Forward Looking Statements
This Quarterly Report on Form 10-Q contains certain forward-looking statements
(within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934) regarding PAID, Inc. (the "Company") and
its business, financial condition, results of operations and prospects. Words
such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates", "could", "may", "should", "will", "would", and similar expressions
or variations of such words are intended to identify forward-looking statements
in this report. Additionally, statements concerning future matters such as the
development of new services, technology enhancements, purchase of equipment,
credit arrangements, possible changes in legislation and other statements
regarding matters that are not historical are forward-looking statements.
Although forward-looking statements in this quarterly report reflect the good
faith judgment of the Company's management, such statements can only be based on
facts and factors currently known by the Company. Consequently, forward-looking
statements are inherently subject to risks, contingencies and uncertainties, and
actual results and outcomes may differ materially from results and outcomes
discussed in this report. Although the Company believes that its plans,
intentions and expectations reflected in these forward-looking statements are
reasonable, the Company can give no assurance that its plans, intentions or
expectations will be achieved. For a more complete discussion of these risk
factors, see Item 1A, "Risk Factors", in the Company's Form 10-K for the fiscal
year ended December 31, 2020 that was filed on March 31, 2021.
For example, the Company's ability to maintain positive cash flow and to become
profitable may be adversely affected as a result of a number of factors that
could thwart its efforts. These factors include the Company's inability to
successfully implement the Company's business and revenue model, higher costs
than anticipated, the Company's inability to sell its products and services to a
sufficient number of customers, the introduction of competing products or
services by others, the Company's failure to attract sufficient interest in, and
traffic to, its site, the Company's inability to complete development of its
products, the failure of the Company's operating systems, and the Company's
inability to increase its revenues as rapidly as anticipated. If the Company is
not profitable in the future, it will not be able to continue its business
operations.
Except as required by applicable laws, we do not intend to publish updates or
revisions of any forward-looking statements we make to reflect new information,
future events or otherwise. Readers are urged to review carefully and to
consider the various disclosures made by the Company in this Quarterly Report,
which attempts to advise interested parties of the risks and factors that may
affect our business, financial condition, results of operations and prospects.
Overview
ShipTime Inc. has developed a SaaS-based application, which focuses on the small
to medium business segment. This offering allows members to quote, process,
generate labels, dispatch and track courier and LTL shipments all from a single
interface. The application provides customers with a choice of today's leading
couriers and freight carriers all with discounted pricing allowing members to
save on every shipment. ShipTime can also be integrated into on-line shopping
carts to facilitate sales via e-commerce. We actively sell directly to small
businesses and through long standing partnerships with selected associations
throughout Canada. Our focus in 2021 is to significantly grow this portion of
our business.
PAID, Inc. (the "Company") has developed AuctionInc, which is a suite of online
shipping and tax management tools assisting businesses with e-commerce
storefronts, shipping solutions, tax calculation, inventory management, and
auction processing. The product does have tools to assist with other aspects of
the fulfillment process, but the main purpose of the product is to provide
accurate shipping and tax calculations and packaging algorithms that provide
customers with the best possible shipping and tax solutions.
BeerRun Software is a brewery management and Alcohol and Tobacco Tax and Trade
Bureau tax reporting software. Small craft brewers can utilize the product to
manage brewery schedules, inventory, packaging, sales and purchasing. Tax
reporting can be processed with a single click and is fully customizable by
state or providence. The software is designed to integrate with QuickBooks
accounting platforms by using our powerful sync engine. We currently offer two
versions of the software BeerRun and BeerRun Light which excludes some of the
enhanced features of BeerRun without disrupting the core functionality of the
software.
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PaidPayments provides commerce solutions to small - and medium-sized businesses
by enabling them to sell their goods and services, accept payment, and create
repeat sales though an online payment processing solution. The Company has
operated as a Payment Facilitator since 2019, which enables our merchants to get
the benefit of instant boarding and discounted rates. Our platform provides all
aspects required for payment processing, including merchant boarding,
underwriting, fraud monitoring, settlement, funding to the sub-merchant, and
monthly reporting and statements. The Company controls all of these necessary
aspects in the payment process and is then able to supply a one-step boarding
process for our partners and value-added resellers. This capability also
provides cost advantages, rapid response to market needs, simplified processes
for boarding business and a seamless interface for our merchant customers.
Significant Accounting Policies
Our significant accounting policies are more fully described in Note 3 to our
consolidated financial statements for the years ended December 31, 2020 and 2019
included in our Form 10-K filed on March 31, 2021, as updated and amended in
Note 1 of the Notes to Condensed Consolidated Financial Statements included
herein. However, certain of our accounting policies, most notably with respect
to revenue recognition, are particularly important to the portrayal of our
financial position and results of operations and require the application of
significant judgment by our management; as a result, they are subject to an
inherent degree of uncertainty. In applying these policies, our management makes
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses and related disclosures. Those estimates and judgments are
based upon our historical experience, the terms of existing contracts, our
observance of trends in the industry, information that we obtain from our
customers and outside sources, and on various other assumptions that we believe
to be reasonable and appropriate under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.
Results of Operations
Comparison of the three months ended September 30, 2021 and 2020.
The following discussion compares the Company's results of operations for the
three months ended September 30, 2021 with those for the three months ended
September 30, 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,
2021 2020 % Change
Client services $ 1,548 $ 1,878 (18 )%
Brewery management software 12,825 25,600 (50 )%
Shipping coordination and label generation
services 3,446,343 3,269,804 5 %
Merchant processing services 13,828 105,713 (87 )%
Shipping calculator services 5,565 6,321 (12 )%
Total revenues $ 3,480,109 $ 3,409,316 2 %
Revenues increased 2% in the third quarter primarily from the sustained volume
due to the impact from the COVID-19 virus on our shipping coordination and label
generation services.
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Client services revenues decreased $330 or 18% to $1,548 in the third quarter of
2021 compared to $1,878 in 2020. This reduction is a result of the decrease in
movie posters auctions held during the quarter.
Brewery management software revenues decreased $12,775 to $12,825 in 2021 from
$25,600 in 2020. The decrease in revenues is due to the closure of several
breweries due to COVID-19, the cancellations of several clients and limited
marketing of the software to new clients.
Shipping coordination and label generation services revenues increased $176,539
or 5% to $3,446,343 in the third quarter of 2021 compared to $3,269,804 in 2020.
The increase is attributable to the shift in online shipping as a result of the
impact of the COVID-19 virus in addition to the change in pricing to retain
customers in a competitive environment.
Merchant processing services is available to businesses that accept credit card
processing online. This segment has had difficulties with the launch and has
declined 87% from $105,713 to $13,828 in the third quarter of 2021. The Company
is reevaluating the launch and preparing to combine these services with other
PAID products for a re-release.
Shipping calculator services revenue decreased $756 or 12% to $5,565 in the
third quarter of 2021 compared to $6,321 in 2020. The decrease was primarily
due to the reduction in volume for the remaining customer using this platform.
Gross Profit
Gross profit decreased $83,534 or 10% in the third quarter of 2021 to $776,949
compared to $860,483 in 2020. Gross margin decreased 3% to 22% for the third
quarter of 2021 compared to 25% from the third quarter of 2020. The decrease in
gross profit is due to the price reduction on the shipping label generation
services for one of the large affiliations.
Operating Expenses
Total operating expenses in the third quarter 2021 were $921,497 compared to
$984,211 in the third quarter of 2020, a decrease of $62,714 or 6%. The decrease
is due to reduction in payroll in addition to the savings in administrative
costs due to the COVID -19 office closure.
Other Income/Expense, net
Net other income in the third quarter of 2021 was $0 compared to $6 in the same
period of 2020. This is attributable to foreign currency translation of other
income.
Net Loss
The Company recorded a net loss in the third quarter of 2021 of $144,548
compared to a net loss of $123,722 for the same period in 2020. The basic net
loss per share available to common shareholders for the third quarter of 2021
and 2020 was $(0.02) and $(0.02) per share, respectively.
Comparison of the nine months ended September 30, 2021 and 2020.
The following discussion compares the Company's results of operations for the
nine months ended September 30, 2021 with those for the nine months ended
September 30, 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.
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Revenues
The following table compares total revenue for the periods indicated.
Nine months Ended September 30,
2021 2020 % Change
Client services $ 3,057 $ 3,283 (7 )%
Brewery management software 48,050 93,413 (49 )%
Shipping coordination and label generation
services 10,899,495 8,805,688 24 %
Merchant processing services 48,806 379,012 (89 )%
Shipping calculator services 17,284 22,114 (22 )%
Total revenues $ 11,008,692 $ 9,303,510 18 %
Revenues increased 18% in the first three quarters primarily from the growth of
our shipping coordination and label generation services.
Client services revenues decreased $226 or 7% to $3,057 in the first three
quarters of 2021 compared to $3,283 in 2020. This decrease is a result of the
small fluctuation in movie posters auctions held during this period.
Brewery management software revenues decreased $45,363 to $48,050 in the first
three quarters of 2021 from $93,413 in the same period of 2020. The decrease in
revenues is due to cancellations and the business closing of several of clients
due to the impacts of COVID-19.
Shipping coordination and label generation services revenues increased
$2,093,807 or 24% to $10,899,495 in the first three quarters of 2021 compared to
$8,805,688 in 2020. The increase is attributable to the shift in online shipping
as a result of the impact of the COVID-19 virus in addition to new marketing
efforts and pricing changes to retain customers.
Merchant processing services has had difficulties with the launch and has
declined 89% from $379,012 to $40,806 in the first three quarters of 2021. The
Company is reevaluating the launch and preparing to combine these services with
other Paid products for a re-release.
Shipping calculator services revenues decreased $4,830 or 22% to $17,284 in the
first three quarters of 2021 compared to $22,114 in the same period of 2020.
The decrease was due to a reduction in the use of our platform for this segment
of the business.
Gross Profit
Gross profit increased $342,267 or 15% in the first three quarters of 2021 to
$2,589,013 compared to $2,246,746 in 2020. Gross margin remained at 24% for the
first three quarters of 2021 compared to the same period of 2020. 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.
Operating Expenses
Total operating expenses in the first three quarters of 2021 were $2,942,702
compared to $2,391,002 in the same period of 2020, an increase of $551,700 or
23%. The increase is primarily due to additional staffing and share-based
compensation recorded in the first three quarters of 2021.
Other Income/Expense, net
Net other income in the first three quarters of 2021 was $0 compared to $13,201
in the same period of 2020. This is primarily attributable to the recovery of a
bad debt that was previously written off.
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Net Income (Loss)
The Company realized a net loss in the first three quarters of 2021 of
($354,645) compared to a net loss of ($131,555) for the same period in 2020. The
net loss available to common shareholders for the three quarters of 2021 and
2020 was ($0.05) 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 nine months ended September
30, 2021 and 2020 is as follows:
2021 2020
Net loss $ (354,645 ) $ (131,555 )
Depreciation and amortization 385,848 364,273
Amortization of operating lease right-of-use assets 24,840 20,957
Share-based compensation
502,427 311,129
Provision for bad debt - 20,125
Gain on sale of property and equipment - (739 )
Changes in assets and liabilities 287,325 251,769
Net cash provided by operating activities $ 845,795 $ 835,959
Working Capital and Liquidity
The Company had cash and cash equivalents of $2,480,524 at September 30, 2021,
compared to $1,644,210 at December 31, 2020. The Company had net working capital
of $739,063 at September 30, 2021, an improvement of $520,448 compared to
$218,615 at December 31, 2020. The increase in net working capital is
attributable to the 18% growth of the Company's revenues for 2021. The increase
in cash and cash equivalents is due to the additional growth of the business
along with the savings related to the decrease in consulting and travel
expenses.
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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