PAID Inc. Releases Q1 2012 and Yearend 2011 Financial Results

WESTBOROUGH, MA--(Marketwire - May 21, 2012) - PAID Inc. (OTCBB: PAYD) shared audited financial results for the year ending December 31, 2011 and the first quarter of 2012 ending March 31, 2012.

Q1 2012 Financial Results
Following are excerpts from the Form 10-Q filing for the first quarter ended March 31, 2012. The complete filing is available at:

Three Months Ended
March 31, 2012 March 31, 2011
Revenues $ 1,280,900 $ 711,300
Cost of revenues 775,400 500,300
Gross profit 505,500 211,000
Operating expenses 1,605,900 1,231,500
Loss from operations (1,100,400 ) (1,020,500 )
Other income (expense):
Interest expense (1,700 ) (400 )
Other income 70,000 --
Total other income (expense), net 68,300 (400 )
Loss before income taxes (1,032,100 ) (1,020,900 )
Provision for income taxes -- --
Net loss $ (1,032,100 ) $ (1,020,900 )
Loss per share - basic $ -- $ --
Weighted average shares - basic and diluted 309,669,694 287,979,151

Results of Operations
Comparison of the three months ended March 31, 2012 and 2011.

The following discussion compares the Company's results of operations for the three months ended March 31, 2012 with those for the three months ended March 31, 2011.

The following table compares total revenue for the periods indicated.

Three Months Ended March 31,
2012 2011 % Change
Merchandising and fulfillment $ 680,500 $ 490,500 39 %
Client services 67,400 55,700 21 %
Touring revenue 533,000 165,100 223 %
Total revenues $ 1,280,900 $ 711,300 80 %

Revenues increased 80% in the first quarter primarily from a 223% increase in touring revenues, a 39% increase in merchandising and fulfillment, and a 21% increase in client services.

Merchandising and fulfillment revenues increased $190,000 or 39% to $680,500 compared to $490,500 in 2011. The increase was attributable to our continued efforts in marketing and social media campaigns, which resulted in reaching new customers. The increase in new customers resulted in double digit revenue increases in a number of the Company's existing clients.

Client services revenues increased $11,700 or 21% to $67,400 compared to $55,700 in 2011. The increase was attributable to the addition of a large consulting project where the Company provided music industry consulting services.

Touring revenues increased $367,900 or 223% to $533,000, compared to $165,100 in 2011. The Company has generated a consistent touring base and revenues are directly impacted by our clients' touring schedules and frequency. In the first quarter of 2012 the Company had several clients on tour which was the primary reason for the increase in revenues as compared to 2011.

Gross Profit
Gross profit increased $294,500 or 140% to $505,500 compared to $211,000 in 2011. Gross margin increased 9.8 percentage points to 39.5% from 29.7% in 2011. The increase was mainly attributable to an increase in merchandising and fulfillment margins due to lower inventory cost and an increase in shipping and handling fees charged.

Operating Expenses
Total operating expenses in 2012 were $1,605,900 compared to $1,231,500 in 2011, an increase of $374,400 or 30%. The increase is due to increases of $40,000 in client expenses related to touring activities and credit card processing costs, $240,700 in payroll and related costs, due to the addition of key personnel, $58,000 in facility and relocation costs associated with the consolidation of our offices, and $35,700 in administrative costs.

Net Loss
The Company realized a net loss in the first quarter of 2012 of $1,032,100 compared to a net loss of $1,020,900 for the same period in 2011. The losses for the first quarter of 2012 and 2011 each represent less than $0.01 per share.

Operating Cash Flows
A summarized reconciliation of the Company's net loss to cash used in operating activities for the three months ended March 31, 2012, and 2011 is as follows:

2012 2011
Net loss $ (1,032,100 ) $ (1,020,900 )
Depreciation and amortization 13,900 7,800
Unrealized gain on investment (127,500 ) --
Share based compensation 90,100 113,000
Change in fair value of stock price guarantee 57,500 --
Intrinsic value of stock options awarded in payment of outside services and compensation

Deferred revenues, net of prepaid royalties 760,100 (93,600 )
Changes in current assets and liabilities (375,300 ) 142,500
Net cash used in operating activities $ (107,800 ) $ (364,600 )

Management's Plan
Management believes that its efforts over the past two years have positioned the Company to take advantage of growth opportunities within the music- and entertainment-related industries. With the consolidation of facilities into the new Westborough location, management believes that the Company will be able to increase productivity and will be able to create efficiencies without having to incur additional overhead to support our client base. In addition, the Company expects to have a direct cash savings in 2012 of approximately $75,000 due to the Company's prior payment of rent in stock as outlined in Note 6. In 2011 the Company invested in infrastructure and new technologies, to enable us to process a higher volume of ecommerce activity, and be able to collect key data on buyers of our products and services. The Company has restructured personnel and has hired top talent to oversee business functions, such as fulfillment operations, client services, and business development. The Company will continue to develop key partnerships to aid in the acquisition of new clients and services.

Management believes that these changes will have a positive impact on revenues and gross profits for 2012, and with the recoupment of prepaid royalties and an increase in inventory turns, the Company should have sufficient resources to generate positive cash flow. In addition, the Company continues to increase its efforts to generate income from its patents.

Although there can be no assurances, the Company believes that the above management plan will be sufficient to meet the Company's working capital requirements through the end of 2012.

Yearend 2011 Financial Results
The complete Form 10-K 2011 annual report is available at

Management Guidance
With these filings, PAID is now current on its financial reporting with the SEC. The "E" which had been appended to the company's ticker has been removed and PAID is trading under the ticker PAYD.

"Over the past five months we have had two auditing firms poring over our books, including three-year audits of 2009, 2010 and 2011. We are pleased to report that there were no material misstatements to our numbers," stated Christopher Culross, PAID Inc. CFO. "Our main mission now is to get back to growing the company and achieving profitability. We're focusing on that 24/7."

PAID has been steadily adding clients and growing revenue in 2012 and is on track for its highest revenue ever in 2012.

"A number of major tours and projects are scheduled to occur in the late second and third quarters of 2012 which are expected to boost revenue, significantly driving PAID to what we anticipate will be the Company's best year financially to date," asserted Culross. "While certain costs will increase with the addition of new clients, we'll be able to accommodate the new business without increasing expenses in other areas. Our goal for 2013 is to get to profitability."

Culross declared, "In addition to devoting more resources to monetizing our patents, in the past nine months, we've added sales, client services and fulfillment staff, resulting in generating more new business and shipping more product now than we have over the past several years combined. With the expected increase in revenue in 2012 and company-wide changes we've put in place to improve productivity, efficiency and control costs, we believe that we will achieve our short-term goal of breaking even on a run-rate basis and be well on our way to our 2013 goal of profitability."

Rich Rotman, Chief Operating Officer of PAID, Inc. noted, "Our fulfillment operations are light years ahead of where they were six months ago thanks to the new consolidated office. We now have a lot more capacity and, with the key personnel added over the past nine months, we are doing more business, faster, and have the capacity to accommodate significantly more, larger, higher-margin clients with the existing staff and resources. The economies of scale are starting to kick in and we expect this will have a positive impact on our bottom line in 2012."

About PAID Inc.:
PAID Inc. is a one-stop brand management and marketing resource to music, entertainment and sports personalities and organizations, and offers AuctionInc™ online shipping calculation and shopping cart software employing its patented technology to streamline ecommerce. Known for quality and customer service, PAID offers turnkey online, mobile, social media and traditional marketing campaigns, as well as award-winning video & film production, VIP ticketing, web site design, merchandising, ecommerce and fan community management programs. More details are available at

Safe Harbor statement under the Private Securities Litigation Reform Act of 1995:
Statements in this news release looking forward in time involve risks and uncertainties, including the risks associated with the effect of changing economic conditions, trends in the markets, variations in the company's cash flow, competition, celebrity programs, business development efforts, technology availability and cost of materials and other risk factors. Factors that could cause actual results to differ materially are discussed in the Company's most recent filings with the Securities and Exchange Commission.

Contact Information:

For PAID Inc.:
Julie Shepherd
Accentuate PR