PAID INC
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
COMMISSION FILE NUMBER 0-28720
(Exact Name of Registrant as Specified in its Charter)
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DELAWARE
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73-1479833
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(State
or Other Jurisdiction of Incorporation or
Organization)
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(I.R.S.
Employer Identification No.)
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225 Cedar Hill Street, Marlborough, Massachusetts
01752
(Address
of Principal Executive Offices) (Zip Code)
(617) 861-6050
(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
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Trading
Symbol
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Name of each
exchange on which registered
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None
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None
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None
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Securities registered under Section 12(g) of the Act:
Common Stock, $0.001 Par Value
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes
☐
No
☑
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
☐
No
☑
Indicate by check
mark whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes
☒ No ☐
Indicate by check
mark whether the registrant has submitted electronically and posted
on its corporate Web site, if any, 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).
Yes
☒ No ☐
Indicate by check
mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated
filer”, “accelerated filer”, and “smaller
reporting company” in Rule 12b-2 of the Exchange
Act. (Check one):
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Large accelerated filer
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☐
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Accelerated
Filer
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☐
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Non-accelerated
filer
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☑
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Smaller reporting company
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☑
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Emerging
Growth Company
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☐
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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
☐ No ☒
As of
May 14, 2021, the issuer had outstanding 7,755,164 shares of its
Common Stock.
P
A
ID, INC.
FORM 10-Q
T
ABLE OF
CONTENTS
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19
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PART I – FIN
A
NCIAL
INFORMATION
PAID, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
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March 31,
2021
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December
31,
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(Unaudited)
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2020
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ASSETS
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Current
assets:
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Cash
and cash equivalents
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$
2,026,002
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$
1,644,210
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Accounts receivable, net
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244,393
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171,785
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Prepaid expenses and other current assets
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141,668
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184,366
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Total
current assets
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2,412,063
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2,000,361
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Property and
equipment, net
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55,187
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59,848
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Intangible assets,
net
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3,562,321
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3,633,420
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Operating lease
right-of-use assets
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86,723
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93,457
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Total
assets
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$
6,116,294
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$
5,787,086
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LIABILITIES AND
SHAREHOLDERS' EQUITY
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Current
liabilities:
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Accounts payable
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$
1,474,209
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$
1,460,484
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Finance leases - current portion
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1,457
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2,844
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Accrued expenses
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461,004
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276,254
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Contract liabilities
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10,258
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9,046
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Operating lease obligations – current portion
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34,889
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33,118
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Total
current liabilities
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1,981,817
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1,781,746
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Long-term
liabilities:
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Operating lease obligations – net of current
portion
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53,009
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61,794
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Deferred tax liability, net
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974,477
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960,947
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Total
liabilities
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3,009,303
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2,804,487
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Commitments and
contingencies
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Shareholders'
equity:
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Series A Preferred
stock, $0.001 par value, 5,000,000 shares authorized; no shares
issued and outstanding at March 31, 2021 and December 31, 2020,
respectively
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-
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-
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Common stock,
$0.001 par value, 25,000,000 shares authorized; 7,789,004 shares
issued and 7,755,164 shares outstanding at March 31, 2021,
6,489,004 shares issued and 6,455,164 shares outstanding at
December 31, 2020
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7,789
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6,489
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Accrued common
stock bonus
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-
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2,005,500
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Additional paid-in
capital
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72,351,299
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70,083,486
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Accumulated other
comprehensive income
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611,273
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570,761
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Accumulated
deficit
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(69,805,523
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(69,625,790
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Common stock in
treasury, at cost, 33,840 shares at March 31, 2021 and December 31,
2020
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(57,847
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(57,847
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Total shareholders'
equity
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3,106,991
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2,982,599
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Total liabilities
and shareholders' equity
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$
6,116,294
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$
5,787,086
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See
accompanying notes to condensed consolidated financial
statements
PA
I
D, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
(Unaudited)
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Three Months
Ended
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March 31,
2021
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March 31,
2020
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Revenues,
net
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$
3,512,773
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$
2,675,322
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Cost of
revenues
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2,633,758
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2,024,176
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Gross
profit
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879,015
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651,146
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Operating
expenses:
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Salaries and
related
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430,175
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399,182
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General and
administrative
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243,165
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270,952
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Share-based
compensation
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263,613
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(20,789
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Amortization of
other intangible assets
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121,395
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114,543
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Total operating
expenses
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1,058,348
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763,888
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Loss from
operations
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(179,333
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(112,742
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Provision for
income taxes
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400
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500
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Net
loss
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(179,733
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(113,242
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Preferred
dividends
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-
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(28,532
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Net loss available
to common shareholders
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$
(179,733
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$
(141,774
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Net loss per share
– basic and diluted
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$
(0.03
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$
(0.04
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Weighted average
number of common shares outstanding – basic and
diluted
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6,455,164
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3,247,248
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Condensed
consolidated statements of comprehensive loss
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Net
loss
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$
(179,733
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$
(113,242
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Other comprehensive
loss:
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Foreign currency
translation adjustments
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40,512
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(235,181
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Comprehensive
loss
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$
(139,221
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$
(348,423
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See
accompanying notes to condensed consolidated financial
statements
PA
I
D, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(Unaudited)
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2021
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2020
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Cash flows from
operating activities:
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Net
loss
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$
(179,733
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$
(113,242
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Adjustments to
reconcile net loss to net cash provided by operating
activities:
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Depreciation and
amortization
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127,980
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122,404
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Amortization of
operating lease right-of-use assets
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7,993
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6,880
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Provision for bad
debts
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-
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20,125
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Share-based
compensation
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263,613
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(20,789
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Changes in assets
and liabilities:
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Accounts
receivable
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(71,038
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(48,761
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Prepaid expenses
and other current assets
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43,852
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27,395
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Accounts
payable
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(4,540
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67,016
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Accrued
expenses
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180,803
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40,095
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Contract
liabilities
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1,076
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1,381
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Operating lease
obligations
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(8,292
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(7,061
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Net cash provided
by operating activities
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361,714
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95,443
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Cash flows from
investing activities:
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Purchase of
property and equipment
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(1,120
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-
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Net cash used in
investing activities
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(1,120
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-
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Cash flows from
financing activities:
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Payments on finance
leases
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(1,417
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(2,316
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Payments of
preferred dividends
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-
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(26,252
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Net cash used in
financing activities
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(1,417
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(28,568
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Effect of exchange
rate changes on cash and cash equivalents
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22,615
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(41,874
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Net change in cash
and cash equivalents
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381,792
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25,001
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Cash and cash
equivalents, beginning of period
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1,644,210
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475,881
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Cash and cash
equivalents, end of period
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$
2,026,002
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$
500,882
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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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$
400
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$
500
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Interest
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$
57
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$
281
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SUPPLEMENTAL
DISCLOSURES OF NON-CASH ITEMS
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Issuance of common
shares in settlement of accrued expenses
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$
2,005,500
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$
-
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Issuance of
preferred shares in settlement of dividends
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$
-
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$
358,683
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See
accompanying notes to condensed consolidated financial
statements
PAID, I
N
C.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND
2020
(Unaudited)
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Common
Stock
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Accrued
Common
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Additional
Paid-in
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Accumulated Other
Comprehensive
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Accumulated
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Treasury
Stock
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Shares
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Amount
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Bonus
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Capital
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Income
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Deficit
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Shares
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Amount
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Total
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Balance, January 1,
2021
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6,489,004
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$
6,489
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$
2,005,500
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70,083,486
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$
570,761
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$
(69,625,790
)
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(33,840
)
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$
(57,847
)
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$
2,982,599
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Foreign currency translation
adjustment
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-
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-
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-
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-
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40,512
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-
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-
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-
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40,512
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Share-based compensation
expense
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-
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-
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-
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24,863
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-
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-
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-
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-
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24,863
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Issuance of common stock for
accrued bonus and compensation
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1,300,000
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1,300
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(2,005,500
)
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2,242,950
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-
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-
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-
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-
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238,750
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Net loss
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-
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-
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-
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-
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-
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(179,733
)
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-
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-
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(179,733
)
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Balance, March 31,
2021
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7,789,004
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$
7,789
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$
-
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72,351,299
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$
611,273
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$
(69,805,523
)
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(33,840
)
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$
(57,847
)
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$
3,106,991
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Preferred
Stock
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Common
Stock
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Additional
Paid-in
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Accumulated
Other Comprehensive
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Accumulated
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Treasury
Stock
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Shares
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Amount
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Shares
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Amount
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Capital
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Income
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Deficit
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Shares
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Amount
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Total
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Balance, January 1,
2020
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4,438,578
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$
4,439
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1,648,657
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$
1,649
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$
69,242,412
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$
512,894
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$
(67,008,347
)
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(33,840
)
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(57,847
)
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$
2,695,200
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Foreign currency translation
adjustment
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-
|
-
|
-
|
-
|
-
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(235,181
)
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-
|
-
|
-
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(235,181
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Share-based compensation
expense
|
-
|
-
|
-
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-
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(20,789
)
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-
|
-
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-
|
-
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(20,789
)
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Preferred dividends paid in
shares
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126,727
|
127
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-
|
-
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358,511
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-
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(358,638
)
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-
|
-
|
-
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Exchange of Preferred to
Common
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(4,125,500
)
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(4,126
)
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4,126,422
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4,126
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-
|
-
|
-
|
-
|
-
|
-
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|
Preferred dividends
paid
|
-
|
-
|
-
|
-
|
-
|
-
|
(26,252
)
|
-
|
-
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(26,252
)
|
|
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
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(113,242
)
|
-
|
-
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(113,242
)
|
|
Balance, March 31,
2020
|
439,805
|
$
440
|
5,775,079
|
$
5,775
|
$
69,580,134
|
$
277,713
|
$
(67,506,479
)
|
(33,840
)
|
$
(57,847
)
|
$
2,299,736
|
S
ee
accompanying notes to condensed consolidated financial
statements
PA
I
D, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2021
Note 1. Organization and Significant Accounting
Policies
PAID,
Inc. (“PAID”, the “Company”,
“we”, “us”, or “our”) has
developed AuctionInc, which is a suite of online shipping and tax
management tools assisting businesses with e-commerce storefronts,
shipping solutions, tax calculation, inventory management, and
auction processing. The product has tools to assist with other
aspects of the fulfillment process, but the main purpose of the
product is to provide accurate shipping and tax calculations and
packaging algorithms that provide customers with the best possible
shipping and tax solutions.
BeerRun
Software (“BeerRun”) 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. Additional features include Brewpad
and Kegmaster and can be added on to the base product. Craft
brewing is on the rise in the United States, and we feel that there
is a large potential to grow this portion of our
business.
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.
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.
General Presentation and Basis of 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, 2020 that was filed on March 31, 2021.
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 2021.
Liquidity and Management’s Plans
For the
three months ended March 31, 2021, the Company reported cash and
cash equivalents of $2,026,002 and cash flows from operations of
$361,714 and net working capital of $430,246. The Company has
reported an operating loss of $179,333 for the period ended March
31, 2021 and has an accumulated deficit of $69,805,523 at March 31,
2021.
Management believes
that the growth of the PAID platform of services in addition to the
continued profitability of ShipTime’s services will return a
valuable impact on the Company’s success in the future. The
ongoing positive cash flows from operations is a significant
indicator of our successful transition to the new shipping and
eCommerce services. In addition to the existing services provided,
ShipTime will launch products in the United States that are
complementary to the current offerings. The Company also continues
to seek alternate sources of capital to support 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 2022 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, 2021 and December 31, 2020. 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 99% of its revenues from Canada and 1% from the U.S.
during the three months ended March 31, 2021 compared to 95% from
Canada and 5% from the U.S. during the three months ended March 31,
2020.
At
March 31, 2021, the Company maintained 100% of its property and
equipment net of accumulated depreciation in Canada.
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. No impairment charges were recognized during
the three months ended March 31, 2021. 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.
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 five 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 scheduled 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.
Customers of
PaidPayments receive a merchant identification number which allows
them to process credit card transactions. Once the transaction is
approved, the funds are disbursed 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.
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
$244,393 and $171,785 as of March 31, 2021 and December 31, 2020,
respectively. Generally, the Company does not have material amounts
of contract assets since revenue is recognized as control of goods
is transferred or as services are performed.
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 $10,258 and $9,046 at March 31, 2021 and December
31, 2020, respectively. During the three months ended March 31,
2021, the Company recognized revenues of $9,046, related to
contract liabilities outstanding at the beginning of the
year.
Earnings (Loss) Per Common Share
Basic
earnings (loss) per share represent income (loss) available to
common shareholders divided by the weighted-average number of
common shares outstanding during the period. Diluted earnings
(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 earnings
(loss) per share because they would reduce the reported loss per
share and therefore have an anti-dilutive effect.
For the
three months ended March 31, 2021 and 2020, there were
approximately 36,000 and 48,000, respectively, of potentially
dilutive shares excluded from the diluted loss per share
calculation, as their effect would be anti-dilutive.
The
Company computes its income (loss) applicable to common
shareholders by adding/subtracting dividends on preferred stock,
including undeclared or unpaid dividends if cumulative, and any
deemed dividends or discounts on redeemed preferred stock from its
reported net income (loss) and reports the same on the face of the
condensed consolidated statements of operations and comprehensive
loss.
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 five
reportable segments are managed separately based on fundamental
differences in their operations. At March 31, 2021, the Company
operated in the following five reportable segments:
a.
Client
services;
b.
Shipping
calculator services;
c.
Brewery
management software;
d.
Merchant
processing services;
e.
Shipping
coordination and label generation services; and
f.
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 revenue for the periods
indicated.
|
|
Three Months
Ended
|
|
|
|
March 31,
2021
|
March 31,
2020
|
|
Client
services
|
$
1,283
|
$
99
|
|
Shipping calculator
services
|
5,863
|
8,322
|
|
Brewery management
software
|
19,200
|
37,106
|
|
Merchant processing
services
|
12,525
|
92,910
|
|
Shipping
coordination and label generation services
|
3,473,902
|
2,536,885
|
|
Total
revenues
|
$
3,512,773
|
$
2,675,322
|
The
following table compares total loss from operations for the periods
indicated.
|
|
Three Months
Ended
|
|
|
|
March 31,
2021
|
March 31,
2020
|
|
Client
services
|
$
969
|
$
99
|
|
Shipping calculator
services
|
2,011
|
4,751
|
|
Brewery management
software
|
11,632
|
(4,882
)
|
|
Merchant processing
services
|
4,622
|
36,496
|
|
Shipping
coordination and label generation services
|
(81,827
)
|
(45,798
)
|
|
Corporate
operations
|
(116,740
)
|
(103,408
)
|
|
Total loss from
operations
|
$
(179,333
)
|
$
(112,742
)
|
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 or disclosure in the notes
thereto, other than as disclosed herein.
Recent Accounting Pronouncements
In December
2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740):
“Simplifying the Accounting for Income Taxes” to
identify, evaluate, and improve areas of GAAP for which costs and
complexity can be reduced while maintaining or improving the
usefulness of the information provided to users of financial
statements. The amendments for ASU No. 2019-12 simplify the
accounting for income taxes by removing certain exceptions to the
general principles in Topic 740. The amendments also improve
consistent application of and simplify GAAP for other areas of
Topic 740 by clarifying and amending existing guidance. The
Company’s adoption of ASU No. 2019-12 in January 2021 had no
impact on its consolidated financial position, results of
operations, cash flows or disclosures.
Note 2. Accrued Expenses
Accrued
expenses are comprised of the following:
|
|
March 31,
2021
(unaudited)
|
December 31,
2020
|
|
Payroll and related
costs
|
$
18,997
|
$
25,319
|
|
Royalties
|
47,803
|
47,803
|
|
Accrued cost of
revenues
|
361,323
|
170,928
|
|
Sales
tax
|
31,902
|
31,902
|
|
Other
|
979
|
302
|
|
Total
|
$
461,004
|
$
276,254
|
Note 3. 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, 2021, intangible assets consisted of the
following:
|
|
Patents
|
Trade
Name
|
Technology &
Software
|
Customer
Relationships
|
Total
|
|
Gross carrying
amount
|
$
16,000
|
$
851,610
|
$
627,626
|
$
4,994,308
|
$
6,489,544
|
|
Accumulated
amortization
|
(16,000
)
|
(720,904
)
|
(627,626
)
|
(1,562,693
)
|
(2,927,223
)
|
|
|
$
-
|
$
130,706
|
$
-
|
$
3,431,615
|
$
3,562,321
|
At
December 31, 2020, intangible assets consisted of the
following:
|
|
Patents
|
Trade
Name
|
Technology &
Software
|
Customer
Relationships
|
Total
|
|
Gross carrying
amount
|
$
16,000
|
$
839,816
|
$
620,094
|
$
4,928,102
|
$
6,404,012
|
|
Accumulated
amortization
|
(16,000
)
|
(668,929
)
|
(620,094
)
|
(1,465,569
)
|
(2,770,592
)
|
|
|
$
-
|
$
170,887
|
$
-
|
$
3,462,533
|
$
3,633,420
|
Amortization
expense of intangible assets for the three months ended March 31,
2021 and 2020 was $121,395 and $114,543, respectively.
Note 4. Commitments and Contingencies
Legal Matters
In the
normal course of business, the Company periodically becomes
involved in litigation and disputes. During 2020, the Company was
notified of a dispute related to its non-renewal of the employment
agreement with Mr. Allan Pratt, the Company's former CEO, in which
Mr. Pratt appears to be treating it as a termination which would
trigger a two-year severance payment. As of March 31, 2021, in the
opinion of management, the Company had no pending litigation and
disputes that would have a material adverse effect on the Company's
consolidated financial position, results of operations, or cash
flows.
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 leases, the Company has agreed to indemnify its
lessors 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 agreements. 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 5. Shareholders’ Equity
Preferred Stock
The
Company’s amended Certificate of Incorporation authorizes the
issuance of 20,000,000 shares of blank-check preferred stock at
$0.001 par value. The Board of Directors will be authorized to fix
the designations, rights, preferences, powers and limitations of
each series of the preferred stock.
The
Company filed a Certificate of Designations effective on December
30, 2016 which sets aside 5,000,000 shares of Preferred Stock as
Series A Preferred Stock. The Series A Preferred Stock carries a
coupon payment obligation of 1.5% of the liquidation value per
share ($3.03) per year in cash or additional Series A Preferred
Stock, calculated by taking the 30-day average closing price for a
share of common stock for the month immediately preceding the
coupon payment date which is made annually. For the year ended
December 31, 2020, the annual coupon was $28,532. The Series A
Preferred Stock has no voting or conversion rights. If purchased,
redeemed, or otherwise acquired (other than conversion), the
preferred stock may be reissued. The Company paid the 2018 and 2019
coupon payments totaling $358,638 by issuing 126,727 preferred
shares and a cash payment of $26,252 for the 2020 coupon payment
for the three months ended March 31, 2020. In 2020, all 4,565,305
shares of Series A Preferred Stock were exchanged for common stock
(see below). As of March 31, 2021 and December 31, 2020, there are
no outstanding shares of Series A Preferred Stock.
Common Stock
In
February 2020, ShipTime Canada amended its rights to exchange one
share of ShipTime Canada stock from 45 PAID common shares and 311
PAID preferred shares to 356 PAID common shares. The Company made
available to its ShipTime Canada exchangeable preferred
shareholders the one-time option to convert existing book entry
preferred shares and exchangeable rights to preferred shares into
PAID common shares. As a result, certain ShipTime exchangeable
shareholders exercised their rights to receive 1,461,078 shares of
PAID Series A Preferred Stock for 1,461,078 shares of PAID common
stock. At the same time, the Company made available to its Series A
Preferred Stock shareholder the option to exchange existing Series
A preferred shares for PAID common shares. The exchange was offered
on a one-to-one basis. Shareholders holding 1,015,851 shares of
Series A Preferred Stock exchanged such shares for 1,015,851 shares
of PAID common stock. Furthermore, because of the amended exchange
rights, the Company reflected an additional exchange of PAID Series
A Preferred Stock shares totaling 2,089,298 to PAID common shares,
representing the additional amount of PAID common shares that will
be issued to the ShipTime shareholders upon the exchange. During
2020, two shareholders sold 500 ShipTime exchangeable shares which
were subsequently exchanged for 178,000 common shares. In total,
the Company has reserved for future issuance of 2,213,608 shares of
PAID common stock with respect to the remaining 6,218 exchangeable
shares to be issued as a result of the ShipTime acquisition which
are considered issued and outstanding as of March 31, 2021 for
financial reporting purposes.
During
2020, the Company issued 274,120 shares of PAID common stock as a
result of the exercise of an investor warrant for 770 ShipTime
exchangeable shares. The Company received gross proceeds of $35,636
in connection with the warrant exercise. On March 29, 2021, the
Company's Board of Directors authorized the issuance of 1,050,000
bonus shares of PAID common stock to the interim CEO/CFO for
services rendered during 2019 and 2020. This bonus was valued at
$2,005,500 based on the closing price of the Company's common stock
at March 29, 2021 and is recorded in accrued common stock bonus in
shareholders’ equity at December 31, 2020. These shares were
issued on March 31, 2021.
On March 29, 2021, the
Board of Directors approved the issuance of 250,000 shares of PAID
common stock valued at $1.91 per share to W. Austin Lewis IV as it
relates to his 2021 employment agreement, of which 125,000 of the
shares are subject to repurchase at the award value of $1.91 per
share if Mr. Lewis terminates employment prior to January 1, 2022,
as defined in the employment agreement. These shares were
issued on March 31, 2021. The value of the shares that are
subject to repurchase will be recognized ratably as share-based
compensation expense over the next nine months. Unrecognized
compensation expense related to these shares is
$238,750.
Share-based Incentive Plans
On
March 23, 2018, the Board of Directors voted to approve the 2018
Stock Option Plan which reserves 450,000 non-qualified stock
options to be granted to employees. The Company has three
additional stock option plans that include both incentive and
non-qualified stock options to be granted to certain eligible
employees, non-employee directors, or consultants of the Company.
On November 10, 2020, the board voted to increase the 2018 Stock
Option Plan from 450,000 options to 900,000 options. For the year
ended December 31, 2020, the Company granted 105,000 stock options
to employees, consultants and directors. The 2020 options have
vesting periods of immediately and over a three-year period, they
expire if not exercised within ten years from grant date, and the
exercise price is $2.885 per share. During 2020, as a result of the
termination of several employees, the Company recorded 61,948
expired options and an additional 20,459 that were cancelled.
During 2021, the Company issued 10,000 stock options to one
employee. These options have a three-year vesting schedule with
one-third vesting immediately, one-third vesting in 18 months and
the final one-third vesting in 36 months, they expire if not
exercised in ten years from the grant date, and their exercise
price is $1.91 per share.
For the
three-month periods ended March 31, 2021 and 2020, the Company
recorded $263,613 and ($20,789), respectively, of share-based
compensation expense related to the vesting of applicable options
granted in 2021 and prior years and the issuance of shares in the
first quarter of 2021 for employment compensation.
Note 6. Leases
We have
an operating lease for our corporate offices in Canada and finance
leases for furniture and equipment. Our leases have remaining lease
terms of two months to twenty-nine months, and our primary
operating leases include options to extend the leases for four
years. Future renewal options that are not likely to be executed as
of the balance sheet date are excluded from right-of-use assets and
related lease liabilities.
We
report operating leased assets, as well as operating lease current
and noncurrent obligations on our balance sheets for the right to
use the building in our business. Our finance leases represent
furniture and office equipment; we report the furniture and
equipment, as well as finance lease current and noncurrent
obligations on our balance sheet.
Generally, interest
rates are stated in our leases for equipment. When no interest rate
is stated in a lease, however, we review the interest rates
implicit in our recent finance leases to estimate our incremental
borrowing rate. We determine the rate implicit in a lease by using
the most recent finance lease rate, or other method we think most
closely represents our incremental borrowing rate.
The
components of lease expense were as follows:
|
|
Three Months
Ended
March 31,
2021
|
Three Months
Ended
March 31,
2020
|
|
Operating lease
cost
|
$
10,095
|
$
9,707
|
|
|
|
|
|
Finance lease
cost:
|
|
|
|
Amortization of
leased assets
|
$
2,741
|
$
2,428
|
|
Interest on lease
liabilities
|
57
|
281
|
|
Total finance lease
cost
|
$
2,798
|
$
2,709
|
Supplemental cash
flow information related to leases was as follows:
|
|
Three Months Ended
March 31, 2021
|
Three Months Ended
March 31, 2020
|
|
Cash paid for
amounts included in leases:
|
|
|
|
Operating cash
flows from operating leases
|
$
10,395
|
$
9,880
|
|
Operating cash
flows from finance leases
|
$
57
|
$
281
|
|
Financing cash
flows from finance leases
|
$
1,417
|
$
2,316
|
|
|
|
|
|
Right-of-use assets
obtained in exchange for lease obligations:
|
|
|
|
Operating
leases
|
$
-
|
$
-
|
|
Finance
leases
|
$
-
|
$
-
|
Supplemental
balance sheet information related to leases was as
follows:
|
|
March 31,
2021
|
December 31,
2020
|
|
Operating
leases:
|
|
|
|
Operating lease
right-of-use assets
|
$
86,723
|
$
93,457
|
|
Current portion of
operating lease obligations
|
$
34,889
|
$
33,118
|
|
Operating lease
obligations, net of current portion
|
53,009
|
61,794
|
|
Total operating
lease liabilities
|
$
87,898
|
$
94,912
|
|
|
|
|
|
Finance
leases:
|
|
|
|
Property and
equipment, at cost
|
$
54,825
|
$
54,066
|
|
Accumulated
depreciation
|
(52,083
)
|
(48,659
)
|
|
Property and
equipment, net
|
$
2,742
|
$
5,407
|
|
|
|
|
|
Current portion of
finance lease obligations
|
$
1,457
|
$
2,844
|
|
Finance lease
obligations, net of current portion
|
-
|
-
|
|
Total finance lease
liabilities
|
$
1,457
|
$
2,844
|
|
|
March 31,
2021
|
December 31,
2020
|
|
Weighted Average
Remaining Lease Term
|
|
|
|
Operating
lease
|
2.4
years
|
2.6
years
|
|
Finance
leases
|
0.2
years
|
0.3
years
|
|
|
|
|
|
Weighted Average
Discount Rate
|
|
|
|
Operating
lease
|
9.0%
|
9.0%
|
|
Finance
leases
|
9.7%
|
9.7%
|
A
summary of future minimum payments under non-cancellable operating
lease commitment as of March 31, 2021 is as follows:
|
Years ending
December 31,
|
Total
|
|
2021
|
32,042
|
|
2022
|
40,869
|
|
2023
|
25,274
|
|
Total lease
liabilities
|
$
98,185
|
|
Less
amount representing interest
|
(10,287
)
|
|
Total
|
87,898
|
|
Less
current portion
|
(34,889
)
|
|
|
$
53,009
|
The
following is a schedule of minimum future rentals on the
non-cancelable finance leases as of March 31, 2021:
|
Year ending
December 31,
|
Total
|
|
2021
|
1,480
|
|
Total minimum
payments required:
|
1,480
|
|
Less amount
representing interest:
|
(23
)
|
|
Present value of
net minimum lease payments:
|
1,457
|
|
Less current
portion
|
(1,457
)
|
|
|
$
-
|
|
MANAGE
M
ENT'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, 2020 that was filed on March 31,
2021.
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, 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 2021 will be to significantly grow this
portion of our business.
PAID,
Inc. (the “Company”) has developed AuctionInc, which is
a suite of online shipping and tax management tools assisting
businesses with e-commerce storefronts, shipping solutions, tax
calculation, inventory management, and auction processing. The
product does have tools to assist with other aspects of the
fulfillment process, but the main purpose of the product is to
provide accurate shipping and tax calculations and packaging
algorithms that provide customers with the best possible shipping
and tax solutions.
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
providence. 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.
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, 2020 and 2019 included in our Form 10-K filed on March
31, 2021, 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, 2021 and
2020
.
The
following discussion compares the Company's results of operations
for the three months ended March 31, 2021 with those for the three
months ended March 31, 2020. 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 revenue for the periods
indicated.
|
|
Three months Ended
March 31,
|
||
|
|
2021
|
2020
|
% Change
|
|
Client
services
|
$
1,283
|
$
99
|
1,196
%
|
|
Brewery management
software
|
19,200
|
37,106
|
(48
)%
|
|
Shipping
coordination and label generation services
|
3,473,902
|
2,536,885
|
37
%
|
|
Merchant processing
services
|
12,525
|
92,910
|
(87
)%
|
|
Shipping calculator
services
|
5,863
|
8,322
|
(30
)%
|
|
Total
revenues
|
$
3,512,773
|
$
2,675,322
|
31
%
|
Revenues increased
31% in the first quarter primarily from the impact of new marketing
services in combination with impact from the COVID-19 virus on the
growth of our shipping coordination and label generation
services.
Client
services revenues increased $1,184 or 1,196% to $1,283 in the first
quarter of 2021 compared to $99 in 2020. This increase is a result
of the increase in movie posters auctions held during the
quarter.
Brewery
management software revenues decreased $17,906 to $19,200 in 2021
from $37,106 in 2020. The decrease in revenues is due to
cancellations of several clients and limited marketing of the
software to new clients.
Shipping
coordination and label generation services revenues increased
$937,017 or 37% to $3,473,902 in the first quarter of 2021 compared
to $2,536,885 in 2020. The increase is attributable to the shift in
online shipping as a result of the impact of the COVID-19 virus in
addition to the change in pricing to retain customers in a
competitive environment.
Merchant processing
services is available to businesses that accept credit card
processing online. This segment has had difficulties with the
launch and has declined 87% from $92,910 to $12,525 in the first
quarter of 2021. The Company is reevaluating the launch and
preparing to combine these services with other Paid products for a
re-release.
Shipping calculator
services revenue decreased $2,459 or 30% to $5,863 in the first
quarter of 2021 compared to $8,322 in 2020. The decrease was
primarily due to the reduction in volume for the remaining customer
using this platform.
Gross Profit
Gross
profit increased $227,869 or 35% in the first quarter of 2021 to
$879,015 compared to $651,146 in 2020. Gross margin increased to
25% for the first quarter of 2021 compared to 24% in the first
quarter of 2020. The increase in gross margin is a result of
ongoing pricing evaluations of our shipping label generation
services to remain competitive in the market. The increase in gross
profit is due to additional marketing programs released in 2021
along with the impact of increased shipping label generation
services as a result of the growth of e-commerce shopping due to
the COVID-19 virus.
Operating Expenses
Total
operating expenses in the first quarter 2021 were $1,058,348
compared to $763,888 in the first quarter of 2020, an increase of
$294,460 or 39%. The increase is due to additional staffing added
in 2021 along with the share-based compensation expense of $263,613
recorded in the first quarter.
Net Income (Loss)
The
Company recorded a net loss in the first quarter of 2021 of
($179,733) compared to a net loss of ($113,242) for the same period
in 2020. The net loss per share available to common shareholders
for the first quarter of 2021 and 2020 was ($0.03) and ($0.04) per
share, respectively.
Cash
Flows from Operating Activities
A
summarized reconciliation of the Company's net loss to cash and
cash equivalents provided by operating activities for the three
months ended March 31, 2021 and 2020 is as follows:
|
|
2021
|
2020
|
|
Net
loss
|
$
(179,733
)
|
$
(113,242
)
|
|
Depreciation and
amortization
|
127,980
|
122,404
|
|
Amortization of
operating lease right-of-use assets
|
7,993
|
6,880
|
|
Share-based
compensation
|
263,613
|
(20,789
)
|
|
Provision for bad
debt
|
-
|
20,125
|
|
Changes in assets
and liabilities
|
141,861
|
80,065
|
|
Net cash provided
by operating activities
|
$
361,714
|
$
95,443
|
Working
Capital and Liquidity
The
Company had cash and cash equivalents of $2,026,002 at March 31,
2021, compared to $1,644,210 at December 31, 2020. The Company had
net working capital of $430,246 at March 31, 2021, an improvement
of $211,631 compared to $218,615 at December 31, 2020. The increase
in net working capital is attributable to the 31% growth of the
Company’s revenues for 2021. The increase in cash and cash
equivalents is due to the additional growth of the business along
with the savings related to the decrease in consulting and travel
expense.
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.
QUAN
T
ITATIVE 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, 2021, 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, 2020.
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.
PA
R
T II - OTHER
INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
In the
normal course of business, the Company periodically becomes
involved in litigation and disputes. During 2020, the Company was
notified of a dispute related to its non-renewal of the employment
agreement with Mr. Allan Pratt, the Company's former CEO, in which
Mr. Pratt appears to be treating it as a termination which would
trigger a two-year severance payment. As of March 31, 2021, in the
opinion of management, the Company had no pending litigation and
disputes that would have a material adverse effect on the Company's
consolidated financial position, results of operations, or cash
flows.
In December 2019, a
novel strain of coronavirus disease (“COVID-19”) was
first reported in Wuhan, China. Less than four months later, on
March 11, 2020, the World Health Organization declared COVID-19 a
global pandemic. The extent of COVID-19’s effect on the
Company’s operational and financial performance will depend
on future developments, including the duration, spread and
intensity of the pandemic, all of which are uncertain and difficult
to predict considering the rapidly evolving landscape. The Company
has reviewed the impact of COVID-19 during the last three months
and has reported a positive effect on Company’s, financial
condition, liquidity, results of operations, and cash
flows.
At this time, it is not
possible to determine the length of time the Company will benefit
from the overall impact of COVID-19. However, it could have a
material effect on the growth of the Company in the future. The
Company continues to monitor the health and wellbeing of its
employees across the US and Canada.
ITEM 2.
UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS
There were no issuances of unregistered securities during the three
months ended March 31, 2021.
ITEM 3.
DEFAULTS UPON SENIOR
SECURITIES
None.
ITEM 4.
MINE SAFETY
DISCLOSURES
Not
Applicable.
ITEM 5.
OTHER INFORMATION
Not
Applicable
ITEM 6.
EXHIBITS
|
|
Amendment to 2018 Non-Qualified
Stock Option Plan
|
|
|
|
CEO and CFO Certification required
under Section 302 of Sarbanes-Oxley Act of 2002
|
|
|
|
CEO and CFO Certification required
under Section 906 of Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document (filed
herewith)
|
|
1
01.SCH
|
|
XBRL Taxonomy Extension Schema
(filed herewith)
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation
Linkbase (filed herewith)
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition
Linkbase (filed herewith)
|
|
101.LAB
|
|
X
BRL Taxonomy Extension Label
Linkbase (filed herewith)
|
|
101.PRE
|
|
XBRL Taxonomy Extension
Presentation Linkbase (filed herewith)
|
SIGN
A
TURES
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.
|
|
|
PAID,
INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ W. Austin
Lewis IV
|
|
|
Date:
May 14, 2021
|
|
W.
Austin Lewis, IV, CEO, CFO
|
LIST OF
EXHIBITS
|
Exhibit
No.
|
|
Description
|
|
|
|
|
|
|
Amendment to 2018 Non-Qualified
Stock Option Plan
|
|
|
|
CEO and CFO Certification required
under Section 302 of Sarbanes-Oxley Act of 2002
|
|
|
|
CEO and CFO Certification required
under Section 906 of Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document (filed
herewith)
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
(filed herewith)
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation
Linkbase (filed herewith)
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition
Linkbase (filed herewith)
|
|
101.LAB
|
|
X
BRL Taxonomy Extension Label
Linkbase (filed herewith)
|
|
101.PRE
|
|
XBRL Taxonomy Extension
Presentation Linkbase (filed herewith)
|
-19-
TABLE OF CONTENTS
Part I Financial InformationItem 1. Financial StatementsNote 1. Organization and Significant Accounting PoliciesNote 2. Accrued ExpensesNote 3. Intangible AssetsNote 4. Commitments and ContingenciesNote 5. Shareholders EquityNote 6. LeasesItem 2. Management's Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II - Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits