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 September 30, 2020March 31, 2021
COMMISSION FILE NUMBER 0-28720
(Exact Name of Registrant as Specified in its Charter)
| |
DELAWARE | 73-1479833 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
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:
Title of each class | Trading Symbol | Name of each exchange on which registered |
None | None | None |
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):
| | | |
Large accelerated filer | ☐ | Accelerated Filer | ☐ |
Non-accelerated filer | ☐☑ | Smaller reporting company | ☒☑ | Emerging Growth Company | ☐ |
(Do not check if a smaller reporting company)
Emerging Growth Company ☐
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 November 13, 2020,May 14, 2021, the issuer had outstanding 6,455,1647,755,164 shares of its Common Stock.
FORM 10-Q
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PARTPART I – FINANCIALFINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAID, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | |
| September 30, 2020 (Unaudited) | | | |
ASSETS | | |
Current assets: | | |
Cash and cash equivalents | $1,317,374 | $475,881 | $2,026,002 | $1,644,210 |
Accounts receivable, net | 196,160 | 131,561 | 244,393 | 171,785 |
Prepaid expenses and other current assets | 138,114 | 124,257 | 141,668 | 184,366 |
Total current assets | 1,651,648 | 731,699 | 2,412,063 | 2,000,361 |
| | |
Property and equipment, net | 63,533 | 89,707 | 55,187 | 59,848 |
Other intangible assets, net | 3,593,580 | 4,048,572 | |
Intangible assets, net | | 3,562,321 | 3,633,420 |
Operating lease right-of-use assets | 96,891 | 121,440 | 86,723 | 93,457 |
Total assets | $5,405,652 | $4,991,418 | $6,116,294 | $5,787,086 |
| | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | |
Current liabilities: | | |
Accounts payable | $1,103,937 | $876,260 | $1,474,209 | $1,460,484 |
Finance leases - current portion | 5,230 | 9,951 | 1,457 | 2,844 |
Accrued expenses | 334,246 | 207,786 | 461,004 | 276,254 |
Contract liabilities | 9,472 | 5,338 | 10,258 | 9,046 |
Operating lease obligations – current portion | 31,492 | 30,255 | 34,889 | 33,118 |
Total current liabilities | 1,484,377 | 1,129,590 | 1,981,817 | 1,781,746 |
Long term liabilities: | | |
Finance leases - net of current portion | - | 2,797 | |
Long-term liabilities: | | |
Operating lease obligations – net of current portion | 67,077 | 93,642 | 53,009 | 61,794 |
Deferred tax liability, net | 1,041,438 | 1,070,189 | 974,477 | 960,947 |
Total liabilities | 2,592,892 | 2,296,218 | 3,009,303 | 2,804,487 |
Commitments and contingencies | | |
Shareholders' equity: | | |
Series A Preferred stock, $0.001 par value, 5,000,000 shares authorized; none and 4,438,578 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively; liquidation value of $0 and $13,808,610 at September 30, 2020 and December 31, 2019, respectively | - | 4,439 | |
Common stock, $0.001 par value, 25,000,000 shares authorized; 6,489,004 shares issued and 6,455,164 shares outstanding at September 30, 2020, 1,648,657 shares issued and 1,614,817 outstanding at December 31, 2019 | 6,489 | 1,649 | |
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 | | - |
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 | | 7,789 | 6,489 |
Accrued common stock bonus | | - | 2,005,500 |
Additional paid-in capital | 69,947,414 | 69,242,412 | 72,351,299 | 70,083,486 |
Accumulated other comprehensive income | 441,496 | 512,894 | 611,273 | 570,761 |
Accumulated deficit | (67,524,792) | (67,008,347) | (69,805,523) | (69,625,790) |
Common stock in treasury, at cost; 33,840 shares at September 30, 2020 and December 31, 2019 | (57,847) | |
Common stock in treasury, at cost, 33,840 shares at March 31, 2021 and December 31, 2020 | | (57,847) |
Total shareholders' equity | 2,812,760 | 2,695,200 | 3,106,991 | 2,982,599 |
| | |
Total liabilities and shareholders' equity | $5,405,652 | $4,991,418 | $6,116,294 | $5,787,086 |
See accompanying notes to condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)LOSS
(Unaudited)
| | |
| | | | |
Revenues, net | $3,409,316 | $2,726,433 | $9,303,510 | $7,730,950 |
Cost of revenues | 2,548,833 | 1,973,499 | 7,056,764 | 5,649,535 |
Gross profit | 860,483 | 752,934 | 2,246,746 | 2,081,415 |
|
Operating expenses: | | | | |
Salaries and related | 360,702 | 381,585 | 1,109,922 | 1,042,459 |
General and administrative | 178,930 | 261,993 | 629,076 | 879,291 |
Share-based compensation | 329,140 | 303,958 | 311,129 | 361,698 |
Amortization of other intangible assets | 115,439 | 116,401 | 340,875 | 346,946 |
Total operating expenses | 984,211 | 1,063,937 | 2,391,002 | 2,630,394 |
Loss from operations | (123,728) | (311,003) | (144,256) | (548,979) |
| |
Other income: | | | | |
Other income, net | 6 | 884,620 | 13,201 | 892,652 |
Unrealized gain on stock price guarantee | - | 8,017 | - | 3,688 |
Total other income, net | 6 | 892,637 | 13,201 | 896,340 |
| |
Income (loss) before provision for income taxes | (123,722) | 581,634 | (131,055) | 347,361 |
Provision for income taxes | - | - | 500 | 960 |
Net income (loss) | (123,722) | 581,634 | (131,555) | 346,401 |
Preferred dividends | - | (50,395) | (28,532) | (141,287) |
Net income (loss) available to common shareholders | $(123,722) | $531,239 | $(160,087) | $205,114 |
| | | | |
Net income (loss) per share – basic | $(0.02) | $0.33 | $(0.03) | $0.13 |
Weighted average number of common shares outstanding - basic | 6,181,044 | 1,614,817 | 5,139,206 | 1,614,817 |
Net income (loss) per share – diluted | $(0.02) | $0.32 | $(0.03) | $0.12 |
Weighted average number of common shares outstanding - diluted | 6,181,044 | 1,671,693 | 5,139,206 | 1,667,566 |
Condensed consolidated statements of comprehensive income (loss) | | | | |
Net income (loss) | $(123,722) | $581,634 | $(131,555) | $346,401 |
Other comprehensive income (loss): | | | | |
Foreign currency translation adjustments | 57,659 | (24,925) | (71,398) | 98,453 |
Comprehensive income (loss) | $(66,063) | $556,709 | $(202,953) | $444,854 |
| |
| | |
Revenues, net | $3,512,773 | $2,675,322 |
Cost of revenues | 2,633,758 | 2,024,176 |
Gross profit | 879,015 | 651,146 |
| | |
Operating expenses: | | |
Salaries and related | 430,175 | 399,182 |
General and administrative | 243,165 | 270,952 |
Share-based compensation | 263,613 | (20,789) |
Amortization of other intangible assets | 121,395 | 114,543 |
Total operating expenses | 1,058,348 | 763,888 |
Loss from operations | (179,333) | (112,742) |
Provision for income taxes | 400 | 500 |
Net loss | (179,733) | (113,242) |
Preferred dividends | - | (28,532) |
Net loss available to common shareholders | $(179,733) | $(141,774) |
| | |
Net loss per share – basic and diluted | $(0.03) | $(0.04) |
Weighted average number of common shares outstanding – basic and diluted | 6,455,164 | 3,247,248 |
Condensed consolidated statements of comprehensive loss | | |
Net loss | $(179,733) | $(113,242) |
Other comprehensive loss: | | |
Foreign currency translation adjustments | 40,512 | (235,181) |
Comprehensive loss | $(139,221) | $(348,423) |
See accompanying notes to condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINETHREE MONTHS ENDED SEPTEMBER 30,MARCH 31,
(Unaudited)
| | | | |
Cash flows from operating activities: | | |
Net income (loss) | $(131,555) | $346,401 | |
Net loss | | $(179,733) | $(113,242) |
Adjustments to reconcile net loss to net cash provided by operating activities: | | |
Depreciation and amortization | 364,273 | 368,183 | 127,980 | 122,404 |
Amortization of operating lease right-of-use assets | 20,957 | 16,020 | 7,993 | 6,880 |
Provision for bad debts | 20,125 | - | - | 20,125 |
Share-based compensation | 311,129 | 361,698 | 263,613 | (20,789) |
Gain on sale of property and equipment | (739) | - | |
Unrealized loss on stock price guarantee | - | (3,688) | |
Other income from stock price guarantee | - | (880,553) | |
Changes in assets and liabilities: | | |
Accounts receivable | (87,361) | (44,051) | (71,038) | (48,761) |
Prepaid expenses and other current assets | (17,686) | 24,381 | 43,852 | 27,395 |
Accounts payable | 246,405 | 146,778 | (4,540) | 67,016 |
Accrued expenses | 127,860 | (192,901) | 180,803 | 40,095 |
Contract liabilities | 4,211 | (46,382) | 1,076 | 1,381 |
Operating lease obligations | (21,660) | (13,266) | (8,292) | (7,061) |
Net cash provided by operating activities | 835,959 | 82,620 | 361,714 | 95,443 |
| | |
Cash flows from investing activities: | | |
Purchase of property and equipment | - | (16,077) | (1,120) | - |
Proceeds from sale of property and equipment | 739 | - | |
Net cash provided by (used in) investing activities | 739 | (16,077) | |
Net cash used in investing activities | | (1,120) | - |
| | |
Cash flows from financing activities: | | |
Payments on finance leases | (7,065) | (6,523) | (1,417) | (2,316) |
Payments on notes payable | - | (15,346) | |
Proceeds from warrant exercise | 35,636 | - | |
Payments of preferred dividends | (26,252) | (163,236) | - | (26,252) |
Net cash provided by (used in) financing activities | 2,319 | (185,105) | |
Net cash used in financing activities | | (1,417) | (28,568) |
| | |
Effect of exchange rate changes on cash and cash equivalents | 2,476 | 11,432 | 22,615 | (41,874) |
| | |
Net change in cash and cash equivalents | 841,493 | (107,130) | 381,792 | 25,001 |
| | |
Cash and cash equivalents, beginning of period | 475,881 | 632,331 | 1,644,210 | 475,881 |
Cash and cash equivalents, end of period | $1,317,374 | $525,201 | $2,026,002 | $500,882 |
| | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | | |
Cash paid during the period for: | | |
Income taxes | $500 | $400 | $500 |
Interest | $496 | $932 | $57 | $281 |
| | |
SUPPLEMENTAL DISCLOSURES OF NON-CASH ITEMS | | |
Issuance of preferred shares in settlement of accrued expenses | $- | $83,221 | |
Issuance of common shares in settlement of accrued expenses | | $2,005,500 | $- |
Issuance of preferred shares in settlement of dividends | $358,638 | $- | $- | $358,683 |
Operating lease liabilities from obtaining lease right-of-use assets | $- | $55,600 | |
| | |
| | |
| | |
See accompanying notes to condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019
(Unaudited)
|
| | Accrued Common | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | | |
| | | | Capital | Income | 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 | - | - | - | - | 40,512 | - | - | - | 40,512 |
Share-based compensation expense | - | - | - | 24,863 | - | - | - | - | 24,863 |
Issuance of common stock for accrued bonus and compensation | 1,300,000 | 1,300 | (2,005,500) | 2,242,950 | - | - | - | - | 238,750 |
Net loss | - | - | - | - | - | (179,733) | - | - | (179,733) |
Balance, March 31, 2021 | 7,789,004 | $7,789 | $- | 72,351,299 | $611,273 | $(69,805,523) | (33,840) | $(57,847) | $3,106,991 |
| | | | | | | | | | Accumulated Other Comprehensive | Accumulated | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Balance, January 1, 2019 | 3,784,712 | $3,785 | 1,648,657 | $1,649 | $68,751,871 | $344,182 | $(67,127,122) | (33,840) | $(57,847) | $1,916,518 | |
Balance, January 1, 2020 | | 4,438,578 | $4,439 | 1,648,657 | $1,649 | $69,242,412 | $512,894 | $(67,008,347) | (33,840) | (57,847) | $2,695,200 |
Foreign currency translation adjustment | - | 73,145 | - | 73,145 | - | (235,181) | - | (235,181) |
Share-based compensation expense | - | 58,840 | - | 58,840 | - | (20,789) | - | (20,789) |
Preferred dividends paid in shares | | 126,727 | 127 | - | 358,511 | - | (358,638) | - |
Exchange of Preferred to Common | | (4,125,500) | (4,126) | 4,126,422 | 4,126 | - |
Preferred dividends paid | | - | (26,252) | - | (26,252) |
Net loss | - | - | (211,986) | - | (211,986) | - | - | (113,242) | - | (113,242) |
Balance, March 31, 2019 | 3,784,712 | 3,785 | 1,648,657 | 1,649 | 68,810,711 | 417,327 | (67,339,108) | (33,840) | (57,847) | 1,836,517 | |
Foreign currency translation adjustment | - | 50,233 | - | 50,233 | |
Share-based compensation expense | - | (1,100) | - | (1,100) | |
Preferred shares issued as compensation | 653,866 | 654 | - | 82,567 | - | 83,221 | |
Preferred dividend paid | - | (163,236) | | (163,236) | |
Net loss | - | - | (23,247) | - | (23,247) | |
Balance, June 30, 2019 | 4,438,578 | 4,439 | 1,648,657 | 1,649 | 68,892,178 | 467,560 | (67,525,591) | (33,840) | (57,847) | 1,782,388 | |
Foreign currency translation adjustment | - | (24,925) | - | (24,925) | |
Share-based compensation expense | - | 303,958 | - | 303,958 | |
Net income | - | - | 581,634 | - | 581,634 | |
Balance, September 30, 2019 | 4,438,578 | $4,439 | 1,648,657 | $1,649 | $69,196,136 | $442,635 | $(66,943,957) | (33,840) | $(57,847) | $2,643,055 | |
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 |
See accompanying notes to condensed consolidated financial statements
PAID, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020
(Unaudited)
| | | | | | | |
| | | | | | | |
| | | | | | | | | | |
Balance, January 1, 2020 | 4,438,578 | $4,439 | 1,648,657 | $1,649 | $69,242,412 | $512,894 | $(67,008,347) | (33,840) | $(57,847) | $2,695,200 |
| | | | | | | | | | |
Foreign currency translation adjustment | - | - | - | - | - | (235,181) | - | - | - | (235,181) |
Share-based compensation expense | - | - | - | - | (20,789) | - | - | - | - | (20,789) |
Preferred dividends paid in shares | 126,727 | 127 | - | - | 358,511 | - | (358,638) | - | - | - |
Exchange of Preferred to Common | (4,125,500) | (4,126) | 4,126,422 | 4,126 | - | - | - | - | - | - |
Preferred dividends paid | - | - | - | - | - | - | (26,252) | - | - | (26,252) |
Net loss | - | - | - | - | - | - | (113,242) | - | - | (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 |
Foreign currency translation adjustment | - | - | - | - | - | 106,124 | - | - | - | 106,124 |
Share-based compensation expense | - | - | - | - | 2,778 | - | - | - | - | 2,778 |
Exchange of Preferred to Common | (439,805) | (440) | 439,805 | 440 | - | - | - | - | - | - |
Net income | - | - | - | - | - | - | 105,409 | - | - | 105,409 |
Balance, June 30, 2020 | - | - | 6,214,884 | 6,215 | 69,582,912 | 383,837 | (67,401,070) | (33,840) | (57,847) | 2,514,047 |
Foreign currency translation adjustment | - | - | - | - | - | 57,659 | - | - | - | 57,659 |
Share-based compensation expense | - | - | - | - | 10,247 | | - | - | - | 10,247 |
Warrant exercise | - | - | 274,120 | 274 | 35,362 | - | - | - | - | 35,636 |
Warrant reprice | - | - | - | | 318,893 | - | - | - | - | 318,893 |
Net loss
| - | - | - | - | - | - | (123,722) | - | - | (123,722) |
Balance, September 30, 2020 | - | $- | 6,489,004 | $6,489 | $69,947,414 | $441,496 | $(67,524,792) | (33,840) | $(57,847) | $2,812,760 |
See accompanying notes to consolidated financial statements
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
September 30, 2020March 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-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, 20192020 that was filed on March 30, 2020.31, 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 2020.2021.
Going ConcernLiquidity and Management's PlanManagement’s Plans
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis which contemplatesFor the realizationthree months ended March 31, 2021, the Company reported cash and cash equivalents of assets$2,026,002 and the satisfactioncash flows from operations of liabilities in the normal course$361,714 and net working capital of business.$430,246. The Company has generally incurred losses, although it has taken significant steps to reduce them. For the nine months ended September 30, 2020, the Company reported a netan operating loss of $131,555. The Company also$179,333 for the period ended March 31, 2021 and has an accumulated deficit of $67,524,792 as of September 30, 2020. These factors raise doubt about the Company’s ability to continue as a going concern.$69,805,523 at March 31, 2021.
Management believes that the continued growth of the new 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 near future. The ongoing positive cash flows from operations areis 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 planplans 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 2020 and future years.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 September 30, 2020March 31, 2021 and December 31, 2019.2020. 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 96%99% of its revenues from Canada and 4%1% from the U.S. during the three months ended September 30, 2020 compared to 97% from Canada and 3% from the U.S. during the three months ended September 30, 2019. For the nine months ended September 30, 2020 and 2019, the Company derived approximately 95% of its revenues from Canada and 5% from the U.S.March 31, 2021 compared to 95% from Canada and 5% from the U.S. during the same period of 2019.three months ended March 31, 2020.
At September 30, 2020,March 31, 2021, the Company maintained 100% of its property and equipment net of accumulated depreciation in Canada.
Right-of-UseRight 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 and nine months ended September 30, 2020 and 2019.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.
ForMerchant processing revenue consists of fees a seller pays us to process their payment processing services, the Company recognizes revenue based on daily transactions by our partners and merchants. Customers process credit card payments for sales and remit fees based on the numberis 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 percent ofputs the processed amounts.risk for refunds and chargebacks on us. The merchant bank depositsgross transaction fees collected from sellers is recognized as revenue as we are the fundsprimary obligor to the customer net of fees. The remainder ofseller and are responsible for processing the fees withheld is disbursedpayment, have latitude in establishing pricing with respect to the Company on a daily basis, net of interchangesellers and other transactional charges.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 $196,160$244,393 and $131,561$171,785 as of September 30, 2020March 31, 2021 and December 31, 2019,2020, 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 $9,472$10,258 and $5,338$9,046 at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively. During the three and nine months ended September 30, 2020,March 31, 2021, the Company recognized revenues of $0 and $5,338, respectively,$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 and nine months ended September 30,March 31, 2021 and 2020, there were approximately 35,00036,000 and 34,000,48,000, respectively, of potentially dilutive shares excluded from the diluted loss per share calculation, as their effect would be anti-dilutive. For the three and nine months ended September 30, 2019, there were approximately 57,000 and 53,000, respectively, of dilutive shares that were included in the diluted earnings per share calculation.
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 income (loss).loss.
The following is a reconciliation of the numerators and denominators of the basic earnings (loss) per common share and diluted earnings (loss) per common share computation for the three and nine months ended September 30, 2020 and 2019.
| Three Months Ended September 30, 2020 | Three Months Ended September 30, 2019 |
Numerator: | | |
Net income (loss) available to common shareholders | $(123,722) | $531,239 |
Denominator: | | |
Basic weighted-average shares outstanding | 6,181,044 | 1,614,817 |
Effect of dilutive securities | - | 56,876 |
Diluted weighted-average shares outstanding | 6,181,044 | 1,671,693 |
Basic earnings (loss) per common share | $(0.02) | $0.33 |
Diluted earnings (loss) per common share | $(0.02) | $0.32 |
| Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 |
Numerator: | | |
Net income (loss) available to common shareholders | $(160,087) | $205,114 |
Denominator: | | |
Basic weighted-average shares outstanding | 5,139,206 | 1,614,817 |
Effect of dilutive securities | - | 52,749 |
Diluted weighted-average shares outstanding | 5,139,206 | 1,667,566 |
Basic earnings (loss) per common share | $(0.03) | $0.13 |
Diluted earnings (loss) per common share | $(0.03) | $0.12 |
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 September 30, 2020,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; and |
e. | Shipping coordination and label generation services |
b.
Shipping calculator services;
c.
Brewery management software;
d.
Merchant processing services;
e.
Shipping coordination and label generation services; and
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 interim Chief Executive Officer/Chief Financial Officer.
The following table compares total revenue for the periods indicated.
| | | |
| | | | | | |
Client services | $1,878 | $1,073 | $3,283 | $17,191 | $1,283 | $99 |
Shipping calculator services | 6,321 | 41,923 | 22,114 | 117,887 | 5,863 | 8,322 |
Brewery management software | 25,600 | 49,107 | 93,413 | 156,394 | 19,200 | 37,106 |
Merchant processing services | 105,713 | - | 379,012 | - | 12,525 | 92,910 |
Shipping coordination and label generation services | 3,269,804 | 2,634,330 | 8,805,688 | 7,439,478 | 3,473,902 | 2,536,885 |
Total revenues | $3,409,316 | $2,726,433 | $9,303,510 | $7,730,950 | $3,512,773 | $2,675,322 |
The following table compares total loss from operations for the periods indicated.
| | | |
| | | | | | |
Client services | $1,417 | $844 | $2,517 | $13,334 | $969 | $99 |
Shipping calculator services | (448,957) | (359,647) | (686,640) | (561,515) | 2,011 | 4,751 |
Brewery management software | 17,830 | 19,231 | 35,845 | 53,029 | 11,632 | (4,882) |
Merchant processing services | 37,548 | - | 86,477 | - | 4,622 | 36,496 |
Shipping coordination and label generation services | 268,434 | 28,569 | 417,545 | (53,527) | (81,827) | (45,798) |
Corporate operations | | (116,740) | (103,408) |
Total loss from operations | $(123,728) | $(311,003) | $(144,256) | $(548,979) | $(179,333) | $(112,742) |
Subsequent Events
The Company has evaluated subsequent events through the filing date of this Form 10-Q, and has determinedetermined that no subsequent events have occurred that would require recognition in the condensed consolidated financial statements or disclosure in the notes thereto, other thatthan as disclosed herein.
Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments”, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model which will result in earlier recognition of credit losses. The Company’s adoption of ASU 2016-13 had no impact on its consolidated financial position, results of operations, cash flows, or disclosures.
In August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements. The Company’s adoption of ASU 2018-13 had no impact on its consolidated financial position, results of operations, cash flows, or disclosures.
In December 2019, the FASB issued ASU No. 2019-12, “IncomeIncome Taxes (Topic 740): Simplifying“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. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. EarlyThe Company’s adoption is permitted. An entity that elects to early adopt must adopt all the amendments in the same period. The Company is currently evaluating the impact of ASU No. 2019-12 and does not expect the adoption of this guidance to have a materialin January 2021 had no impact on its consolidated financial position, or results of operations.operations, cash flows or disclosures.
Note 2. Accrued Expenses
Accrued expenses are comprised of the following:
| September 30, 2020 (unaudited) | | March 31, 2021 (unaudited) | |
Payroll and related costs | $849 | $1,797 | $18,997 | $25,319 |
Professional and consulting fees | 1,989 | 960 | |
Royalties | 47,803 | 47,803 |
Accrued cost of revenues | 241,667 | 114,455 | 361,323 | 170,928 |
Sales tax | 31,902 | 31,902 |
Other | 10,036 | 10,869 | 979 | 302 |
Total | $334,246 | $207,786 | $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 September 30, 2020 and DecemberMarch 31, 2019,2021, intangible assets consisted of the following:
| September 30, 2020 (unaudited) | |
Patents | $16,000 | $16,000 |
Software | 83,750 | 83,750 |
Trade name | 803,904 | 826,098 |
Technology | 513,409 | 527,583 |
Client list / relationship | 4,726,509 | 4,851,093 |
Accumulated amortization | (2,549,992) | (2,255,952) |
| $3,593,580 | $4,048,572 |
| | | | | |
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:
Table of Contents | | | | | |
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 September 30,March 31, 2021 and 2020 was $121,395 and 2019 was $115,439 and $116,401, respectively, and for the nine months ended September 30, 2020 and 2019, amortization expense was $340,875 and $346,946,$114,543, respectively.
Note 4. Commitments and Contingencies
Notes Payable
In August 2018, the Company entered into a note payable with a shareholder to repurchase common and preferred shares. The note was an interest-free, six-month note for CAD $122,400 with payment terms of six equal installments of CAD $20,400. This note was paid in full in the first quarter of 2019.
Stock Price Guarantee
In connection with one of the Company’s advance royalties with a client, the Company guaranteed that shares of its common stock issued as royalties would sell for at least $60.00 per share. If the shares were not at the required $60.00 per share when they were sold, the Company had the option of issuing additional shares at their fair value or making cash payments for the difference between the guaranteed price per share and the fair value of the stock. The change in fair value of the guarantee was $3,688 for the nine months ended September 30, 2019. The Company would have disputed this obligation if demanded by the client; further, pursuing any action by the client was required to be commenced within six years of the time of the original issuance and the Company believes the time for pursuing an action expired in 2019. As a result of the expiration, the Company eliminated this obligation from its consolidated balance sheet and recorded $880,553 in other income during the year ended December 31, 2019.
Legal Matters
In the normal course of business, the Company periodically becomes involved in litigation.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 September 30, 2020,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 holders have no voting or conversion rights. The Series A Preferred Stock also 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 proceedingpreceding the coupon payment date which is made annually. For the nine month periodsyear ended September 30,December 31, 2020, and 2019, the portion of the annual coupon is $28,532 and $141,287, respectively.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. In April 2019, the Company paid the annual coupon in cash for the year ended December 31, 2017. The Company paid the 2018 and 2019 coupon payments totaling $358,638 inby issuing 126,727 preferred shares and a cash payment of $26,252 for the 2020 coupon payment through March of 2020. During 2019,for the Board of Directors satisfied 2018 accrued Executive Compensation by means of issuance of 653,866 preferred shares valued at $83,221. During the ninethree months ended September 30,March 31, 2020. In 2020, all 4,565,305 shares of Series A Preferred Stock were exchanged for common stock (see below). As of September 30,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 Series A Preferred Stockpreferred 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 shareholdersshareholder 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, as a resultbecause 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 the third quarter of 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 September 30, 2020March 31, 2021 for financial reporting purposes.
On September 30,During 2020, the Company issued 274,120 shares of the Company’sPAID 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 and issued 274,120 shares of the Company’s common stock with an exercise price of $0.13 per share 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
The Company has aOn March 23, 2018, the Board of Directors voted to approve the 2018 Stock Option Plan which reservedreserves 450,000 non-qualified stock options to be granted to employees. In November 2020, the board approved an increase to this plan up to 900,000 non-qualified stock options. 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. TheOn 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 15,000105,000 stock options to one employee during the quarter ended March 31, 2019.employees, consultants and directors. The 2020 options have vesting periods of immediately and over a vestingthree-year period, of one-third immediately, one-third in 18 months, and one-third in 36 months from the date of the grant, they expire if not exercised within ten years from grant date, and the exercise price is $2.92$2.885 per share. TheDuring 2020, as a result of the termination of several employees, the Company granted 1,245recorded 61,948 expired options and an additional 20,459 that were cancelled. During 2021, the Company issued 10,000 stock options to one employee during the quarter ended September 30, 2019. Theemployee. These options have a three-year vesting period ofschedule with one-third vesting immediately, one-third vesting in 18 months and the final one-third vesting in 36 months, from the date of the grant, they expire if not exercised withinin ten years from the grant date, and thetheir exercise price is $3.50$1.91 per share. During the second quarter of 2019, the Company recorded a reversal of unvested stock option expense for the termination of a non-employee consultant’s 25,000 stock options totaling $44,167 and $43,067 of stock compensation expense related to the vesting of applicable options granted in 2019 and prior years. The Company granted 119,775 stock options to three directors and four employees during the third quarter of 2019. There were 77,275 stock options granted to the directors and one employee that vested immediately, the remaining three employees received 42,500 stock options with a vesting period of one-third immediately, one-third in 18 months, and one-third in 36 months from the date of the grant. All stock options granted in the third quarter of 2019 expire if not exercised within ten years from grant date, and the exercise price ranges from $2.96 to $3.00 per share. During the second quarter of 2020, the Company reversed $7,469 unvested stock option expenses for the termination of one employee.
For the three and nine monththree-month periods ended September 30,March 31, 2021 and 2020, the Company recorded $329,140$263,613 and $311,129,($20,789), respectively, of share-based compensation expense related to the vesting of applicable options granted in 20192021 and prior years and the repricingissuance of 770 warrantsshares in the thirdfirst quarter of 2020. Share-based compensation expense2021 for the nine months ended September 30, 2020 included the reversal of unvested stock option expense of $42,549 for the termination of several employees.
On August 14, 2020, the Board of Directors approved an amendment to ShipTime’s December 30, 2016 Warrant Agreement with an entity controlled by the Company’s Interim CEO/CFO to reprice the outstanding warrants. The modification of the warrant resulted in a charge to the Company’s share-based compensation expense of $318,893.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 one monthtwo months to thirty-fivetwenty-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 September 30, 2020 | Three Months Ended September 30, 2019 |
Operating lease cost | $9,612 | $12,091 |
| | |
Finance lease cost: | | |
Amortization of leased assets | $2,698 | $2,559 |
Interest on lease liabilities | 168 | 393 |
Total finance lease cost | $2,866 | $2,952 |
| Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 |
Operating lease cost | $28,347 | $23,397 | $10,095 | $9,707 |
| | |
Finance lease cost: | | |
Amortization of leased assets | $7,763 | $7,812 | $2,741 | $2,428 |
Interest on lease liabilities | 664 | 1,325 | 57 | 281 |
Total finance lease cost | $8,427 | $9,137 | $2,798 | $2,709 |
Supplemental cash flow information related to leases was as follows:
| Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 | 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 | $29,402 | $20,929 | $10,395 | $9,880 |
Operating cash flows from finance leases | $664 | $1,325 | $57 | $281 |
Financing cash flows from finance leases | $7,065 | $6,523 | $1,417 | $2,316 |
| | |
Right-of-use assets obtained in exchange for lease obligations: | | |
Operating leases | $- | $55,600 | $- |
Finance leases | $- | $- |
Supplemental balance sheet information related to leases was as follows:
| | | | |
Operating leases: | | |
Operating lease right-of-use assets | $96,891 | $121,440 | $86,723 | $93,457 |
Current portion of operating lease obligations | $31,492 | $30,255 | $34,889 | $33,118 |
Operating lease obligations, net of current portion | 67,077 | 93,642 | 53,009 | 61,794 |
Total operating lease liabilities | $98,569 | $123,897 | $87,898 | $94,912 |
| | |
Finance leases: | | |
Property and equipment, at cost | $51,754 | $53,183 | $54,825 | $54,066 |
Accumulated depreciation | (43,585) | (37,227) | (52,083) | (48,659) |
Property and equipment, net | $8,169 | $15,956 | $2,742 | $5,407 |
| | |
Current portion of finance lease obligations | $5,230 | $9,951 | $1,457 | $2,844 |
Finance lease obligations, net of current portion | - | 2,797 | - |
Total finance lease liabilities | $5,230 | $12,748 | $1,457 | $2,844 |
| | |
Weighted Average Remaining Lease Term | | |
Operating lease | | |
Finance leases | | |
| | |
Weighted Average Discount Rate | | |
Operating lease | 9.0% | 9.0% |
Finance leases | 9.7% | 9.7% |
Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019 | | |
Weighted Average Remaining Lease Term | | |
Operating lease | | |
Finance leases | | |
| | |
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 September 30, 2020March 31, 2021 is as follows:
Years ending December 31, | | |
2020 (remaining months) | 9,780 | |
2021 | 39,122 | 32,042 |
2022 | 39,122 | 40,869 |
2023 | 24,193 | 25,274 |
Total lease liabilities | $112,217 | $98,185 |
Less amount representing interest | (13,648) | (10,287) |
Total | 98,569 | 87,898 |
Less current portion | (31,492) | (34,889) |
| $67,077 | $53,009 |
The following is a schedule of minimum future rentals on the non-cancelable finance leases as of September 30, 2020:March 31, 2021:
Year ending December 31, | | |
2020 (remaining months) | 2,573 | |
2021 | 2,755 | 1,480 |
Total minimum payments required: | 5,328 | 1,480 |
Less amount representing interest: | (98) | (23) |
Present value of net minimum lease payments: | 5,230 | 1,457 |
Less current portion | (5,230) | (1,457) |
| $- | $- |
| MANAGEMENT'SMANAGEMENT'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, 20192020 that was filed on March 30, 2020.31, 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, Software. AuctionIncwhich 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 application was designed to focus on real-time carrier calculated shipping rates and tax calculations. 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 province.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. Additional features include Brewpad and Kegmaster and can be added on to the base product. Craft brewing continues to grow in the United States and we feel that there is considerable potential to grow this portion of our business.
ShipTime Canada Inc. ShipTime’s platform provides its members with the ability to quote, process, track and dispatch shipments while getting preferred rates on packages and skidded (LTL) freight shipments throughout North America and around the world. In addition to these features, ShipTime also provides what it refers to as “Heroic Multilingual Customer Support.” In this capacity, ShipTime acts as an advocate on behalf of its clients in resolving matters concerning orders and shipping. With an increasing focus and service offering for e-commerce merchants, which include online shopping carts, inventory management, payment services, client prospecting and retention software, ShipTime can help merchants worldwide grow and scale their businesses. ShipTime generates monthly recurring revenue through transactions and “software as a service” (SAAS) offerings. It currently serves in excess of 50,000 members in North America and has plans to expand its services into Europe and then worldwide.
PaidPaymentsprovides 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. PaidThe 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, 20192020 and 20182019 included in our Form 10-K filed on March 30, 2020,31, 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 September 30,March 31, 2021 and 2020 and 2019.
The following discussion compares the Company's results of operations for the three months ended September 30, 2020March 31, 2021 with those for the three months ended September 30, 2019.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 September 30, | Three months Ended March 31, |
| | | % Change | | | % Change |
Client services | $1,878 | $1,073 | 75% | $1,283 | $99 | 1,196% |
Brewery management software | 25,600 | 49,107 | (48)% | 19,200 | 37,106 | (48)% |
Shipping coordination and label generation services | 3,269,804 | 2,634,330 | 24% | 3,473,902 | 2,536,885 | 37% |
Merchant processing services | 105,713 | - | 100% | 12,525 | 92,910 | (87)% |
Shipping calculator services | 6,321 | 41,923 | (85)% | 5,863 | 8,322 | (30)% |
Total revenues | $3,409,316 | $2,726,433 | 25% | $3,512,773 | $2,675,322 | 31% |
Revenues increased 25%31% in the thirdfirst 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 and the addition of the merchant processing services new segment.services.
Client serviceservices revenues increased $805$1,184 or 75%1,196% to $1,878$1,283 in the thirdfirst quarter of 20202021 compared to $1,073$99 in 2019.2020. This increase is a result of the increase in movie posters auctions held during the third quarter.
Brewery management software revenues decreased $23,507$17,906 to $25,600$19,200 in 20202021 from $49,107$37,106 in 2019.2020. The decrease in revenues is due to cancellations of several clients and an increase in competition.limited marketing of the software to new clients.
Shipping coordination and label generation serviceservices revenues increased $635,474$937,017 or 24%37% to $3,269,804$3,473,902 in the thirdfirst quarter of 20202021 compared to $2,634,330$2,536,885 in 2019.2020. 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 service is a new segment for the Company andservices is available to businesses that accept credit card processing online. This segment launched in early 2020has had difficulties with the launch and has contributed 3% ofdeclined 87% from $92,910 to $12,525 in the total revenue for the thirdfirst quarter of 2020.2021. 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 $35,602$2,459 or 85%30% to $6,321$5,863 in the thirdfirst quarter of 20202021 compared to $41,923$8,322 in 2019.2020. The decrease was primarily due to the retirement of a large portion ofreduction in volume for the legacy software sold byremaining customer using this segment of the business.platform.
Gross Profit
Gross profit increased $107,549$227,869 or 14%35% in the thirdfirst quarter of 20202021 to $860,483$879,015 compared to $752,934$651,146 in 2019.2020. Gross margin decreasedincreased to 25% for the thirdfirst quarter of 20202021 compared to 28%24% in the thirdfirst quarter of 2019.2020. The decreaseincrease in gross margin is a result of price reductionsongoing pricing evaluations of our shipping label generation services in order to remain competitive in the market in addition to a reduction in merchant processing revenues which have a higher profit margin.market. The increase in gross profit is due to a combination of the new merchant processing segment of the businessadditional marketing programs released in 2021 along with the impact of increased shipping label generation services as a result of the growth of ecommercee-commerce shopping due to the COVID-19 virus.
Operating Expenses
Total operating expenses in the thirdfirst quarter 20202021 were $984,211$1,058,348 compared to $1,063,937$763,888 in the third quarter of 2019, a decrease of $79,726 or 7%. The decrease is primarily due to the reduction in personnel and the decreased travel related expenses as a result of COVID-19.
Other Income, net
Net other income in the thirdfirst quarter of 2020, was $6 comparedan increase of $294,460 or 39%. The increase is due to $892,637additional staffing added in 2021 along with the share-based compensation expense of $263,613 recorded in the same period of 2019, a change of $892,631. This change is a result of a one-time write off of the guarantee liability of $880,553 in the third quarter of 2019.first quarter.
Net Income (Loss)
The Company realizedrecorded a net loss in the thirdfirst quarter of 20202021 of ($123,722)179,733) compared to a net incomeloss of $581,634($113,242) for the same period in 2019.2020. The net (loss) incomeloss per share available to common shareholders for the thirdfirst quarter of 20202021 and 20192020 was ($0.02)0.03) and $0.33($0.04) per share, respectively.
Comparison of the nine months ended September 30, 2020 and 2019.
The following discussion compares the Company's results of operations for the nine months ended September 30, 2020 with those for the nine months ended September 30, 2019. 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.
| Nine months Ended September 30, |
| | | % Change |
Client services | $3,283 | $17,191 | (81)% |
Brewery management software | 93,413 | 156,394 | (40)% |
Shipping coordination and label generation services | 8,805,688 | 7,439,478 | 18% |
Merchant processing services | 379,012 | - | 100% |
Shipping calculator services | 22,114 | 117,887 | (81)% |
Total revenues | $9,303,510 | $7,730,950 | 20% |
Revenues increased 20% in the first three quarters primarily from the growth of our shipping coordination and label generation services and the addition of the new merchant processing services segment.
Client service revenues decreased $13,908 or 81% to $3,283 in the first three quarters of 2020 compared to $17,191 in 2019. This decrease is a result of the reduction of movie posters auctions held during this period.
Brewery management software revenues decreased $62,981 to $93,413 in the first three quarters of 2020 from $156,394 in the same period of 2019. The decrease in revenues is due to cancellations of several clients and an increase in competition.
Shipping coordination and label generation service revenues increased $1,366,210 or 18% to $8,805,688 in the three quarters of 2020 compared to $7,439,478 in 2019. The increase is attributable to the shift in online shipping as a result of the impact of the COVID-19 virus.
Merchant processing service is a new segment for the Company launched in early 2020. This segment has contributed 4% of the total revenue for 2020. These services also have a higher gross margin and gross profit and will continue to be a source of growth for the Company.
Shipping calculator services revenue decreased $95,773 or 81% to $22,114 in the first three quarters of 2020 compared to $117,887 in the same period of 2019. The decrease was due to the retirement of a portion of the legacy software sold by this segment of the business.
Gross Profit
Gross profit increased $165,331 or 8% in the first three quarters of 2020 to $2,246,746 compared to $2,081,415 in 2019. Gross margin decreased to 24% for the first three quarters of 2020 compared to 27% during the same period of 2019. The growth in gross profit is a result of the increased revenue due to the shift of online shipping as a result of the COVID-19 virus. The decrease in gross margin is due to the decline in merchant processing, shipping calculator and brewery management revenues which carry a higher gross margin than the other segments of the business.
Operating Expenses
Total operating expenses in the first three quarters of 2020 were $2,391,002 compared to $2,630,394 in the same period of 2019, a decrease of $239,392 or 9%. The decrease is primarily due to the declining need for consulting services in addition to the reduced general and administrative expenses as a result of the temporary office closure and travel ban as it relates to the COVID-19 virus.
Other Income, net
Net other income in the first three quarters of 2020 was $13,201 compared to $896,340 in the same period of 2019, a change of $883,139. This is primarily attributable to the one-time write off of the guarantee liability of $880,553.
Net Income (Loss)
The Company realized a net loss in the first three quarters of 2020 of ($131,555) compared to a net income of $346,401 for the same period in 2019. The net (loss) income available to common shareholders for the three quarters of 2020 and 2019 was ($0.03) and $0.13 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 ninethree months ended September 30,March 31, 2021 and 2020 and 2019 is as follows:
| | | | |
Net (loss) income | $(131,555) | $346,401 | |
Net loss | | $(179,733) | $(113,242) |
Depreciation and amortization | 364,273 | 368,183 | 127,980 | 122,404 |
Amortization of operating lease right-of-use assets | 20,957 | 16,020 | 7,993 | 6,880 |
Share-based compensation | 311,129 | 361,698 | 263,613 | (20,789) |
Provision for bad debts | 20,125 | - | |
Unrealized loss (gain) on stock price guarantee | - | (3,688) | |
Other income from stock price guarantee | - | (880,553) | |
Gain on sale of property and equipment | (739) | - | |
Provision for bad debt | | - | 20,125 |
Changes in assets and liabilities | 251,769 | (125,441) | 141,861 | 80,065 |
Net cash provided by operating activities | $835,959 | $82,620 | $361,714 | $95,443 |
Working Capital and Liquidity
The Company had cash and cash equivalents of $1,317,374$2,026,002 at September 30, 2020,March 31, 2021, compared to $475,881$1,644,210 at December 31, 2019.2020. The Company had net working capital of $167,271$430,246 at September 30 2020,March 31, 2021, an improvement of $565,162$211,631 compared to a negative working capital of $397,891$218,615 at December 31, 2019.2020. The increase in net working capital is attributable to the 20%31% growth of the Company’s revenues for 2020.2021. 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. QUANTITAQUANTIVEITATIVE 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 Interim 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 Interim Chief Executive Officer/Chief Financial Officer has concluded that, as of September 30, 2020,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, 2019.2020.
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.
PPAARRTT II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the normal course of business, the Company periodically becomes involved in litigation.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 September 30, 2020,March 31, 2021, in the opinion of management, the Company had no material pending litigation other than ordinary litigation incidental toand disputes that would have a material adverse effect on the business.Company's consolidated financial position, results of operations, or cash flows.
ITEM 1A. RISKRISK FACTORS
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 ninethree months ended September 30, 2020.March 31, 2021.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
The Company has a 2018 Stock Option Plan which reserved 450,000 non-qualified stock options to be granted to employees. In November 2020, the board approved an increase to this plan up to 900,000 non-qualified stock options.
Not Applicable
ITEM 6. EXHIBITS
| | Amendment to 2018 Non-Qualified Stock Option Plan
|
| | CEO Certification required under Section 302 of Sarbanes-Oxley Act of 2002 |
| | 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 XBRL Taxonomy Extension Label Linkbase (filed herewith)
101.PRE | | |
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
| | XBRL Taxonomy Extension Label Linkbase (filed herewith) |
101.PRE
| | XBRL Taxonomy Extension Presentation Linkbase (filed herewith) |
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: November 13, 2020May 14, 2021 | | W. Austin Lewis, IV, Interim CEO, Chief Financial OfficerCFO |
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 | | XBRL Taxonomy Extension Label Linkbase (filed herewith) |
101.PRE | | XBRL Taxonomy Extension Presentation Linkbase (filed herewith) |
Amendment to 2018 Non-Qualified Stock Option Plan
CEO Certification required under Section 302 of Sarbanes-Oxley Act of 2002
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 XBRL
Taxonomy Extension Label Linkbase (filed herewith)
101.PRE XBRL
Taxonomy Extension Presentation Linkbase (filed herewith)