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, 2021 that was filed on March 31, 2022.
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 2022 will be to continue to significantly grow
this portion of our business.
PAID, Inc. (the "Company") has developed AuctionInc, which is a suite of online
shipping and tax management tools assisting businesses with e-commerce
storefronts, shipping solutions, tax calculation, inventory management, and
auction processing. The product does have tools to assist with other aspects of
the fulfillment process, but the main purpose of the product is to provide
accurate shipping and tax calculations and packaging algorithms that provide
customers with the best possible shipping and tax solutions.
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BeerRun Software is a brewery management and Alcohol and Tobacco Tax and Trade
Bureau tax reporting software. Small craft brewers can utilize the product to
manage brewery schedules, inventory, packaging, sales and purchasing. Tax
reporting can be processed with a single click and is fully customizable by
state or providence. The software is designed to integrate with QuickBooks
accounting platforms by using our powerful sync engine. We currently offer two
versions of the software BeerRun and BeerRun Light which excludes some of the
enhanced features of BeerRun without disrupting the core functionality of the
software.
PaidPayments provides commerce solutions to small - and medium-sized businesses
by enabling them to sell their goods and services, accept payment, and create
repeat sales though an online payment processing solution. The Company has
operated as a Payment Facilitator since 2019, which enables our merchants to get
the benefit of instant boarding and discounted rates. Our platform provides all
aspects required for payment processing, including merchant boarding,
underwriting, fraud monitoring, settlement, funding to the sub-merchant, and
monthly reporting and statements. The Company controls all of these necessary
aspects in the payment process and is then able to supply a one-step boarding
process for our partners and value-added resellers. This capability also
provides cost advantages, rapid response to market needs, simplified processes
for boarding business and a seamless interface for our merchant customers.
Significant Accounting Policies
Our significant accounting policies are more fully described in Note 3 to our
consolidated financial statements for the years ended December 31, 2021 and 2020
included in our Form 10-K filed on March 31, 2022, 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 June 30, 2022 and 2021.
The following discussion compares the Company's results of operations for the
three months ended June 30, 2022 with those for the three months ended June 30,
2021. 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 June 30,
2022 2021 % Change
Client services $ 477 $ 226 111 %
Brewery management software 8,356 16,025 (48) %
Shipping coordination and label generation
services 4,521,400 3,979,250 14 %
Merchant processing services 4,445 14,453 (69) %
Shipping calculator services 987 5,856 (83) %
Total revenues $ 4,535,665 $ 4,015,810 13 %
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Revenues increased 13% in the second quarter primarily from the seasonal
increase in shipping along with the ongoing increases to the fuel surcharges for
revenues related to our shipping coordination and label generation services.
Client services revenues increased $251 or 111% to $477 in the second quarter of
2022 compared to $226 in 2021. This increase is a result of additional movie
posters sold at auction during the quarter.
Brewery management software revenues decreased $7,669 to $8,356 in 2022 from
$16,025 in 2021. The decrease in revenues is due to cancellations of several
clients and limited marketing of the software to new clients.
Shipping coordination and label generation services revenues increased $542,150
or 14% to $4,521,400 in the second quarter of 2022 compared to $3,979,250 in
2021. The increase is attributable to the seasonal increases in addition to the
impact of the rising fuel surcharges.
Merchant processing services is available to businesses that accept credit card
processing online. This segment has had difficulties with the launch and the
Company has reduced the offering which resulted in a decline of 69% from $14,453
to $4,445 in the second quarter of 2022. 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 $4,869 or 83% to $987 in the
second quarter of 2022 compared to $5,856 in 2021. The decrease was due to the
cancellation of the remailing customer on the platform. Future revenues are
related to the rebate program offered by one of our partners.
Gross Profit
Gross profit increased $88,728 or 10% in the second quarter of 2022 to
$1,021,777 compared to $933,049 in 2021. Gross margin remained at 23% the second
quarter of 2022 compared to the second quarter of 2021. The consistency in gross
margin and increase in gross profit are a result of ongoing pricing evaluations
of our shipping label generation services to remain competitive in the market.
Operating Expenses
Total operating expenses in the second quarter of 2022 were $862,688 compared to
$962,857 in the second quarter of 2021, a decrease of $100,169 or 10%. The
decrease is primarily due to a reduction in share-based compensation of $102,285
in addition to a reduction in amortization expense for several assets that are
fully amortized.
Net Income (Loss)
The Company recorded a net income in the second quarter of 2022 of $80,000
compared to a net loss of ($30,364) for the same period in 2021. The net income
(loss) per share available to common shareholders for the second quarter of 2022
and 2021 was $0.01 and $0.00 per share, respectively.
Comparison of the six months ended June 30, 2022 and 2021.
The following discussion compares the Company's results of operations for the
six months ended June 30, 2022 with those for the six months ended June 30,
2021. 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.
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Revenues
The following table compares total revenue for the periods indicated.
Six months ended June 30,
2022 2021 % Change
Client services $ 757 $ 1,509 (50) %
Brewery management software 17,731 35,225 (50) %
Shipping coordination and label generation
services 8,103,849 7,453,152 9 %
Merchant processing services 16,498 26,978 (39) %
Shipping calculator services 6,531 11,719 (44) %
Total revenues $ 8,145,366 $ 7,528,583 8 %
Revenues increased 8% in the first two quarters primarily from the increases to
the fuel surcharges for revenues related to our shipping coordination and label
generation services.
Client services revenues decreased $752 or 50% to $757 in the first two quarters
of 2022 compared to $1,509 in 2021. This decrease is a result of the limited
number of movie posters available for sale during the quarter.
Brewery management software revenues decreased $17,494 to $17,731 in 2022 from
$35,225 in 2021. The decrease in revenues is due to cancellations of several
clients and limited marketing of the software to new clients.
Shipping coordination and label generation services revenues increased $650,697
or 9% to $8,103,849 in the first two quarters of 2022 compared to $7,453,152 in
2021. The increase is attributable to the seasonal increases in addition to the
impact of the rising fuel surcharges.
Merchant processing services is available to businesses that accept credit card
processing online. This segment has had difficulties with the launch and the
Company has reduced the offering which resulted in a decline of 39% from $26,978
to $16,498 in the first two quarters of 2022. 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 $5,188 or 44% to $6,531 in the
first two quarters of 2022 compared to $11,719 in 2021. The decrease was due to
the cancellation of the remaining customer on the platform. Future revenues are
related to the rebate program offered by one of our partners.
Gross Profit
Gross profit increased $8,205 or 0% in the first two quarters of 2022 to
$1,820,269 compared to $1,812,064 in 2021. Gross margin decreased from 24% in
2021 to 22% in 2022. The decrease in gross margin and increase in gross profit
are a result of ongoing pricing evaluations of our shipping label generation
services to remain competitive in the market.
Operating Expenses
Total operating expenses in the first two quarters of 2022 were $1,720,734
compared to $2,021,205 for the same period of 2021, a decrease of $300,471 or
15%. The decrease is primarily due to a reduction in share-based compensation of
$347,802 in addition to a reduction in amortization expense for several assets
that are fully amortized.
Net Income (Loss)
The Company recorded a net income in the first half of 2022 of $19,546 compared
to a net loss of ($210,097) for the same period in 2021. The net income (loss)
per share available to common shareholders for first two quarters of 2022 and
2021 was $0.00 and ($0.03) per share, respectively.
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Cash Flows from Operating Activities
A summarized reconciliation of the Company's net income (loss) to cash and cash
equivalents provided by operating activities for the six months ended June 30,
2022 and 2021 is as follows:
2022 2021
Net income (loss) $ 19,546 $ (210,097 )
Depreciation and amortization 168,219 259,919
Amortization of operating lease right-of-use assets 17,656 16,423
Share-based compensation
60,012 407,814
Provision for bad debt 13,500 -
Changes in assets and liabilities 149,040 303,273
Net cash provided by operating activities $ 427,973 $ 777,332
Working Capital and Liquidity
The Company had cash and cash equivalents of $3,212,244 at June 30, 2022,
compared to $2,839,687 at December 31, 2021. The Company had net working capital
of $724,827 at June 30, 2022, an improvement of $229,381 compared to $495,446 at
December 31, 2021. The increase in net working capital is attributable to the
increase in cash and cash equivalents. This is due to the additional growth of
the business along with ongoing cost savings measures.
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.
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