Paid Inc 10-Q for FY2024 Q1
Paid Inc (PAYD)
About this 10-Q
Paid Inc filed this 10-Q on May 15, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).
Headline figures
Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $4.16M
- up 9.3% from $3.81M a year earlier
- Net income
- $299.56K
- compared with a net loss of $294.93K a year earlier
- Diluted EPS
- $0.04
- compared with -$0.04 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
OF THE SECURITIES EXCHANGE ACT OF 1934
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
COMMISSION FILE NUMBER
(Exact Name of as Specified in its Charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices) (Zip Code)
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(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol |
Name of each exchange on which registered |
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None |
None |
None |
Securities registered under Section 12(g) of the Act:
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 and posted 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, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer |
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Accelerated Filer |
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Smaller reporting company |
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Emerging Growth Company |
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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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
As of May 15, 2024, the issuer had outstanding
FORM 10-Q
TABLE OF CONTENTS
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Part I – Financial Information |
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Item 1. |
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Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
7-16 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Part II – Other Information |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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PART I – FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
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March 31, 2024 |
December 31, |
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(Unaudited) |
2023 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
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Accounts receivable, net |
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Note receivable, net of discount |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Intangible assets, net |
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Operating lease right-of-use assets, net |
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Total assets |
$ | $ | ||||||
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
$ | $ | ||||||
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Accrued expenses |
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Contract liabilities |
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Operating lease obligations |
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Total current liabilities |
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Long-term liabilities: |
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Deferred tax liability, net |
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Uncertain tax position liability |
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Total liabilities |
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Commitments and contingencies |
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Shareholders' equity: |
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Series A Preferred stock, $ authorized; shares issued and outstanding |
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Common stock, $ |
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Accrued common stock bonus |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
( |
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Common stock in treasury, at cost, |
( |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
$ | $ | ||||||
See accompanying notes to condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
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Three Months Ended |
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March 31, 2024 |
March 31, 2023 |
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Revenues, net |
$ | $ | ||||||
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Cost of revenues |
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Gross profit |
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Operating expenses: |
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Salaries and related |
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General and administrative |
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Share-based compensation |
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Amortization of other intangible assets |
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Total operating expenses |
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Loss from operations |
( |
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Other income (expense): |
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Interest income |
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Other income |
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Total other income |
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Income (loss) before income tax provision |
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Income tax provision |
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Net income (loss) |
$ | $ | ( |
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Net income (loss) per share – basic |
$ | $ | ( |
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Weighted average number of common shares outstanding – basic |
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Net income (loss) per share – diluted |
$ | $ | ( |
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Weighted average number of common shares outstanding – diluted |
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Condensed consolidated statements of comprehensive income (loss): |
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Net income (loss) |
$ | $ | ( |
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Other comprehensive loss: |
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Foreign currency translation adjustments |
(45,425 | ) | ( |
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Comprehensive income (loss) |
$ | $ | ( |
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See accompanying notes to condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(Unaudited)
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2024 |
2023 |
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Cash flows from operating activities: |
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Net income (loss) |
$ |
$ |
( |
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Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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Depreciation and amortization |
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Amortization of operating lease right-of-use assets |
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Accretion of discount on note receivable |
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Share-based compensation |
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Interest income accrued on note receivable |
( |
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Changes in assets and liabilities: |
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Accounts receivable |
( |
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Prepaid expenses and other current assets |
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Accounts payable |
( |
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Accrued expenses |
( |
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Contract liabilities |
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Operating lease obligations |
( |
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Net cash used in operating activities |
( |
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Cash flows from investing activities |
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Purchase of property and equipment |
( |
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Issuance of note receivable |
( |
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Net cash used in investing activities |
( |
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Cash flows from financing activities |
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Repurchase of common stock |
( |
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Net cash used in financing activities |
( |
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Effect of exchange rate changes on cash and cash equivalents |
( |
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Net change in cash and cash equivalents |
( |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period |
$ | $ | ||||||
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
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Cash paid during the period for: |
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Income taxes |
$ | $ | ||||||
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Interest |
$ | $ | ||||||
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SUPPLEMENTAL DISCLOSURES OF NON-CASH ITEMS |
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| Increase in note receivable for reimbursable expenses | ||||||||
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Issuance of common shares in settlement of accrued common stock bonus |
$ | $ | ||||||
See accompanying notes to condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2023
(Unaudited)
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Common Stock |
Accrued Common Stock |
Additional |
Accumulated Other Comprehensive |
Accumulated |
Treasury Stock |
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Shares |
Amount |
Bonus | Paid-in Capital | Income | Deficit |
Shares |
Amount |
Total | ||||||||||||||||||||||||||||
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Balance, January 1, 2023 |
$ | $ | $ | $ | $ | ( |
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Foreign currency translation adjustment |
- | ( |
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Issuance of common stock in settlement of accrued common stock bonus |
( |
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Issuance of common stock for signing bonus |
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Share-based compensation expense |
- | - | ||||||||||||||||||||||||||||||||||
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Net loss |
- | ( |
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Balance, March 31, 2023 |
$ | $ | $ | $ | $ | ( |
) | ( |
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PAID, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2024
(Unaudited)
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Common Stock |
Accrued Common Stock |
Additional |
Accumulated Other Comprehensive |
Accumulated |
Treasury Stock |
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Shares |
Amount |
Bonus | Paid-in Capital | Income |
Deficit |
Shares |
Amount |
Total | ||||||||||||||||||||||||||||
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Balance, January 1, 2024 |
$ | $ | $ | $ | $ | ( |
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Foreign currency translation adjustment |
- | ( |
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Issuance of common stock in settlement of accrued common stock bonus |
( |
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Purchase of treasury stock |
( |
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Share-based compensation expense |
- | - | ||||||||||||||||||||||||||||||||||
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Net income |
- | - | ||||||||||||||||||||||||||||||||||
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Balance, March 31, 2024 |
$ | $ | $ | $ | $ | ( |
) | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2024
Note 1. Organization and Significant Accounting Policies
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. Operating as a Payment Facilitator since 2019, 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.
General Presentation and Basis of Condensed Consolidated Financial Statements
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and with the rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2023 that was filed on April 1, 2024.
In the opinion of management, the Company has prepared the accompanying unaudited condensed consolidated financial statements on the same basis as its audited consolidated financial statements, and these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year 2024.
Liquidity and Management’s Plans
At March 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 quarterly report on Form 10-Q. In addition, management continues to explore opportunities and has organized additional resources to monetize its patents. However, there can be no assurance that 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.
Although there can be no assurances, the Company believes that the above management plans will be sufficient to meet the Company’s working capital requirements through the end of May 2025 and will have a positive impact on the Company for the foreseeable future.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of PAID, Inc. and its wholly owned subsidiaries, PAID Run, LLC and 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 March 31, 2024 and December 31, 2023. 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 March 31, 2024, the Company maintained
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 generally consist of an operating lease for a building.
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.
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 flow 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 three months ended March 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 revenue principally from fees for coordinating shipping services, sales of shipping calculator subscriptions, brewery management software subscriptions, merchant processing services and client services.
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 product offerings and contracts associated with those products, the Company’s deliverables do not fluctuate, and its revenue recognition is consistent.
Nature of Goods and Services
For label generation service revenues, the Company recognizes revenue when a customer has successfully prepared a shipping label and scheduled a pickup. Customers with pickups 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 shipping calculator revenues and brewery management software revenues, the Company recognizes subscription revenue on a monthly basis. Shipping calculator customers’ renewal dates are based on their date of installation and registration of the shipping calculator line of products. The timing of the revenue recognition and cash collection may vary within a given quarter and the deposits for future services are recorded as contract liabilities on the condensed consolidated balance sheets. Brewery management software subscribers are billed monthly at the first of the month. All payments are made via credit card for the following month.
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 below).
Performance Obligations
At contract inception, an assessment of the goods and services promised in the contracts with customers is performed 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). To identify the performance obligations, the Company considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Revenue is recognized when the performance obligation has been met, which is when the customer has successfully prepared a shipping label and had a pickup for shipping coordination and label generation services. The Company considers control to have transferred at that time because the Company has a present right to payment at that time, the Company has provided the shipping label, and the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the shipping label.
For arrangements under which the Company provides a subscription for shipping calculator services and 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. The Company has offered its customers consolidated payments which are billed weekly and are paid with a credit card on file. 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 one note receivable and is a senior secure lender with an absolute obligation. The note is evaluated for credit losses 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 $
Income (Loss) Per Common Share
Basic earnings (loss) per share represent 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. The potential common shares that may be issued by the Company relate to outstanding stock options and have been excluded from the computation of diluted income (loss) per share if they would reduce the reported loss per share and therefore have an anti-dilutive effect.
For the three months ended March 31, 2023, there were approximately
The following is a reconciliation of the numerators and denominators of the basic and diluted income (loss) per common share computations for the three months ended March 31, 2024 and 2023.
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Three Months Ended March 31, 2024 |
Three Months Ended March 31, 2023 |
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Numerator: |
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Net income (loss) |
$ | $ | ( |
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Denominator: |
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Basic weighted-average shares outstanding |
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| Basic income (loss) per share | $ | $ | ( |
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Effect of dilutive securities |
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Diluted weighted-average shares outstanding |
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Diluted income (loss) per share |
$ | $ | ( |
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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 March 31, 2024, the Company operated in the following reportable segments:
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a. |
Client services; |
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b. |
Merchant processing services; |
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c. |
Shipping coordination and label generation services; and |
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d. |
Corporate operations |
The Company evaluates performance and allocates resources based upon 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 net revenue for the periods indicated.
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Three Months Ended |
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March 31, 2024 |
March 31, 2023 |
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Client services |
$ | $ | ||||||
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Merchant processing services |
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Shipping coordination and label generation services |
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Total net revenues |
$ | $ | ||||||
The following table compares total loss from operations for the periods indicated.
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Three Months Ended |
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March 31, 2024 |
March 31, 2023 |
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Client services |
$ | $ | ||||||
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Merchant processing services |
( |
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Shipping coordination and label generation services |
( |
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Corporate operations |
( |
) | ( |
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Total loss from operations |
$ | ( |
) | $ | ( |
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Subsequent Events
The Company has evaluated subsequent events through the filing date of this Form 10-Q and has determined that no subsequent events have occurred that would require recognition in the condensed consolidated financial statements of disclosure in the notes thereto, other than disclosed herein.
Reclassification
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. An adjustment has been made to the segment reporting for the period ended March 31, 2023, to consolidate revenue reporting for smaller segments of the Company.
Recent Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures (“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 2. Note Receivable
On October 13, 2022, the Company entered in a Securities Purchase Agreement (“SPA”) with respect to a secured $
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 2024.
Note 3. Accrued Expenses
Accrued expenses are comprised of the following:
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March 31, 2024 (unaudited) |
December 31, 2023 |
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|
Payroll and related costs |
$ | $ | ||||||
|
Royalties |
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|
Accrued cost of revenues |
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Sales tax |
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Other |
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Total |
$ | $ | ||||||
Note 4. 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 other intangibles from past business combinations.
At March 31, 2024, intangible assets consisted of the following:
|
Patents |
Trade Name |
Technology & Software |
Customer Relationships |
Total |
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|
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 three months ended March 31, 2024 and 2023 was $
Note 5. 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 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 courts to contest that decision and this claim was dismissed on November 9, 2023. 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. 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 condensed consolidated balance sheets.
Note 6. 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 February 22, 2024, the Company’s Board of Directors authorized the issuance of
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 Repurchase
In February 2024, the Company entered into an agreement to repurchase
Share-based Incentive Plans
On March 23, 2018, the Board of Directors voted to approve the 2018 Stock Option Plan which reserves
On February 22, 2024, the Board of Directors voted to approve the issuance of options to purchase
For the three-month period ended March 31, 2024 and 2023, the Company recorded $
Note 7. Leases
We have an operating lease for our corporate office in Canada. Our lease has a remaining lease term of months. Future renewal options that 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 condensed consolidated balance sheets for the right to use the building in our business.
The components of lease expense were as follows:
|
Three Months Ended March 31, 2024 |
Three Months Ended March 31, 2023 |
|||||||
|
Operating lease cost |
$ | $ | ||||||
Supplemental cash flow information related to leases was as follows:
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Three Months Ended |
Three Months Ended |
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|
Cash paid for amounts included in leases: |
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|
Operating cash flows from operating leases |
$ | $ | ||||||
Supplemental balance sheet information related to leases was as follows:
|
March 31, 2024 |
December 31, 2023 |
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Operating leases: |
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|
Operating lease right-of-use assets |
$ | $ | ||||||
|
Operating lease obligations |
$ | $ | ||||||
|
March 31, 2024 |
December 31, 2023 |
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Weighted Average Remaining Lease Term |
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|
Operating lease (in years) |
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|
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|
Weighted Average Discount Rate |
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|
Operating lease |
% | % | ||||||
A summary of future minimum payments under non-cancellable operating lease commitment as of March 31, 2024 is as follows:
|
Years ending December 31, |
Total |
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|
2024 (remainder of year) |
||||
|
Total lease liabilities |
$ | |||
|
Less amount representing interest |
( |
) | ||
|
Total |
||||
|
Less current portion |
( |
) | ||
| - | ||||
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Forward Looking Statements
This Quarterly Report on Form 10-Q 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 PAID, Inc. (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 quarterly 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 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", in the Company's Form 10-K for the fiscal year ended December 31, 2023 that was filed on April 1, 2024.
For example, the Company's ability to maintain 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 site, 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. 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 Quarterly Report, which attempts to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
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 solutions are developed to provide businesses with a streamlined experience for website creation, online sales, payment collection and shipping all in one platform.
PaidPayments provides commerce solutions to small - and medium-sized businesses by enabling them to sell their goods and services, accept payment, and create repeat sales though an online payment processing solution. The Company has operated as a Payment Facilitator since 2019, which enables our merchants to get the benefit of instant boarding and discounted rates. Our platform provides all aspects required for payment processing, including merchant boarding, underwriting, fraud monitoring, settlement, funding to the sub-merchant, and monthly reporting and statements. The Company controls all of these necessary aspects in the payment process and is then able to supply a one-step boarding process for our partners and value-added resellers. This capability also provides cost advantages, rapid response to market needs, simplified processes for boarding business and a seamless interface for our merchant customers.
Significant Accounting Policies
Our significant accounting policies are more fully described in Note 3 to our consolidated financial statements for the years ended December 31, 2023 and 2022 included in our Form 10-K filed on April 1, 2024, as updated and amended in Note 1 of the Notes to Condensed Consolidated Financial Statements included herein. However, certain of our accounting policies, most notably with respect to revenue recognition, 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.
Results of Operations
Comparison of the three months ended March 31, 2024 and 2023.
The following discussion compares the Company's results of operations for the three months ended March 31, 2024 with those for the three months ended March 31, 2023. The Company's condensed consolidated financial statements and notes thereto included elsewhere in this quarterly report contain detailed information that should be referred to in conjunction with the following discussion.
Revenues
The following table compares total net revenue for the periods indicated.
|
Three months Ended March 31, |
||||||||||||
|
2024 |
2023 |
% Change |
||||||||||
|
Client services |
$ | 7,260 | $ | 8,665 | (16 | )% | ||||||
|
Shipping coordination and label generation services |
4,139,845 | 3,772,767 | 10 | % | ||||||||
|
Merchant processing services |
13,645 | 24,843 | (45 | )% | ||||||||
|
Total net revenues |
$ | 4,160,750 | $ | 3,806,275 | 9 | % | ||||||
Revenues increased 9% in the first quarter as a result of the shipping coordination and label generation segment of the business. Shipping suppliers implement an annual pricing increase and as a result the Company has seen an increase in revenue.
Client services revenues which include brewery management software and shipping calculator services decreased $1,405 or 16% to $7,260 in the first quarter of 2024 compared to $8,665 in 2023. This decrease is a result of minimal activity in this segment of the business. The decrease in revenues is primarily due to the cancellation of several clients and the limited marketing of this segment of the business.
Shipping coordination and label generation services revenues increased $367,078 or 10% to $4,139,845 in the first quarter of 2024 compared to $3,772,767 in 2023. The increase is attributable to the supplier price increase of an average of 5.9%. The Company has also invested additional sales personnel to improve the conversion rates of new customers and reduce churn of existing customers.
Merchant processing services are available to businesses that process ecommerce online transactions. These include shipping, payments and web hosting services. The decrease is due to a one time increase of transactions for the first quarter of 2023. The Company has started to market this segment of the business in the first quarter of 2024.
Gross Profit
Gross profit increased $165,764 or 19% in the first quarter of 2024 to $1,018,358 compared to $852,594 in 2023. Gross margin improved 2% to 24% in the first quarter of 2024 compared to 22% for the same period in 2023.
Operating Expenses
Total operating expenses in the first quarter 2024 were $1,056,185 compared to $1,272,122 in the first quarter of 2023, a decrease of $215,937 or 17%. The decrease is due to the share-based compensation of $392,538 in 2023 compared to $38,984 in 2024 offset by an annual increase in salaries for 2024.
Other Income/Expense, net
Net other income in 2024 was $342,989 compared to $125,000 in 2023, an increase of $217,989 or 174%. The 2024 amount is made up of interest income of $141,780 and a gain of $201,209 on the Embolx, Inc. note receivable compared to the gain of $125,000 recorded in 2023.
Net Income (Loss)
The Company recorded a net income in the first quarter of 2024 of $299,562 compared to a net loss of $(294,928) for the same period in 2023. The net income per share for the first quarter of 2024 was $0.04 and net loss for 2023 was $(0.04) per share.
Cash Flows from Operating Activities
A summarized reconciliation of the Company's net income (loss) to cash and cash equivalents used in operating activities for the three months ended March 31, 2024 and 2023 is as follows:
|
2024 |
2023 |
|||||||
|
Net income (loss) |
$ | 299,562 | $ | (294,928 | ) | |||
|
Depreciation and amortization |
77,809 | 77,526 | ||||||
|
Amortization of operating lease right-of-use assets |
5,125 | 8,988 | ||||||
|
Share-based compensation |
38,984 | 392,538 | ||||||
|
Accretion of discount on note receivable |
(201,209 | ) | (125,000 | ) | ||||
|
Interest income accrued on note receivable |
(141,780 | ) | - | |||||
|
Changes in assets and liabilities |
(303,940 | ) | (74,195 | ) | ||||
|
Net cash used in operating activities |
$ | (225,449 | ) | $ | (15,071 | ) | ||
Working Capital and Liquidity
The Company had cash and cash equivalents of $1,272,409 at March 31, 2024, compared to $2,052,421 at December 31, 2023. The Company had net working capital of $3,309,821 at March 31, 2024, an improvement of $396,871 compared to $2,912,950 at December 31, 2023. The increase in net working capital is attributable to the decrease in accounts payable along with the accretion of discount and the interest accrued on the note receivable.
The Company may need an infusion of additional capital to fund anticipated operating costs over the next 12 months, however, management believes that the Company has adequate cash resources to fund operations. There can be no assurance that anticipated growth will occur, and that the Company will be successful in launching new products and services. If necessary, management will seek alternative sources of capital to support operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, the Company is not required to provide the information for this Item 3.
ITEM 4. 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 March 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.
The Company has identified numerous material weaknesses in internal control over financial reporting as described in the Company's Form 10-K for the year ended December 31, 2023.
Changes in Internal Control over Financial Reporting
The Company continues to evaluate the internal controls over financial reporting and is working toward implementation of corporate governance and operational process documentation.
PART II - OTHER INFORMATION
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. 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.
There are no material changes for the risk factors previously disclosed on Form 10-K for the year ended December 31, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On February 24, 2024, the Company issued 54,559 shares of common stock at $1.55 per share for bonus compensation. The common stock was issued in reliance upon the exemptions from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act Rule 506(b) of Regulation D promulgated thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
Applicable
|
10.1 |
Amendment to 2018 Non-Qualified Stock Option Plan (incorporated by reference) |
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31.1 |
CEO and CFO Certification required under Section 302 of Sarbanes-Oxley Act of 2002 |
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32 |
CEO and CFO Certification required under Section 906 of Sarbanes-Oxley Act of 2002 |
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101.INS |
Inline XBRL Instance Document (filed herewith) |
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101.SCH |
Inline XBRL Taxonomy Extension Schema (filed herewith) |
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101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith) |
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101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase (filed herewith) |
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101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase (filed herewith) |
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101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith) |
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104 |
Cover Page Interactive Data File (embedded within the Inline XBRL Document and include in Exhibit 101) |
Pursuant to the requirements 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.
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PAID, INC. |
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By: |
/s/ W. Austin Lewis IV |
|
|
Date: May 15, 2024 |
W. Austin Lewis, IV, CEO, CFO |
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LIST OF EXHIBITS
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10.1 |
Amendment to 2018 Non-Qualified Stock Option Plan |
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|
31.1 |
CEO and CFO Certification required under Section 302 of Sarbanes-Oxley Act of 2002 |
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32 |
CEO and CFO Certification required under Section 906 of Sarbanes-Oxley Act of 2002 |
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101.INS |
Inline XBRL Instance Document (filed herewith) |
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101.SCH |
Inline XBRL Taxonomy Extension Schema (filed herewith) |
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101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith) |
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101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase (filed herewith) |
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101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase (filed herewith) |
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101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith) |
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104 |
Cover Page Interactive Data File (embedded within the Inline XBRL Document and include in Exhibit 101) |
EXHIBIT 31.1
CERTIFICATION
I, W. Austin Lewis, IV, certify that:
1. I have reviewed this quarterly report on Form 10-Q of PAID, INC.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the Registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
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(c) |
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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(d) |
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; |
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
| Date: May 15, 2024 | ||
| /s/ W. Austin Lewis, IV | ||
| W. Austin Lewis, IV, Chief Executive Officer, Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
EXHIBIT 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of PAID, INC. (the “Company”) on Form 10-Q for the quarter ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in their capacities as CEO and CFO of the Company, certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ W. Austin Lewis, IV | |
| W. Austin Lewis, IV, Chief Executive Officer, Chief Financial Officer |
May 15, 2024