Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 12, 2017 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | PAID INC | |
Entity Central Index Key | 1,017,655 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,017 | |
Trading Symbol | PAYD | |
Entity Common Stock, Shares Outstanding | 1,098,657 |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 344,050 | $ 339,562 |
Accounts receivable, net | 74,786 | 39,314 |
Other receivable | 0 | 1,026 |
Funds held in trust | 172,531 | 169,082 |
Prepaid expenses and other current assets | 67,086 | 57,383 |
Total current assets | 658,453 | 606,367 |
Property and equipment, net | 88,467 | 92,552 |
Intangible assets, net | 5,753,701 | 5,956,771 |
Goodwill | 9,989,685 | 9,989,685 |
Total assets | 16,490,306 | 16,645,375 |
Current liabilities: | ||
Accounts payable | 622,476 | 563,860 |
Note payable | 10,200 | 17,850 |
Due to related parties | 144,911 | 169,697 |
Capital leases - current portion | 7,633 | 7,655 |
Accrued expenses | 1,003,236 | 977,891 |
Deferred revenues | 239,708 | 238,040 |
Total liabilities | 2,028,164 | 1,974,993 |
Commitments and contingencies | ||
Shareholders’ deficit | ||
Preferred Stock, $0.001 par value, 20,000,000 shares authorized 3,825,000 shares issued and outstanding at March 31, 2017 and December 31, 2016; liquidation value of $11,581,000 as of March 31, 2017 and December 31, 2016 | 3,825 | 3,825 |
Common stock, $0.001 par value, 25,000,000 shares authorized; 1,648,960 issued and outstanding at March 31, 2017 and December 31, 2016 | 1,649 | 1,649 |
Additional paid-in capital | 68,782,432 | 68,782,432 |
Accumulated other comprehensive loss | (3,175) | 0 |
Accumulated deficit | (55,610,199) | (55,406,826) |
Total shareholders' deficit | 13,174,532 | 13,381,080 |
Total liabilities and shareholders' deficit | $ 16,490,306 | $ 16,645,375 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
Shareholders' equity: | ||
Preferred Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 3,825,000 | 3,825,000 |
Preferred stock, shares outstanding | 3,825,000 | 3,825,000 |
Liquidation value | $ 11,581,000 | $ 11,581,000 |
Common stock, par value (in dollars per share) | $ .001 | $ .001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 1,648,960 | 1,648,960 |
Common stock, shares outstanding | 1,648,960 | 1,648,960 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Revenues | $ 1,589,682 | $ 133,779 |
Cost of revenues | 1,099,160 | 6,827 |
Gross profit | 490,522 | 126,952 |
Operating expenses | 689,740 | 266,332 |
Loss from operations | (199,218) | (139,380) |
Other income (expense): | ||
Interest expense | (2,261) | (257) |
Other income, net | 6,895 | 53,500 |
Unrealized gain (loss) on stock price guarantee | (8,339) | 75,025 |
Total other income (expense), net | (3,705) | 128,268 |
Loss before provision for income taxes | (202,923) | (11,112) |
Provision for income taxes | 450 | 807 |
Comprehensive loss: | ||
Net loss | $ (203,373) | $ (11,919) |
Loss per share - basic and diluted | $ (0.12) | $ (0.01) |
Weighted average number of common shares outstanding - basic and diluted | 1,648,960 | 967,407 |
Net loss | $ (203,373) | $ (11,919) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | (3,175) | 0 |
Comprehensive loss | $ (206,548) | $ (11,919) |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (203,373) | $ (11,919) |
Adjustments to reconcile net loss to cash and cash equivalents used in operating activities: | ||
Depreciation and amortization | 212,898 | 25,727 |
Share-based compensation | 0 | 10,720 |
Unrealized loss on stock price guarantee | 8,339 | (75,025) |
Write down of other receivables | 1,040 | 0 |
Changes in assets and liabilities: | ||
Accounts receivable | (35,480) | 3,442 |
Other receivables | 0 | (53,500) |
Prepaid expenses and other current assets | (10,711) | 16,959 |
Advanced royalties | 0 | 5,000 |
Accounts payable | 52,972 | 9,692 |
Accrued expenses | 17,268 | 3,544 |
Deferred revenues | (155) | (825) |
Net cash provided by (used in) operating activities | 42,798 | (66,185) |
Cash flows from investing activities: | ||
Purchase of fixed assets | (5,037) | 0 |
Net cash and cash equivalents provided by investing activities | (5,037) | 0 |
Cash flows from financing activities: | ||
Payments on capital leases | (262) | (2,964) |
Payments on note payable | (7,650) | (9,042) |
Proceeds from the exercise of common stock warrants | 0 | 180,000 |
Payments on amounts due to related parties | (26,290) | 0 |
Net cash (used in) provided by financing activities | (34,202) | 167,994 |
Effect of exchange rate changes on cash and cash equivalents | 929 | 0 |
Net change in cash and cash equivalents | 4,488 | 101,809 |
Cash and cash equivalents, beginning of period | 339,562 | 123,913 |
Cash and cash equivalents, end of period | 344,050 | 225,722 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Income taxes paid | 450 | 807 |
Interest paid | $ 2,261 | $ 257 |
Organization and Significant Ac
Organization and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Organization and Significant Accounting Policies | PAID, Inc. (“PAID”, the “Company”, “we”, “us”, “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 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 North America and we feel that there is a large potential to grow this portion of our business. SpiritRun is a product of BeerRun and is designed specifically for distilleries. This product was recently released, and we feel that there with additional marketing and visibility in the distillery industry, SpiritRun has the right core resources to be a valuable tool in distilleries around the United States. ShipTime Inc. has developed a SaaS based application, which focuses on the small business 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 ecommerce. We actively sell directly to small businesses and through long standing partnerships with selected associations throughout Canada. 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 to 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, 2016, that was filed on March 31, 2017. 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 2017. On November 9, 2016, the board of directors agreed to effectuate a reverse split immediately followed by a forward split. The process was completed with FINRA on January 23, 2017. As a result of the split every ten shares of common stock outstanding prior to the reverse split were consolidated into one share, reducing the number of common shares outstanding on the effective date from 10,989,608 to 1,098,960. All share and per share information in this Form 10-Q has been retroactively adjusted to reflect the reverse stock split. Going Concern and Management's Plan The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has continued to incur losses, although it has taken significant steps to reduce them. For the three months ended March 31, 2017, the Company reported a net loss of $203,373. The Company has an accumulated deficit of $55,610,199 and has a working capital deficit of $(1,369,711) as of March 31, 2017. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management feels that the addition of ShipTime’s services will return a valuable impact on the Company’s growth in the near future. The positive cash flow from operations as a result of the first quarter’s operations is a significant indicator of our successful transition to the new shipping services. In addition to the existing services provided, ShipTime will launch products that are complementary to the current offering of AuctionInc, BeerRun and SpiritRun. Combined, the Company believes that all segments of the operations will benefit from ShipTime. Although there can be no assurances, the Company believes that the above management plan will be sufficient to meet the Company's working capital requirements through the end of 2017 and will have a positive impact on the Company for 2017 and future years. Principles of Consolidation The consolidated financial statements include the accounts of PAID, Inc. and its wholly owned subsidiaries, PAID Run, LLC and ShipTime, Inc. All intercompany accounts and transactions have been eliminated. Foreign Currency The currencies of ShipTime, the Company’s international subsidiary, are in Canadian dollars. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at March 31, 2017. 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 component of shareholders’ equity in accumulated other comprehensive income (loss). 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 incurred during the three months ended March 31, 2017 and 2016. 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 shipping services, sales of shipping calculator subscriptions, brewery management software subscriptions, and client services. The Company recognizes revenues in accordance with the FASB ASC Topic 605. Accordingly, the Company recognizes revenues when there is persuasive evidence that an arrangement exists, product delivery and acceptance have occurred, the sales price is fixed or determinable, and collectability of the resulting receivable is reasonably assured. ShipTime recognizes revenues primarily from fees for shipping services. Customers use an online tool to calculate shipping and generate a shipping label. The majority of the transactions are paid via credit card when the label is generated. Revenues are recognized when the customer completes the online transaction. 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 payments for shipping calculator services are made via credit card for the month preceding the service and are recorded as deferred revenues until the service has been provided. Brewery management software subscribers are billed on a calendar month at the first of the month with payments processed via credit card for the month following. Client services revenues include web development and design, creative services, marketing services and general business consulting services. For contracts that are of a short duration and fixed price, revenue is recognized when there are no significant obligations and upon acceptance by the customer of the completed project. Services that are performed on a time and material basis are recognized as the related services are performed. 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, 2017 and 2016, there were approximately 63,000 and 189,000, respectively, dilutive shares that were excluded from the diluted earnings (loss) per share as their effect would have been antidilutive for the period then ended. 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 four reportable segments are managed separately based on fundamental differences in their operations. At March 31, 2017, the Company operated in the following four reportable segments: a. Client services b. Shipping calculator services c. Brewery management software d. Shipping and label generation services 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 makers are the Chief Executive Officer and Chief Financial Officer. The following table compares total revenue for the periods indicated. Three Months Ended March 31, 2017 March 31, 2016 Clientt services$ 13,409 $ 6,004 Shipping calculator services 56,306 45,459 Brewery management software 77,841 82,316 Shipping services 1,442,126 - Total revenue $ 1,589,682 $ 133,779 The following table compares total loss from operations for the periods indicated. Three Months Ended March 31, 2017 March 31, 2016 Client services$ 10,157 $ 4,562 Shipping calculator services (256,607 ) (152,385 ) Brewery management software 12,279 8,443 Shipping services 34,953 - Total loss from operations $ (199,218 ) $ (139,380 ) Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases, which requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018 with early adoption permitted. While the Company is still evaluating ASU 2016-02, the Company expects the adoption of ASU 2016-02 to have a material effect on the Company’s financial condition due to the recognition of the lease rights and obligations as assets and liabilities. The Company does not expect ASU 2016-02 to have a material effect on the Company’s results of operations and cash flows. In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation and disclosure of financial statements. This guidance will be effective in the first quarter of fiscal year 2019 and early adoption is not permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which the Company elected to adopt in the first quarter of 2017. The Company has evaluated the impact of this guidance and has determined that it did not have a material effect on the financial statements for this quarter. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This updated guidance supersedes the current revenue recognition guidance, including industry-specific guidance. The updated guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for interim and annual periods beginning after December 15, 2016, and early adoption is not permitted. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 until December 15, 2017. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. The Company is currently evaluating which transition method it will adopt and the expected impact of the updated guidance, but does not believe the adoption of the updated guidance will have a significant impact on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the definition of a business . In January 2017, the FASB also issued ASU 2017-04, Intangibles - Goodwill and other (Topic 350): Simplifying the test for goodwill impairment. The amendments in this Update remove the second step of the current goodwill impairment test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. This guidance is effective for impairment tests in fiscal years beginning after December 15, 2019. |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2017 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued expenses are comprised of the following: March 31, 2017 (unaudited) December 31, 2016 (audited) Payroll and related costs $ 3,147 $ 3,136 Royalties 51,838 51,838 Stock price guarantee 875,742 867,403 Other 72,509 55,514 Total $ 1,003,236 $ 977,891 |
Acquisition and Intangible Asse
Acquisition and Intangible Assets | 3 Months Ended |
Mar. 31, 2017 | |
Intangible Assets | |
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. On October 7, 2015, the Company, through a newly formed limited liability company named PAID Run, LLC, entered into an asset purchase agreement to purchase assets related to BeerRun Software and SpiritRun Software and related intellectual property. The purchase price and additional development for these assets was $297,500, which include all of the client lists, along with all rights, benefits and privileges associated with the software and intellectual property, associated contracts, and books and records. On December 30, 2016, the Company completed a merger with ShipTime Inc. and its subsidiary to acquire assets related to the technology, client base and other intellectual property. The Company engaged an outside independent third party valuation firm to assist in establishing a value for the ShipTime Inc. At March 31, 2017 and December 31, 2016, intangible assets consisted of the following: March 31, 2017 December 31, 2016 Patents $ 16,000 $ 16,000 Software 83,750 83,750 Trade Name 797,000 797,000 Technology 509,000 509,000 Client list / relationship 4,687,750 4,687,750 Accumulated amortization (339,799 ) (136,729 ) $ 5,753,701 $ 5,956,771 Amortization expense of intangible assets for all subsidiaries for the three months ended March 31, 2017, and 2016 was $203,070 and $100,107, respectively. Goodwill Of the total estimated purchase price, $9,989,685 was allocated to goodwill and is attributable to expected synergies between the combined companies, including the ability for the combined companies to estimate and process shipping calculations and support eCommerce shopping cart platforms in addition to the acquired workforce. Goodwill represents the excess of the purchase price of the acquired business over the estimated fair value of the underlying net tangible and intangible assets acquired. In the event the Company determines that the value of goodwill has become impaired, it will incur an accounting charge for the amount of the impairment during the fiscal quarter in which the determination is made. None of the goodwill is expected to be deductible for income tax purposes. Pro Forma Financial Information The following table presents the Company’s unaudited pro forma results (including ShipTime) for the period ended March 31, 2016 as though the companies had been combined as of the beginning of the period presented. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of each period presented, nor is it indicative of results of operations which may occur in the future. The unaudited pro forma results presented include amortization charges for intangible assets and eliminations of intercompany transactions. For the Period Ended March 31, 2016 Total Revenues $ 1,424,934 Net loss $ (173,666 ) |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note Payable In October 2016, the Company entered into a $30,000 note payable with a financial institution. The term of the note is for a period of one year and is payable in 10 monthly installments of $2,632 at an interest rate of 3%. The balance due on the note payable as of March 31, 2017 was $10,200. Due to Related Parties During the growth and development of ShipTime, two notes were issued. One note issued was issued at an 8% interest rate and is due to mature in December 2017. A second note was issued in 2014 with a 6% interest rate and was due to mature in June 2014; the second note outstanding is currently due for re-negotiation as it is in default. Stock Price Guarantee In connection with the Company’s advance royalties with a client, the Company guaranteed that shares of common stock would sell for at least $60.00 per share as adjusted for the reverse stock split. If the shares are not at the required $60.00 per share when they are sold, the Company has 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. As of March 31, 2017 and December 31, 2016, the stock price guarantee was $875,742 and $867,403, respectively, as the Company’s stock price was below $60.00 per share at March 31, 2017 and December 31, 2016, although some or all of the stock may already be sold and no longer subject to a guaranty and any required payment would be disputed by the Company. For the three months ended March 31, 2017 and 2016, the Company recorded an unrealized (loss)/gain on stock price guarantee of ($8,339) and $75,025, respectively. Legal Matters In the normal course of business, the Company periodically becomes involved in litigation. As of March 31, 2017, in the opinion of management, the Company had no pending litigation 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 consolidated balance sheets. |
Shareholder's Deficit
Shareholder's Deficit | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Shareholder's Deficit | Preferred Stock On December 19, 2016, the Company filed an amendment to its Certificate of Incorporation to authorize the issuance of 20,000,000 shares of blank-check preferred stock at $.001 par value, of which 3,825,000 shares have been reserved for future issuance. 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 rights and have an aggregate liquidation value of approximately $11,581,000. The Series A Preferred Stock also carries a coupon payment obligation of 1.5% per year calculated by taking the 30-day average closing price for an equal number of shares of common stock for the month immediately preceding the coupon payment date, which is made annually. Payout of the coupon may be made out of existing cash or in shares of Series A Preferred stock of the Company. The Series A Preferred Stock have no voting or conversion rights. If purchased, redeemed, or otherwise acquired (other than conversion), the preferred stock may be reissued. Common Stock In November 2016, the majority shareholders approved an amendment to the Company’s Certificate of Incorporation to increase the Company’s authorized shares of common stock from 1,100,000 to 25,000,000, to issue up to 2,000,000 shares of blank check preferred stock and to make effective, a reverse stock split at a range of 1 for 500 through 1 for 3,000 immediately followed by a forward split of the outstanding common stock at an exchange rate of 50 for 1 through 300 for 1 to reduce the number of authorized shares of the Company’s common stock, subject to the Board of Directors’ discretion. In January 2017, the Company completed a reverse split of 1-for 3,000 immediately followed by a forward split of 300 for 1. As a result of the split every ten shares of common stock outstanding were consolidated into one share, reducing the number of common shares outstanding on the effective date from 10,989,608 to 1,098,960. All share and per share information on this Form 10-Q has been retroactively adjusted to reflect the reverse stock split. The Company has authorized and reserved for future issuance 550,000 shares of common stock and 3,850,000 shares of preferred stock with respect to the exchangeable shares issued as a result of the merger. Share-based Incentive Plans During the period ended March 31, 2017, the Company had three stock option plans that include both incentive and non-qualified options to be granted to certain eligible employees, non-employee directors, or consultants of the Company. There were no stock options granted, exercised, canceled or expired during the three months ended March 31, 2017. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | The Company has evaluated subsequent events through the filing date of this Form 10-Q, and have 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. |
Organization and Significant 12
Organization and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
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 to 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, 2016, that was filed on March 31, 2017. 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 2017. On November 9, 2016, the board of directors agreed to effectuate a reverse split immediately followed by a forward split. The process was completed with FINRA on January 23, 2017. As a result of the split every ten shares of common stock outstanding prior to the reverse split were consolidated into one share, reducing the number of common shares outstanding on the effective date from 10,989,608 to 1,098,960. All share and per share information in this Form 10-Q has been retroactively adjusted to reflect the reverse stock split. |
Going Concern And Management Plan | The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has continued to incur losses, although it has taken significant steps to reduce them. For the three months ended March 31, 2017, the Company reported a net loss of $203,373. The Company has an accumulated deficit of $55,610,199 and has a working capital deficit of $(1,369,711) as of March 31, 2017. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management feels that the addition of ShipTime’s services will return a valuable impact on the Company’s growth in the near future. The positive cash flow from operations as a result of the first quarter’s operations is a significant indicator of our successful transition to the new shipping services. In addition to the existing services provided, ShipTime will launch products that are complementary to the current offering of AuctionInc, BeerRun and SpiritRun. Combined, the Company believes that all segments of the operations will benefit from ShipTime. Although there can be no assurances, the Company believes that the above management plan will be sufficient to meet the Company's working capital requirements through the end of 2017 and will have a positive impact on the Company for 2017 and future years. |
Principles of Consolidation | The consolidated financial statements include the accounts of PAID, Inc. and its wholly owned subsidiaries, PAID Run, LLC and ShipTime, Inc. All intercompany accounts and transactions have been eliminated. |
Foreign Currency | The currencies of ShipTime, the Company’s international subsidiary, are in Canadian dollars. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at March 31, 2017. 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 component of shareholders’ equity in accumulated other comprehensive income (loss). |
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 incurred during the three months ended March 31, 2017 and 2016. 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 shipping services, sales of shipping calculator subscriptions, brewery management software subscriptions, and client services. The Company recognizes revenues in accordance with the FASB ASC Topic 605. Accordingly, the Company recognizes revenues when there is persuasive evidence that an arrangement exists, product delivery and acceptance have occurred, the sales price is fixed or determinable, and collectability of the resulting receivable is reasonably assured. ShipTime recognizes revenues primarily from fees for shipping services. Customers use an online tool to calculate shipping and generate a shipping label. The majority of the transactions are paid via credit card when the label is generated. Revenues are recognized when the customer completes the online transaction. 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 payments for shipping calculator services are made via credit card for the month preceding the service and are recorded as deferred revenues until the service has been provided. Brewery management software subscribers are billed on a calendar month at the first of the month with payments processed via credit card for the month following. Client services revenues include web development and design, creative services, marketing services and general business consulting services. For contracts that are of a short duration and fixed price, revenue is recognized when there are no significant obligations and upon acceptance by the customer of the completed project. Services that are performed on a time and material basis are recognized as the related services are performed. |
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, 2017 and 2016, there were approximately 63,000 and 189,000, respectively, dilutive shares that were excluded from the diluted earnings (loss) per share as their effect would have been antidilutive for the period then ended. |
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 four reportable segments are managed separately based on fundamental differences in their operations. At March 31, 2017, the Company operated in the following four reportable segments: a. Client services b. Shipping calculator services c. Brewery management software d. Shipping and label generation services 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 makers are the Chief Executive Officer and Chief Financial Officer. The following table compares total revenue for the periods indicated. Three Months Ended March 31, 2017 March 31, 2016 Clientt services$ 13,409 $ 6,004 Shipping calculator services 56,306 45,459 Brewery management software 77,841 82,316 Shipping services 1,442,126 - Total revenue $ 1,589,682 $ 133,779 The following table compares total loss from operations for the periods indicated. Three Months Ended March 31, 2017 March 31, 2016 Client services$ 10,157 $ 4,562 Shipping calculator services (256,607 ) (152,385 ) Brewery management software 12,279 8,443 Shipping services 34,953 - Total loss from operations $ (199,218 ) $ (139,380 ) |
Recent Accounting Pronouncements | In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases, which requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018 with early adoption permitted. While the Company is still evaluating ASU 2016-02, the Company expects the adoption of ASU 2016-02 to have a material effect on the Company’s financial condition due to the recognition of the lease rights and obligations as assets and liabilities. The Company does not expect ASU 2016-02 to have a material effect on the Company’s results of operations and cash flows. In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation and disclosure of financial statements. This guidance will be effective in the first quarter of fiscal year 2019 and early adoption is not permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which the Company elected to adopt in the first quarter of 2017. The Company has evaluated the impact of this guidance and has determined that it did not have a material effect on the financial statements for this quarter. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This updated guidance supersedes the current revenue recognition guidance, including industry-specific guidance. The updated guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for interim and annual periods beginning after December 15, 2016, and early adoption is not permitted. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 until December 15, 2017. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. The Company is currently evaluating which transition method it will adopt and the expected impact of the updated guidance, but does not believe the adoption of the updated guidance will have a significant impact on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the definition of a business . In January 2017, the FASB also issued ASU 2017-04, Intangibles - Goodwill and other (Topic 350): Simplifying the test for goodwill impairment. The amendments in this Update remove the second step of the current goodwill impairment test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. This guidance is effective for impairment tests in fiscal years beginning after December 15, 2019. |
Organization and Significant 13
Organization and Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Condensed Income Statement | Three Months Ended March 31, 2017 March 31, 2016 Clientt services$ 13,409 $ 6,004 Shipping calculator services 56,306 45,459 Brewery management software 77,841 82,316 Shipping services 1,442,126 - Total revenue $ 1,589,682 $ 133,779 Three Months Ended March 31, 2017 March 31, 2016 Client services$ 10,157 $ 4,562 Shipping calculator services (256,607 ) (152,385 ) Brewery management software 12,279 8,443 Shipping services 34,953 - Total loss from operations $ (199,218 ) $ (139,380 ) |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | March 31, 2017 (unaudited) December 31, 2016 (audited) Payroll and related costs $ 3,147 $ 3,136 Royalties 51,838 51,838 Stock price guarantee 875,742 867,403 Other 72,509 55,514 Total $ 1,003,236 $ 977,891 |
Acquisitions and Intangible Ass
Acquisitions and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Intangible Assets Tables | |
Schedule of Intangible Assets | March 31, 2017 December 31, 2016 Patents $ 16,000 $ 16,000 Software 83,750 83,750 Trade Name 797,000 797,000 Technology 509,000 509,000 Client list / relationship 4,687,750 4,687,750 Accumulated amortization (339,799 ) (136,729 ) $ 5,753,701 $ 5,956,771 |
Organization and Significant 16
Organization and Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Accounting Policies [Line Items] | ||
Total revenue | $ 1,589,682 | $ 133,779 |
Total loss from operations | (199,218) | (139,380) |
Client Services [Member] | ||
Accounting Policies [Line Items] | ||
Total revenue | 13,409 | 6,004 |
Total loss from operations | 10,157 | 4,562 |
Shipping Calculator services [Member] | ||
Accounting Policies [Line Items] | ||
Total revenue | 56,306 | 45,459 |
Total loss from operations | (256,607) | (152,385) |
Brewery Management Software [Member] | ||
Accounting Policies [Line Items] | ||
Total revenue | 77,841 | 82,316 |
Total loss from operations | 12,279 | 8,443 |
Shipping Services [Member] | ||
Accounting Policies [Line Items] | ||
Total revenue | 1,442,126 | 0 |
Total loss from operations | $ 34,953 | $ 0 |
Organization and Significant 17
Organization and Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Organization And Significant Accounting Policies Details Narrative | |||
Net loss | $ (203,373) | $ (11,919) | |
Accumulated deficit | (55,610,199) | $ (55,406,826) | |
Cash used in operations | $ 4,488 | $ 101,809 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Payroll and related costs | $ 3,147 | $ 3,136 |
Royalties | 51,838 | 51,838 |
Stock price guarantee | 875,742 | 867,403 |
Other | 72,509 | 55,514 |
Total | $ 1,003,236 | $ 977,891 |
Acquisitions and Intangible A19
Acquisitions and Intangible Assets (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Intangible Assets Details | ||
Patents | $ 16,000 | $ 16,000 |
Software | 83,750 | 83,750 |
Trade Name | 797,000 | 797,000 |
Technology | 509,000 | 509,000 |
Client list / relationship | 4,687,750 | 4,687,750 |
Accumulated amortization | (339,799) | (136,729) |
Intangible asset, net | $ 5,753,701 | $ 5,956,771 |
Acquisitions and Intangible A20
Acquisitions and Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Intangible Assets Details Narrative | ||
Amortization of Intangible Assets | $ 203,070 | $ 100,107 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Note Payable | $ 10,200 | $ 17,850 | |
Stock price guarantee | 875,742 | $ 867,403 | |
Unrealized loss on stock price guarantee | $ (8,339) | $ 75,025 |
Shareholder's Deficit (Details
Shareholder's Deficit (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Shareholders Deficit Details Narrative | ||
Proceeds from exercise of warrants | $ 0 | $ 180,000 |