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 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 March 31, 2022 and 2021.

The following discussion compares the Company's results of operations for the three months ended March 31, 2022 with those for the three months ended March 31, 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 March 31,
                                                  2022            2021           % Change
Client services                                $       280     $     1,283              (78 )%
Brewery management software                          9,375          19,200              (51 )%
Shipping coordination and label generation
services                                         3,582,449       3,473,902                3 %
Merchant processing services                        12,053          12,525               (4 )%
Shipping calculator services                         5,544           5,863               (5 )%
Total revenues                                 $ 3,609,701     $ 3,512,773                3 %






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Revenues increased 3% in the first quarter primarily from the annual increase in carrier rates along with the ongoing increases to the fuel surcharges for revenues related to our shipping coordination and label generation services.

Client services revenues decreased $1,003 or 78% to $280 in the first quarter of 2022 compared to $1,283 in 2021. This decrease is a result of the limited number of movie posters available for auction during the quarter.

Brewery management software revenues decreased $9,825 to $9,375 in 2022 from $19,200 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 $108,547 or 3% to $3,582,449 in the first quarter of 2022 compared to $3,473,902 in 2021. The increase is attributable to the annual increases imposed by the carriers 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 has reduced the offering which resulted in a decline of 4% from $12,525 to $12,053 in the first 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 $319 or 5% to $5,544 in the first quarter of 2022 compared to $5,863 in 2021. The decrease was primarily due to the reduction in volume for the remaining customer using this platform.





Gross Profit

Gross profit decreased $80,523 or 9% in the first quarter of 2022 to $798,492 compared to $879,015 in 2021. Gross margin decreased to 22% for the first quarter of 2022 compared to 25% in the first quarter of 2021. The decrease in gross margin and 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 quarter 2022 were $858,046 compared to $1,058,348 in the first quarter of 2021, a decrease of $200,302 or 19%. The decrease is due to lower share-based compensation of $18,096 recorded in the first quarter of 2022, compared to $263,613 recorded in the first quarter of 2021.





Net Income (Loss)

The Company recorded a net loss in the first quarter of 2022 of ($60,454) compared to a net loss of ($179,733) for the same period in 2021. The net loss per share available to common shareholders for the first quarter of 2022 and 2021 was ($0.01) and ($0.03) per share, respectively.

Cash Flows from Operating Activities

A summarized reconciliation of the Company's net loss to cash and cash equivalents provided by operating activities for the three months ended March 31, 2022 and 2021 is as follows:





                                                        2022           2021
Net loss                                              $ (60,454 )   $ (179,733 )
Depreciation and amortization                            85,909        127,980

Amortization of operating lease right-of-use assets 8,761 7,993 Share-based compensation

                                 18,096        263,613
Changes in assets and liabilities                       (51,530 )      141,861
Net cash provided by operating activities             $     782     $  361,714






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Working Capital and Liquidity

The Company had cash and cash equivalents of $2,876,293 at March 31, 2022, compared to $2,839,687 at December 31, 2021. The Company had net working capital of $545,151 at March 31, 2022, an improvement of $49,705 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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