What changed in this filing

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Item 1. Financial Statements

2024-11-14 compared with 2024-08-19 · 149 added, 145 removed, 462 unchanged (39% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2024

September 30,

Current assets:

7 unchanged sentences

Operating lease right-of-use assets, net

Note receivable, long term

LIABILITIES AND SHAREHOLDERS' EQUITY

8 unchanged sentences

Uncertain tax position liability

Operating lease obligation – net of current portion

Total liabilities

4 unchanged sentences

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

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

8,209,033 shares issued and 8,061,400 shares outstanding at September 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 June 30, 2024 and 143,637 shares at December 31, 2023

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

Total shareholders' equity

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Nine Months Ended

September 30,

Revenues, net

23 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30,

FOR THE NINE MONTHS ENDED SEPTEMBER 30,

Cash flows from operating activities:

Net income (loss)

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

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

Depreciation and amortization

10 unchanged sentences

Operating lease obligations

Net provided by operating activities

Net used in operating activities

Cash flows from investing activities

Purchase of property and equipment

Issuance of note receivable

Issuance of notes receivable

Net cash used in investing activities

13 unchanged sentences

Issuance of common shares in settlement of accrued common stock bonus

Operating lease liabilities from obtaining lease right-of-use assets

See accompanying notes to condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2023

Accumulated Other

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023

Treasury Stock

Paid-in Capital

Comprehensive

10 unchanged sentences

Balance, June 30, 2023

Foreign currency translation adjustment

Share-based compensation expense

Balance, September 30, 2023

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2024

Accumulated Other

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024

Treasury Stock

Paid-in Capital

Comprehensive

8 unchanged sentences

Balance, June 30, 2024

Foreign currency translation adjustment

Share-based compensation expense

Balance, September 30, 2024

See accompanying notes to condensed consolidated financial statements

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2024

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENT

September 30, 2024

Organization and Significant Accounting Policies

5 unchanged sentences

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.

Backed by Heroic Support™, ShipTime offers live support via phone, chat and email to enhance the customer experience.

The software can also be integrated into on-line shopping carts to facilitate sales via e-commerce.

We actively sell directly to small and medium businesses and through long standing partnerships with selected associations throughout Canada.

14 unchanged sentences

Liquidity and Management ’ s Plans

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.

At September 30, 2024, the Company reported cash and cash equivalents of $ 1,089,520 and net working capital of $ 3,803,180 and reported cash flows used from operations of $ 142,736 for the nine months ended September 30, 2024.

The Company has reported a net income of $ 936,335 for the nine months ended September 30, 2024 and has an accumulated deficit of $ 68,380,855 at September 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.

1 unchanged sentence

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 August 2025 and will have a positive impact on the Company for the foreseeable future.

Management may 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 November 2025 and will have a positive impact on the Company for the foreseeable future.

Principles of Consolidation

5 unchanged sentences

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

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

dollars using the exchange rates in effect at September 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 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.

during the nine months ended September 30, 2024 and 2023.

At September 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 six months ended June 30, 2024 and 2023.

No impairment charges were recognized during the nine months ended September 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.

12 unchanged sentences

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.

We control the price for which the customer pays, and generally collect 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.

33 unchanged sentences

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.

The primary note was evaluated for credit losses as of September 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 $ 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.

Accordingly, the Company has only a small balance of accounts receivable, totaling $ 209,976 and $ 205,647 as of September 30, 2024 and December 31, 2023, respectively.

The Company has no customers that made up 10% of the accounts receivable balance at September 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.

1 unchanged sentence

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.

Contract liabilities were $ 260,546 and $ 15,382 at September 30, 2024 and December 31, 2023, respectively.

During the nine months ended September 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 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

June 30, 2024

Three Months Ended

June 30, 2023

Net income (loss)

For the nine months ended September 30, 2023, there were approximately 7,800 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 September 30, 2024 and 2023.

September 30, 2024

September 30, 2023

Basic weighted-average shares outstanding

3 unchanged sentences

Diluted income (loss) per share

Six Months Ended

June 30, 2023

Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2024

Nine Months Ended

September 30, 2023

Net income (loss)

8 unchanged sentences

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

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

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

Client services;

7 unchanged sentences

Three Months Ended

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Nine Months Ended

September 30,

Client services

4 unchanged sentences

Three Months Ended

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Nine Months Ended

September 30,

Client services

2 unchanged sentences

Corporate operations

Total revenues

Total loss from operations

Subsequent Events

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.

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 or disclosure in the notes thereto, other than as disclosed herein.

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 June 30, 2023, to consolidate revenue reporting for smaller segments of the Company.

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

Recent Accounting Pronouncements

11 unchanged sentences

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.

(“Noteholder”), a California corporation.

(“Noteholder”).

The Convertible Note was purchased at a 20 % ($ 375,000 ) original issue discount and is subject to a 9 -month maturity, after which, if unpaid will then carry a 20 % interest rate.

The Company recognized $ 270,833 in other income related to accretion of the discount on the Convertible Note for the year ended December 31, 2023 in addition to a $ 375,000 , 20 % non-payment penalty and interest due on the note of $ 203,425 .

The Company has the option to convert the Convertible Note into shares of common stock of the Noteholder.

The Company has the option to convert the Convertible Note into shares of common stock of Embolx.

The Convertible Note is secured by substantially all assets of the Noteholder.

Under the SPA, the Company has a right to purchase additional notes and receive warrants on the same terms for a total potential investment amount of $ 2,000,000 with an additional over-allotment option of $ 500,000 as defined in the SPA.

As additional consideration, the Company received a 5 -year warrant to purchase shares of common stock of the Noteholder.

As additional consideration, the Company received a 5 -year warrant to purchase shares of common stock of the Embolx.

The shares are subject to certain piggyback registration rights under a Registration Rights Agreement.

The warrant is offered at 50 % of the original principal amount and will be valued at the price per share of common stock paid in the first liquidity event following October 19, 2022.

The warrants expire five years from the original issue date.

The warrant was offered at 50 % of the original principal amount and will be valued at the price per share of common stock paid in the first liquidity event following October 19, 2022.

The warrants were to expire five years from the original issue date.

As of July 19, 2023, the note was in default and carried an additional 20 % penalty and 20 % interest resulting in $ 578,425 of other income which was recognized in the Company’s consolidated financial statements for the year ended December 31, 2023.

The Company amended and replaced the note and terminated the warrants as of March 26, 2024.

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 $ 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.

In March 2024, the Company amended and replaced the note and terminated the warrants.

The terms on the amended note receivable include an additional investment of $ 500,000 with a 25 % original issue discount and is due on June 19, 2024.

The Company was granted a $ 50,000 increase to the debt owed by Embolx which was applied toward legal expenses incurred during the first quarter relating to the preparation of the note documentation.

For the nine months ended September 30, 2024, the Company has recognized $ 141,782 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 compared to $ 270,833 of other income recorded as of September 30, 2023.

The note receivable is currently in default effective June 19, 2024 in the amount of $ 4,193,607 and the Company has elected to defer interest of $ 426,025 and default penalties of $ 838,721 .

On July 29, 2024, the Board of Directors approved an extension with Embolx which is currently being modified.

The extension includes a forbearance agreement with Embolx which extends the note receivable until June 1, 2025.

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.

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

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 includes an additional $ 198,500 investment carrying a 12 % interest rate.

The short term note of $ 50,000 plus $ 1,500 interest calculated from April 4, 2024 to July 3, 2024, along with a $ 198,500 additional investment results in a $ 250,000 long term note due on or before April 30, 2027.

On April 30, 2027 the Company has the option to convert the balance of the $ 400,000 note receivable into 55 % ownership of 5String Solutions.

In the event that the Company elects to convert the noted they subsequently have the option to purchase the remaining 45 % ownership of 5String Solutions at a rate of 5-times EBITDA reported on December 31, 2026.

Interest of $ 11,918 has been recorded based on the outstanding balance of the $ 250,000 note for the period of July 3, 2024 to September 30, 2024.

Accrued Expenses

Accrued expenses are comprised of the following:

June 30, 2024

December 31, 2023

September 30,

Payroll and related costs

5 unchanged sentences

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

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

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

Relationships

5 unchanged sentences

Accumulated amortization

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

Amortization expense of intangible assets for the three months ended September 30, 2024 and 2023 was $ 73,443 and $ 74,678 , respectively.

Commitments and Contingencies

11 unchanged sentences

More than a year later, in 2021, Mr.

Pratt filed a claim in Delaware courts to contest that decision and this claim was dismissed on November 9, 2023.

Pratt filed a claim in Delaware courts to contest that decision.

In July 2022, Mr.

Pratt amended the complaint to dispute the proper authorization of a stock bonus that was awarded to the Company’s CEO in March 2021.

On November 9, 2023 the courts dismissed the claim contesting the reduction of the board size.

The Company has not recorded a reserve as the outcome of these matters cannot be determined.

On December 5, 2024 a trial is scheduled to begin on the claims made in the Delaware courts.

Indemnities and Guarantees

13 unchanged sentences

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

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

As of September 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 June 30, 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 June 30, 2023 in connection with these additional shares.

The Company recorded $ 273,438 of share-based compensation expense for the three-month period ended September 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 June 30, 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 September 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 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.

Our lease has a remaining lease term of eleven months.

For the three-month and nine-month periods ended September 30, 2024, the Company recorded $ 3,266 and $ 44,928 , respectively, of share-based compensation expense related to the vesting of applicable options granted in 2024 and prior years.

For the three and nine-month periods ended September 30, 2023, the Company recorded $ 14,550 and $ 148,200 , respectively, of share-based compensation expense related to the vesting of applicable options granted in 2023 and prior years.

On July 2, 2024, the Company has entered into an operating lease for our corporate office located at 700 Dorval Drive in Oakville Ontario.

The lease commences September 1, 2024 with a expiration date of August 31, 2028.

Our lease has a remaining lease term of forty-seven months.

Future renewal options that are not likely to be executed as of the balance sheet date and are excluded from right-of-use assets and related lease liabilities.

1 unchanged sentence

The components of lease expense were as follows:

Three Months Ended

June 30, 2024

Three Months Ended

June 30, 2023

September 30, 2024

September 30, 2023

Operating lease cost

Six Months Ended

June 30, 2023

Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2024

Nine Months Ended

September 30, 2023

Operating lease cost

Supplemental cash flow information related to leases was as follows:

Six Months Ended

June 30, 2024

Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2024

Nine Months Ended

September 30, 2023

Cash paid for amounts included in leases:

1 unchanged sentence

Supplemental balance sheet information related to leases was as follows:

June 30, 2024

September 30, 2024

December 31, 2023

1 unchanged sentence

Operating lease right-of-use assets

Operating lease obligations

June 30, 2024

Current portion of operating lease obligations

Operating lease obligations, net of current portion

Total operating lease liabilities

September 30,

December 31, 2023

Weighted Average Remaining Lease Term

Operating lease (in years)

Weighted Average Discount Rate

Operating lease

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

Weighted Average Remaining Lease Term Operating lease (in years)

Weighted Average Discount Rate Operating lease

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

Years ending December 31,

3 unchanged sentences

Less current portion

Long term portion

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

2 unchanged sentences

(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.

Words such as "expects," "anticipates," "intends," "plans,"FnoteF "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.

30 unchanged sentences

Results of Operations

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.

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

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

Three months Ended September 30,

Client services

2 unchanged sentences

Total net revenues

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.

Revenues increased 8% in the third quarter as a result of the shipping coordination and label generation segment of the business.

Marketing efforts, pricing strategies and additional personnel have contributed to the shipping volume increase of 11% in 2024.

Client services revenues which include brewery management software and shipping calculator services decreased $5,554 or 69% to $2,495 in the third quarter of 2024 compared to $8,048 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.

Shipping coordination and label generation services revenues increased $338,571 or 8% to $4,425,505 in the third quarter of 2024 compared to $4,086,934 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 third quarter of 2024.

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

2 unchanged sentences

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.

Gross profit increased $139,562 or 15% in the third quarter of 2024 to $1,083,834 compared to $944,272 in 2023.

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

Operating Expenses

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.

Total operating expenses in the third quarter 2024 were $1,233,614 compared to $1,009,888 in the third quarter of 2023, an increase of $223,601 or 22%.

The increase is due to increased legal expenses and the addition of several new 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 the original issue discount of $847,193 on the Embolx, Inc.

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

Net other income in 2024 was $17,221 compared to $20,833 in 2023, a decrease of $3,612 or 17%.

The third quarter 2024 other income made up of gains on an interest-bearing savings account along with interest earned on notes receivable.

Net Income (Loss )

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 recorded a net loss in the third quarter of 2024 of $133,679 compared to a net loss of $44,783 for the same period in 2023.

The net loss per share for the third quarter of 2024 was ($0.02) and the net loss for 2023 was ($0.01) per share.

Comparison of the nine months ended September 30, 2024 and 2023

The following discussion compares the Company's results of operations for the nine months ended September 30, 2024, with those for the nine months ended September 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,

Nine months ended September 30,

Client services

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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.

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

Client services revenues decreased $10,512 or 41% to $15,020 in the first three quarters of 2024 compared to $25,532 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.

Shipping coordination and label generation services revenues increased $1,178,736 or 10% to $13,144,624 in the first three quarters of 2024 compared to $11,965,888 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.

This segment has had limited marketing in the first three quarters and has shown a decrease of $2,693 or 5% from $53,007 in 2023 to $50,314 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 profit increased $468,245 or 17% in the first three quarters of 2024 to $3,209,760 compared to $2,741,514 in 2023.

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

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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.

Total operating expenses in the first three quarters of 2024 were $3,472,894 compared to $3,294,028 for the same period of 2023, an increase of $178,866 or 5%.

The increase is primarily due to the new personnel and consultants along with increased legal fees offset by the decrease in share-based compensation for same period of 2023.

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.

The Company recorded a net income in the three quarters of 2024 of $936,335 compared to a net loss of $282,537 for the same period in 2023.

The increase of $1,218,872 in net income is primarily a result of Other Income recorded in the amounts of $1,048,402 for the discount and $141,780 in interest due on the note receivable.

The net income (loss) per share available to common shareholders for the first three quarters of 2024 and 2023 was $0.12 and $(0.04) 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 six months ended June 30, 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 nine months ended September 30, 2024 and 2023 is as follows:

Net income (loss)

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Working Capital and Liquidity

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 Company had cash and cash equivalents of $1,089,520 at September 30, 2024, compared to $2,052,421 at December 31, 2023.

The Company had net working capital of $3,803,179 at September 30, 2024, an improvement of $890,229 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.

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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