What changed in this filing

/stocks — the workspaceLOADING

Item 3. Legal Proceedings

2022-03-31 compared with 2021-03-31 · 52 added, 527 removed, 10 unchanged (98% of the section changed)

Legal Proceedings

time to time we may be a party to various legal proceedings arising

in the ordinary course of our business.

Our management is not aware

of any litigation outstanding, threatened or pending as of the date

hereof by or against us or our properties which we believe would be

material to our financial condition or results of operations,

except with respect to a dispute related to its non-renewal of the

employment agreement with Mr.

Allan Pratt, the Company's former

CEO, in which Mr.

Pratt appears to be treating it as a termination

which would trigger a two-year severance payment.

From time to time we may be a party to various legal proceedings arising in the ordinary course of our business.

Our management is not aware of any litigation outstanding, threatened or pending as of the date hereof by or against us or our properties which we believe would be material to our financial condition or results of operations, except with respect to a dispute related to its non-renewal of the employment agreement with Mr.

Allan Pratt, the Company's former President and CEO, in which Mr.

Pratt appears to be treating it as a termination which would trigger a two-year severance payment. 

Around the same time that Mr.

Pratt’s employment term expired, the Company’s Board of Directors voted to reduce the board from five to three, and Mr.

Pratt and Mr.

Austin Lewis, CFO, automatically rolled off from the Board of Directors.

More than a year later, in 2021, Mr.

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

Mine Safety Disclosure

Item 5.   

Market for Registrant's Common Equity,

Related Stockholder Matters and Issuer Purchases of Equity

common stock, par value $0.001 per share, is presently quoted on

the OTC Pink operated by the OTC Markets Group Inc., on the OTCPINK

under the symbol "PAYD".

following table sets forth the high and low bid information for our

common stock as reported by OTCPINK for the eight quarters ended

December 31, 2019 (retroactively to reflect the reverse stock

The quotations from the OTCPINK reflect inter-dealer prices

without retail mark-up, mark-down, or commission and may not

represent actual transactions.

Not applicable.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock, par value $0.001 per share, is presently quoted on the OTC Pink operated by the OTC Markets Group Inc., on the OTCPINK under the symbol "PAYD".

The following table sets forth the high and low bid information for our common stock as reported by OTCPINK for the eight quarters ended December 31, 2021.

The quotations from the OTCPINK reflect inter-dealer prices without retail mark-up, mark-down, or commission and may not represent actual transactions.

Quarter ended March 31, 2020

$ 3.50  

$ 2.69  

Quarter ended June 30, 2020

$ 3.26  

$ 2.55  

Quarter ended

September 30, 2019

$ 3.55  

$ 2.69  

Quarter ended

December 31, 2019

$ 3.50  

$ 2.52  

Quarter ended September 30, 2020

Quarter ended December 31, 2020

Quarter ended March 31, 2021

$ 2.95  

$ 2.49  

Quarter ended June 30, 2021

$ 3.25  

$ 2.10  

Quarter ended

September 30, 2020

$ 5.45  

$ 2.33  

Quarter ended

December 31, 2020

$ 3.36  

$ 2.02  

As of March 31, 2021, there were approximately 873 holders of

record of our common stock.

Because many of the shares are held by

brokers and other institutions on behalf of stockholders, the

Company is unable to estimate the total number of individual

stockholders represented by these holders of record.

not previously paid cash dividends on our common stock, and intend

to utilize current resources to operate the business;

not anticipated that cash dividends will be paid on our common

stock in the foreseeable future.

Quarter ended September 30, 2021

Quarter ended December 31, 2021

As of March 31, 2022, there were approximately 867 holders of record of our common stock.

Because many of the shares are held by brokers and other institutions on behalf of stockholders, the Company is unable to estimate the total number of individual stockholders represented by these holders of record.

We have not previously paid cash dividends on our common stock, and intend to utilize current resources to operate the business;

thus, it is not anticipated that cash dividends will be paid on our common stock in the foreseeable future.

Exchangeable Shares

Holders of our subsidiary’s exchangeable shares have the same

dividend and distribution rights as holders of Company shares, and

if Company shares are subdivided or in the event of a Company stock

dividend, the exchangeable shares will be equally subdivided, as

exchangeable shares are intended to be economically the same as

shares of common or preferred stock of the Company.

will have a “liquidation call right”

in the event of

proposed liquidation, dissolution or winding up of ShipTime Canada

Absent prior events, the Company will redeem the

exchangeable shares on the fifth anniversary whereby the Company

will redeem the exchangeable shares for shares of the

Company’s preferred stock and common stock. 

agreement, exchangeable shares also may be purchased by ShipTime

Holders of our subsidiary’s exchangeable shares have the same dividend and distribution rights as holders of Company shares, and if Company shares are subdivided or in the event of a Company stock dividend, the exchangeable shares will be equally subdivided, as exchangeable shares are intended to be economically the same as shares of common or preferred stock of the Company.

The Company will have a “liquidation call right”

in the event of proposed liquidation, dissolution or winding up of ShipTime Canada Inc. 

Absent prior events, the Company will redeem the exchangeable shares on the fifth anniversary whereby the Company will redeem the exchangeable shares for shares of the Company’s preferred stock and common stock. 

By agreement, exchangeable shares also may be purchased by ShipTime Canada Inc.

for cancellation. 

The Company also has a right to

call the shares in the event of a change in the applicable

The holders of exchangeable shares have an “automatic

exchange right”

in the event of any bankruptcy or insolvency

or in general, related proceedings, of ShipTime Canada Inc.

Company. 

The exchangeable shares would at such time be

converted automatically into that number of shares of common stock

and preferred stock of the Company at the agreed upon conversion

Moreover, Callco will have an overriding call right to

purchase some or all of the exchangeable shares.

This mechanism

will be triggered with the automatic exchange right and is

necessary to comply with Canadian tax laws.

The exercise of this

call right does not alter the outcome of the exchangeable share

Support Agreement, the Company is required to treat holders of

Exchangeable Shares substantially similar, or economically

equivalent, to holders of Company stock. 

As such, under the

Support Agreement, the Company cannot declare or pay any dividend

or other distribution on Company stock unless ShipTime Inc.

simultaneously declares or pays the dividend or distribution on the

Exchangeable Shares and has sufficient money or other assets to

meet these requirements.

The Company also has a right to call the shares in the event of a change in the applicable laws.

The holders of exchangeable shares have an “automatic exchange right”

in the event of any bankruptcy or insolvency or in general, related proceedings, of ShipTime Canada Inc.

or the Company. 

The exchangeable shares would at such time be converted automatically into that number of shares of common stock and preferred stock of the Company at the agreed upon conversion ratio.

Moreover, Callco will have an overriding call right to purchase some or all of the exchangeable shares.

This mechanism will be triggered with the automatic exchange right and is necessary to comply with Canadian tax laws.

The exercise of this call right does not alter the outcome of the exchangeable share transaction.

Under a Support Agreement, the Company is required to treat holders of Exchangeable Shares substantially similar, or economically equivalent, to holders of Company stock. 

As such, under the Support Agreement, the Company cannot declare or pay any dividend or other distribution on Company stock unless ShipTime Inc.

simultaneously declares or pays the dividend or distribution on the Exchangeable Shares and has sufficient money or other assets to meet these requirements.

In turn, ShipTime Inc.

would effect a

corresponding dividend or distribution of its securities related to

the Exchangeable Shares. 

The Company also undertakes to

advise ShipTime Inc.

of the declaration of dividend or

distribution, among other similar events, and to cooperate with it

to effect the dividend or distribution as of the same record and

effective date.  

The Company is also required in this

case to segregate funds to pay for the dividend, and to reserve

sufficient number of shares to permit the exchange of the

Exchangeable Shares into the required number of Company shares of

common stock and preferred stock. 

The Support Agreement is

also binding on any successor to the Company and with respect to

any successor transaction. 

would effect a corresponding dividend or distribution of its securities related to the Exchangeable Shares. 

The Company also undertakes to advise ShipTime Inc.

of the declaration of dividend or distribution, among other similar events, and to cooperate with it to effect the dividend or distribution as of the same record and effective date.  

The Company is also required in this case to segregate funds to pay for the dividend, and to reserve sufficient number of shares to permit the exchange of the Exchangeable Shares into the required number of Company shares of common stock and preferred stock. 

The Support Agreement is also binding on any successor to the Company and with respect to any successor transaction. 

Equity Compensation Plan Information

Number of Securities

To be Issued Upon Exercise of Outstanding Options, Warrants and

Weighted-Average

Exercise Price of Outstanding Options, Warrants and

Number of Securities

Remaining Available For Future Issuance Under Equity Compensation

Plans (Excluding Securities Reflected

Equity Compensation

Plans Approved by Security Holders

16,000  

$ 23.33  

Equity Compensation

Plans Not Approved by Security Holders

387,790  

$ 3.24  

591,210  

403,790  

$ 3.81  

591,210  

Note 10, Notes to Consolidated Financial Statements for the years

ended December 31, 2020 and 2019 included in Part IV, Item 15, of

this Annual Report, for a discussion of the material features of

the stock options, warrants and related stock plans.

Se l ected Financial

smaller reporting company, the Company is not required to provide

the information for this Item 6.

Manage m ent's Discussion and

Analysis of Financial Condition and Results of

Looking Statements

Annual Report on Form 10-K 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 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

forward-looking statements in this Annual 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.

complete discussion of these risk factors, see Item 1A, "Risk

Factors.”

example, the Company's ability to maintain a 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 sites, 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

ShipTime Inc.

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.

actively sell directly to small businesses and through long

standing partnerships with selected associations throughout

Canada. 

Our focus in 2021 will be to significantly grow this

portion of our business.

(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.

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.

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

The software is designed to integrate with QuickBooks

accounting platforms by using our powerful sync engine.

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

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.

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.

Critical Accounting Policies

significant accounting policies are more fully described in Note 3

to our consolidated financial statements.

However, certain of our

accounting policies are particularly important to the portrayal of

our financial position and results of operations and require the

application of significant judgment by our management;

they are subject to an inherent degree of uncertainty.

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.

Our critical accounting policies

Revenue Recognition

Company generates revenue principally from the sales related to the

label generation services, shipping calculator services, brewery

management software subscriptions, merchant processing services,

and client services.

Company recognizes revenues in accordance with the FASB ASC Topic

Accordingly, the Company recognizes revenues when the transfer

of goods or services to customers at an amount that reflects the

consideration to which the entity expects to be entitled in

exchange for those goods or services.

label generation service revenues the Company recognizes revenue

when a customer has successfully prepared a shipping label and had

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

shipping calculator revenues and brewery management software and

other subscription-based 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

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 consolidated

balance sheets.

Brewery management software subscribers are billed

monthly at the first of the month.

All payments are made via credit

card for the month following.

payment processing services, the Company recognizes revenue based

on daily transactions by our partners and merchants.

process credit card payments for sales and remit fees based on the

number of transactions and percent of the processed amounts.

merchant bank deposits the funds to the customer net of fees.

remainder of the fees withheld is disbursed to the Company on a

daily basis, net of interchange and other transactional

Foreign Currency

The currencies of ShipTime, the Company’s international

subsidiary, are in Canadian dollars.

Foreign currency denominated

assets and liabilities are translated into U.S.

dollars using the

exchange rates in effect at December 31, 2020.

operations and cash flows are translated using the average exchange

rates throughout the period.

The effect of exchange rate

fluctuations on translation of assets and liabilities is included

as a component of shareholders’

equity in accumulated other

comprehensive income.

Long-Lived Assets

Company reviews the carrying values of its long-lived assets for

possible impairment whenever events or changes in circumstances

indicate that the carrying amount may not be recoverable.

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.

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 additional impairment

of long-lived assets in the future.

Share- Based Compensation

Board of Directors has on occasion voted to award stock options or

common shares/preferred shares to employees or directors.

at which the option shares may be purchased is based on the fair

market value of the shares on the date of the agreement.

recipient’s option agreement may differ;

the vesting terms

may vary from fully vested immediately to one-third immediately,

one-third vesting in 18 months and the final one-third vesting in

36 months from the date of the grant or one-third immediately,

one-third vesting on January 1, 2019 and one-third vesting on

January 1, 2020.

Historically the options granted have had a

10-year term.

If the recipient’s employment or relationship

with the Company is terminated the options recipient may be allowed

up to three months to exercise their options.

Option compensation

is calculated by using the

Black-Scholes-Merton option pricing model to estimate the fair

value of these share-based awards.

right-of-use asset represents a lessee’s right to use a

leased asset for the term of the lease.

Our right-of-use assets

generally consist of an operating lease for a building.

Right-of-use assets are measured initially at the present value of

the lease payments, plus any lease payments made before a lease

began and any initial direct costs, such as commissions paid to

obtain a lease.

Right-of-use assets are subsequently measured at

the present value of the remaining lease payments, adjusted for

incentives, prepaid or accrued rent, and any initial direct costs

not yet expensed.

an operating lease for our corporate offices in Canada and finance

leases for furniture and equipment.

Our leases have remaining lease

terms of six months to thirty-two months, and our primary operating

leases include options to extend the leases for four years.

renewal options that are not likely to be executed as of the

balance sheet date are excluded from right-of-use assets and

related lease liabilities.

report operating leased assets, as well as operating lease current

and noncurrent obligations on our balance sheets for the right to

use the building in our business.

Our finance leases represent

furniture and office equipment;

we report the furniture and

equipment, as well as finance lease current and noncurrent

obligations on our balance sheet.

Generally, interest

rates are stated in our leases for equipment.

When no interest rate

is stated in a lease, however, we review the interest rates

implicit in our recent finance leases to estimate our incremental

borrowing rate.

We determine the rate implicit in a lease by using

the most recent finance lease rate, or other method we think most

closely represents our incremental borrowing rate.

Results of Operations

Comparison of the years ended December 31, 2020 and

following discussion compares the Company's results of operations

for the year ended December 31, 2020 with those for the year ended

December 31, 2019.

The Company's consolidated financial

statements and notes thereto included elsewhere in this Annual

Report contain detailed information that should be referred to in

conjunction with the following discussion.

following table compares total revenue for the periods

indicated. 

Years ended December

$ 3,541  

$ 19,395  

Shipping calculator

27,845  

148,035  

Brewery management

114,881  

193,150  

Merchant processing

425,839  

coordination and label generation services

12,348,683  

10,185,704  

$ 12,920,789  

$ 10,548,295  

Revenues increased

22% in 2020 primarily from the continued growth of the shipping

coordination and label generation services and the addition of

merchant processing services to the Company’s revenue

services revenues decreased $15,854 or 82% to $3,541 compared to

$19,395 in 2019.

The decrease was attributable to depleting

inventory of our movie posters available for auction.

Shipping calculator

services revenues decreased $120,190 or 81% to $27,845 compared to

$148,035 in 2019.

The decrease was attributed to discontinuance of

billable services for a portion of the AuctionInc products.

Company is preparing to launch a new platform where the new clients

will be migrated to.

Brewery management software revenues decreased $78,269 or 41% to

$114,881 in 2020 compared to $193,150 in 2019.

The decrease is

attributable to the additional competition in the brewery

management software industry and the limited marketing to new

Merchant processing

services is a new segment for the Company launched in late 2019.

This segment has contributed to the overall growth of the Company

increasing $423,828 to $425,839 in 2020 from $2,011 in 2019.

services also have a higher gross margin and gross profit.

will continue to be a source of growth for the

coordination and label generation service revenues increased

$2,162,979 or 21% to $12,348,683 in 2020 compared to $10,185,704 in

The increase is attributable to the increase in marketing

efforts along with the impact of COVID-19 on the small businesses

and their ability to sell and ship online.

profit increased $364,548 or 13% to $3,111,289 in 2020 compared to

$2,746,741 in 2019.

Gross margin decreased 2 percentage points to

24% in 2020 from 26% in 2019.

The decrease in gross margin was

partially due to the increase in revenue from our shipping label

generation services which are offered at a lower

Operating Expenses

operating expenses in 2020 were $5,242,763 compared to $3,458,774

in 2019, an increase of $1,783,989 or 52%.

The increase is mainly

due to the share-based compensation for 2020.

Other Income/Expense, net

other income in 2020 was $21,128 compared to $991,840 in the same

period of 2019, a decrease of $970,712.

This is primarily

attributable to the gain recorded on the elimination of the stock

price guarantee in 2019.

Net Income (Loss)

Company reported a net loss in 2020 of $(2,232,553) compared to a

net income of $282,011 for the same period in 2019.

The basic loss

per common share in 2020 represents $(0.41) while the basic net

income per common share in 2019 represents $0.06.

Company believes that inflation has not had a material effect on

its results of operations.

Operating Cash Flows

summarized reconciliation of the Company's net income (loss) to

cash provided by operating activities for the years ended December

31, 2020 and 2019 is as follows:

$ (2,232,553 )

$ 282,011  

Provision for bad

20,125  

Depreciation and

488,745  

490,250  

Amortization of

operating lease right-of-use assets

28,545  

22,850  

2,452,701  

407,974  

Other income from

stock price guarantee

Deferred income

Gain on sale of

property and equipment

Unrealized loss on

stock price guarantee

Changes in current

assets and liabilities

464,820  

Net cash provided

by operating activities

$ 1,100,809  

$ 15,533  

Working Capital and Liquidity

Company had cash and cash equivalents of $1,644,210 on December 31,

2020 compared to $475,881 at December 31, 2019.

The Company had

working capital of $218,615 as of December 31, 2020 compared to a

working capital deficit of $397,891 at December 31, 2019, an

improvement of $616,506.

The improvement in working capital is

primarily attributed to the cash on hand at year end.

Management believes

that the Company has adequate cash resources to fund operations

during the next 12 months.

In addition, management continues to

explore opportunities and has organized additional resources to

monetize its patents.

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.

Qu a ntitative and

Qualitative Disclosure about Market Risk

smaller reporting company, the Company is not required to provide

the information for this Item 7A.

Number of Securities To be Issued Upon Exercise of Outstanding Options, Warrants and Rights

Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights

Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected

in Column (a)

Equity Compensation Plans Approved by Security Holders

Equity Compensation Plans Not Approved by Security Holders

See Note 9, Notes to Consolidated Financial Statements for the years ended December 31, 2021 and 2020 included in Part IV, Item 15, of this Annual Report, for a discussion of the material features of the stock options, warrants and related stock plans.

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-K

Item 3. Legal Proceedings