Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining effective internal control over financial reporting of the Company. Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer/Chief Financial Officer 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 financial statements for external purposes in accordance with generally accepted accounting principles.
Our internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) 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.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Management, with the participation of our principal executive officer/principal financial officer, is required to evaluate the effectiveness of our internal controls over financial reporting as of December 31, 2024 based on criteria established under the COSO integrated framework of internal controls. The COSO framework identifies five components of internal control and provides a basis for evaluating the effectiveness of internal controls. Management has concluded that our internal controls over financial reporting were not effective as of December 31, 2024 due to the following:
|
1. |
Entity Level Controls |
|
- |
Ineffective control environment, including lack of corporate governance |
|
|
- |
Ineffective communication of information |
|
|
- |
Ineffective monitoring of activities |
|
2. |
Activity Level Controls |
|
- |
Lack of procedures and control documentation |
|
- |
Lack of procedures for contract asset and contract liability reporting |
|
- |
Lack of reconciliation of cash held in reserve |
|
- |
Ineffective review of concessions provided to customers |
1. Inadequate Entity Level Controls
Ineffective Control Environment, Including Lack of Corporate Governance
The Control Environment is the tone of an organization and how the tone influences the control consciousness of its people. Control Environment factors include the integrity, ethical values, and competence of the entity’s people; management’s philosophy and operating style; the way management assigns authority and responsibility; the way management organizes and develops its people; and the attention and direction provided by the audit committee and board of directors. The Control Environment includes the Company’s Corporate Governance which is made up of a set of practices, policies, laws, and principals, designed to provide guidance and structure to directors, managers, and employees with a clear view of corporate goals and business objectives. These processes and procedures need to be clearly defined, presented and administered to each participant in the organization, and should document the distribution of rights and responsibilities among employees, management, clients and customers.
Steps taken towards Remediation for an Ineffective Control Environment:
|
● |
Management continues to focus on the Company culture with engagement between the employees and senior management. Culture and values have been added to the company handbook which is reviewed annually. and the communication of goals for the products and services that the company offers. |
|
● |
The CEO/CFO communicates to the Board of Directors all new products and goals that on the technology roadmap. These items are reviewed by senior management and the COO on a weekly basis to ensure that all members of the Company are aligned on the Company’s vision. |
Ineffective Communication of Information
Information and communication systems support the identification, capture, and exchange of information in a form and time frame that enable people to carry out their responsibilities. This component includes information technology controls which are specific activities performed by persons of systems designed to ensure that the business objective can be met, protect the business from fraud and collusion, and keep the corporate assets protected and safe.
Steps taken towards Remediation of Ineffective Communication of Information:
|
● |
The IT department has created new positions in order to implement technology controls and oversee work development activity that could have a direct impact on the Company. |
|
● |
Human Resources has implemented an annual review process for all employees which assures that goals are set to assist the Company in communicating the business objectives. |
Ineffective Monitoring of Activities
Monitoring is a process that assesses the quality of internal control performance over time.
Steps taken towards Remediation of Ineffective Monitoring of Activities:
|
● |
The COO and VP of Finance meet weekly to review risk, discuss strategy and create policies and procedures to monitor the day-to-day operations. |
|
● |
Third party services have been engaged with to monitor fraud, reduce risk and prevent malicious behavior to our website and on our platform. |
The Company believes improvements have been made to remediate its material weakness in the internal controls over financial reporting at the entity level but does not have the appropriate documentation to support its efforts. The Company also believes that further work is still required to develop appropriate controls in some aspects of entity level control to provide reasonable assurance that controls are designed in the most effective and efficient manner possible. While we believe these changes will be effective at mitigating the risk of material a error, there continues to be additional work required for us to conclude that all three of these control areas are operating effectively. As noted in the Management's Report on Internal Control over Financial Reporting, we consider each of these control areas within the entity level control to constitute a material weakness.
The Company has taken significant steps to reduce risks associated with information technology controls and documentation. Our information technology department has worked toward cross training and redundancies to assure that no one single person has the ability to make changes to the core operating systems of our products. We used cloud-based solutions, tokenization to remove the need to capture and site confidential financial data in addition to encryption to protect personal data.
In addition to the ongoing increase of documentation of the policies and procedures the Company has added increased internal controls with regard to the segregation of duties. As the Company grows and adds additional management level personnel it is increasingly easier to segregate duties. We have also added internal spending and approval limits to monitor activities.
2. Inadequate Activity Level Controls
Lack of Procedures and Control Documentation
The Company lacks specific documentation relating to certain accounts, and financial closing, which in effect make these internal controls ineffective. The lack of documentation in internal controls relating to these accounts may affect the financial statements and will directly affect the nature and timing of other auditing procedures for certain activities.
Steps taken towards Remediation of Revenue Recognition:
|
● |
The Company continues to use automation to support its financial reporting. Our internal software produces real-time transactional based reporting that is tied to our cash transactions. This automation eliminated the risk of human error for these tasks and created a more concise audit trail in the revenue recognition process. |
|
● |
Reconciliations to contract assets and contracts liabilities have been created to establish cutoff periods for system generated reports. |
Steps taken towards Remediation of Financial Closing:
|
● |
The Company closes its books and reconciles all accounts monthly and provides management with a comprehensive set of financial and operating reports and analysis of results. All transactions are audited on a quarterly basis. |
|
● |
The CEO/CFO receives daily cash balances and monthly financial updates on each segment of the Company. |
Steps taken towards Remediation of Cash held in Reserve:
|
● |
The Company will implement a reconciliation process to review and record cash held in reserve at month end. |
The Company has made improvements to the activity level controls specifically with regard to the deficiencies with the financial close. In addition, further work is required to develop appropriate controls in the other aspects of activity level control to provide reasonable assurance that controls are designed in the most effective and efficient manner possible. Therefore, while we believe these changes are effective at mitigating risk of material error, there continues to be additional work required for us to conclude that this control area is operating effectively. Therefore, as noted in the Management's Report on Internal Control over Financial Reporting, we consider this control area within the activity level control to constitute a material weakness.
A factor for our internal control deficiencies is the small size of the Company and the lack of a financial expert on the Audit Committee of the Board of Directors and other corporate governance controls. As defined by the Public Company Accounting Oversight Board Auditing Standard No. 5, a material weakness is a significant control deficiency or a combination of significant control deficiencies that results in there being more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management continues to monitor and assess the controls to ensure compliance.
As a smaller reporting company, our independent registered public accounting firm is not required to issue a report on the Company's internal control over financial reporting as of December 31, 2024.
Changes in Internal Control Over Financial Reporting
As discussed in the Managements' Annual Report on Internal Control over Financial Reporting, the Company continues to make improvements to the entity and activity controls and expects to take further steps in 2025 to remediate the outlined deficiencies. The Company monitors all financial activity and has implemented automated tools to support the reconciliation process specific to financial reporting. The Company has added many new reconciliations to assist with the financial reporting. The CEO/CFO has worked with the SVP of Finance and management to identify areas of improvement and together they continue to implement cross training and redundancies to assist with internal controls. Departmental budgets have been established, and all transactions are reviewed monthly. The forecast is reviewed by the CFO on a regular basis and all members of Management contribute to the review. While we believe these improvements are effective at mitigating the risk of a material error, we have not yet concluded that they are operating effectively. There were several areas of improvement in our segregation of duties, financial closing, and information technology controls that have positively impacted our internal control over financial reporting for the fiscal year ended 2024.
Item 9B. Other Information
applicable.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Directors and Executive Officers
The following table sets forth certain information regarding the directors and executive officers of PAID:
|
Name |
Age |
Position |
||
|
W. Austin Lewis, IV |
49 |
CEO, CFO |
||
|
David Scott |
30 |
COO |
||
|
Andrew Pilaro |
55 |
Director |
||
|
Laurie Bradley |
71 |
Director |
||
|
David Ogden |
62 |
Director |
Andrew Pilaro was elected as of September 19, 2000, for a term expiring at the 2001 Annual Meeting of Stockholders and until their successors are elected and qualified. On March 27, 2021, the Company amended its Bylaws to reduce the existing Board of Directors from five positions to three positions. At that time, W. Austin Lewis, IV and Allan Pratt automatically rolled off from the Board of Directors. Under Delaware law, unless otherwise provided in the certificate of incorporation or bylaws, directors are elected for one-year terms at the annual meeting of shareholders. The Amended Bylaws would provide for the Board to be divided into three classes of directors serving staggered three-year terms. As a result, approximately one-third of the Board will be elected each year. Initially, three directors will serve between one-to-three-year terms. The directors placed in a Class I position will serve for approximately one year. The directors placed in a Class II position will serve for approximately two years. The directors placed in a Class III position will serve approximately three years. After this transitional arrangement, the Directors will serve for three-year terms, with one class being elected each year.
Andrew Pilaro has served as a Director of PAID since September 2000. He is President of CAP Properties Limited, a family office which is an investment management company, with a primary responsibility for asset management. Mr. Pilaro was asked to serve as a director because he provides investment management skills and has a general business background.
W. Austin Lewis, IV currently serves as CFO and CEO of PAID and previously served as the Chairman of the Audit Committee for MAM Software, Inc. (MAMS). Since 2004, Mr. Lewis has served as Chief Executive Officer of Lewis Asset Management Corporation, an investment management company he founded, where he is also the General Partner of the Lewis Opportunity Fund. Prior to founding Lewis Asset Management, Mr. Lewis held a variety of positions with investment firms, including Puglisi & Co., Thompson Davis & Co., and Branch Cabell & Company. Mr. Lewis holds a Bachelor of Science in Finance and a Bachelor of Science in Financial Economics from James Madison University. Mr. Lewis was asked to serve as the CEO because he had a thorough knowledge of the Company’s strengths and weaknesses and has a strong background in being able to make companies run efficiently and successfully.
David Ogden is the CEO of Soho Management Consulting, a global investment consulting firm, and President of Soho Printing LLC in Naples, Florida. He has held many senior positions with FedEx, including Managing Director of Sales for the FedEx Middle East and Africa region based in Dubai, where he played a key role in India's launch as a directly served FedEx location. Additionally, he served as Managing Director of FedEx Logistics in the Middle East and Africa, where he was responsible for establishing the region's first FedEx Logistics subsidiary. After his tenure with FedEx, he relocated to Egypt, where he established a group of companies offering best-in-class business support services under a holding company. Following Egypt, he moved to Abu Dhabi to work for an alternative investment company focused on developing warehousing and logistics parks in the United Arab Emirates. Recently, he has been involved with e-commerce ventures from around the world.
Laurie Bradley is the Chief Executive Officer of Flexible Support Group providing funding, accounting, and payroll services to small and mid-size businesses across North America. Ms. Bradley also retains ownership in ASG Renaissance and serves as its President. ASG sold its staffing and contracting business in 2016 and now operates with a focus on executive search, and consulting services that delivers training to assist clients with their diversity and inclusion initiatives. The ASG consulting practice also leverages the 2007 Mosaic Advantage initiative which aggregated a network of minority, women, and veteran owned businesses providing them with access to larger business opportunities, coaching, mentoring and financial services. Ms. Bradley has worked in both the public and private sectors specializing in talent management, executive leadership, and advisory services. Ms. Bradley holds a Bachelor of Arts degree from McMaster University and a certificate in Business Strategy from Cornell University.
David Scott currently serves as the Chief Operating Officer of Paid, having previously held the role of Director of Technology, joining the company in 2017. With a background in computer science from Mohawk College and McMaster University, Mr. Scott has been instrumental in driving Paid's technological innovation, operational scalability, and market expansion. As COO, he oversees technology, marketing, support, and business analytics, ensuring Paid and its flagship shipping platform, ShipTime, remain industry leaders. His leadership continues to drive efficiency, innovation, and strategic growth, reinforcing Paid’s position as a trusted solution for businesses across North America.
The Company has not made any material changes to the procedures by which security holders may recommend nominees to the Board of Directors. The Board does not have a separate nominating committee.
Audit Committee
The Securities and Exchange Commission has adopted rules to implement certain requirements of the Sarbanes-Oxley Act of 2002 pertaining to public company audit committees. One of the rules requires a company to disclose whether it has an “audit committee financial expert” serving on its audit committee. Based on its review of the criteria of an audit committee financial expert under the rule adopted by the SEC, the Board of Directors does not believe that any member of the Board of Directors' Audit Committee would be described as an audit committee financial expert. At this time, the Board of Directors believes it would be desirable for the Audit Committee to have an audit committee financial expert serving on the committee. While from time-to-time informal discussions as to potential candidates have occurred, no formal search process has commenced. Andrew Pilaro, one of the Company’s independent directors, is the sole member of the audit committee. The audit committee does not have a charter.
Audit Committee Report
The Audit Committee reviewed and discussed our audited consolidated financial statements for the year ended December 31, 2024 with our management. The Audit Committee also reviewed and discussed our audited consolidated financial statements, and the matters required to be discussed, by the Public Company Accounting Oversight Board (“PCAOB”), including material weaknesses and other internal control deficiencies with KMJ Corbin & Company LLP and dbbmckennon, our independent registered public accounting firm. The Audit Committee received from KMJ Corbin & Company LLP and dbbmckennon the written disclosures and letter required by applicable requirements of the PCAOB regarding the independent accountant's communications with the audit committee concerning independence and has discussed with the independent accountant the independent accountant's independence.
Based on the reviews and discussions referred to above, the Audit Committee recommended to our Board of Directors that our audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2024.
|
The Audit Committee |
|
|
/s/ Andrew Pilaro |
Code of Ethics
The Company has adopted a Code of Ethics that applies to all of its directors, officers, and employees, including its principal executive officer, principal financial officer, principal accounting officer, or controller, or persons performing similar functions. A written copy of the Company's Code of Ethics will be provided to anyone, free of charge, upon request to: W. Austin Lewis, CEO and CFO, PAID, Inc., 225 Cedar Hill Street, Marlborough, Massachusetts 01752.
Any waiver of the code of business conduct and ethics for directors or executive officers, or any amendment to the code that applies to directors or executive officers, may only be made by the board of directors. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of this code of ethics by posting such information on our website, at the address and location specified above. To date, no such waivers have been requested or granted.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than 10% of the Company's outstanding Common Stock to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Common Stock. These persons are required by SEC regulation to furnish the Company with copies of all such reports they file. To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and representations that no other reports were required, all Section 16(a) filing requirements applicable to its officers and directors and beneficial owners of more than 10% of the Company's stock, have been complied with for the period which this Form 10-K relates.
Item 11. Executive Compensation
On May 10, 2017, the Board of Directors appointed Laurie Bradley as the Chairman of the Compensation Committee. Ms. Bradley, along with the remaining Board of Directors, will be responsible for carrying out the Board responsibilities relating to executive compensation, employment agreements, executive succession and equity-based compensation programs and practices of the Company.
On March 29, 2021, the Company entered into an Employment Agreement and an Executive Non-Competition Agreement with W. Austin Lewis, IV, as CEO of the Company, with an effective date of January 4, 2021. The Employment Agreement is for a two-year term from the effective date with automatic one-year renewals subject to 12 months’ notice of termination by the Company. Mr. Lewis shall receive an annualized salary of $300,000 and may qualify for a bonus. Mr. Lewis also received 250,000 shares of Company’s common stock as a signing bonus, of which 125,000 shares may be repurchased at $1.91 per share in the event that Mr. Lewis terminates his employment prior to January 1, 2022. In addition, other than termination “for cause”, Mr. Lewis qualifies for a one-year severance of his then current salary. By separate agreement dated March 29, 2021, Mr. Lewis is also bound by a non-competition restriction for a period of 12 months following termination. On March 21, 2023, the Board of Directors approved a renewal of Mr. Lewis’s employment agreement. The Amendment to the Employment Agreement is for a two-year term with automatic one-year renewals subject to 12 months’ notice of termination by the Company. Mr. Lewis shall receive an annualized salary of $321,000 and may qualify for a bonus. Mr. Lewis also received 250,000 shares of the Company’s common stock of which 125,000 shares may be repurchased at $0.01 per share in the event that Mr. Lewis terminated his employment agreement prior to January 1, 2024. On March 23, 2023, the Board of Directors approved the terms of an employment contract for David Scott, the Company’s COO. The Employment Agreement as executed is for a one-year term with automatic one-year renewals subject to 6 months’ notice of termination by the Company. Mr. Scott shall receive an annualized salary of $214,000 CAD and may qualify for a bonus. Mr. Scott also received $25,000 USD shares of the Company’s common stock which may be repurchased at $0.01 per share in the event that Mr. Scott terminated his employment agreement prior to April 1, 2024.
Compensation to the Named Executive Officers
The following table sets forth the compensation of the Company's chief executive officer, chief financial officer and the chief operating officer, and each officer whose total cash compensation exceeded $100,000, for the last two fiscal years ended December 31, 2024 and 2023.
|
Summary Compensation Table |
||||||||||||||||||
|
Name and Principal Position |
Year |
Salary |
Bonus |
Option Awards ($) |
Total |
|||||||||||||
|
W. Austin Lewis, IV (1)(2)(4)(6)(8) (CFO, CEO) |
2024 |
$ | 321,000 | $ | 131,407 | $ | - | $ | 452,407 | |||||||||
|
2023 |
$ | 321,000 | $ | 550,256 | $ | - | $ | 871,256 | ||||||||||
|
David Scott (3)(5)(6)(7)(9) (COO) |
2024 |
$ | 163,558 | $ | 77,298 | $ | - | $ | 240,856 | |||||||||
|
2023 |
$ | 158,509 | $ | 81,378 | $ | - | $ | 239,887 | ||||||||||
|
1. |
Mr. Lewis’s start date was July 31, 2012. |
|
2. |
Mr. Lewis’s salary was approved by the Board of Directors at $321,000. |
|
3. |
Mr. Scott was promoted to Chief Operating Officer on May 1, 2020. |
|
4. |
Mr. Lewis received 250,000 shares on March 29, 2023 valued at $1.75 per share. |
|
5. |
Mr. Scott received 13,889 shares on April 10, 2023 valued at $1.80 per share. |
|
6. |
Mr. Lewis’ bonus for 2023 includes $112,756 to be paid out in 2024 in cash and shares was approved by the Board of Directors on February 22, 2024. 36,373 shares were valued at $1.55 per share based on the close price of the Company’s common stock at February 21, 2024 |
|
7. |
Mr. Scott’s bonus for 2023 includes $56,378 to be paid out in 2024 in cash and shares, which was approved by the Board of Directors on February 22, 2024. 9,093 shares were valued at $1.55 per share based on the close price of the Company’s common stock at February 21, 2024. |
|
8. |
Mr. Lewis’s bonus for 2024 includes $139,136 to be paid out in 2025 in cash and shares, which was approved by the Board of Directors on March 07, 2024. 34,440 shares were valued at $3.03 per share based on the close price of the Company’s common stock at March 06, 2024. |
|
9. |
Mr. Scott’s bonus for 2024 includes $77,298 to be paid out in 2025 in cash and shares, which was approved by the Board of Directors on March 07, 2024. 12,755 shares were valued at $3.03 per share based on the close price of the Company’s common stock at March 06, 2024. |
The following tables set forth certain information related to outstanding equity awards as of December 31, 2024 for our executive officers.
|
Option Awards |
|||||||||||||||||
|
Name |
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Unexercisable |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
Option Exercise Price ($) |
Option Expiration Date |
||||||||||||
|
David Scott |
7,000 | - | - | $ | 4.10 |
03/23/2028 |
|||||||||||
| 3,000 | - | - | $ | 3.50 |
10/01/2028 |
||||||||||||
| 15,000 | - | - | $ | 2.92 |
02/13/2029 |
||||||||||||
| 15,000 | - | - | $ | 3.00 |
08/13/2029 |
||||||||||||
| 40,000 | - | - | $ | 2.89 |
11/10/2030 |
||||||||||||
On August 13, 2020, the Board of Directors approved cash compensation to board members equal to $4,000, payable in equal installments quarterly, plus an additional $6,000 for each chairperson payable in equal installments quarterly. There were no options granted to executives in 2022. On March 23, 2023 the Board of Directors approved stock option awards of 15,000 shares for board members and an additional 20,000 shares for committee chairmen. These awards take into consideration the absence of option issuance in 2021 and 2022. Options were granted at an exercise price of $1.75 per share and vested immediately. The Company recorded $104,550 of share-based compensation with relation to the options granted to the Board. On February 22, 2024 the Board of Directors approved stock option awards of 5,000 shares for board members and an additional 5,000 shares for committee chairmen. Options were granted at an exercise price of $1.55 per share and vested immediately. The Company recorded $31,500 of share-based compensation with relation to the options granted to the Board.
The following table provides compensation information for the one-year period ended December 31, 2024 for the only non-employee members of our Board of Directors.
|
Director Compensation in 2024 |
||||||||||||
|
Name |
Fees earned or paid in cash |
Option Awards ($) |
Total |
|||||||||
|
Andrew Pilaro |
$ | 10,000 | $ | 14,500 | $ | 24,500 | ||||||
|
Laurie Bradley |
$ | 10,000 | $ | 14,500 | $ | 24,500 | ||||||
|
David Ogden |
$ | 4,000 | $ | 7,250 | $ | 11,250 | ||||||
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
To the knowledge of the management of the Company the following table sets forth the beneficial ownership of our common stock as of March 31, 2025 of each of our directors and executive officers, and all of our directors and executive officers as a group, and other beneficial owners holding more than five percent of the Company’s issued and outstanding shares.
|
Amount and Nature of Beneficial Ownership |
Percent of Class (2) |
|||||||
|
W. Austin Lewis, IV |
3,348,298 | 39 | % | |||||
|
Allan Pratt |
2,222,273 | (3) | 26 | % | ||||
|
David Scott |
134,008 | (6) | 2 | % | ||||
|
John Smith |
887,100 | 10 | % | |||||
|
David Ogden |
55,000 | (4) | 1 | % | ||||
|
Laurie Bradley |
119,217 | (5) | 1 | % | ||||
|
Andrew Pilaro |
110,000 | (1) | 1 | % | ||||
|
All directors beneficial owners |
6,856,911 | 80 | % | |||||
|
(1) |
Includes options to purchase 102,000 shares of the Company’s common stock. |
|
(2) |
Percentages are calculated on the basis of the amount of outstanding securities plus for such person or group, any securities that person or group has the right to acquire within 60 days. |
|
(3) |
Included in this amount are shares authorized and reserved for future issuance from exchangeable shares. |
|
(4) |
Includes options to purchase 55,000 shares of the Company’s common stock. |
|
(5) |
Includes options to purchase 92,500 shares of the Company’s common stock. |
|
(6) |
Includes options to purchase 80,000 shares of the Company’s common stock |
To the knowledge of the management of the Company, based solely on our review of SEC filings, three shareholders are the beneficial owner of more than five percent of the Company’s common stock.
The information regarding the Company’s “Equity Compensation Plan Information” is incorporated herein by reference in Part II, Item 5 of this Annual Report on Form 10-K.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The Company did not engage in any transaction in 2024 or 2023, and does not currently propose any transaction, in which the Company was a participant whereas the amount involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest.
Review, Approval or Ratification of Transactions with Related Parties
It is our unwritten policy, which policy is not otherwise evidenced, for any related party transaction that involves more than a de minimis obligation, expense or payment or stock option or equity grants, to obtain approval by our entire board of directors prior to our entering into any such transaction. In conformity with our various policies on related party transactions, any transactions discussed in this Item 12 have been reviewed and approved by our board of directors.
Director Independence
The Company has a majority of independent directors with Laurie Bradley as the sole member of the compensation committee and Andrew Pilaro is the sole member of the audit committee.
Our board of directors currently consists of three members. Our board of directors determined that the three directors, Andrew Pilaro, Laurie Bradley and David Ogden, are independent under the standards of the “Nasdaq Global Market” pursuant to Nasdaq Listing Rule 5605.
Item 14. Principal Accountant Fees and Services
dbbmckennon is our independent registered public accounting firm for the period of May 29, 2024 through current, KMJ Corbin & Company LLP (“KMJ”) was our independent registered public accounting firm through May 29, 2024 and for year ended December 31, 2023.
The following is a summary of the fees billed to the Company by KMJ and dbbmckennon for professional services rendered for the years ended December 31, 2024 and 2023. These fees are for work performed in the years indicated and, in some instances, we have estimated the fees for services rendered but not yet billed.
|
2024 |
2023 |
|||||||
|
Audit Fees: |
||||||||
|
Consists of fees billed for professional services rendered for the audit of the Company’s annual financial statements and the review of the interim financial statements included in the Company’s Quarterly Reports (together, the “Financial Statements” ) and for services normally provided in connection with statutory and regulatory filings or engagements |
$ | 67,500 | $ | 78,500 | ||||
|
Tax Fees |
||||||||
|
Consists of fees billed for tax compliance, tax advice and tax planning |
6,900 | 6,600 | ||||||
|
Total All Fees |
$ | 74,400 | $ | 85,100 | ||||
The Audit Committee approves all audit and audit-related fees. The Audit Committee is required to pre-approve all non-audit services to be performed by the auditor. The percentage of hours expended on the principal accountant’s engagement to audit the Company’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was 0%.
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)(1) Financial Statements
For a list of the financial information included herein, see “Index to Audited Consolidated Financial Statements” on page 35 of this Annual Report on Form 10-K.
(a)(2) Financial Statements Schedules
All schedules are omitted because they are not applicable, or the required information is included in the financial statements or notes thereto.
(a)(3) Exhibits
The list of exhibits filed as a part of this Annual Report on Form 10-K is set forth on the Exhibit Index immediately preceding the exhibits hereto and is incorporated herein by reference.
Item 16. Form 10-K Summary
None.
EXHIBIT INDEX
|
No. |
Description of Exhibits |
|
|
Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to Form 8-K, filed on November 25, 2003) |
||
|
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K, filed on December 8, 2004) |
||
|
Certificates of Amendment of Certificate of Incorporation of the Company effective December 30, 2016 (incorporated by reference to Exhibit 3.1 to Form 8-K filed on December 23, 2016) |
||
|
Amendment No. 1 to Bylaws effective December 30, 2016 (incorporated by reference to Exhibit 3.2 to Form 8-K filed on December 23, 2016) |
||
|
Specimen of certificate for Common Stock (incorporated by reference to Exhibit 4.1 to Form SB-2/A filed on December 1, 2000) |
||
|
2002 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 10.17 to Form 10-KSB filed on March 31, 2003) |
||
|
2011 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 99.1 to Form S-8 filed on February 2, 2011) |
||
|
2018 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 10.35 to Form 10-K filed on April 1, 2019 ) |
||
|
PAID, Inc. 2012 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on October 18, 2012) |
||
|
Agreement for Non-Qualified Stock Option under the PAID, Inc. 2012 Non-Qualified Stock Option Plan awarded to W. Austin Lewis, IV, dated October 15, 2012 (incorporated by reference to Exhibit 10.2 to Form 10-Q filed on October 18, 2012) |
||
|
Agreement for Non-Qualified Stock Option under the PAID, Inc. 2011 Non-Qualified Stock Option Plan awarded to W. Austin Lewis, IV, dated August 8, 2012 (incorporated by reference to Exhibit 10.3 to Form 10-Q filed on October 18, 2012) |
||
|
Amalgamation Agreement dated September 1, 2016 by and among PAID, Inc., emergeIT, Inc., 2534845 Ontario Inc. and 2534841 Ontario Inc. (incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 23, 2016) |
||
|
Exchange and Call Rights Agreement (incorporated by reference to Exhibit 10.2 to Form 8-K filed on December 23, 2016) |
||
|
Support Agreement (incorporated by reference to Exhibit 10.4 to Form 8-K filed on December 23, 2016) |
||
|
Employment Agreement for Allan Pratt (incorporated by reference to Exhibit 10.5 to Form 8-K filed on December 23, 2016) |
||
|
Employment Agreement for W. Austin Lewis IV dated March 29, 2021 (incorporated by reference to Exhibit 10.11 to Form 10-K filed on March 31, 2021) |
||
|
Non-Compete Agreement for W. Austin Lewis IV dated March 29, 2021 (incorporated by reference to Exhibit 10.12 to Form 10-K filed on March 31, 2021) |
||
| 10.13+ | Addendum to Employment Agreement for W. Austin Lewis IV dated March 21, 2023 (incorporated by reference to Exhibit 10.13 to Form 10-K filed on March 31, 2023) | |
| 10.14+ | Employment Agreement for David Scott dated March 29, 2023 (incorporated by reference to Exhibit 10.14 to Form 10-K filed on March 31, 2023) | |
|
Securities Purchase Agreement dated March 26, 2024, by and between Paid, Inc. and Embolx, Inc. (incorporated by reference to Exhibit 10.15 to Form 10-K filed April 1, 2024) |
||
|
Convertible Note dated March 26, 2024 by Embolx, Inc for the benefit of Paid, Inc. (incorporated by reference to Exhibit 10.16 to Form 10-K filed April 1, 2024) |
||
|
Security Agreement dated March 26, 2024 by and between Embolx, Inc. and Paid, Inc. (incorporated by reference to Exhibit 10.17 to Form 10-K filed April 1, 2024) |
||
|
31.2* |
CFO Certification required under Section 302 of Sarbanes-Oxley Act of 2002 |
|
|
32.0* |
CEO and CFO Certification required under Section 906 of Sarbanes-Oxley Act of 2002 |
|
|
EX-101.INS |
Inline XBRL Instance Document |
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|
EX-101.SCH |
Inline XBRL Taxonomy Extension Schema |
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EX-101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase |
|
|
EX-101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase |
|
|
EX-101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase |
|
|
EX-101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase |
|
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) |
|
*filed herewith |
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|
+Indicates a management contract or any compensatory plan, contract or arrangement |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
PAID, INC. |
||
|
By: |
/s/ W. Austin Lewis, IV |
|
|
Date: April 15, 2025 |
W. Austin Lewis, IV, Chief Executive Officer, Chief Financial 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.
|
Signature |
Title |
Date |
|||
|
/s/ Andrew Pilaro |
|||||
|
Andrew Pilaro |
Director |
April 15, 2025 |
|||
|
/s/ Laurie Bradley |
|||||
|
Laurie Bradley |
Director |
April 15, 2025 |
PAID, INC. & SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2024 AND 2023
|
Report of Independent Registered Public Accounting Firm (PCAOB ID: |
F-1 |
| Report of Independent Registered Public Accounting Firm (PCAOB ID: 170) | F-2 |
|
Consolidated Balance Sheets as of December 31, 2024 and 2023 |
F-3 |
|
Consolidated Statements of Income and Comprehensive Income for the Years ended December 31, 2024 and 2023 |
F-4 |
|
Consolidated Statements of Changes in Shareholders’ Equity for the Years ended December 31, 2024 and 2023 |
F-5 |
|
Consolidated Statements of Cash Flows for the Years ended December 31, 2024 and 2023 |
F-6 |
|
Notes to Consolidated Financial Statements |
F-7 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Paid, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Paid, Inc. and subsidiaries (collectively the “Company”) as of December 31, 2024, the related consolidated statements of operations, shareholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current year audit of the financial statements that was communicated, or required to be communicated, to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Recoverability of Note Receivable
Description of the Matter:
As discussed in Notes 4 and 5 to the financial statements, the Company has a note receivable from a third party. Management’s assessment of the recoverability of the note receivable involves significant judgment and estimates related to the borrowers’ financial condition and future sources of cash flows. These were the principal considerations that led us to determine this as a critical audit matter.
How We Addressed the Matter in our Audit:
We obtained an understanding of the controls over the Company’s identification of the allowance estimation process. To evaluate the third party’s ability to repay the note, our audit procedures included, among others, obtaining and reviewing the note receivable agreements, reviewing the third party’s financial statements and cash flow projections, confirming with the third party as to the balance and terms of the note receivable, and evaluating subsequent events.
/s/
We have served as the Company's auditor since 2024.
April 15, 2025
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
PAID, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of PAID, Inc. and subsidiaries (the “Company”) as of December 31, 2023, the related consolidated statements of income and comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
|
/s/ KMJ Corbin & Company LLP |
|
We served as the Company’s auditor from 2013 to 2024.
Glendora, California
April 1, 2024 (except for the “Prior Period Corrections” section of Note 3, as to which the date is April 15, 2025)
PAID, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31,
|
2024 |
2023 |
|||||||
|
ASSETS |
||||||||
|
Current assets: |
||||||||
|
Cash and cash equivalents |
$ | $ | ||||||
|
Accounts receivable, net |
||||||||
|
Note receivable, net of discount |
||||||||
|
Prepaid expenses and other current assets |
||||||||
|
Total current assets |
||||||||
|
Property and equipment, net |
||||||||
|
Intangible assets, net |
||||||||
|
Operating lease right-of-use assets |
||||||||
|
Notes receivable, long term |
||||||||
|
Total assets |
$ | $ | ||||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
|
Current liabilities: |
||||||||
|
Accounts payable |
$ | $ | ||||||
|
Accrued expenses |
||||||||
|
Contract liabilities |
||||||||
|
Operating lease obligations |
||||||||
|
Total current liabilities |
||||||||
|
Long-term liabilities: |
||||||||
|
Deferred tax liability, net |
||||||||
|
Uncertain tax position liability |
||||||||
|
Operating lease obligation – net of current position |
||||||||
|
Total liabilities |
||||||||
|
Commitments and contingencies (Note 9.) |
|
|
||||||
|
Shareholders’ equity: |
||||||||
|
Series A Preferred stock, $ |
||||||||
|
Common stock, $ |
||||||||
|
Accrued common stock bonus |
||||||||
|
Additional paid-in capital |
||||||||
|
Accumulated other comprehensive income |
||||||||
|
Accumulated deficit |
( |
) | ( |
) | ||||
|
Common stock in treasury, at cost, |
( |
) | ( |
) | ||||
|
Total shareholders’ equity |
||||||||
|
Total liabilities and shareholders’ equity |
$ | $ | ||||||
See accompanying notes to consolidated financial statements
PAID, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31,
|
2024 |
2023 |
|||||||
|
Revenues, net |
$ | $ | ||||||
|
Cost of revenues |
||||||||
|
Gross profit |
||||||||
| Operating expenses: | ||||||||
|
Salaries and related |
||||||||
|
General and administrative |
||||||||
|
Amortization of intangible assets |
||||||||
|
Share-based compensation |
||||||||
|
Total operating expenses |
||||||||
|
Income (loss) from operations |
( |
) | ( |
) | ||||
|
Other income (expense): |
||||||||
|
Interest income |
||||||||
|
Other income |
||||||||
|
Total other income |
||||||||
|
Income before income tax (benefit) provision |
||||||||
|
Income tax (benefit) provision |
( |
) | ( |
) | ||||
|
Net income |
$ | $ | ||||||
|
Net income per share – basic |
$ | $ | ||||||
|
Net income per share – diluted |
$ | $ | ||||||
|
Weighted average number of common shares outstanding – basic |
||||||||
|
Weighted average number of common shares outstanding – diluted |
||||||||
|
Consolidated statements of comprehensive income: |
||||||||
|
Net income |
$ | $ | ||||||
|
Other comprehensive income (loss): |
||||||||
|
Foreign currency translation adjustments |
( |
) | ||||||
|
Comprehensive income |
$ | $ | ||||||
See accompanying notes to consolidated financial statements
PAID, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
| Common Stock |
Accrued Common |
Additional Paid-in |
Accumulated Other Comprehensive |
Accumulated |
Treasury Stock |
|
||||||||||||||||||||||||||||||
| Shares | Amount | Stock Bonus | Capital | Income | Deficit |
Shares |
Amount |
Total | ||||||||||||||||||||||||||||
|
Balance, January 1, 2023, as corrected |
$ | $ | $ | $ | $ | ( |
) | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||
|
Foreign currency translation adjustment |
- | - | ||||||||||||||||||||||||||||||||||
|
Issuance of common stock for accrued bonus |
( |
) | ||||||||||||||||||||||||||||||||||
|
Issuance of common stock for signing bonus |
||||||||||||||||||||||||||||||||||||
|
Share-based compensation expense |
- | - | - | |||||||||||||||||||||||||||||||||
| Issuance of common stock for bonus | ||||||||||||||||||||||||||||||||||||
|
Option exercise |
||||||||||||||||||||||||||||||||||||
|
Net income |
- | |||||||||||||||||||||||||||||||||||
|
Balance December 31, 2023 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
|
Foreign currency translation adjustment |
- | ( |
) | ( |
) | |||||||||||||||||||||||||||||||
|
Issuance of common stock for accrued bonus |
( |
) | ||||||||||||||||||||||||||||||||||
|
Share-based compensation expense |
- | 193,246 | - | |||||||||||||||||||||||||||||||||
|
Option exercise |
||||||||||||||||||||||||||||||||||||
|
Purchase of treasury stock |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
|
Net income |
||||||||||||||||||||||||||||||||||||
|
Balance December 31, 2024 |
$ | $ | $ | $ | $ | ( |
) | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||
See accompanying notes to consolidated financial statements
PAID, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
|
2024 |
2023 |
|||||||
|
Cash flows from operating activities: |
||||||||
|
Net income |
$ | $ | ||||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
|
Depreciation and amortization |
||||||||
|
Amortization of operating lease right-of-use assets |
||||||||
|
Accretion of discount on note receivable |
( |
) | ( |
) | ||||
|
Share-based compensation |
||||||||
|
Deferred income taxes |
( |
) | ( |
) | ||||
|
Interest and default income accrued on note receivable |
( |
) | ( |
) | ||||
|
Changes in assets and liabilities: |
||||||||
|
Accounts receivable |
( |
) | ( |
) | ||||
|
Prepaid expenses and other current assets |
( |
) | ||||||
|
Accounts payable |
( |
) | ||||||
|
Uncertain tax position liability |
||||||||
|
Accrued expenses |
( |
) | ||||||
|
Contract liabilities |
||||||||
|
Operating lease obligations |
( |
) | ( |
) | ||||
| Net cash provided by (used in) operating activities | ||||||||
|
Cash flows from investing activities: |
||||||||
|
Issuance of notes receivable |
( |
) | ||||||
|
Purchase of property and equipment |
( |
) | ||||||
|
Net cash used in investing activities |
( |
) | ||||||
|
Cash flows from financing activities: |
||||||||
|
Proceeds from option exercise |
||||||||
|
Repurchase of common stock |
( |
) | ||||||
|
Net cash provided by financing activities |
||||||||
|
Effect of exchange rate changes on cash and cash equivalents |
( |
) | ||||||
|
Net change in cash and cash equivalents |
( |
) | ||||||
|
Cash and cash equivalents, beginning of year |
||||||||
|
Cash and cash equivalents, end of year |
$ | $ | ||||||
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
||||||||
|
Cash paid during the year for: |
||||||||
|
Income taxes |
$ | $ | ||||||
|
Interest |
$ | $ | ||||||
|
SUPPLEMENTAL DISCLOSURES OF NON-CASH ITEMS |
||||||||
| Increase in note receivable for reimbursable expenses | $ | $ | ||||||
|
Increase in note receivable for discount |
$ | $ | ||||||
| Adjustment to operating lease right-of-use assets and operating lease obligations due to lease amendment. | $ | $ | ||||||
|
Issuance of common shares in settlement of accrued common stock bonus |
$ | $ | ||||||
| Operating lease liabilities from obtaining lease right-of-use assets | $ | $ | ||||||
See accompanying notes to consolidated financial statements
PAID, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2024 AND 2023
NOTE 1. ORGANIZATION
PAID, Inc. (“PAID”, the “Company”, “we”, “us”, or “our”) has developed a full line of SaaS-based business services including PaidPayments, PaidCart, PaidShipping and PaidWeb. These solutions are developed to provide businesses with a streamlined experience for website creation, online sales, payment collection and shipping all in one platform.
ShipTime Canada Inc. (“ShipTime”) has developed a SaaS-based application, which focuses on the small and medium business segments. This offering allows members to quote, process, generate labels, dispatch and track courier and LTL shipments all from a single interface. The application provides customers with a choice of today’s leading couriers and freight carriers all with discounted pricing allowing members to save on every shipment. ShipTime can also be integrated into on-line shopping carts to facilitate sales via e-commerce. We actively sell directly to small and medium businesses and through long standing partnerships with selected associations throughout Canada.
Paid offers a robust platform enabling small and medium businesses to launch websites via our catalog of templates. Our platform includes a wide array of features such as mobile editing, search engine optimization, collaboration tools, pre-designed templates, and can be integrated with multiple platforms. PaidCart serves as a comprehensive solution for small and medium businesses looking to expand their online sales through multiple channels. It provides a centralized system to manage sales across various platforms, with additional functionalities for currency and language management, promotional sales, and abandoned cart recovery. PaidPayments and PaidShipping seamlessly interface with PaidCart to facilitate the checkout and shipping processes. PaidPayments provides businesses with a secure and efficient way to conduct online transactions including a virtual terminal, invoicing capability, subscriptions processing, checkout pages, and a point-of-sale system with support for USD, CAD, and EUR currencies. PaidShipping delivers a solution to quote, process, generate labels, dispatch and track courier and LTL shipments all from a single interface. We offer savings through partnerships with leading carriers. It includes a multi-courier comparison tool, integrations with eCommerce platforms and branded tracking.
NOTE 2. LIQUIDITY AND MANAGEMENT’S PLANS
As of December 31, 2024, the Company reported cash and cash equivalents of $
Management believes that the Company has adequate cash resources to fund operations during the next 12 months after the filing of this annual report on Form 10-K. However, there can be no assurance that the anticipated growth of the existing products will occur, and that the Company will be successful in launching new products and services. To address the cash requirements, Management has considered a reduction in expenses and the issuance of stock for select payroll and consulting expenses. They may also seek alternative sources of capital to support the growth of future operations.
Although there can be no assurances, the Company believes that the above management plan will be sufficient to meet the Company’s working capital requirements through April 15, 2026 and will have a positive impact on the Company for the foreseeable future.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Principles of Consolidation
The consolidated financial statements include the accounts of PAID, Inc. and its wholly owned subsidiaries, ShipTime Canada Inc. All intercompany accounts and transactions have been eliminated.
Foreign Currency
The currency of ShipTime, the Company’s international subsidiary, is in Canadian dollars. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at each balance sheet date. Results of operations and cash flows are translated using the average exchange rates throughout the period. The effect of exchange rate fluctuations on translation of assets and liabilities is included as a separate component of shareholders’ equity in accumulated other comprehensive income.
Geographic Concentrations
The Company conducts business in the U.S. and Canada. For customers headquartered in their respective countries, the Company derived approximately
At December 31, 2024 and 2023, the Company maintained
Comprehensive Income (Loss)
Comprehensive income (loss) includes all changes in equity (net assets) during a period from non-owner sources. For the years ended December 31, 2024 and 2023, the components of comprehensive income (loss) consist solely of foreign currency translation gains (losses).
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates made by the Company’s management include, but are not limited to, the collectability of notes receivable. Actual results could materially differ from those estimates.
Fair Value Measurements
The Company measures the fair value of certain of its financial assets on a recurring basis. A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
At December 31, 2024 and 2023, the Company’s financial instruments include cash and cash equivalents, accounts receivable, notes receivable, accounts payable, and accrued expenses. The carrying amount of cash and cash equivalents, accounts receivable, notes receivable, accounts payable, and accrued expenses approximate their fair value due to the short-term maturities of these instruments.
Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with initial maturities of three months or less to be cash equivalents.
Concentration of Risk
The Company maintains cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to USD $250,000 and the Canadian Depositors Insurance Corporation (“CDIC”) up to CAD $100,000. At December 31, 2024, the Company had amounts that exceeded the CDIC insurance limits but none that were in excess of the FDIC insurance limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk related to these deposits.
The Company extends credit based on an evaluation of the customer's financial condition, generally without requiring collateral. Exposure to losses on accounts receivable is principally dependent on each customer’s financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses. Although the Company expects to collect amounts due, actual collections may differ from the estimated amounts. As of the years ended December 31, 2024 and 2023, the Company recorded an allowance for credit losses of $
As of December 31, 2024 and 2023, there was customer that accounted for more than 10% of the accounts receivable balance for the year. The loss of this customer would not have a significant impact on our operations.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of to years. Any leasehold improvements are depreciated at the lesser of the useful life of the asset or the lease term. Equipment purchased under finance leases is amortized on a straight-line basis over the estimated useful life of the asset or the term of the lease, whichever is shorter. Expenditures for repairs and maintenance are charged to expense as incurred.
Right-of-Use Assets
A right-of-use asset represents a lessee’s right to use a leased asset for the term of the lease. Our right-of-use assets consist of an operating lease for office space.
Right-of-use assets are measured initially at the present value of the lease payments, plus any lease payments made before a lease began and any initial direct costs, such as commissions paid to obtain a lease.
Right-of-use assets are subsequently measured at the present value of the remaining lease payments, adjusted for incentives, prepaid or accrued rent, and any initial direct costs not yet expensed.
Intangible Assets
Intangible assets consist of patents, client lists, trade names and customer relationships, which are being amortized on a straight-line basis over their estimated useful lives. Currently the only intangible assets remaining is customer relationships with an estimated life of years.
Long-Lived Assets
The Company reviews the carrying values of its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the expected future cash flows from the use of the asset and its eventual disposition is less than the carrying amount of the asset, an impairment loss is recognized and measured using the fair value of the related asset. impairment charges were recognized during the years ended December 31, 2024 and 2023. There can be no assurance, however, that market conditions will not change or demand for the Company’s services will continue, which could result in impairment of long-lived assets in the future.
Revenue Recognition
The Company generates revenues principally from fees for coordinating shipping services, brewery management software subscriptions, eCommerce services and client services (see Note 4).
Cost of Revenues
Cost of revenues includes carrier services, web hosting, data storage, commissions, carrier insurance costs and merchant processing interchange fees.
Operating Expenses
Operating expenses include indirect expenses, including credit card processing fees, marketing, payroll, travel, facility costs, amortization of intangible assets and other general and administrative expenses.
Advertising
Advertising costs are charged to expenses as incurred. For the years ended December 31, 2024 and 2023, advertising expenses totaled $
Share-Based Compensation
The Company grants options to purchase the Company’s common stock to employees, directors and consultants under stock option plans. The benefits provided under these plans are share-based payments that the Company accounts for using the fair value method. During the year ended December 31, 2024 the Company recorded $
The fair value of each option award is estimated on the date of grant using a Black-Scholes-Merton option pricing model (“Black-Scholes-Merton model”) that uses assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, expected stock price volatility, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. Expected volatility is based on the historical volatility of the Company’s common stock. The expected terms of options granted are based on analyses of historical employee termination rates and option exercises. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant. Since the Company does not expect to pay dividends on common stock in the foreseeable future, it estimated the dividend yield to be
Share-based compensation expense recognized during a period is based on the value of the portion of share-based payment awards that is ultimately expected to vest and is amortized under the straight-line attribution method. As share-based compensation expense recognized in the accompanying consolidated statements of income and comprehensive income for the years ended December 31, 2024 and 2023 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. The fair value method requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates forfeitures based on historical experience. Changes to the estimated forfeiture rate are accounted for as a cumulative effect of change in the period the change occurred.
Since the Company has a net operating loss carry-forward as of December 31, 2024 and 2023, excess tax benefits for tax deductions related to share-based awards were recognized from any stock options exercised in the years ended December 31, 2024 and 2023 that would have resulted in a reclassification from cash flows from operating activities to cash flows from financing activities.
Income Taxes
The Company accounts for income taxes and the related accounts under the liability method. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the income tax bases of assets and liabilities. A valuation allowance is applied against any net deferred tax asset if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Therefore, the Company has recorded a full valuation allowance against the net deferred tax assets. The Company’s income tax provision includes state minimum taxes.
The Company recognizes any uncertain income tax positions on income tax returns at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained (see Note 11).
The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.
The Company is subject to taxation in the U.S., and Canada and various state jurisdictions.
Income (Loss) Per Common Share
Basic income (loss) per share represents income (loss) divided by the weighted-average number of common shares outstanding during the period. Diluted income (loss) per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income (loss) that would result from the assumed issuance. For the year ended December 31, 2024 and 2023, there were approximately
The following is a reconciliation of the numerators and denominators of the basic and diluted income per share computations for the years ended December 31:
|
2024 |
2023 |
|||||||
| Numerator: | ||||||||
|
Net income |
$ | $ | ||||||
| Denominator: | ||||||||
|
Basic weighted-average shares outstanding |
||||||||
|
Effect of dilutive securities |
||||||||
|
Diluted weighted-average shares outstanding |
||||||||
|
Net income per share – basic |
$ | $ | ||||||
|
Net income per share – diluted |
$ | $ | ||||||
Segment Reporting
The Company reports information about segments of its business in its annual consolidated financial statements and reports selected segment information in its quarterly reports issued to shareholders. The Company also reports on its entity-wide disclosures about the products and services it provides and reports revenues and its major customers. The Company’s reportable segments are managed separately based on fundamental differences in their operations. At December 31, 2024, the Company operated in the following reportable segments:
|
a) |
Client services; |
|
b) |
eCommerce services; |
|
c) |
Shipping coordination and label generation services; and |
|
d) |
Corporate operations. |
The Company evaluates performance and allocates resources based on operating income. The accounting policies of the reportable segments are the same as those described in this summary of significant accounting policies. The Company’s chief operating decision maker is the Chief Executive Officer/Chief Financial Officer.
The following table compares total revenues for the years indicated.
|
Years Ended |
||||||||
|
December 31, 2024 |
December 31, 2023 |
|||||||
|
Client services |
$ | $ | ||||||
|
eCommerce services |
||||||||
|
Shipping coordination and label generation services |
||||||||
|
Total revenues, net |
$ | $ | ||||||
The following table compares total income (loss) from operations for the years indicated.
|
Years Ended |
||||||||
|
December 31, 2024 |
December 31, 2023 |
|||||||
|
Client services |
$ | $ | ||||||
|
eCommerce services |
( |
) | ||||||
|
Shipping coordination and label generation services |
( |
) | ( |
) | ||||
|
Corporate operations |
( |
) | ( |
) | ||||
|
Total income (loss) from operations |
$ | ( |
) | $ | ( |
) | ||
During 2024 and 2023, the Company recorded depreciation and amortization expense of $
Prior Period Corrections
Following an analysis of quantitative and qualitative factors in accordance with SEC Staff Accounting Bulletin 99, Materiality, the Company concluded that the errors below were immaterial to the previously issued consolidated financial statements, and thus, no restatement of any of the Company’s previously issued financial statements is necessary. The Company revised the reported balances to correct for the immaterial errors accordingly.
During the fourth quarter of 2024, the Company identified and corrected immaterial errors impacting the December 31, 2023 balances previously reported related to cash and cash equivalents. These revisions resulted in an adjustment to the opening accumulated deficit balance as of January 1, 2023 of $
Recent Accounting Pronouncements
Accounting Standard Update 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). In December 2023, the FASB issued ASU 2023-09, which requires more detailed income tax disclosures. The guidance requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the disclosure requirements related to the new standard.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures which provides guidance to improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about reportable segment’s expenses. The new guidance must be adopted for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, and retrospective application is required for all periods presented. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.
NOTE 4. REVENUE FROM CONTRACTS WITH CUSTOMERS
The Company recognizes revenue by taking into consideration the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Due to the nature of the Company’s service and product offerings and contracts associated with these, the Company’s deliverables do not fluctuate, and its revenue recognition is consistent. The Company evaluates whether amounts billed to customers should be reported as revenues on a gross or net basis. Generally, revenue is recorded on a gross basis when the Company is primarily responsible for fulfilling the promise to provide the services, when it assumes the risk of loss, when it has discretion in setting the prices for the services to the customers, and when the Company has the ability to direct the use of the services provided by the third party. We generally are responsible for the fulfilment of a customer order despite the fact we do not directly provide the delivery services; we can redirect delivery to other shipping companies in our network. We control the price for which the customer pays and generally collect the gross shipping fees and remit the contractual rate to this shipping company. Our risk of loss relates to credit card chargebacks, certain self-insured shipping losses and other miscellaneous charges that we cannot pass through to the shipping company.
Nature of Goods and Services
For label generation service revenues, the Company recognizes revenue when a customer has successfully prepared a shipping label, and their shipment is delivered. Customers with pickups and shipments in transit after the end of the reporting period are recorded as contract liabilities on the condensed consolidated balance sheets. The service is offered to consumers via an online registration and allows users to create a shipping label using a credit card on their account (all customers must have a valid credit card on file to process shipments on the ShipTime platform).
For brewery management software revenues, the Company recognizes subscription revenue on a monthly basis. Brewery management software subscribers are billed monthly at the first of the month. All payments are made via credit card for the following month.
eCommerce and merchant processing revenue consists of fees a seller pays us to process their payment transactions and is recognized upon authorization of a transaction. Revenue is recognized net of estimated refunds, which are reversals of transactions initiated by sellers. We act as the merchant of record for our sellers, which puts us in their shoes with respect to card networks and puts the risk for refunds and chargebacks on us. The gross transaction fees collected from sellers is recognized as revenue as we are the primary obligor to the seller and are responsible for processing the payment, have latitude in establishing pricing with respect to the sellers and other terms of service, have sole discretion in selecting the third party to perform the settlement, and assume the credit risk for the transaction processed.
Revenue Disaggregation
The Company operates in reportable segments (see Note 3).
Performance Obligations
At contract inception, an assessment of the goods and services promised in the contracts with customers is carried out and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services). The Company fulfills nearly all of its performance obligations within a one-to-two-week period and contracts with customers have an original expected duration of less than one month. The Company generally has an unconditional right to consideration when the services are initiated or soon thereafter. The amount due from the customer is either collected up front or recorded as accounts receivable. The amounts related to services that are not yet completed at the reporting date are presented as contract liabilities. The Company measures the performance of its obligations as services are completed over the life of a shipment, including services at origin, freight and destination. This method of measurement of progress depicts the pattern of the Company's actual performance under the contracts with the customer. For arrangements under which the Company provides a subscription for brewery management software, the Company satisfies its performance obligations over the life of the subscription, typically twelve months or less.
For arrangements under which the Company provides a subscription for brewery management software, the Company satisfies its performance obligations over the life of the subscription, typically twelve months or less.
Merchant processing customers receive a merchant identification number which allows them to process credit card transactions. Once the transaction is approved, the funds are distributed in an overnight feed and the Company has met its performance obligation.
The Company has no shipping and handling activities related to contracts with customers.
Revenues are recognized net of any taxes collected from customers, which are subsequently remitted to government authorities.
Significant Payment Terms
Pursuant to the Company’s contracts with its customers, amounts are collected up front primarily through credit/debit card transactions. Accordingly, the Company determined that its contracts with customers do not include extended payment terms or a significant financing component.
Measurement of Credit Losses
The Company has accounts receivable and note receivable and monitors the granting of credit and collecting debt on an ongoing basis. The Company maintains an allowance for doubtful accounts based on historical loss patterns, the number of days that billings are past due, and an evaluation of potential risk of loss associated with delinquent accounts. The Company has two notes receivable and is a senior secure lender with an absolute obligation for one of the notes. The primary note was evaluated for credit losses as of December 31, 2024 by considering the contractual obligation, the valuation of the assets and the senior position of the repayment.
Variable Consideration
In some cases, the nature of the Company’s contracts may give rise to variable consideration, including rebates and cancellations or other similar items that generally decrease the transaction price.
Variable consideration is estimated at the most likely amount that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the anticipated performance and all information (historical, current and forecasted) that is reasonably available.
Revenues are recorded net of variable consideration, such as rebates, refunds and cancellations.
Warranties
The Company’s products and services are provided on an “as is” basis and no warranties are included in the contracts with customers. Also, the Company does not offer separately priced extended warranty or product maintenance contracts.
Contract Assets
Typically, the Company has already collected revenue from the customer at the time it has satisfied its performance obligation. Accordingly, the Company has only a small balance of accounts receivable, totaling $
Contract Liabilities (Deferred Revenue)
Contract liabilities are recorded when cash payments are received in advance of the Company’s performance (including rebates). Contract liabilities were $
NOTE 5. NOTE RECEIVABLE
On October 13, 2022, the Company entered in a Securities Purchase Agreement (“SPA”) with respect to a secured $
The note receivable was in default effective June 19, 2024 in the amount of $
The Company does not believe there is any impairment to the note receivable due to its secured position on the assets of Embolx and its expectation that the amounts will be recoverable if and when Embolx consummates a financial or merger transaction which is expected to happen in 2025 or 2026.
The Company entered into a $
Interest of $
NOTE 6. PROPERTY AND EQUIPMENT
At December 31, property and equipment consisted of the following:
|
2024 |
2023 |
|||||||
|
Computer equipment and software |
$ | $ | ||||||
|
Office furniture and equipment |
||||||||
|
Website development costs |
||||||||
|
Accumulated depreciation |
( |
) | ( |
) | ||||
| $ | $ | |||||||
Depreciation expense of property and equipment for the years ended December 31, 2024 and 2023 amounted to $
NOTE 7. INTANGIBLE ASSETS
The Company holds several patents for the real-time calculation of shipping costs for items purchased through online auctions using a zip code as a destination location indicator. It includes shipping charge calculations across multiple carriers and accounts for additional characteristics of the item being shipped, such as weight, special packaging or handling, and insurance costs. These patents help facilitate rapid and accurate estimation of shipping costs across multiple shipping carriers and also include real-time calculation of shipping.
In addition, the Company has various intangible assets from past business combinations.
At December 31, 2024, intangible assets consisted of the following:
|
Patents |
Trade Name |
Technology & Software |
Customer Relationships |
Total |
||||||||||||||||
|
Gross carrying amount |
$ | $ | $ | $ | $ | |||||||||||||||
|
Accumulated amortization |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
At December 31, 2023, intangible assets consisted of the following:
|
Patents |
Trade Name |
Technology & Software |
Customer Relationships |
Total |
||||||||||||||||
|
Gross carrying amount |
$ | $ | $ | $ | $ | |||||||||||||||
|
Accumulated amortization |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
Amortization expense of intangible assets for the years ended December 31, 2024 and 2023 was $
Amortization of intangible assets for the next five years ending December 31 are as follows:
|
Year Ended December 31, |
||||
|
2025 |
$ | |||
|
2026 |
||||
|
2027 |
||||
|
2028 |
||||
|
2029 |
||||
| Thereafter | 473,081 | |||
|
Total amortization |
$ |
NOTE 8. ACCRUED EXPENSES
At December 31, accrued expenses consist of the following:
|
2024 |
2023 |
|||||||
|
Payroll and related costs |
$ | $ | ||||||
|
Royalties |
||||||||
|
Accrued cost of revenues |
||||||||
|
Sales tax |
||||||||
|
Other |
||||||||
|
Total |
$ | $ | ||||||
NOTE 9. COMMITMENTS AND CONTINGENCIES
Legal Matters
In the normal course of business, the Company periodically becomes involved in litigation and disputes. During 2021, the Company was notified of a dispute related to its non-renewal of the employment agreement with Mr. Allan Pratt, the Company’s former President, CEO and Chairman. On or around January 2020, the Company had allowed Mr. Pratt’s employment agreement to not renew, but Mr. Pratt alleges in a court in Canada that the Company terminated him and that the Company owes him a severance and bonus payment. Around the same time that Mr. Pratt’s employment term expired, the Company’s Board of Directors voted to reduce the size of the Board from five to three members, and Mr. Pratt and Mr. Austin Lewis, then CFO, automatically rolled off from the Board of Directors. More than a year later, in 2021, Mr. Pratt filed a claim in Delaware court to contest that decision. In July 2022, Mr. Pratt amended the Delaware complaint to dispute the proper authorization of a stock bonus that was awarded to the Company’s CEO in March 2021. On November 9, 2023, the Delaware court dismissed the claim contesting the reduction of the board size. The trial on the remaining claim was held before the Delaware court on December 5-6, 2024. Post-trial briefing in the Delaware action was completed on March 21, 2025, and the Delaware court is scheduled to hear post-trial arguments at a hearing on May 14, 2025. The Company has not recorded a reserve as the outcome of these matters cannot be determined.
Indemnities and Guarantees
The Company has made certain indemnities and guarantees, under which it may be required to make payments to a guaranteed or indemnified party, in relation to certain actions or transactions. The Company indemnifies its directors, officers, employees and agents, as permitted under the laws of the State of Delaware. In connection with its facility lease, the Company has agreed to indemnify its lessor for certain claims arising from the use of the facilities. The duration of the guarantees and indemnities varies and is generally tied to the life of the agreement. These guarantees and indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated nor incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities and guarantees in the accompanying consolidated balance sheets.
NOTE 10. SHAREHOLDERS’ EQUITY
Preferred Stock
The Company’s amended Certificate of Incorporation authorizes the issuance of
The Company filed a Certificate of Designations effective on December 30, 2016 which sets aside
Common Stock
In February 2020, ShipTime Canada amended its rights to exchange share of ShipTime Canada stock from
On March 21, 2023, the Company’s Board of Directors authorized the issuance of
On March 21, 2023, the Company’s Board of Directors approved the terms of the employment agreement for David Scott, the Company’s COO. Per the terms of the agreement, the Company issued
Share-Based Incentive Plans
During the years ended December 31, 2024 and 2023, the Company had three stock option plans that include both incentive and non-qualified options to be granted to certain eligible employees, non-employee directors, or consultants of the Company.
On March 23, 2018, the Board of Directors voted to approve the 2018 Stock Option Plan which reserves
On May 12, 2023, the Company received a notice of exercise of options to purchase
Active Plans:
2018 Plan
On March 23, 2018, the Company adopted the 2018 Non-Qualified Stock Option Plan (the “2018 Plan”). The purpose of the 2018 Plan is to provide long-term incentives and rewards to those employees of the Company, and any other individuals, whether directors, consultants or advisors who are in a position to contribute to the long-term success and growth of the Company. The options granted have a
|
Number of shares |
Weighted average exercise price per share |
|||||||
|
Options outstanding at January 1, 2024 |
$ | |||||||
|
Granted |
||||||||
|
Cancelled/Expired |
||||||||
|
Exercised |
||||||||
|
Options outstanding at December 31, 2024 |
$ | |||||||
2012 Plan
On October 15, 2012, the Company adopted the 2012 Non-Qualified Stock Option Plan (the “2012 Plan”). The purpose of the 2012 Plan is to provide long-term incentives and rewards to those employees of the Company, and any other individuals, whether directors, consultants or advisors who are in a position to contribute to the long-term success and growth of the Company. The options granted have a
|
Number of shares |
Weighted average exercise price per share |
|||||||
|
Options outstanding at January 1, 2024 |
$ | |||||||
|
Granted |
||||||||
|
Cancelled |
( |
) | ||||||
|
Exercised |
( |
) | ||||||
|
Options outstanding at December 31, 2024 |
$ | |||||||
2011 Plan
On February 1, 2011, the Company adopted the 2011 Non-Qualified Stock Option Plan (the “2011 Plan”). Under the 2011 Plan, employees and consultants may elect to receive their gross compensation in the form of options, exercisable at $
|
Number of shares |
Weighted average exercise price per share |
|||||||
|
Options outstanding at January 1, 2024 |
$ | |||||||
|
Granted |
||||||||
|
Cancelled |
||||||||
|
Exercised |
( |
) | ||||||
|
Options outstanding at December 31, 2024 |
$ | |||||||
Fair value of issuances
The Company granted
| 2024 | ||||
|
Expected term (based upon historical experience) (in years) |
||||
|
Expected volatility |
% | |||
|
Expected dividends |
|
|||
|
Risk free interest rate |
% | |||
For the years ended December 31, 2024 and 2023, the Company recorded total share-based compensation expense related to the common stock bonuses, other stock issuances, and stock options of $
The Company has an unrecognized share-based compensation expense of $
Summary of all stock option plans activity during the year ended December 31, 2024 is as follows:
|
Number of Shares |
Weighted Average Price |
Weighted Average Remaining Contractual Life (In Years) |
Aggregate Intrinsic Value |
|||||||||||||
|
Options outstanding at January 1, 2024 |
$ | |||||||||||||||
|
Granted |
||||||||||||||||
|
Cancelled/Expired |
( |
) | ||||||||||||||
|
Exercised |
( |
) | ||||||||||||||
|
Options outstanding and expected to vest at December 31, 2024 |
$ | $ | ||||||||||||||
|
Options exercisable at December 31, 2024 |
$ | $ | ||||||||||||||
The aggregate intrinsic value of options is calculated as the difference between the exercise price of options and the fair value of the Company’s common stock at December 31, 2024. The aggregate intrinsic value of the options exercised during the years ended December 31, 2024 and 2023 was $
NOTE 11. INCOME TAXES
The Company’s income (loss) before income tax (benefit) provision includes the following components for the years ended December 31:
|
2024 |
2023 |
|||||||
|
U.S. |
$ | $ | ||||||
|
Foreign |
( |
) | ( |
) | ||||
| $ | $ | |||||||
The Company is subject to taxation in the U.S., Canada, and Massachusetts. The (benefit) provision for income taxes for the years ended December 31 are summarized below:
|
2024 |
2023 |
|||||||
|
Current: |
||||||||
|
Federal |
$ | $ | ||||||
|
State |
||||||||
|
Foreign |
||||||||
|
Total current |
||||||||
|
Deferred: |
||||||||
|
Federal |
||||||||
|
State |
||||||||
|
Foreign |
( |
) | ( |
) | ||||
|
Total deferred |
( |
) | ( |
) | ||||
|
Income tax (benefit) provision |
$ | ( |
) | $ | ( |
) | ||
A reconciliation of income taxes computed by applying the statutory U.S. income tax rate to the Company’s income (loss) before income tax (benefit) provision to the income tax (benefit) provision is as follows for the years ended December 31:
|
2024 |
2023 |
|||||||
|
U.S. federal statutory tax rate |
% |
% |
||||||
|
State tax benefit, net |
% |
% |
||||||
|
Stock compensation |
% |
% |
||||||
|
Foreign rate differential |
( |
)% | ( |
)% | ||||
|
Attributes expiration |
% |
% |
||||||
|
Returns to Provision |
% |
( |
)% |
|||||
|
Other |
% |
% |
||||||
|
NOL Adjustment |
( |
)% |
( |
)% |
||||
|
Unrecognized tax benefit |
% |
( |
)% |
|||||
|
GILTI |
% |
% |
||||||
|
Interest and penalties |
% |
% |
||||||
|
Valuation allowance |
( |
)% |
( |
)% |
||||
|
Effective income tax rate |
( |
)% |
( |
)% |
||||
Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred tax liabilities are as follows as of December 31:
|
2024 |
2023 |
|||||||
|
Deferred taxes: |
||||||||
|
NOLs |
$ | $ | ||||||
|
Inventory and other reserves |
||||||||
|
Stock based compensation expense |
||||||||
|
Lease liability |
||||||||
|
Accruals |
||||||||
|
Other |
||||||||
|
Total deferred tax assets |
||||||||
|
Depreciation and amortization |
( |
) | ( |
) | ||||
|
Right-of-use assets |
( |
) | ||||||
|
Valuation allowance |
( |
) | ( |
) | ||||
|
Net deferred tax liabilities |
$ | ( |
) | $ | ( |
) | ||
Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The reduction in the valuation allowance is approximately $
As of December 31, 2024, the Company had net operating loss carryforwards for federal income tax purposes of approximately $
Utilization of the net operating losses may be subject to substantial annual limitation due to federal and state ownership change limitation provided by the Internal Revenue Code and similar state provisions. Such annual limitations could result in the expiration of the net operating losses and credits before their utilization. The Company has not performed an analysis to determine the limitation of the net operating loss carryforwards.
A valuation allowance of
The evaluation of uncertainty in a tax position is a two-step process. The first step involves recognition. The Company determines whether it's more likely than not that a tax position will be sustained upon tax examination including any resolution of any related appeals or litigation, based on only the technical merits of the position. The technical merits of a tax position are derived from both statutory and judicial authority (legislation and statutes, legislative intent, regulations, rulings, and case law) and their applicability to the facts and circumstances of the tax position. If a tax position does not meet the more-likely-than-not recognition threshold, the benefit of that position is not recognized in the consolidated financial statements. The second step is measurement. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the consolidated financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate resolution with a taxing authority. Uncertain tax positions are reviewed on an ongoing basis and are adjusted after considering facts and circumstances, including progress of tax audits, developments in case law and closing of statutes of limitation.
The following table summarizes the activity related to the Company’s gross unrecognized tax benefits at the beginning and end of the years ended December 31, 2024 and 2023:
|
2024 |
2023 |
|||||||
|
Gross unrecognized tax benefits at the beginning of the year |
$ | $ | ||||||
|
Increases related to current year positions |
||||||||
|
Increases (decreases) related to prior year positions |
( |
) | ||||||
|
Expiration of unrecognized tax benefits |
( |
) | ||||||
|
Gross unrecognized tax benefits at the end of the year |
$ | $ | ||||||
The amount of unrecognized tax benefits that would impact the Company’s effective tax rate, if recognized, is $
The income tax provision at December 31, 2024 reflects a full accounting of tax filings under ASC subtopic 740-10. The Company is subject to U.S. federal and Massachusetts state tax. With limited exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by the tax authorities for years before 2021. Generally, the tax years remain open for examination by the federal and Massachusetts authorities under a three-year statute of limitation. In addition, the Company's tax years starting 2005 and 2011 are subject to limited examination by the United States and Massachusetts authorities, respectively, due to the carryforward of unutilized net operating losses. ShipTime is subject to taxation in Canada and Ontario. The foreign subsidy is generally subject to examination for 4 years following the year in which the tax obligation originated. ShipTime is not currently under examination by the local tax authority. The Company recognizes interest and penalties related with income taxes, as estimated or incurred, as part of the income tax provision.
As of December 31, 2024 and 2023 the Company accrued $
NOTE 12. LEASES
We have an operating lease for our corporate office in Canada located at 700 Dorval Drive in Oakville Ontario. Our lease has a remaining lease term of months. Future renewal options are not likely to be executed as of the balance sheet date and are excluded from right-of-use assets and related lease liabilities.
We report operating lease assets, as well as operating lease current and noncurrent obligations on our consolidated balance sheets for the right to use the office space in our business.
The components of lease expense for the years ended December 31, were as follows:
|
2024 |
2023 |
|||||||
|
Operating lease cost |
$ | $ | ||||||
Supplemental balance sheet information related to leases was as follows:
|
December 31, 2024 |
December 31, 2023 |
|||||||
|
Operating leases: |
||||||||
|
Operating lease right-of-use assets |
$ | $ | ||||||
|
Current portion of operating lease obligations |
$ | $ | ||||||
|
Operating lease obligations, net of current portion |
||||||||
|
Total operating lease liabilities |
$ | $ | ||||||
|
Year Ended |
||||
|
Weighted Average Remaining Lease Term |
||||
|
Operating lease (in years) |
||||
|
Weighted Average Discount Rate |
||||
|
Operating lease |
% | |||
A summary of future minimum payments under non-cancellable operating lease commitment as of December 31, 2024 is as follows:
|
Years ending December 31, |
Total |
|||
|
2025 |
$ | |||
|
2026 |
||||
|
2027 |
||||
|
2028 |
||||
|
Total lease liabilities |
$ | |||
|
Less amount representing interest |
( |
) | ||
| Total | ||||
|
Less current portion |
( |
) | ||
|
Long term portion |
$ | |||
NOTE 13. SUBSEQUENT EVENTS
On March 07, 2025, the Board of Directors approved the allocation of the 2024 bonus accrual to be paid out in cash and shares of which $
On January 31, 2025 the Company amended its Note with Embolx to a forbearance agreement which is in effect until September 2025.
The Company has evaluated subsequent events through the filing of this Annual Report on Form 10-K and determined that there have been no events that have occurred that would require adjustment to or additional disclosure in the consolidated financial statements, except as disclosed herein.