Paid Inc 10-K for FY2022

Paid Inc (PAYD)

10-K 2023-03-31 For: 2022-12-31

Added on April 06, 2026

About this 10-K

Paid Inc filed this 10-K on March 31, 2023, covering the fiscal year ended December 31, 2022 (FY2022).

Headline figures

Fiscal year ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $16.59M; up 11.4% from $14.89M a year earlier
Net income: $652.15K; compared with a net loss of $696.76K a year earlier
Diluted EPS: $0.08; compared with -$0.09 a year earlier

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Delaware	73-1479833
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

Title of each class	Trading Symbol	Name of each exchange on which registered
None	None	None

PART I

	Item 1.	Business	1
	Item 1A.	Risk Factors	4
	Item 1B.	Unresolved Staff Comments	11
	Item 2.	Properties	11
	Item 3.	Legal Proceedings	11
	Item 4.	Mine Safety Disclosure	11

PART II

	Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	11
	Item 6.	Reserved
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
	Item 7A.	Quantitative and Qualitative Disclosure about Market Risk	17
	Item 8.	Financial Statements and Supplementary Data	17
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	17
	Item 9A.	Controls and Procedures	17
	Item 9B.	Other Information	21
	Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	22

PART III

	Item 10.	Directors, Executive Officers and Corporate Governance	22
	Item 11.	Executive Compensation	24
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	26
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	26
	Item 14.	Principal Accountant Fees and Services	27

PART IV

	Item 15.	Exhibits and Financial Statement Schedules	27
	Item 16.	Form 10-K Summary	28
	Signatures		29
	Exhibit Index

2021	High		Low
Quarter ended March 31, 2021	$	3.27	$	1.85
Quarter ended June 30, 2021	$	2.85	$	2.07
Quarter ended September 30, 2021	$	2.95	$	2.26
Quarter ended December 31, 2021	$	2.88	$	2.21

2022	High		Low
Quarter ended March 31, 2022	$	2.87	$	1.85
Quarter ended June 30, 2022	$	2.42	$	1.53
Quarter ended September 30, 2022	$	2.20	$	1.60
Quarter ended December 31, 2022	$	2.24	$	1.03

	●	the need to manage relationships with various technology licensors, other websites and services, and other third parties;

	●	pressures for the continued development of our core of software products; and

	●	we will be able to accurately project the rate or timing of increases if any, in the use of our services; or

	●	the content and publication of various materials based on defamation, libel, negligence, personal injury and other legal theories;

	●	copyright, trademark or patent infringement and wrongful action due to the actions of third parties; and

	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)
	(a)		(b)		(c)
Equity Compensation Plans Approved by Security Holders		0	$	0.00		-
Equity Compensation Plans Not Approved by Security Holders		371,000	$	3.07		586,000
Total		371,000	$	3.07		586,000

	Years ended December 31,
	2022		2021		% Change
Client services	$	806	$	3,141		(74	)%
Shipping calculator services		7,964		22,872		(65	)%
Brewery management software		38,575		59,075		(35	)%
Merchant processing services		40,153		54,003		(26	)%
Shipping coordination and label generation services		16,498,431		14,750,625		12	%
Total revenues	$	16,585,929	$	14,889,716		11	%

	2022			2021
Net income (loss)	$	652,146		$	(696,760	)
Provision for bad debts		36,845			-
Depreciation and amortization		325,940			511,698
Accretion of discount on note receivable		(104,167	)		-
Amortization of operating lease right-of-use assets		35,337			33,447
Deferred income taxes		(77,128	)		(131,204	)
Share-based compensation		172,488			603,533
Write-off of other payables		(32,495	)		-
Changes in current assets and liabilities		(207,554	)		882,640
Net cash provided by operating activities	$	801,412		$	1,203,354
Net cash used in investing activities	$	(1,500,000	)	$	(1,120	)
Net cash used in financing activities	$	(87,493	)	$	(2,907	)
Effect of exchange rate on cash and cash equivalents	$	(266,358	)	$	(3,850	)
Net change in cash and cash equivalents	$	(1,052,439	)	$	1,195,477

	-	Ineffective control environment, including lack of corporate governance
	-	Ineffective communication of information
	-	Ineffective monitoring of activities

●	On an annual basis, the Company distributes the employee handbook which includes public company policies and practices, Corporate Disclosure and Insider Trading policies and a Communication Policy.
●	The Company meets monthly in a town hall style meeting led by the CEO. This provides an ongoing opportunity to convey best practices for public companies.

	●	traditional media advertising campaigns; and

●	Management and the Board formally meet to discuss our filings. During these discussions, our auditors, and legal counsel may present to the Company various information which may be of material importance to our financial reporting and internal controls.
●	The Board of Directors has appointed a Compensation Committee Chairman to oversee matters relating to employment, personnel and independent contractors.

●	Enhanced the documentation and procedures of our information technology to control assurance that changes to financial applications are properly authorized and tested and that access to our information systems and financial applications are appropriately restricted.
●	Technology staff has implemented a documenting and sharing process for software development.
●	Updated our information systems user profiles and passwords to improve access controls.
●	Implemented improvements to our information systems to further address control deficiencies.
●	Updated secure backup procedures with best practice methodologies for protecting our financial data in case of a problem.
●	Enhanced the documentation of certain core proprietary technologies so that there is more redundancy and protection of corporate assets.

●	The Company has reorganized the organizational reporting structure to enable greater oversight and control of operations which has increased the level of awareness and accountability.
●	The Company meets regularly throughout the year to review operating results, policies and procedures, and staff reviews and practices.
●	Senior Management meets weekly to discuss day to day operations and team successes. Managers work with team members in one-on-one meetings to continue to monitor employee activity.
●	The Company has made changes to its policies and procedures with regard to its financial reporting systems. Upgrades to software systems have been made which has resulted in the automation of accounting transactions and has enhanced our financial reporting and timeliness of operating results. Management and staff are more integrated into the review process.
●	Daily financial summaries are distributed to senior management to review gross margins, cash receipts and customer activity to evaluate for fraudulent or inconsistent behavior.

●	The Company upgraded its transactional processing systems which resulted in the automation of several manual accounting tasks. This automation eliminated the risk of human error for these manual tasks and created a more concise audit trail in the revenue recognition process.
●	All sales are reconciled across the Company's multiple revenue and accounting systems comparing for any discrepancies.
●	The Company continues to document new processes and procedures to assure employees are following proper protocols with regard to activity that has an effect on the financial transactions of the Company.

●	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.
●	The CEO/CFO receives monthly financial updates on each segment of the Company.

Name	Age	Position
W. Austin Lewis, IV	47	CEO, CFO
David Scott	28	COO
Andrew Pilaro	53	Director
Laurie Bradley	69	Director
David Ogden	60	Director

	Summary Compensation Table

Name and Principal Position	Year	Salary		Bonus		Option Awards ($)		Total
W. Austin Lewis, IV (1)(2)(4)(7) (CFO, CEO)	2022	$	300,000	$	109,574	$	-	$	409,574
	2021	$	300,000	$	477,500	$	-	$	777,500
David Scott (3)(5)(6)(8) (COO)	2022	$	153,787	$	79,787	$	-	$	233,574
	2021	$	149,675	$	25,000	$	-	$	174,675

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
		26,667		13,333		-	$	2.885	11/10/2030

	Director Compensation in 2022
Name	Fees earned or paid in cash		Option Awards ($)		Total
Andrew Pilaro	$	10,000	$	-	$	10,000
Laurie Bradley	$	10,000	$	-	$	10,000
David Ogden	$	4,000	$	-	$	4,000

	Amount and Nature of Beneficial Ownership			Percent of Class (2)
W. Austin Lewis, IV		3,277,485			39	%
Allan Pratt		2,222,273	(3)		26	%
David Scott		112,160	(6)		1	%
John Smith		914,973			11	%
David Ogden		50,000	(4)		1	%
Laurie Bradley		109,217	(5)		1	%
Andrew Pilaro		100,337	(1)		1	%
All directors beneficial owners		6,786,445			80	%

	(1)	Includes options to purchase 98,000 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 50,000 shares of the Company’s common stock.
	(5)	Includes options to purchase 82,500 shares of the Company’s common stock.
	(6)	Includes options to purchase 80,000 shares of the Company’s common stock

	2022		2021
*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	$	61,715	$	64,925
*Tax Fees*
Consists of fees billed for tax compliance, tax advice and tax planning		5,400		5,000
*Total All Fees*	$	67,115	$	69,925

No.		Description of Exhibits
3.1		Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to Form 8-K, filed on November 25, 2003)
3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K, filed on December 8, 2004)
3.3		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)
3.4		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)
4.1		Specimen of certificate for Common Stock (incorporated by reference to Exhibit 4.1 to Form SB-2/A filed on December 1, 2000)
10.1+		2002 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 10.17 to Form 10-KSB filed on March 31, 2003)
10.2+		2011 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 99.1 to Form S-8 filed on February 2, 2011)
10.3		2018 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 10.35 to Form 10-K filed on April 1, 2019 )
10.4+		PAID, Inc. 2012 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on October 18, 2012)
10.5+		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)
10.6+		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)
10.7		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)
10.8		Exchange and Call Rights Agreement (incorporated by reference to Exhibit 10.2 to Form 8-K filed on December 23, 2016)
10.9		Support Agreement (incorporated by reference to Exhibit 10.4 to Form 8-K filed on December 23, 2016)
10.10+		Employment Agreement for Allan Pratt (incorporated by reference to Exhibit 10.6 to Form 8-K filed on December 23, 2016)
10.11+		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)
10.12+		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
10.14+*		Employment Agreement for David Scott dated March 29, 2023
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
EX-101.SCH		Inline XBRL Taxonomy Extension Schema
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
+Indicates a management contract or any compensatory plan, contract or arrangement

	PAID, INC.

	By:	/s/ W. Austin Lewis, IV
Date: March 31, 2023		W. Austin Lewis, IV, Chief Executive Officer, Chief Financial Officer

Signature	Title	Date

/s/ Andrew Pilaro
Andrew Pilaro	Director	March 31, 2023

/s/ Laurie Bradley
Laurie Bradley	Director	March 31, 2023

Report of Independent Registered Public Accounting Firm (PCAOB ID: 170)	F-1
Consolidated Balance Sheets as of December 31, 2022 and 2021	F-3
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years ended December 31, 2022 and 2021	F-4
Consolidated Statements of Changes in Shareholders’ Equity for the Years ended December 31, 2022 and 2021	F-5
Consolidated Statements of Cash Flows for the Years ended December 31, 2022 and 2021	F-6
Notes to Consolidated Financial Statements	F-7

	2022			2021
ASSETS
Current assets:
Cash and cash equivalents	$	1,787,248		$	2,839,687
Accounts receivable, net		169,074			215,109
Note receivable, net of discount		1,604,167			-
Prepaid expenses and other current assets		151,374			164,823
Total current assets		3,711,863			3,219,619

Property and equipment, net		23,487			40,493
Intangible assets, net		2,663,311			3,175,198
Operating lease right-of-use assets		23,063			61,040
Total assets	$	6,421,724		$	6,496,350

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,610,416		$	1,625,588
Income tax payable		-			674,921
Accrued expenses		430,858			376,387
Contract liabilities		13,020			11,154
Operating lease obligations – current portion		22,199			36,123
Total current liabilities		2,076,493			2,724,173
Long-term liabilities:
Operating lease obligations – net of current portion		-			25,187
Deferred tax liability, net		707,952			838,312
Uncertain tax position liability		265,167			-
Total liabilities		3,049,612			3,587,672
Commitments and contingencies
Shareholders’ equity:
Series A Preferred stock, $0.001 par value, 5,000,000 shares authorized; no shares issued and outstanding at December 31, 2022 and 2021, respectively		-			-
Common stock, $0.001 par value, 25,000,000 shares authorized; 7,840,124 shares issued and 7,696,487 shares outstanding at December 31, 2022, 7,807,103 shares issued and 7,773,263 shares outstanding at December 31, 2021		7,840			7,807
Accrued common stock bonus		82,180			-
Additional paid-in capital		72,800,976			72,691,201
Accumulated other comprehensive income		316,360			590,067
Accumulated deficit		(69,670,404	)		(70,322,550	)
Common stock in treasury, at cost, 143,637 and 33,840 shares at December 31, 2022 and 2021, respectively		(164,840	)		(57,847	)
Total shareholders’ equity		3,372,112			2,908,678

Total liabilities and shareholders’ equity	$	6,421,724		$	6,496,350

	2022			2021

Revenues, net	$	16,585,929		$	14,889,716
Cost of revenues		12,896,948			11,436,235
Gross profit		3,688,981			3,453,481
Operating expenses:
Salaries and related		1,912,142			1,803,173
General and administrative		1,233,549			1,046,711
Amortization of intangible assets		311,809			490,567
Share-based compensation		172,488			603,533
Total operating expenses		3,629,988			3,943,984
Income (loss) from operations		58,993			(490,503	)

Other income (expense):
Other income		136,662			-
Income (loss) before income tax (benefit) provision		195,655			(490,503	)
Income tax (benefit) provision		(456,491	)		206,257
Net income (loss)	$	652,146		$	(696,760	)

Net income (loss) per share – basic	$	0.08		$	(0.09	)
Net income (loss) per share – diluted	$	0.08		$	(0.09	)

Weighted average number of common shares outstanding – basic		7,770,298			7,444,732
Weighted average number of common shares outstanding – diluted		7,781,689			7,444,732

Consolidated statements of comprehensive income (loss):
Net income (loss)	$	652,146		$	(696,760	)
Other comprehensive income (loss):
Foreign currency translation adjustments		(273,707	)		19,306
Comprehensive income (loss)	$	378,439		$	(677,454	)

	Common Stock															Treasury Stock
	Shares		Amount		Accrued Common Stock Bonus			Additional Paid-in Capital		Accumulated Other Comprehensive Income			Accumulated Deficit			Shares			Amount			Total
Balance, January 1, 2021		6,489,004	$	6,489	$	2,005,500		$	70,083,486	$	570,761		$	(69,625,790	)		(33,840	)	$	(57,847	)	$	2,982,599
Foreign currency translation adjustment		-		-		-			-		19,306			-			-			-			19,306
Share-based compensation expense		-		-		-			324,783		-			-			-			-			324,783
Issuance of common stock for accrued bonus and signing bonus		1,300,000		1,300		(2,005,500	)		2,242,950		-			-			-			-			238,750
Issuance of common stock for compensation		18,099		18		-			39,982		-			-			-			-			40,000
Net loss		-		-		-			-		-			(696,760	)		-			-			(696,760	)

Balance December 31, 2021		7,807,103		7,807		-			72,691,201		590,067			(70,322,550	)		(33,840	)		(57,847	)		2,908,678
Foreign currency translation adjustment		-				-			-		(273,707	)		-			-			-			(273,707	)
Share-based compensation expense		-		-		82,180			65,308		-			-			-			-			147,488
Repurchase of common stock for treasury		-		-		-			-		-			-			(109,797	)		(106,993	)		(106,993	)
Option exercise		20,000		20		-			19,480		-			-			-			-			19,500
Issuance of common stock for compensation		13,021		13		-			24,987		-			-			-			-			25,000
Net income		-		-		-			-		-			652,146			-			-			652,146
Balance December 31, 2022		7,840,124	$	7,840	$	82,180		$	72,800,976	$	316,360		$	(69,670,404	)		(143,637	)	$	(164,840	)	$	3,372,112