What changed in this filing

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Item 1. Financial Statements

2024-08-19 compared with 2024-05-15 · 181 added, 103 removed, 426 unchanged (40% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2024

June 30, 2024

Current assets:

20 unchanged sentences

Shareholders' equity:

Series A Preferred stock, $ 0.001 par value, 5,000,000 shares

Series A Preferred stock, $ 0.001 par value, 5,000,000 shares authorized;

no shares issued and outstanding

Common stock, $ 0.001 par value, 25,000,000 shares authorized;

8,209,033 shares issued and 8,061,400 shares outstanding at March 31, 2024 and 8,154,474 shares issued and 8,010,837 shares outstanding at December 31, 2023

8,209,033 shares issued and 8,061,400 shares outstanding at June 30, 2024 and 8,154,474 shares issued and 8,010,837 shares outstanding at December 31, 2023

Accrued common stock bonus

2 unchanged sentences

Accumulated deficit

Common stock in treasury, at cost, 147,633 shares at March 31, 2024 and 143,637 shares at December 31, 2023

Common stock in treasury, at cost, 147,633 shares at June 30, 2024 and 143,637 shares at December 31, 2023

Total shareholders' equity

3 unchanged sentences

Three Months Ended

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Revenues, net

6 unchanged sentences

Total operating expenses

Loss from operations

Income (loss) from operations

Other income (expense):

Interest income

Total other income

Income (loss) before income tax provision

7 unchanged sentences

Net income (loss)

Other comprehensive loss:

Other comprehensive income (loss):

Foreign currency translation adjustments

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31,

FOR THE SIX MONTHS ENDED JUNE 30,

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Adjustments to reconcile net income (loss) to net cash provided by/used in operating activities:

Depreciation and amortization

10 unchanged sentences

Operating lease obligations

Net cash used in operating activities

Net provided by operating activities

Cash flows from investing activities

4 unchanged sentences

Repurchase of common stock

Proceeds from option exercises

Net cash used in financing activities

7 unchanged sentences

Increase in note receivable for reimbursable expenses

Increase in note receivable for discount

Issuance of common shares in settlement of accrued common stock bonus

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2023

Accumulated Other Comprehensive

FOR THE THREE MONTHS ENDED JUNE 30, 2023

Accumulated Other

Treasury Stock

Paid-in Capital

Comprehensive

Balance, January 1, 2023

4 unchanged sentences

Balance, March 31, 2023

Foreign currency translation adjustment

Option exercise

Issuance of common stock for bonus

Share-based compensation expense

Balance, June 30, 2023

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Accumulated Other Comprehensive

FOR THE THREE MONTHS ENDED JUNE 30, 2024

Accumulated Other

Treasury Stock

Paid-in Capital

Comprehensive

Balance, January 1, 2024

4 unchanged sentences

Balance, March 31, 2024

Foreign currency translation adjustment

Share-based compensation expense

Balance, June 30, 2024

See accompanying notes to condensed consolidated financial statements

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

March 31, 2024

June 30, 2024

Organization and Significant Accounting Policies

22 unchanged sentences

Liquidity and Management ’ s Plans

At March 31, 2024, the Company reported cash and cash equivalents of $ 1,272,409 and net working capital of $ 3,309,821 and reported cash flows used in operations of $ 225,449 for the three months ended March 31, 2024.

The Company has reported a net income of $ 299,562 for the three months ended March 31, 2024 and has an accumulated deficit of $ 69,017,628 at March 31, 2024.

At June 30, 2024, the Company reported cash and cash equivalents of $ 1,503,796 and net working capital of $ 4,160,034 and reported cash flows received from operations of $ 76,701 for the six months ended June 30, 2024.

The Company has reported a net income of $ 1,069,890 for the six months ended June 30, 2024 and has an accumulated deficit of $ 68,247,176 at June 30, 2024.

Management believes that the Company has adequate cash resources to fund operations during the next 12 months after the filing of this quarterly report on Form 10-Q.

In addition, management continues to explore opportunities and has organized additional resources to monetize its patents.

In addition, management continues to explore opportunities and has organized additional resources to grow the Paid platform.

However, there can be no assurance that anticipated growth in new business will occur, and that the Company will be successful in launching new products and services.

Management continues to seek alternative sources of capital to support the growth of future operations.

Although there can be no assurances, the Company believes that the above management plans will be sufficient to meet the Company’s working capital requirements through the end of May 2025 and will have a positive impact on the Company for the foreseeable future.

Although there can be no assurances, the Company believes that the above management plans will be sufficient to meet the Company’s working capital requirements through the end of August 2025 and will have a positive impact on the Company for the foreseeable future.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of PAID, Inc.

and its wholly owned subsidiaries, PAID Run, LLC and ShipTime Canada, Inc.

and its wholly owned subsidiary ShipTime Canada, Inc.

All intercompany accounts and transactions have been eliminated.

2 unchanged sentences

Foreign currency denominated assets and liabilities are translated into U.S.

dollars using the exchange rates in effect at March 31, 2024 and December 31, 2023.

dollars using the exchange rates in effect at June 30, 2024 and December 31, 2023.

Results of operations and cash flows are translated using the average exchange rates throughout the period.

3 unchanged sentences

For customers headquartered in their respective countries, the Company derived approximately 99 % of its revenues from Canada and 1 % from the U.S.

during the three months ended March 31, 2024 and 2023.

At March 31, 2024, the Company maintained 100 % of its property and equipment, net of accumulated depreciation, in Canada.

during the six months ended June 30, 2024 and 2023.

At June 30, 2024, the Company maintained 100 % of its property and equipment, net of accumulated depreciation, in Canada.

Right of Use Assets

6 unchanged sentences

If the expected future cash flow from the use of the asset and its eventual disposition is less than the carrying amount of the asset, an impairment loss is recognized and measured using the fair value of the related asset.

No impairment charges were recognized during the three months ended March 31, 2024 and 2023.

No impairment charges were recognized during the six months ended June 30, 2024 and 2023.

There can be no assurance, however, that market conditions will not change or demand for the Company’s services will continue, which could result in impairment of long-lived assets in the future.

Revenue Recognition

The Company generates revenue principally from fees for coordinating shipping services, sales of shipping calculator subscriptions, brewery management software subscriptions, merchant processing services and client services.

The Company generates revenue principally from fees for coordinating shipping services, merchant processing services and client services.

The Company recognizes revenue by taking into consideration the following five steps:

4 unchanged sentences

and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

Due to the nature of the Company’s product offerings and contracts associated with those products, the Company’s deliverables do not fluctuate, and its revenue recognition is consistent.

Due to the nature of the Company’s service and product offerings and contracts associated with these, the Company’s deliverables do not fluctuate, and its revenue recognition is consistent.

The Company evaluates whether amounts billed to customers should be reported as revenues on a gross or net basis.

Generally, revenue is recorded on a gross basis when the Company is primarily responsible for fulfilling the promise to provide the services, when it assumes the risk of loss, when it has discretion in setting the prices for the services to the customers, and when the Company has the ability to direct the use of the services provided by the third party.

We generally are responsible for the fulfilment of a customer order despite the fact we do not directly provide the delivery services;

we can redirect delivery to other shipping companies in our network.

We control the price for which the customers pays, and generally collect the gross shipping companies in our network.

We control the price for which the customer pays, and generally the gross shipping fees and remit the contractual rate to this shipping company.

Our risk of loss relates to credit-card chargebacks, certain self-insured shipping losses and other miscellaneous charges that we cannot pass through to the shipping company.

Nature of Goods and Services

For label generation service revenues, the Company recognizes revenue when a customer has successfully prepared a shipping label and scheduled a pickup.

Customers with pickups after the end of the reporting period are recorded as contract liabilities on the condensed consolidated balance sheets.

For label generation service revenues, the Company recognizes revenue when a customer has successfully prepared a shipping label and their shipment is delivered.

Customers with pickups and shipments in transit after the end of the reporting period are recorded as contract liabilities on the condensed consolidated balance sheets.

The service is offered to consumers via an online registration and allows users to create a shipping label using a credit card on their account (all customers must have a valid credit card on file to process shipments on the ShipTime platform).

For shipping calculator revenues and brewery management software revenues, the Company recognizes subscription revenue on a monthly basis.

Shipping calculator customers’ renewal dates are based on their date of installation and registration of the shipping calculator line of products.

The timing of the revenue recognition and cash collection may vary within a given quarter and the deposits for future services are recorded as contract liabilities on the condensed consolidated balance sheets.

For brewery management software revenues, the Company recognizes subscription revenue on a monthly basis.

Brewery management software subscribers are billed monthly at the first of the month.

8 unchanged sentences

At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services).

To identify the performance obligations, the Company considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

Revenue is recognized when the performance obligation has been met, which is when the customer has successfully prepared a shipping label and had a pickup for shipping coordination and label generation services.

The Company considers control to have transferred at that time because the Company has a present right to payment at that time, the Company has provided the shipping label, and the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the shipping label.

For arrangements under which the Company provides a subscription for shipping calculator services and brewery management software, the Company satisfies its performance obligations over the life of the subscription, typically twelve months or less.

The Company fulfills nearly all of its performance obligations within a one-to-two-week period and contracts with customers have an original expected duration of less than one month.

The Company generally has an unconditional right to consideration when the services are initiated or soon thereafter.

The amount due from the customer is either collected up front or recorded as accounts receivable.

The amounts related to services that are not yet completed at the reporting date are presented as contract liabilities.

The Company measures the performance of its obligations as services are completed over the life of a shipment, including services at origin, freight and destination.

This method of measurement of progress depicts the pattern of the Company's actual performance under the contracts with the customer.

For arrangements under which the Company provides a subscription for brewery management software, the Company satisfies its performance obligations over the life of the subscription, typically twelve months or less.

Merchant processing customers receive a merchant identification number which allows them to process credit card transactions.

9 unchanged sentences

The Company maintains an allowance for doubtful accounts based on historical loss patterns, the number of days that billings are past due, and an evaluation of potential risk of loss associated with delinquent accounts.

The Company has one note receivable and is a senior secure lender with an absolute obligation.

The note is evaluated for credit losses by considering the contractual obligation, the valuation of the assets and the senior position of the repayment.

The Company has two notes receivable and is a senior secure lender with an absolute obligation for one of the notes.

The primary note was evaluated for credit losses as of June 30, 2024 by considering the contractual obligation, the valuation of the assets and the senior position of the repayment.

Variable Consideration

8 unchanged sentences

Typically, the Company has already collected revenue from the customer at the time it has satisfied its performance obligation.

Accordingly, the Company has only a small balance of accounts receivable, totaling $ 290,948 and $ 205,647 as of March 31, 2024 and December 31, 2023, respectively.

The Company has no customers that made up 10% of the accounts receivable balance at March 31, 2024 and one customer that made up 10% of the accounts receivable balance as of December 31, 2023.

Accordingly, the Company has only a small balance of accounts receivable, totaling $ 253,839 and $ 205,647 as of June 30, 2024 and December 31, 2023, respectively.

The Company has no customers that made up 10% of the accounts receivable balance at June 30, 2024 and one customer that made up 10% of the accounts receivable balance as of December 31, 2023.

Generally, the Company does not have material amounts of contract assets since revenue is recognized as control of goods is transferred or as services are performed.

Contract Liabilities (Deferred Revenue)

Contract liabilities are recorded when cash payments are received in advance of the Company’s performance (including rebates).

Contract liabilities were $ 13,420 and $ 15,382 at March 31, 2024 and December 31, 2023, respectively.

During the three months ended March 31, 2024, the Company recognized revenues of $ 15,382 related to contract liabilities outstanding at the beginning of the period.

Contract liabilities are recorded when cash payments are received in advance of the Company’s performance.

Contract liabilities were $ 239,636 and $ 15,382 at June 30, 2024 and December 31, 2023, respectively.

During the six months ended June 30, 2024, the Company recognized revenues of $ 15,382 related to contract liabilities outstanding at the beginning of the period.

Income (Loss) Per Common Share

2 unchanged sentences

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 income (loss) per share if they would reduce the reported loss per share and therefore have an anti-dilutive effect.

For the three months ended March 31, 2023, there were approximately 7,500 of potentially dilutive shares excluded from the diluted loss per share calculation, as their effect would be anti-dilutive.

The following is a reconciliation of the numerators and denominators of the basic and diluted income (loss) per common share computations for the three months ended March 31, 2024 and 2023.

For the six months ended June 30, 2023, there were approximately 5,800 of potentially dilutive shares excluded from the diluted loss per share calculation, as their effect would be anti-dilutive.

The following is a reconciliation of the numerators and denominators of the basic and diluted income (loss) per common share computations for the three months ended June 30, 2024 and 2023.

Three Months Ended

March 31, 2024

June 30, 2024

Three Months Ended

March 31, 2023

June 30, 2023

Net income (loss)

4 unchanged sentences

Diluted income (loss) per share

Six Months Ended

June 30, 2023

Six Months Ended

June 30, 2023

Net income (loss)

Basic weighted-average shares outstanding

Effect of dilutive securities

Diluted weighted-average shares outstanding

Basic income (loss) per share

Diluted income (loss) per share

Segment Reporting

2 unchanged sentences

The Company’s four reportable segments are managed separately based on fundamental differences in their operations.

At March 31, 2024, the Company operated in the following four reportable segments:

At June 30, 2024, the Company operated in the following four reportable segments:

Client services;

7 unchanged sentences

Three Months Ended

March 31, 2024

March 31, 2023

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Client services

1 unchanged sentence

Shipping coordination and label generation services

Total net revenues

Total revenues

The following table compares total loss from operations for the periods indicated.

Three Months Ended

March 31, 2024

March 31, 2023

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Client services

2 unchanged sentences

Corporate operations

Total loss from operations

Total revenues

Subsequent Events

The Company has evaluated subsequent events through the filing date of this Form 10-Q and has determined that no subsequent events have occurred that would require recognition in the condensed consolidated financial statements of disclosure in the notes thereto, other than disclosed herein.

The Company has entered into a convertible long term note with 5String Solutions effective July 3, 2024.

The note includes an additional $ 348,500 in funding of which $ 198,500 was funded on July 6, 2024.

The note returns an annual interest rate of 12 % and the company a receives 55 % stake in 5String Solutions when fully funded.

The existing short-term note of $ 50,000 plus an additional $ 1,500 interest will be rolled into the long-term note for a total investment of $ 250,000 .

On July 29, 2024 the Board of Directors voted to extend the Embolx note receivable until June 1, 2025 and forego any additional investments.

Reclassification

1 unchanged sentence

These reclassifications had no effect on the reported results of operations.

An adjustment has been made to the segment reporting for the period ended March 31, 2023, to consolidate revenue reporting for smaller segments of the Company.

An adjustment has been made to the segment reporting for the period ended June 30, 2023, to consolidate revenue reporting for smaller segments of the Company.

Recent Accounting Pronouncements

9 unchanged sentences

We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

Note Receivable

Notes Receivable

On October 13, 2022, the Company entered in a Securities Purchase Agreement (“SPA”) with respect to a secured $ 1,875,000 convertible note (“Convertible Note”) made by Embolx, Inc.

12 unchanged sentences

The terms on the amended note receivable include an additional investment of $ 500,000 with a 25 % original issue discount and are subject to a 9 -month maturity with a new 60-day extension option.

The Company has recognized $ 141,780 in other income related to the interest earned and $ 201,209 in other income related to the accretion of the discount on the Convertible Note for the three months ended March 31, 2024 compared to $ 125,000 of other income recorded for the three months ended March 31, 2023.

The Company has recognized $ 141,780 in other income related to the interest earned and $ 1,048,402 in other income related to the accretion of the discount on the Convertible Note for the six months ended June 30, 2024 compared to $ 250,000 of other income recorded for the six months ended June 30, 2023.

The Company reserves the right to record an additional interest amount of $ 45,498 for the period of June 19, 2024 to June 30, 2024 in addition to the default penalty of $ 838,721 which has been deferred as the note is currently in default as of June 19, 2024.

The Company does not believe there is any impairment to the note receivable due to its secured position on the assets of Embolx and its expectation that the amounts will be recoverable if and when Embolx consummates a financial or merger transaction which is expected to happen in 2025.

The Company entered into a $ 50,000 short term note with 5String Solutions LLC on April 4, 2024.

The terms on the note receivable include a 12 % annual interest rate from the inception of the note which was due on May 15, 2024.

As of June 30, 2024 the note was in default however the note has been amended as of July 3, 2024 and the initial investment shall be deducted from the future advance and the note shall be deemed paid in full.

The new note included an additional $ 198,500 investment carrying a 12 % interest rate.

The short term note of $ 50,000 plus an additional $ 1,500 interest along with the $ 198,500 additional investment total $ 250,000 due on or before April 30, 2027.

Accrued Expenses

Accrued expenses are comprised of the following:

March 31, 2024

June 30, 2024

December 31, 2023

6 unchanged sentences

In addition, the Company has various other intangibles from past business combinations.

At March 31, 2024, intangible assets consisted of the following:

Technology & Software

Customer Relationships

At June 30, 2024, intangible assets consisted of the following:

Relationships

Gross carrying amount

1 unchanged sentence

At December 31, 2023, intangible assets consisted of the following:

Technology & Software

Customer Relationships

Relationships

Gross carrying amount

Accumulated amortization

Amortization expense of intangible assets for the three months ended March 31, 2024 and 2023 was $ 74,285 and $ 74,066 , respectively.

Amortization expense of intangible assets for the three months ended June 30, 2024 and 2023 was $ 73,211 and $ 74,514 , respectively.

Commitments and Contingencies

30 unchanged sentences

If purchased, redeemed, or otherwise acquired (other than conversion), the preferred stock may be reissued.

As of March 31, 2024 and December 31, 2023, there are no outstanding shares of Series A Preferred Stock.

As of June 30, 2024 and December 31, 2023, there are no outstanding shares of Series A Preferred Stock.

In February 2020, ShipTime Canada amended its rights to exchange one share of ShipTime Canada stock from 45 PAID common shares and 311 PAID preferred shares to 356 PAID common shares.

5 unchanged sentences

Furthermore, because of the amended exchange rights, the Company reflected an additional exchange of PAID Series A Preferred Stock shares totaling 2,089,298 to PAID common shares, representing the additional amount of PAID common shares that will be issued to the ShipTime shareholders upon the exchange.

In total, the Company has reserved for future issuance of 2,106,808 shares of PAID common stock with respect to the remaining 5,918 exchangeable shares to be issued as a result of the ShipTime acquisition which are considered issued and outstanding as of March 31, 2024 for financial reporting purposes.

On February 22, 2024, the Company’s Board of Directors authorized the issuance of 54,559 bonus shares of PAID common stock to the CEO/CFO, one additional officer and one employee for services rendered during 2023.

7 unchanged sentences

The remaining $ 218,750 of share-based compensation expense was recognized ratably during 2023 as 125,000 of the bonus shares were subject to repurchase if the CEO/CFO were to terminate employment during the period ended January 1, 2024.

The Company recorded $ 273,438 of share-based compensation expense for the three-month period ended March 31, 2023 in connection with these additional shares.

The Company recorded $ 273,438 of share-based compensation expense for the three-month period ended June 30, 2023 in connection with these additional shares.

On March 21, 2023, the Company’s Board of Directors approved the terms of the employment agreement for David Scott, the Company’s COO.

Per the terms of the agreement, the Company issued 13,889 shares of PAID common stock to the COO.

This compensation was valued at $ 25,000 based on the closing price of the Company’s common stock at March 31, 2023 and the shares were issued on April 10, 2023.

This compensation was valued at $ 25,000 based on the closing price of the Company’s common stock at June 30, 2023 and the shares were issued on April 10, 2023.

The Company recorded $ 25,000 of share-based compensation expense in connection with the additional compensation.

7 unchanged sentences

The options have an exercise price of $1.55 per share and have vesting periods of 0-3 years and they expire if not exercised within ten years from grant date.

For the three-month period ended March 31, 2024 and 2023, the Company recorded $ 38,984 , and $ 119,100 , respectively, of share-based compensation expense related to the vesting of applicable options granted in 2024 and prior years.

For the three-month and six-month periods ended June 30, 2024, the Company recorded $$ 2,678 and $ 38,984 , respectively, of share-based compensation expense related to the vesting of applicable options granted in 2024 and prior years.

For the three and six-month periods ended June 30, 2023, the Company recorded $ 14,550 and $ 133,650 , respectively, of share-based compensation expense related to the vesting of applicable options granted in 2023 and prior years.

We have an operating lease for our corporate office in Canada.

4 unchanged sentences

Three Months Ended

March 31, 2024

June 30, 2024

Three Months Ended

March 31, 2023

June 30, 2023

Operating lease cost

Six Months Ended

June 30, 2023

Six Months Ended

June 30, 2023

Operating lease cost

Supplemental cash flow information related to leases was as follows:

Three Months Ended

March 31, 2024

Three Months Ended

March 31, 2023

Six Months Ended

June 30, 2024

Six Months Ended

June 30, 2023

Cash paid for amounts included in leases:

1 unchanged sentence

Supplemental balance sheet information related to leases was as follows:

March 31, 2024

June 30, 2024

December 31, 2023

2 unchanged sentences

Operating lease obligations

March 31, 2024

June 30, 2024

December 31, 2023

3 unchanged sentences

Operating lease

A summary of future minimum payments under non-cancellable operating lease commitment as of March 31, 2024 is as follows:

A summary of future minimum payments under non-cancellable operating lease commitment as of June 30, 2024 is as follows:

Years ending December 31,

40 unchanged sentences

Results of Operations

Comparison of the three months ended March 31, 2024 and 2023.

The following discussion compares the Company's results of operations for the three months ended March 31, 2024 with those for the three months ended March 31, 2023.

Comparison of the three months ended June 30, 2024 and 2023.

The following discussion compares the Company's results of operations for the three months ended June 30, 2024 with those for the three months ended June 30, 2023.

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.

The following table compares total net revenue for the periods indicated.

Three months Ended March 31,

Three months Ended June 30,

Client services

2 unchanged sentences

Total net revenues

Revenues increased 9% in the first quarter as a result of the shipping coordination and label generation segment of the business.

Shipping suppliers implement an annual pricing increase and as a result the Company has seen an increase in revenue.

Client services revenues which include brewery management software and shipping calculator services decreased $1,405 or 16% to $7,260 in the first quarter of 2024 compared to $8,665 in 2023.

This decrease is a result of minimal activity in this segment of the business.

The decrease in revenues is primarily due to the cancellation of several clients and the limited marketing of this segment of the business.

Shipping coordination and label generation services revenues increased $367,078 or 10% to $4,139,845 in the first quarter of 2024 compared to $3,772,767 in 2023.

The increase is attributable to the supplier price increase of an average of 5.9%.

The Company has also invested additional sales personnel to improve the conversion rates of new customers and reduce churn of existing customers.

Revenues increased 11% in the second quarter as a result of the shipping coordination and label generation segment of the business.

Shipping volume has increased 15% in 2024 as a result the Company has seen an increase in revenue.

Client services revenues which include brewery management software and shipping calculator services decreased $3,553 or 40% to $5,266 in the second quarter of 2024 compared to $8,819 in 2023.

The decrease in revenues is primarily due to the cancellation of several brewery management software clients and the limited marketing of this segment of the business.

Shipping coordination and label generation services revenues increased $473,087 or 12% to $4,579,274 in the second quarter of 2024 compared to $4,106,187 in 2023.

The increase is attributable to the increase of the volume of labels generated, this is a result of the additional marketing and sales efforts in the second quarter of 2024.

Merchant processing services are available to businesses that process ecommerce online transactions.

These include shipping, payments and web hosting services.

The decrease is due to a one time increase of transactions for the first quarter of 2023.

The Company has started to market this segment of the business in the first quarter of 2024.

Gross profit increased $165,764 or 19% in the first quarter of 2024 to $1,018,358 compared to $852,594 in 2023.

Gross margin improved 2% to 24% in the first quarter of 2024 compared to 22% for the same period in 2023.

The Company has recognized revenues of $18,760 and increase of $3,385 or 22% compared to $15,375 for the same period in 2023.

The Company has started to market this segment of the business in 2024.

Gross profit increased $162,921 or 17% in the second quarter of 2024 to $1,107,569 compared to $944,648 in 2023.

Gross margin improved 1% to 24% in the second quarter of 2024 compared to 23% for the same period in 2023.

Operating Expenses

Total operating expenses in the first quarter 2024 were $1,056,185 compared to $1,272,122 in the first quarter of 2023, a decrease of $215,937 or 17%.

The decrease is due to the share-based compensation of $392,538 in 2023 compared to $38,984 in 2024 offset by an annual increase in salaries for 2024.

Total operating expenses in the second quarter 2024 were $1,183,095 compared to $1,012,018 in the second quarter of 2023, an increase of $171,077 or 17%.

The increase is due to additional employees and consultants in combination with the additional marketing expenses in 2024 compared to those in 2023.

Other Income/Expense, net

Net other income in 2024 was $848,674 compared to $125,000 in 2023, an increase of $723,675 or 579%.

The 2024 amount is made up of interest income of $141,780 and a gain of $201,209 on the Embolx, Inc.

The 2024 amount is made up of the original issue discount of $847,193 on the Embolx, Inc.

note receivable compared to the gain of $125,000 recorded in 2023.

Net Income (Loss )

The Company recorded a net income in the first quarter of 2024 of $299,562 compared to a net loss of $(294,928) for the same period in 2023.

The net income per share for the first quarter of 2024 was $0.04 and net loss for 2023 was $(0.04) per share.

The Company recorded a net income in the second quarter of 2024 of $770,452 compared to a net income of $57,174 for the same period in 2023.

The net income per share for the second quarter of 2024 was $0.10 and net income for 2023 was $0.01 per share.

Comparison of the six months ended June 30, 2023 and 2022

The following discussion compares the Company's results of operations for the six months ended June 30, 2024, with those for the six months ended June 30, 2023.

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.

The following table compares total revenue for the periods indicated.

Six months ended June 30,

Client services

Shipping coordination and label generation services

Merchant processing services

Total revenues

Revenues increased 10% in the first two quarters primarily from the marketing efforts and the increase in volume to our shipping coordination and label generation services.

Client services revenues decreased $4,958 or 28% to $12,525 in the first two quarters of 2024 compared to $17,484 in 2023.

This decrease is a result of the declining number of brewery management subscription clients active during the quarters.

Shipping coordination and label generation services revenues increased $840,164 or 11% to $8,719,118 in the first two quarters of 2024 compared to $7,878,954 in 2023.

The increase is attributable to increases in volume as a result of the additional sales and marketing efforts for the same period in 2023.

Merchant processing services is available to businesses that accept credit card processing online.

This segment has had limited marketing in the first two quarters and has shown a decrease of $7,813 or 19% from $40,218 in 2023 to $32,405 for the same period of 2024.

The Company continues to increase the product offerings in this segment of the business.

Gross profit increased $328,685 or 18% in the first two quarters of 2024 to $2,125,927 compared to $1,797,242 in 2023.

Gross margin increased from 23% in 2023 to 24% in 2024.

The increase 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 2024 were $2,239,405 compared to $2,284,140 for the same period of 2023, a decrease of $44,735 or 2%.

The decrease is primarily due to the share-based compensation of $486,776 recorded in 2023 compared to $41,662 for the same period of 2024.

Net Income (Loss)

The Company recorded a net income in the first half of 2024 of $1,069,890 compared to a net loss of $237,754 for the same period in 2023.

The net income (loss) per share available to common shareholders for the first two quarters of 2024 and 2023 was $0.13 and $(0.03) per share, respectively.

Cash Flows from Operating Activities

A summarized reconciliation of the Company's net income (loss) to cash and cash equivalents used in operating activities for the three months ended March 31, 2024 and 2023 is as follows:

A summarized reconciliation of the Company's net income (loss) to cash and cash equivalents used in operating activities for the six months ended June 30, 2024 and 2023 is as follows:

Net income (loss)

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Accretion of discount on note receivable

Interest income accrued on note receivable

Interest and penalty income accrued on note receivable

Changes in assets and liabilities

1 unchanged sentence

Working Capital and Liquidity

The Company had cash and cash equivalents of $1,272,409 at March 31, 2024, compared to $2,052,421 at December 31, 2023.

The Company had net working capital of $3,309,821 at March 31, 2024, an improvement of $396,871 compared to $2,912,950 at December 31, 2023.

The increase in net working capital is attributable to the decrease in accounts payable along with the accretion of discount and the interest accrued on the note receivable.

The Company had cash and cash equivalents of $1,503,796 at June 30, 2024, compared to $2,052,421 at December 31, 2023.

The Company had net working capital of $4,160,034 at June 30, 2024, an improvement of $1,247,084 compared to $2,912,950 at December 31, 2023.

The increase in net working capital is attributable to the accretion of discount and the interest and penalties accrued on the note receivable.

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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements