DELAWARE
|
73-1479833
|
(State or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer
|
o
|
Accelerated Filer
|
o
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
þ
|
PART I
|
PAGE | ||
1 | |||
4 | |||
11 | |||
11 | |||
11 | |||
11 | |||
PART II
|
|||
12 | |||
13 | |||
13 | |||
18 | |||
18 | |||
18 | |||
18
|
|||
23 | |||
PART III
|
|||
23 | |||
25 | |||
27 | |||
27 | |||
28 | |||
PART IV
|
|||
29 | |||
30 | |||
53 |
|
•
|
our ability to anticipate and adapt to a developing market;
|
|
•
|
our ability to market, license and enforce our shipping calculator; and
|
|
•
|
development of equal or superior Internet portals, shipping calculators and related services by competitors.
|
|
•
|
our ability to significantly increase our customer base and traffic to our websites, maintain gross margins, and maintain customer satisfaction;
|
|
•
|
our ability to market and sell our software products;
|
|
•
|
consumer confidence in encrypted transactions in the Internet environment;
|
|
•
|
the announcement or introduction of new types of services or products by our competitors;
|
|
•
|
technical difficulties with respect to customer use of our technologies;
|
|
•
|
governmental regulation by federal or local governments; and
|
|
•
|
general economic conditions and economic conditions specific to the Internet and e-commerce.
|
|
•
|
the need to manage relationships with various technology licensors, advertisers, other websites and services, Internet service providers and other third parties; and
|
|
•
|
pressures for the continued development of our core of software products.
|
|
•
|
web advertising, marketing, and social media;
|
|
•
|
traditional media advertising campaigns; and
|
|
•
|
providing a high quality user experience.
|
|
•
|
we will be able to accurately project the rate or timing of increases if any, in the use of our services;
|
|
•
|
we will be able to expand and upgrade on a timely basis our systems and infrastructure to accommodate increases in the use of these services;
|
|
•
|
we will have uninterrupted access to the Internet;
|
|
•
|
we or our suppliers' network will be able to timely achieve or maintain a sufficiently high capacity of data transmission, especially if the customer usage of the services increases.
|
|
•
|
the content and publication of various materials based on defamation, libel, negligence, personal injury and other legal theories;
|
|
•
|
copyright, trademark or patent infringement and wrongful action due to the actions of third parties; and
|
|
•
|
other theories based on the nature and content of online materials made available through our websites.
|
|
•
|
actual or anticipated variations in our results of operations;
|
|
•
|
announcements of new products, services or technological innovations by our competitors;
|
|
•
|
developments with respect to patents, copyrights or proprietary rights;
|
|
•
|
short selling our common stock and stock price manipulation;
|
|
•
|
developments in Internet regulation; and
|
|
•
|
general conditions and trends in the Internet and e-commerce industries.
|
2014
|
High
|
Low
|
||||||
Quarter ended March 31, 2014
|
$ | 13.00 | $ | 7.50 | ||||
Quarter ended June 30, 2014
|
$ | 8.00 | $ | 4.00 | ||||
Quarter ended September 30, 2014
|
$ | 5.00 | $ | 3.50 | ||||
Quarter ended December 31, 2014
|
$ | 3.50 | $ | 2.00 | ||||
2015
|
High
|
Low
|
||||||
Quarter ended March 31, 2015
|
$ | 4.15 | $ | 2.50 | ||||
Quarter ended June 30, 2015
|
$ | 3.05 | $ | 2.40 | ||||
Quarter ended September 30, 2015
|
$ | 2.60 | $ | 0.20 | ||||
Quarter ended December 31, 2015
|
$ | 0.28 | $ | 0.12 |
Number of Securities To be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)
|
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)
|
Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))(c)
|
||||||||||
Equity Compensation Plans Approved by Security Holders
|
160,000 | 1.94 | - | |||||||||
Equity Compensation Plans Not Approved by Security Holders
|
360,000 | 5.37 | - | |||||||||
Total
|
520,000 | 7.31 | - |
Years ended December 31,
|
||||||||||||
2015
|
2014
|
% Change
|
||||||||||
Merchandise and fulfillment
|
$
|
27,875
|
$
|
118,631
|
(77)
|
%
|
||||||
Client services
|
517
|
6,674
|
(92)
|
%
|
||||||||
Shipping calculator services
|
163,690
|
149,246
|
10
|
%
|
||||||||
Brewery management software
|
80,838
|
-
|
100
|
%
|
||||||||
Touring revenue
|
-
|
522,205
|
(100)
|
%
|
||||||||
Total revenues
|
$
|
272,920
|
$
|
796,756
|
(66)
|
%
|
Years ended December 31,
|
||||||||||||
2014
|
2013
|
% Change
|
||||||||||
Merchandising and fulfillment
|
$
|
118,631
|
$
|
953,638
|
(88)
|
%
|
||||||
Client services
|
6,674
|
84,496
|
(92)
|
%
|
||||||||
Shipping calculator services
|
149,246
|
162,894
|
(8)
|
%
|
||||||||
Touring revenue
|
522,205
|
3,151,540
|
(83)
|
%
|
||||||||
Total revenues
|
$
|
796,756
|
$
|
4,352,568
|
(82)
|
%
|
2015
|
2014
|
|||||||
Net loss
|
$
|
(1,309,497
|
)
|
$
|
(1,665,770
|
)
|
||
Depreciation and amortization
|
34,520
|
26,067
|
||||||
Realized loss on investments in available-for-sale securities
|
-
|
79,983
|
||||||
Write down of other receivables
|
115,913
|
334,719
|
||||||
Provision for bad debt
|
2,137
|
29,612
|
||||||
Write down of advanced royalties
|
77,905
|
136,246
|
||||||
Gain on settlement of liabilities
|
-
|
(34,759
|
)
|
|||||
Share-based compensation
|
181,365
|
247,807
|
||||||
Unrealized loss on stock price guarantee
|
358,850
|
554,732
|
||||||
Out-of-period adjustment
|
-
|
(321,601
|
) | |||||
Changes in current assets and liabilities
|
(39,402
|
) |
115,652
|
|||||
Net cash used in operating activities
|
$
|
(578,209
|
)
|
$
|
(497,312
|
)
|
|
1.
|
Entity Level Controls
|
|
◦
|
Ineffective control environment, including lack of corporate governance
|
|
◦
|
Ineffective communication of information
|
|
◦
|
Ineffective monitoring of activities
|
|
2.
|
Activity Level Controls
|
|
◦
|
Lack of procedures and control documentation
|
|
◦
|
Lack of segregation of duties
|
|
◦
|
Lack of information technology controls and documentation.
|
|
1.
|
Inadequate Entity Level Controls
|
|
•
|
The Company has strengthened its hiring and employment practices by completing in-depth screenings of new personnel, and has initiated formal employee review procedures.
|
|
•
|
Management has direct oversight and responsibility for independent contractors and consultants. All independent contractors and consultants are required to follow strict corporate policies relating to confidential information, and non-disclosure of corporate and client data. Management sets project goals and objectives for each independent contractor and consultant and measures the performance of each on a regular basis.
|
|
•
|
Management and the Board formally meet to discuss our filings and the discussions are being documented for future reference. During these discussions, our auditors, and legal counsel may present to the Company various information which may be of material importance to our financial reporting and internal controls.
|
|
•
|
The Company has made improvements by designing and drafting a corporate governance policy which has been approved by the Board of Directors, which documents the role of the Board and management, functions of the Board, role of the Audit Committee, agenda items for Board meetings, recoupment of unearned compensation, indemnification, reporting of concerns and complaints, and director access to management.
|
|
•
|
Enhanced the documentation and procedures of our information technology to control assurance that changes to financial applications are properly authorized and tested and that access to our information systems and financial applications are appropriately restricted.
|
|
•
|
Updated our information systems user profiles to improve access controls.
|
|
•
|
Implemented improvements to our information systems to further address control deficiencies.
|
|
•
|
Updated secure backup procedures with best practice methodologies for protecting our financial data and, in case of a problem.
|
|
•
|
Enhanced the documentation of certain core proprietary technologies so that there is more redundancy and protection of corporate assets.
|
|
•
|
The Company has reorganized the organizational reporting structure to enable greater oversight and control of operations which has increased the level of awareness and accountability.
|
|
•
|
The Company meets regularly throughout the year to review operating results, policies and procedures, and employee reviews and practices.
|
|
•
|
New management personnel are required to review their procedures and policies to make sure they are effective. The Company is evaluating the procedure and polices that have material weakness and developing corrective action plans to strengthen our internal controls.
|
|
•
|
The Company has made changes to its policies and procedures with regard to its financial reporting systems. Upgrades to software systems have been made which has resulted in the automation of accounting transactions and has enhanced our financial reporting and timeliness of operating results. Management and staff are more integrated into the review process.
|
|
•
|
Finance staff are required to review expenses for proper approval and accounting treatment. Managers and staff are required to have expenditures pre-approved by their supervisor. All significant expenditures require multiple approvals including Company officers.
|
|
•
|
In 2015 the Company upgraded its transactional processing systems which resulted in the automation of several manual accounting tasks. This automation eliminated the risk of human error for these manual tasks and created a more concise audit trail in the revenue recognition process.
|
|
•
|
All web sales are reconciled across the Company's multiple revenue and accounting systems comparing for any discrepancies.
|
|
•
|
Expenses are reviewed as incurred for proper accounting treatment and approval.
|
|
•
|
The Vendor Master File is reviewed for updates and changes and any changes are analyzed and monitored for their activity and frequency.
|
|
•
|
The Company has moved all accounting functions in-house from a third party certified accounting firm.
|
|
•
|
The Company closes its books and reconciles all accounts monthly, and provides management with a quarterly comprehensive set of financial and operating reports and analysis of results.
|
|
•
|
The Company has changed processes and procedures, and has made upgrades to its management system to better align duties and responsibilities so that there is a greater segregation of duties.
|
|
•
|
Transactional processing requires review and approval from an independent staff member or manager. Manual tasks are required to follow written or verbal procedures that have been approved by the Company.
|
|
•
|
The Company implemented project management software, which was designed to increase efficiencies and reduce overhead. The software also identifies deliverables, which may be dependent on other deliverables enabling the project managers to redirect duties to other individuals. This software assists the Company with reducing its dependency on any one particular employee with multiple responsibilities, thus preventing a bottleneck and risk of too much control on any one individual.
|
|
•
|
Enhanced the documentation and procedures of our information technology to control assurance that changes to financial applications are properly authorized and tested and that access to our information systems and financial applications are appropriately restricted.
|
|
•
|
Updated our information systems user profiles to improve access controls.
|
|
•
|
Implemented improvements to our information systems to further address control deficiencies.
|
|
•
|
Updated secure backup procedures with best practice methodologies for protecting our financial data and, in case of a problem, continuously testing restoration from backup tapes.
|
|
•
|
Enhanced the documentation of certain core proprietary technologies so that there is more redundancy and protection of corporate assets.
|
W. Austin Lewis, IV
|
40
|
President, CEO, CFO and Director
|
||
Andrew Pilaro
|
46
|
Director
|
||
Terry Fokas
|
51
|
Director
|
The Audit Committee |
Andrew Pilaro |
Summary Compensation Table | ||||||||||||||||||||
Name and Principal Position`
|
Year
|
Salary
|
Bonus
|
Option Awards ($)
|
||||||||||||||||
W. Austin Lewis, IV (1),(2)
|
2015
|
$ | 181,152 | $ | 0 | $ | 0 | $ | 181,152 | |||||||||||
(CEO)(CFO) |
2014
|
$ | 248,516 | $ | 0 | $ | 108,000 | $ | 356,516 |
|
1.
|
Mr. Lewis’s start date was July 31, 2012.
|
|
2.
|
Mr. Lewis’s salary was approved by the Board of Directors at $180,000.
|
Option Awards
|
|||||||||||||||||
Name
|
Number of Securities Underlying Unexercised Options (#) Exercisable
|
Number of Securities Underlying Unexercised Options (#) Unexercisable
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
|
Option Exercise Price ($)
|
Option Expiration Date
|
||||||||||||
W. Austin Lewis, IV President and CEO (PEO)(PFO)
|
100,000 | - | - | $ | 0.150 |
8/8/2022
|
|||||||||||
100,000 | - | - | $ | 0.150 |
10/15/2022
|
||||||||||||
20,000 | - | - | $ | 0.150 |
12/6/2022
|
||||||||||||
20,000 | - | - | $ | 0.150 |
5/16/2023
|
||||||||||||
40,000 | - | - | $ | 0.150 |
11/18/2024
|
Director Compensation in 2015
|
||||||||||||
Name and
|
Fees earned or paid in cash
|
Option Awards ($)
|
Total
|
|||||||||
Andrew Pilaro
|
$ | - | $ | 0 | $ | 0 | ||||||
Terry Fokas
|
$ | - | $ | 0 | $ | 0 |
Name of Beneficial Owner
|
Amount and Nature of Beneficial Ownership
|
Percent of Class (4)
|
|||||||
W. Austin Lewis, IV
|
2,601,566 | (1 | ) | 23.69 | % | ||||
Andrew Pilaro
|
110,000 | (2 | ) | 1.00 | % | ||||
Terry Fokas
|
40,000 | (3 | ) | 0.36 | % | ||||
All directors and executive officers as a group (3 individuals)
|
2,751,566 | 25.04 | % |
|
(1)
|
Included are options to purchase 280,000 shares of the Company’s common stock and 470,999 shares held for the following funds for which W. Austin Lewis, IV is the General Partner.
|
|
(2)
|
Includes options to purchase 90,000 shares of the Company's common stock.
|
|
(3)
|
Included are options to purchase 40,000 vested shares of the Company’s common stock.
|
|
(4)
|
Percentages are calculated on the basis of the amount of outstanding securities plus for such person or group, any securities that person or group has the right to acquire within 60 days.
|
2015
|
2014
|
|||||||
Audit Fees:
|
||||||||
Consists of fees billed for professional services rendered for the audit of the Company’s annual financial statements and the review of the interim financial statements included in the Company’s Quarterly Reports (together, the “Financial Statements” ) and for services normally provided in connection with statutory and regulatory filings or engagements
|
$
|
33,000
|
$
|
36,300
|
||||
Other Fees:
|
||||||||
Audit-Related Fees
|
||||||||
Consists of fees billed for assurance and related services reasonably related to the performance of the annual audit or review of the Financial Statements (defined above)
|
—
|
—
|
||||||
Tax Fees
|
||||||||
Consists of fees billed for tax compliance, tax advice and tax planning
|
3,650
|
8,911
|
||||||
All Other Fees
|
||||||||
Consists of fees billed for other products and services not described above
|
-
|
—
|
||||||
Total All Fees
|
$
|
36,650
|
$
|
45,211
|
PAID, INC.
|
|||
By:
|
/s/ W. Austin Lewis, IV
|
||
W. Austin Lewis, IV, President, CEO and Chief Financial Officer (CEO and CFO)
|
|||
Date:
|
March 30, 2016
|
Signature
|
Title
|
Date
|
||
/s/ Andrew Pilaro
|
Director
|
March 30, 2016
|
||
Andrew Pilaro
|
||||
/s/ Terry Fokas
|
Director
|
March 30, 2016
|
||
Terry Fokas
|
/s/ W. Austin Lewis, IV
|
Director
|
March 30, 2016
|
||
W. Austin Lewis, IV
|
32
|
|
33
|
|
34
|
|
35
|
|
36
|
|
37
|
|
PAID, INC.
|
||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||
AS OF DECEMBER 31,
|
||||||||
2015
|
2014
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 123,913 | $ | 651,318 | ||||
Accounts receivable, net
|
26,696 | 91,574 | ||||||
Other receivables, net
|
- | 120,338 | ||||||
Inventories
|
- | 1,305 | ||||||
Prepaid expenses and other current assets
|
57,394 | 42,567 | ||||||
Advanced royalties, net
|
5,000 | 82,905 | ||||||
Total current assets
|
213,003 | 990,007 | ||||||
Property and equipment, net
|
8,833 | 18,489 | ||||||
Intangible assets, net
|
276,878 | 4,242 | ||||||
Deposits and other assets
|
- | 23,387 | ||||||
Total assets
|
$ | 498,714 | $ | 1,036,125 | ||||
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 95,441 | $ | 215,707 | ||||
Note payable
|
24,202 | - | ||||||
Capital leases - current portion
|
3,097 | 15,223 | ||||||
Accrued expenses
|
1,001,359 | 674,019 | ||||||
Deferred revenues
|
6,768 | 7,102 | ||||||
Total current liabilities
|
1,130,867 | 912,051 | ||||||
Long term liabilities:
|
||||||||
Capital leases - net of current portion
|
- | 3,095 | ||||||
Total liabilities
|
1,130,867 | 915,146 | ||||||
Commitments and contingencies
|
||||||||
Shareholders' (deficit) equity:
|
||||||||
Common stock, $0.001 par value, 11,000,000
|
||||||||
shares authorized; 8,932,466 and 6,787,323 shares issued
|
||||||||
and outstanding at December 31, 2015 and 2014, respectively
|
8,932 | 6,787 | ||||||
Common stock subscribed but not issued
|
- | 25,000 | ||||||
Additional paid-in capital
|
54,418,160 | 53,838,940 | ||||||
Accumulated deficit
|
(55,059,245 | ) | (53,749,748 | ) | ||||
Total shareholders' (deficit) equity
|
(632,153 | ) | 120,979 | |||||
Total liabilities and shareholders' (deficit) equity
|
$ | 498,714 | $ | 1,036,125 | ||||
See accompanying notes to consolidated financial statements
|
2015
|
2014
|
|||||||
Revenues, net
|
$ | 272,920 | $ | 796,756 | ||||
Cost of revenues
|
39,504 | 503,238 | ||||||
Gross profit
|
233,416 | 293,518 | ||||||
Operating expenses
|
1,067,216 | 1,431,829 | ||||||
Loss from operations
|
(833,800 | ) | (1,138,311 | ) | ||||
Other income (expense):
|
||||||||
Interest income (expense), net
|
(946 | ) | 1,065 | |||||
Other income, net
|
987 | 408,581 | ||||||
Realized loss on investments in available-for-sale securities
|
- | (79,983 | ) | |||||
Write down of other receivables
|
(115,913 | ) | (334,719 | ) | ||||
Gain on settlement of liabilities
|
- | 34,759 | ||||||
Unrealized loss on stock price guarantee
|
(358,850 | ) | (554,732 | ) | ||||
Total other (expense), net
|
(474,722 | ) | (525,029 | ) | ||||
Loss before provision for income taxes
|
(1,308,522 | ) | (1,663,340 | ) | ||||
Provision for income taxes
|
975 | 2,430 | ||||||
Net loss
|
$ | (1,309,497 | ) | $ | (1,665,770 | ) | ||
Loss per share - basic and diluted
|
$ | (0.18 | ) | $ | (0.25 | ) | ||
Weighted average number of common shares outstanding - basic and diluted
|
7,192,919 | 6,607,441 |
Common stock
|
Common Stock
Subscribed
|
Accumulated
Other
|
|
|||||||||||||||||||||||||
Shares
|
Amount
|
But Not Issued
|
Additional
Paid-in Capital
|
Comprehensive Loss
|
Accumulated Deficit
|
Total
|
||||||||||||||||||||||
Balance, January 1, 2014
|
6,577,323 | $ | 6,577 | $ | - | $ | 53,066,343 | $ | (131,536 | ) | $ | (52,083,978 | ) | $ | 857,406 | |||||||||||||
Sale of common stock
|
210,000 | 210 | - | 524,790 | - | - | 525,000 | |||||||||||||||||||||
Common stock subscribed but not issued
|
- | - | 25,000 | - | - | - | 25,000 | |||||||||||||||||||||
Recognition of loss on investments in available-for-sale securities
|
- | - | - | - | 131,536 | - | 131,536 | |||||||||||||||||||||
Share-based compensation expense
|
- | - | - | 247,807 | - | - | 247,807 | |||||||||||||||||||||
Net loss
|
- | - | - | - | - | (1,665,770 | ) | (1,665,770 | ) | |||||||||||||||||||
Balance, December 31, 2014
|
6,787,323 | 6,787 | 25,000 | 53,838,940 | - | (53,749,748 | ) | 120,979 | ||||||||||||||||||||
Sale of common stock
|
2,135,143 | 2,135 | - | 372,865 | - | - | 375,000 | |||||||||||||||||||||
Issuance of common stock subscribed
|
10,000 | 10 | (25,000 | ) | 24,990 | - | - | - | ||||||||||||||||||||
Share-based compensation expense
|
- | - | - | 181,365 | - | - | 181,365 | |||||||||||||||||||||
Net loss
|
- | - | - | - | - | (1,309,497 | ) | (1,309,497 | ) | |||||||||||||||||||
Balance, December 31, 2015
|
8,932,466 | $ | 8,932 | $ | - | $ | 54,418,160 | $ | - | $ | (55,059,245 | ) | $ | (632,153 | ) |
PAID, INC.
|
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
FOR THE YEARS ENDED DECEMBER 31,
|
||||||||
2015
|
2014
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$ | (1,309,497 | ) | $ | (1,665,770 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
34,520 | 26,067 | ||||||
Realized loss on investments in available-for-sale securities
|
- | 79,983 | ||||||
Provision for bad debt
|
2,137 | 29,612 | ||||||
Write down of other receivables
|
115,913 | 334,719 | ||||||
Write down of advanced royalties
|
77,905 | 136,246 | ||||||
Share-based compensation
|
181,365 | 247,807 | ||||||
Unrealized loss on stock price guarantee
|
358,850 | 554,732 | ||||||
Gain on settlement of liabilities
|
- | (34,759 | ) | |||||
Out-of-period adjustment
|
- | (321,601 | ) | |||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable
|
62,741 | 219,477 | ||||||
Other receivables
|
4,425 | 214,758 | ||||||
Inventories
|
1,305 | - | ||||||
Prepaid expenses and other current assets
|
20,850 | (1,387 | ) | |||||
Advanced royalties
|
- | (4,624 | ) | |||||
Deposits and other assets
|
23,387 | (23,387 | ) | |||||
Accounts payable
|
(120,266 | ) | (284,613 | ) | ||||
Accrued expenses
|
(31,510 | ) | 1,940 | |||||
Deferred revenues
|
(334 | ) | (6,512 | ) | ||||
Net cash used in operating activities
|
(578,209 | ) | (497,312 | ) | ||||
Cash flows from investing activities:
|
||||||||
Purchase of intangible assets
|
(297,500 | ) | - | |||||
Proceeds from sale of investments in available-for-sale securities
|
- | 157,650 | ||||||
Net cash (used in) provided by investing activities
|
(297,500 | ) | 157,650 | |||||
Cash flows from financing activities:
|
||||||||
Payments on capital leases
|
(15,221 | ) | (22,305 | ) | ||||
Payments on note payable
|
(11,475 | ) | - | |||||
Proceeds from issuance of common stock
|
375,000 | 525,000 | ||||||
Common stock subscribed but not issued
|
- | 25,000 | ||||||
Net cash provided by financing activities
|
348,304 | 527,695 | ||||||
Net change in cash and cash equivalents
|
(527,405 | ) | 188,033 | |||||
Cash and cash equivalents, beginning of year
|
651,318 | 463,285 | ||||||
Cash and cash equivalents, end of year
|
$ | 123,913 | $ | 651,318 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
Income taxes
|
$ | 975 | $ | 3,971 | ||||
Interest
|
$ | 634 | $ | 1,066 | ||||
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
|
||||||||
Issuance of previously subscribed common stock
|
$ | 25,000 | $ | - | ||||
Debt financing of directors & officers insurance
|
$ | 35,677 | $ | - |
|
a.
|
Entertainment services,
|
|
b.
|
Shipping calculator services, and
|
|
c.
|
Brewery management software.
|
2015
|
2014
|
|||||||
Computer equipment and software
|
$ | 125,830 | $ | 125,830 | ||||
Office furniture and equipment
|
19,580 | 19,580 | ||||||
Website development costs
|
314,190 | 314,190 | ||||||
459,600 | 459,600 | |||||||
Accumulated depreciation
|
(450,767 | ) | (441,111 | ) | ||||
$ | 8,833 | $ | 18,489 |
2015
|
2014
|
|||||||
Patents
|
$ | 16,000 | $ | 16,000 | ||||
Software
|
83,750 | - | ||||||
Client list
|
213,750 | - | ||||||
Accumulated amortization
|
(36,622 | ) | (11,758 | ) | ||||
$ | 276,878 | $ | 4,242 |
2015
|
2014
|
|||||
Payroll and related costs
|
$
|
3,686
|
$
|
2,019
|
||
Royalties
|
51,838
|
80,572
|
||||
Stock price guarantee (see Note 8)
|
913,582
|
554,732
|
||||
Other
|
32,253
|
36,696
|
||||
Total
|
$
|
1,001,359
|
$
|
674,019
|
2015
|
2014
|
|||||||
Property and equipment
|
$ | 83,000 | $ | 83,000 | ||||
Accumulated depreciation
|
(83,000 | ) | (77,500 | ) | ||||
$ | - | $ | 5,500 |
Year Ended December 31,
|
||||
2016
|
3,141 | |||
Less amount representing interest
|
(44 | ) | ||
Present value of net minimum lease payments
|
3,097 | |||
Less current portion
|
(3,097 | ) | ||
$ | - |
2016
|
$ | 13,000 |
Number of shares
|
Weighted average exercise price per share
|
||||
Options outstanding at January 1, 2014
|
180,000
|
$
|
2.70
|
||
Granted
|
120,000
|
$
|
2.70
|
||
Cancelled
|
—
|
$
|
—
|
||
Exercised
|
—
|
$
|
—
|
|
|
Options outstanding at December 31, 2014
|
300,000
|
$
|
5.10
|
||
Granted
|
---
|
$
|
—
|
||
Cancelled
|
—
|
$ |
—
|
||
Exercised
|
—
|
$ |
—
|
||
Options outstanding at December 31, 2015
|
300,000
|
$
|
0.28
|
Number of shares
|
Weighted average exercise price per share
|
|||||||
Options outstanding at January 1, 2014
|
45,000 | $ | 5.75 | |||||
Granted
|
15,000 | $ | 2.70 | |||||
Cancelled
|
$ | - | ||||||
Exercised
|
- | $ | - | |||||
Options outstanding at December 31, 2014
|
60,000 | $ | 6.05 | |||||
Granted
|
- | $ | - | |||||
Cancelled
|
- | $ | - | |||||
Exercised
|
- | $ | - | |||||
Options outstanding at December 31, 2015
|
60,000 | $ | 3.58 |
Number of shares
|
Weighted average exercise price per share
|
|||||||
Options outstanding at January 1, 2014
|
160,000 | $ | 4.75 | |||||
Granted
|
- | $ | - | |||||
Cancelled or Expired
|
- | $ | - | |||||
Exercised
|
- | $ | - | |||||
Options outstanding at December 31, 2014
|
160,000 | $ | 4.75 | |||||
Granted
|
- | $ | - | |||||
Cancelled or Expired
|
- | $ | - | |||||
Exercised
|
- | $ | - | |||||
Options outstanding at December 31, 2015
|
160,000 | $ | 2.37 |
2014
|
|||
Expected term (based upon historical experience)
|
5-6 years
|
||
Expected volatility
|
130.50
|
%
|
|
Expected dividends
|
None
|
||
Risk free interest rate
|
1.0%-2.0%
|
Options Outstanding
|
Options Exercisable
|
|||||||||||||||||
Exercise Prices
|
Number of Shares
|
Weighted Average Remaining Contractual Life (In Years)
|
Number of Shares
|
Weighted Average Remaining Contractual Life (In Years)
|
||||||||||||||
$ | 0.15 | 435,000 | 6.22 | 425,017 | 6.37 | |||||||||||||
$ | 2.70 | 10,000 | 0.17 | 3,333 | 0.06 | |||||||||||||
$ | 4.60 | 15,000 | 0.21 | 10,000 | 0.15 | |||||||||||||
$ | 7.25 | 50,000 | 0.56 | 50,000 | 0.59 | |||||||||||||
$ | 8.00 | 10,000 | 0.15 | 6,700 | 0.11 | |||||||||||||
520,000 | 7.31 | 495,050 | 7.28 |
Number of Shares
|
Weighted Average Price
|
Weighted Average Remaining Contractual Life (In Years)
|
Aggregate Intrinsic Value
|
|||||||||||||
Options outstanding at January 1, 2014
|
385,000 | $ | 3.90 | |||||||||||||
Granted
|
135,000 | $ | 2.70 | |||||||||||||
Options exercisable at December 31, 2014
|
520,000 | $ | 3.60 | |||||||||||||
Granted
|
- | $ | - | |||||||||||||
Options outstanding and expected to vest at December 31, 2015
|
520,000 | $ | 1.16 | $ | 7.31 | $ | - | |||||||||
Options exercisable at December 31, 2015
|
495,050 | $ | 1.08 | $ | 7.28 | $ | - |
Number of Shares Subject to Warrants Outstanding
|
Weighted Average Exercise Price Price
|
|||||||
Warrants outstanding - January 1, 2015
|
- | $ | - | |||||
Granted
|
2,057,143 | 0.09 | ||||||
Exercised
|
- | |||||||
Expired
|
- | $ | - | |||||
Warrants outstanding and exercisable - December 31, 2015
|
2,057,143 | 0.09 | ||||||
Weighted average remaining contractual life of the outstanding warrants in years
|
4.85 |
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Current:
|
||||||||
Federal
|
$ | - | $ | - | ||||
State
|
975 | 2,430 | ||||||
Total current
|
975 | 2,430 | ||||||
Deferred:
|
||||||||
Federal
|
571,125 | (846,000 | ) | |||||
State
|
(372,409 | ) | (424,000 | ) | ||||
Change in valuation allowance
|
(198,716 | ) | 1,270,000 | |||||
Total deferred
|
- | - | ||||||
Income tax provision (benefit)
|
$ | 975 | $ | 2,430 |
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
U.S. federal statutory tax rate
|
34.00 | % | 34.00 | % | ||||
State tax benefit, net
|
(0.02 | )% | (0.04 | )% | ||||
Gain on stock price guarantee | - | - | ||||||
Other | (0.02 | )% | (0.24 | )% | ||||
Valuation allowance
|
(33.99 | )% | (33.92 | )% | ||||
Effective income tax rate
|
(0.03 | )% | (0.20 | )% |
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Deferred tax assets:
|
||||||||
NOL's
|
$ | 16,247,000 | $ | 16,311,000 | ||||
State taxes
|
(308,800 | ) | (435,000 | ) | ||||
Inventory and other reserves
|
42,800 | 194,000 | ||||||
Depreciation and amortization
|
6,600 | 1,000 | ||||||
Change in value of stock
|
435,100 | 238,000 | ||||||
NQ stock option expense
|
736,700 | 674,000 | ||||||
Total deferred tax assets
|
17,159,400 | 16,983,000 | ||||||
Valuation allowance
|
(17,159,400 | ) | (16,983,000 | ) | ||||
Net deferred tax assets
|
$ | - | $ | - |
Year Ended
|
||||||||
December 31, 2015
|
December 31, 2014
|
|||||||
Entertainment services
|
$ | 28,392 | $ | 647,509 | ||||
Brewery management software
|
80,838 | - | ||||||
Shipping calculator services
|
163,690 | 149,246 | ||||||
Total revenues
|
272,920 | 796,756 |
Year Ended
|
||||||||
December 31, 2015
|
December 31, 2014
|
|||||||
Entertainment services
|
$ | 20,432 | $ | (344,974 | ) | |||
Brewery management software
|
13,844 | - | ||||||
Shipping calculator services
|
(868,076 | ) | (793,337 | ) | ||||
Total income (loss) from operations
|
(833,800 | ) | (1,138,311 | ) |
No.
|
Description of Exhibits
|
|||||
3.1
|
Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to Form 8-K, filed on November 25, 2003)
|
|||||
3.2
|
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K, filed on December 8, 2004)
|
|||||
4.1
|
Specimen of certificate for Common Stock (incorporated by reference to Exhibit 4.1 to Form SB-2/A filed on December 1, 2000)
|
|||||
4.2
|
Agreement dated November 21, 2008, by and between the Company and Lewis Asset Management Equity Fund, LLP with respect to the purchase of 2,500,000 shares at $.20 per share (incorporated by reference to Exhibit 4.2 to Form 10-KSB filed on March 31, 2009)
|
|||||
4.3
|
Form of Warrant to Lewis Asset Management with respect to Promissory Note dated April 29, 2009 (incorporated by reference to Exhibit 4.2 to Form 10-Q filed on May 12, 2009)
|
|||||
10.1+
|
2001 Non-Qualified Stock Option Plan, as amended (incorporated by reference from Exhibit 99.1 to Form S-8 filed on September 5, 2003)
|
|||||
10.2+
|
2002 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 10.17 to Form 10-KSB filed on March 31, 2003)
|
|||||
10.3+
|
2011 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 99.1 to Form S-8 filed on February 2, 2011)
|
|||||
10.4
|
Promissory Note dated April 29, 2009 for up to $2,500,000 to Lewis Asset Management (incorporated by reference to Exhibit 10.2 to Form 10-Q filed on May 12, 2009)
|
|||||
10.5
|
Lease agreement, dated December 7, 2011 between Forty Washington, LLC and the Company
(incorporated by reference to Exhibit 10.1 to Form 8-K/A filed on December 13, 2011)
|
|||||
10.6+
|
PAID, Inc. 2012 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on October 18, 2012)
|
|||||
10.7+
|
Agreement for Non-Qualified Stock Option under the PAID, Inc. 2012 Non-Qualified Stock Option Plan awarded to W. Austin Lewis, IV, dated October 15, 2012 (incorporated by reference to Exhibit 10.2 to Form 10-Q filed on October 18, 2012)
|
|||||
10.8+
|
Agreement for Non-Qualified Stock Option under the PAID, Inc. 2011 Non-Qualified Stock Option Plan awarded to W. Austin Lewis, IV, dated August 8, 2012 (incorporated by reference to Exhibit 10.3 to Form 10-Q filed on October 18, 2012)
|
|||||
10.9
|
Agreement dated January 31, 2013 between Paid, Inc., and MCN Interactive, LLC d/b/a Music City Networks (incorporated by reference to Exhibit 10.1 to Form 8-K filed on February 5, 2013)
|
|||||
10.10
|
Second amendment to lease agreement dated November 12, 2013 between Forty Washington LLC and PAID, Inc. (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on November 14, 2013)
|
|||||
23.1*
|
Consent of KMJ Corbin & Company LLP
|
|||||
31.1*
|
CEO Certification required under Section 302 of Sarbanes-Oxley Act of 2002
|
|||||
31.2*
|
CFO Certification required under Section 302 of Sarbanes-Oxley Act of 2002
|
|||||
32.0*
|
CEO and CFO Certification required under Section 906 of Sarbanes-Oxley Act of 2002
|
|||||
EX-101.INS
|
XBRL Instance Document
|
|||||
EX-101.SCH
|
XBRL Taxonomy Extension Schema
|
|||||
EX-101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
|||||
EX-101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
|||||
EX-101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
|||||
EX-101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase |
*filed herewith
|
|
+Indicates a management contract or any compensatory plan, contract or arrangement
|
|
EXHIBIT 31.1
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information;
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
|
|
Date: March 30, 2016
|
/s/ W. Austin Lewis, IV
W. Austin Lewis, IV, President and CEO
(Principal Executive Officer)
|
|
EXHIBIT 31.2
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information;
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
|
|
Date: March 30, 2016
|
/s/ W. Austin Lewis, IV
W. Austin Lewis, IV, Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Document And Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Mar. 30, 2016 |
Jun. 30, 2015 |
|
Document And Entity Information [Abstract] | |||
Entity Registrant Name | PAID INC | ||
Entity Central Index Key | 0001017655 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Trading Symbol | PAYD | ||
Entity Common Stock, Shares Outstanding | 343,774,050 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 9,263,614 |
BALANCE SHEETS (Parenthetical) - $ / shares |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Shareholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 11,000,000 | 11,000,000 |
Common stock, shares issued | 8,932,466 | 6,787,323 |
Common stock, shares outstanding | 8,932,466 | 6,787,323 |
STATEMENTS OF OPERATIONS - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Statement [Abstract] | ||
Revenues, net | $ 272,920 | $ 796,756 |
Cost of revenues | 39,504 | 503,238 |
Gross profit | 233,416 | 293,518 |
Operating expenses | 1,067,216 | 1,431,829 |
Loss from operations | (833,800) | (1,138,311) |
Other income (expense): | ||
Interest income (expense), net | (946) | 1,065 |
Other income, net | 987 | 408,581 |
Realized loss on investments in available-for-sale securities | 0 | (79,983) |
Write down of other receivables | (115,913) | (334,719) |
Gain on settlement of liabilities | 0 | 34,759 |
Unrealized loss on stock price guarantee | (358,850) | (554,732) |
Total other (expense), net | (474,722) | (525,029) |
Loss before provision for income taxes | (1,308,522) | (1,663,340) |
Provision for income taxes | 975 | 2,430 |
Net loss | $ (1,309,497) | $ (1,665,770) |
Loss per share - basic and diluted | $ (0.18) | $ (0.25) |
Weighted average number of common shares outstanding - basic and diluted | 7,192,919 | 6,607,441 |
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) |
Common Stock |
Common Stock Subscribed But Not Issued |
Additional Paid-In Capital |
Accumulated Other Comprehensive Loss |
Accumulated Deficit |
Total |
---|---|---|---|---|---|---|
Begning Balance, Amount at Dec. 31, 2013 | $ 6,577 | $ 53,066,343 | $ (131,536) | $ (52,083,978) | $ 857,406 | |
Begning Balance, Shares at Dec. 31, 2013 | 6,577,323 | |||||
Sale of common stock, Amount | $ 210 | $ 524,790 | 525,000 | |||
Sale of common stock, Shares | 210,000 | |||||
Common stock subscribed but not issued | $ 25,000 | 25,000 | ||||
Recognition of loss on investments in available-for-sale securities | $ 131,536 | 131,536 | ||||
Share-based compensation expense | $ 247,807 | 247,807 | ||||
Net loss | $ (1,665,770) | (1,665,770) | ||||
Ending Balance, Amount at Dec. 31, 2014 | $ 6,787 | $ 25,000 | $ 53,838,940 | $ (53,749,748) | 120,979 | |
Ending Balance, Shares at Dec. 31, 2014 | 6,787,323 | |||||
Sale of common stock, Amount | $ 2,135 | 372,865 | $ 375,000 | |||
Sale of common stock, Shares | 2,135,143 | 2,057,143 | ||||
Issuance of Common stock subscribed, Amount | $ 10 | $ (25,000) | 24,990 | |||
Issuance of Common stock subscribed, Shares | 10,000 | |||||
Share-based compensation expense | $ 181,365 | $ 181,365 | ||||
Net loss | $ (1,309,497) | (1,309,497) | ||||
Ending Balance, Amount at Dec. 31, 2015 | $ 8,932 | $ 54,418,160 | $ (55,059,245) | $ (632,153) | ||
Ending Balance, Shares at Dec. 31, 2015 | 8,932,466 |
ORGANIZATION |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
ORGANIZATION |
NOTE 1. ORGANIZATION
PAID, Inc. (PAID, the Company, we, us, our) has developed AuctionInc, which is a suite of online shipping and tax management tools assisting businesses with e-commerce storefronts, shipping solutions, tax calculation, inventory management, and auction processing. The product has tools to assist with other aspects of the fulfillment process, but the main purpose of the product is to provide accurate shipping and tax calculations and packaging algorithms that provide customers with the best possible shipping and tax solutions.
BeerRun Software is a brewery management and Alcohol and Tobacco Tax and Trade Bureau tax reporting software. Small craft brewers can utilize the product to manage brewery schedules, inventory, packaging, sales and purchasing. Tax reporting can be processed with a single click and is fully customizable by state or providence. The software is designed to integrate with QuickBooks accounting platforms by using our powerful sync engine. We currently offer two versions of the software BeerRun and BeerRun Light which excludes some of the enhanced features of BeerRun without disrupting the core functionality of the software. Additional features include Brewpad and Kegmaster and can be added on to the base product. Craft brewing is on the rise in the United States and we feel that there is a large potential to grow this portion of our business.
SpiritRun is a product of BeerRun and is designed specifically for distilleries. This product was recently released and we feel that there with additional marketing and visibility in the distillery industry SpiritRun has the right core resources to be a valuable tool in distilleries around the United States.
Previously, the Company's primary focus was to provide brand-related services to businesses, celebrity clients in the entertainment industry as well as charitable organizations. PAID's brand management, brand marketing, social media marketing, product design and merchandising, website design; development and hosting services were designed to grow each client's customer base in size, loyalty and revenue generation. We offered entertainers and business entities comprehensive web-presence and related services supporting and managing clients' official websites and fan-community services including e-commerce, VIP ticketing, live event fan experiences, user-generated content, client content publishing and distribution, fan forums, social network management, social media marketing, customer data capture, management and analysis. |
GOING CONCERN AND MANAGEMENT’S PLANS |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Managements Plan [Abstract] | |
GOING CONCERN AND MANAGEMENT’S PLANS |
The accompanying consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has continued to incur losses. For the year ended December 31, 2015, the Company reported a net loss of $1,309,497. The Company has an accumulated deficit of $55,059,245 at December 31, 2015 and used $578,209 of cash in operations for the year ended December 31, 2015. These factors raise substantial doubt about the Companys ability to continue as a going concern.
The changes made in our celebrity services offerings reduced revenues and increased gross profit in 2015. Management feels that AuctionInc, BeerRun and SpiritRun will be a beneficial portion of our business and provide more opportunity for growth. The costs of doing business have been and will be significantly reduced in hopes of eliminating the net loss and providing positive cash flow from operations.
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 2016 and will have a positive impact on the Company for 2016 and future years. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||
Accounting Policies [Abstract] | ||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Presentation and Basis of Consolidated Financial Statements
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
On October 7, 2015, the board of directors agreed to effectuate a reverse split of the Companys common stock. The process was completed with FINRA on November 13, 2015. As a result of the split every fifty shares of common stock outstanding prior to the reverse split were consolidated into one share, reducing the number of common shares outstanding on the effective date from 446,623,300 to 8,932,466. All share and per share information on this Form 10-K has been retroactively adjusted to reflect the reverse stock split.
The Company has evaluated subsequent events through the filing date of this Form 10-K, and determined that no subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the notes, other than as disclosed in the accompanying notes.
Principles of Consolidation
The consolidated financial statements include the accounts of PAID, Inc. and its wholly owned subsidiary, PAID Run, LLC. All intercompany accounts and transactions have been eliminated.
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by the Companys management include, but are not limited to, the collectability of accounts receivable, the recoverability of long-lived assets, valuation of deferred tax assets and liabilities and the estimated fair value of the royalty and advance guarantees, and share-based transactions. Actual results could materially differ from those estimates.
Fair Value Measurements
The Company measures the fair value of certain of its financial assets on a recurring basis. A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
At December 31, 2015 and 2014, the Companys financial instruments include cash and cash equivalents, accounts receivable, other receivables, accounts payable, capital leases, note payable and accrued expenses. The carrying amount of cash and cash equivalents, accounts receivable, other receivables, accounts payable, capital leases, note payable and accrued expenses approximates fair value due to the short-term maturities of these instruments.
Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with an initial maturity of three months or less to be cash equivalents. Management believes that the carrying amounts of cash equivalents approximate their fair value because of the short maturity period.
Concentration of Credit Risk
The Company maintains cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At December 31, 2015, the Company had no amounts in these accounts in excess of the FDIC insurance limit. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk related to these deposits.
The Company extends credit based on an evaluation of the customer's financial condition, generally without requiring collateral. Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses. Although the Company expects to collect amounts due, actual collections may differ from the estimated amounts. As of December 31, 2015 and 2014, the Company recorded a provision for doubtful accounts of $40,609 and $38,609, respectively.
For the year ended December 31, 2015 no revenues from any one individual client accounted for more than 10% of the total revenues compared to one client in 2014. The one client accounted for approximately 65% of total revenues in 2014.
Other Receivables
Other receivables consisted of shares of our common stock held by the Companys landlord, Carruth Capital, which were available-for-sale. During the year ended December 31, 2015, the Company liquidated the 2,528,091 shares held by Carruth Capital. During 2015, the Company recorded an impairment of these shares when the market price decreased. For the year ended December 31, 2015 and 2014, the write down of other receivables was $115,913 and $334,719.
Inventories
Inventories consisted of merchandise for sale and were stated at the lower of average cost or market determined on a first-in, first-out (FIFO) method. When a purchase contained multiple copies of the same item, they were stated at average cost. At each balance sheet date, the Company evaluated its ending inventory quantities on hand and on order and recorded a provision for excess quantities and obsolescence. Among other factors, the Company considered historical demand and forecasted demand in relation to the inventory on hand, competitiveness of product offerings, market conditions and product life cycles when determining obsolescence and net realizable value. In addition, the Company considered changes in the market value of components in determining the net realizable value of its inventory. Provisions were made to reduce excess or obsolete inventories to their estimated net realizable values. Once established, write-downs were considered permanent adjustments to the cost basis of the excess or obsolete inventories.
Advanced Royalties
Advanced royalties represent amounts the Company has advanced to certain clients and are recoupable against future royalties earned by the clients. Advances are issued in either cash or shares of the Companys common stock and advanced amounts are calculated based on the clients projected earning potential over a fixed period of time. Advances made by issuing common stock or common stock options are recorded at their fair value on the date of issue. If the shares do not reach the required price per share, the Company has the option of issuing additional shares or making cash payment of the difference between the sales price and the fair value of the stock. The Company records a liability for the difference between the fair value of the stock and the guaranteed sales price amount. The change in fair value of the stock price guarantee is recorded in the accompanying consolidated statements of operations (see Note 8).
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of 3 to 5 years. Any leasehold improvements are depreciated at the lesser of the useful life of the asset or the lease term. Equipment purchased under capital leases is amortized on a straight-line basis over the estimated useful life of the asset or the term of the lease, whichever is shorter.
Intangible Assets
Intangible assets consist of patents, client lists and brewery and distillery management software which are being amortized on a straight-line basis over their estimated useful life. Currently there are intangible assets that are being amortized over 3 and 17 years.
Long-Lived Assets
The 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. 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 for long lived assets were incurred during the years ended December 31, 2015 and 2014. There can be no assurance, however, that market conditions will not change or demand for the Companys services will continue, which could result in impairment of long-lived assets in the future.
Revenue Recognition
The Company generates revenue principally from sales of shipping calculator subscriptions, brewery management software subscriptions, and client services.
The Company recognizes revenues in accordance with the FASB ASC Topic 605. Accordingly, the Company recognizes revenues when there is persuasive evidence that an arrangement exists, product delivery and acceptance have occurred, the sales price is fixed or determinable, and collectability of the resulting receivable is reasonably assured.
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 payments for shipping calculator services are made via credit card for the month preceding the service and are recorded as deferred revenues until the service has been provided. Brewery management software subscribers are billed on a calendar month at the first of the month with payments processed via credit card for the month following.
Client services revenues include web development and design, creative services, marketing services and general business consulting services. For contracts that are of a short duration and fixed price, revenue is recognized when there are no significant obligations and upon acceptance by the customer of the completed project. Revenues on longer-term fixed price contracts are recognized using the percentage-of-completion method. Services that are performed on a time and material basis are recognized as the related services are performed.
Historically, the Company also generated revenues from sales of fan experiences, fan club membership fees, commissions and tour merchandise sales. These revenues were recognized in accordance with FASB ASC Topic 605. The Company does not expect significant future revenues related to these sales.
Cost of Revenues
Cost of revenues includes web hosting, data storage, and commissions. Historically cost of revenues also included event tickets, ticketing and venue fees, shipping and handling fees, merchandise and royalties paid to clients.
Operating Expenses
Operating expenses include indirect client related expenses, including credit card processing fees, payroll, travel, facility costs, and other general and administrative expenses.
Advertising
Advertising costs are charged to expense as incurred. For the years ended December 31, 2015 and 2014, advertising expense totaled $24,111 and $6,125, respectively, and are included in operating expenses in the accompanying consolidated statements of operations.
Share-Based Compensation
The Company grants options to purchase the Companys common stock to employees, directors and consultants under stock option plans. The benefits provided under these plans are share-based payments that the Company accounts for using the fair value method.
The fair value of each option award is estimated on the date of grant using a Black-Scholes-Merton option pricing model (Black-Scholes-Merton model) that uses assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, expected stock price volatility, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. Expected volatilities are based on the historical volatility of the Companys common stock. The expected terms of options granted are based on analyses of historical employee termination rates and option exercises. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant. Since the Company does not expect to pay dividends on common stock in the foreseeable future, it estimated the dividend yield to be 0%.
Share-based compensation expense recognized during a period is based on the value of the portion of share-based payment awards that is ultimately expected to vest and is amortized under the straight-line attribution method. As share-based compensation expense recognized in the accompanying consolidated statements of operations for the years ended December 31, 2015 and 2014 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. The fair value method requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates forfeitures based on historical experience. Changes to the estimated forfeiture rate are accounted for as a cumulative effect of change in the period the change occurred.
Since the Company has a net operating loss carry-forward as of December 31, 2015 and 2014, no excess tax benefits for tax deductions related to share-based awards were recognized from stock options exercised in the years ended December 31, 2015 and 2014 that would have resulted in a reclassification from cash flows from operating activities to cash flows from financing activities.
Income Taxes
The Company accounts for income taxes and the related accounts under the liability method. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the income tax bases of assets and liabilities. A valuation allowance is applied against any net deferred tax asset if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Therefore, the Company has recorded a full valuation allowance against the net deferred tax assets. The Companys income tax provision consists of state minimum taxes.
The Company recognizes any uncertain income tax positions on income tax returns at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.
The total unrecognized tax benefit resulting in an increase in deferred tax assets and corresponding increase in the valuation allowance at December 31, 2015 is approximately $176,000. There are no unrecognized tax benefits included in the consolidated balance sheet that would, if recognized, affect the effective tax rate.
The Companys policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had $0 accrued for interest and penalties on each of the Companys consolidated balance sheets at December 31, 2015 and 2014.
The Company is subject to taxation in the U.S. and various state jurisdictions. The Companys tax years for 2012 and forward for federal and 2011 and forward for state purposes are subject to examination by the U.S., Massachusetts and New Jersey tax authorities due to the carry-forward of unutilized net operating losses. The Company does not foresee material changes to its gross uncertain income tax position liability within the next twelve months.
Earnings (Loss) Per Common Share
Basic earnings (loss) per share represent income (loss) available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income (loss) that would result from the assumed issuance. 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 earnings (loss) per share because they would reduce the reported loss per share and therefore have an anti-dilutive effect.
For the year ended December 31, 2015, there were no dilutive shares that were excluded from the diluted earnings (loss) per share as their effect would have been antidilutive for the year then ended.
Segment Reporting
The Company reports information about segments of its business in its annual consolidated financial statements and reports selected segment information in its quarterly reports issued to shareholders. The Company also reports on its entity-wide disclosures about the products and services it provides and reports revenues and its major customers. The Companys three reportable segments are managed separately based on fundamental differences in their operations. At December 31, 2015, the Company operated in the following three reportable segments (see Note 11):
The Company evaluates performance and allocates resources based upon operating income. The accounting policies of the reportable segments are the same as those described in this summary of significant accounting policies. The Companys chief operating decision maker is the President, Chief Executive Officer and Chief Financial Officer.
Reclassifications
Certain reclassifications have been made to the prior period consolidated financial statement presentation to conform to the current period consolidated financial statement presentation. Certain expenses that were previously classified as operating expenses were reclassified to cost of revenues. The reclassifications did not have any effect on reported net losses for any period presented.
Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases, which requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018 with early adoption permitted. While the Company is still evaluating ASU 2016-02, the Company expects the adoption of ASU 2016-02 to have a material effect on the Companys financial condition due to the recognition of the lease rights and obligations as assets and liabilities. The Company does not expect ASU 2016-02 to have a material effect on the Companys results of operations and cash flows.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation and disclosure of financial statements. This guidance will be effective in the first quarter of fiscal year 2019 and early adoption is not permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes, an update to accounting guidance to simplify the presentation of deferred income taxes. The guidance requires an entity to classify all deferred tax liabilities and assets, along with any valuation allowance, as noncurrent in the balance sheet. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2016, including interim periods within these reporting periods. Early adoption is permitted. The Company has elected to early adopt ASU 2015-17 during the year ended December 31, 2015 with retrospective application. The adoption of ASU 2015-17 did not have a material impact on the Company's consolidated financial statements.
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern. Currently, there is no guidance in U.S. GAAP about managements responsibility to evaluate whether there is substantial doubt about an entitys ability to continue as a going concern or to provide related footnote disclosures. The amendments require management to assess an entitys ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of managements plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of managements plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the reporting periods beginning after December 15, 2016 and early application is permitted. Management is currently assessing the impact the adoption of ASU 2014-15 will have on our consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This updated guidance supersedes the current revenue recognition guidance, including industry-specific guidance. The updated guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict 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. The updated guidance is effective for interim and annual periods beginning after December 15, 2016, and early adoption is not permitted. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 until December 15, 2017. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. The Company is currently evaluating which transition method it will adopt and the expected impact of the updated guidance, but does not believe the adoption of the updated guidance will have a significant impact on its consolidated financial statements. |
PROPERTY AND EQUIPMENT |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT | At December 31, property and equipment consisted of the following:
Depreciation expense of property and equipment for the years ended December 31, 2015 and 2014 amounted to $9,656 and $25,125, respectively. |
INTANGIBLE ASSETS |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS |
The Company has a patent for the real-time calculation of shipping costs for items purchased through online auctions using a zip code as a destination location indicator. It includes shipping charge calculations across multiple carriers and accounts for additional characteristics of the item being shipped, such as weight, special packaging or handling, and insurance costs.
On January 29, 2008, the Company was granted a patent for a technique for facilitating advanced, rapid, accurate estimation of shipping costs across multiple shipping carriers and shipping options between buyer and seller in an online auction. Since that time the Company has received four additional patents. These patents help facilitate rapid and accurate estimation of shipping costs across multiple shipping carriers and also include real-time calculation of shipping. Further continuations include the addition of shipping calculation with taxes and enhanced shipping promotions.
On October 7, 2015, the Company, through a newly formed limited liability company named PAID Run, LLC, entered into an asset purchase agreement to purchase assets related to BeerRun Software and SpiritRun Software and related intellectual property. The purchase price and additional development for these assets was $297,500, which include all of the client lists, along with all rights, benefits and privileges associated with the software and intellectual property, associated contracts, and books and records.
At December 31, intangible assets consisted of the following:
Amortization expense of intangible assets for the years ended December 31, 2015, and 2014 was $24,864 and $942, respectively. Estimated future annual amortization expense is approximately $100,000 for each year through 2018 and $900 for 2019. |
ACCRUED EXPENSES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES | At December 31, accrued expenses consist of the following:
|
LONG-TERM LIABILITIES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases, Capital [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM LIABILITIES | Note Payable
On October 2, 2015, the Company entered into a $35,677 note payable with a financial institution. The term of the note is for a period of one year and is payable in 10 monthly installments of $3,089 at an interest rate of 6.35%. The balance due on the note payable as of December 31, 2015 was $24,202.
Capital Lease Obligations
The Company is obligated under capital leases for equipment, which expire at various dates through April 2016. The assets capitalized under these leases and associated accumulated depreciation at December 31, are as follows:
Depreciation of equipment under capital leases is included in depreciation expense.
Minimum future lease payments under capital lease obligations as of December 31, 2015 are as follows:
|
COMMITMENTS AND CONTINGENCIES |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||
COMMITMENTS AND CONTINGENCIES | Lease Commitment
In November 2013, the Company moved its offices located at 40 Washington Street, Westborough, MA and entered into a lease for premises located at 200 Friberg Parkway, Westborough, MA. The Company resides at 200 Friberg Parkway with a lease that is for a three-year term ending in November 2016. The original lease at 40 Washington Street was prepaid with 6,082,985 shares of common stock having a closing price of $0.21 per share on August 22, 2011. The payment was for rent over five years, projected taxes and operating expenses, and a security deposit. As a result of the termination of the 40 Washington Street lease, the Company forfeited its security deposit of $83,134, which was previously paid with shares of common stock of the Company, paid a termination fee of $166,865, recorded an other receivable, net due from the landlord, Carruth Capital, in the amount of $0 and $120,338 in the accompanying consolidated balance sheets as of December 31, 2015 and 2014, respectively. Shares that were held for sale at Carruth Capital, which were recorded as a receivable in 2014, have been liquidated in 2015.
The approximate future minimum rent under the current operating lease is:
Stock Price Guarantee
In connection with the Companys advance royalties with a client, the Company guaranteed that shares of common stock would sell for at least $6.00 per share. If the shares are not at the required $6.00 per share when they are sold, the Company has the option of issuing additional shares at their fair value or making cash payments for the difference between the guaranteed price per share and the fair value of the stock. As of December 31, 2015 and 2014, the stock price guarantee was $913,582 and $554,732, respectively, although any required payment would be disputed by the Company.
MCN Settlement
In 2013, the Company entered into a transfer of services agreement (Agreement) with MCN Interactive, LLC (MCN). In accordance with the agreement, MCN provided client based services directly to the Companys clients in exchange for a profit participation as defined in the Agreement. In March 2016, the Company entered into separate settlement agreements (Settlement Agreements) with MCN and Future Shirts, LLC (FS) with an effective date in September 30, 2015, in which the Company and MCN and FS agreed to release each other from all claims, liabilities, obligations, demands, damages, actions or rights of action arising under or in connection with the Agreement whether arising before, on, or after the effective date. As a result of the Settlement Agreements, the Company reduced its assets and liabilities by approximately $69,000 as no amounts will be recovered by the Company or will be paid to MCN or FS that arose from the Partnership Agreement.
Legal Matters
In the normal course of business, the Company periodically becomes involved in litigation. As of December 31, 2015, in the opinion of management, the Company had no pending litigation that would have a material adverse effect on the Company's consolidated financial position, results of operations, or cash flows.
The Company commenced on December 20, 2013 patent infringement litigation against eBay, Inc. (Paid, Inc. v. eBay, Inc.; CV No. 4:13-cv-40151-TSH) in the United States District Court for the District of Massachusetts Central Division. On September 30, 2014, PAID and eBay filed a joint motion to stay the district court litigation pending completion of eBays petitions for covered business method review that were filed with the Patent and Trial and Appeal Board (PTAB). On September 30, 2014 the PTAB announced that it had granted petitions filed by eBay for covered business method review of PAIDs United States Patent Nos. 8,635,150, 8,521,642, 8,352,357, and 7,930,237, entitled Method and System for Improved Online Auction (collectively, the Online Auction Patents). On June 9, 2015, the Company and eBay, Inc. presented oral arguments to the Patent Trials Appeals Board. On September 16, 2015, the PTAB entered a final ruling that the claims of the Online Auction Patents lacked patent eligible subject matter. Pursuant to a settlement with eBay (discussed below), the Company has decided not to appeal the PTABs final ruling. Consequently, the claims of the Online Auction Patents are not valid. The PTABs final ruling does not affect the validity of PAIDs United States Patent No. 7,324,968 or PAIDS United State Patent Pending both entitled Method and System for Improved Online Auction (collectively, the Non-Asserted Intellectual Property) which were not subject to the petitions for covered business method review filed by eBay. This litigation has been settled pursuant to a Confidential Settlement and License Agreement dated March 11, 2016. Under the agreement, the Company received $53,500 after costs as full and final payment for such settlement of the lawsuit and non-exclusive licensing of the Companys patents.
Indemnities and Guarantees
The Company has made certain indemnities and guarantees, under which it may be required to make payments to a guaranteed or indemnified party, in relation to certain actions or transactions. The Company indemnifies its directors, officers, employees and agents, as permitted under the laws of the State of Delaware. In connection with its facility leases, the Company has agreed to indemnify its lessors for certain claims arising from the use of the facilities. The duration of the guarantees and indemnities varies, and is generally tied to the life of the agreement. These guarantees and indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated nor incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities and guarantees in the accompanying consolidated balance sheets. |
SHAREHOLDERS’ (DEFICIT) EQUITY |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS’ (DEFICIT) EQUITY | Common Stock
In October 2015, the board of directors agreed to effectuate a reverse split of the Companys common stock. As a result of the split every fifty shares of common stock outstanding were consolidated into one share, reducing the number of common shares outstanding on the effective date from 446,623,300 to 8,932,466. All share and per share information on this Form 10-K has been retroactively adjusted to reflect the reverse stock split.
In October 2014, the shareholders approved an amendment to the Companys Certificate of Incorporation to increase the Companys authorized shares of common stock from 7,000,000 to 11,000,000 and to make effective, a reverse stock split at a range of 1 for 10 through 1 for 50 to reduce the number of authorized shares of the Companys common stock, subject to the Board of Directors discretion.
From January 2015 through March 2015, the Company sold 78,000 shares of common stock for proceeds of $195,000.
From October 2015 through November 2015, the Company sold 2,057,143 shares of common stock and warrants for proceeds of $180,000. W. Austin Lewis IV (our President, CEO and CFO) purchased 900,000 shares of common stock in the equity raise for proceeds of $78,750.
From January 1, 2016 through the filing date of this Annual Report, the Company issued a total of 2,057,143 shares of common stock for gross proceeds of $180,000 from the exercise of warrants.
Subscribed and Issued Shares
During the year ended December 31, 2014, the Company sold 10,000 shares of common stock that had not been issued to a shareholder and accordingly, the unissued shares had been reflected as common stock subscribed but not issued in the amount of $25,000 in the accompanying consolidated balance sheet as of December 31, 2014. In February 2015, the Company issued the 10,000 shares to the shareholder.
Share-based Incentive Plans
During the years ended December 31, 2015 and 2014, the Company had three stock option plans that include both incentive and non-qualified options to be granted to certain eligible employees, non-employee directors, or consultants of the Company. There were no stock options granted, exercised, canceled or expired during 2015.
Active Plans:
2012 Plan
On October 15, 2012, the Company adopted the 2012 Non-Qualified Stock Option Plan (the "2012 Plan"). The purpose of the 2012 Plan, is to provide long-term incentives and rewards to those employees of the Company, and any other individuals, whether directors, consultants or advisors who are in a position to contribute to the long-term success and growth of the Company. The options granted have a 10 year contractual term and vest one hundred percent on the date of grant. There are no shares reserved for future issuance under this plan. Information with respect to stock options granted under this plan during the years ended December 31, 2015 and 2014 is as follows:
2011 Plan
On February 1, 2011, the Company adopted the 2011 Non-Qualified Stock Option Plan (the "2011 Plan"), to replace the 2001 Plan discussed below, and has filed Registration Statements on Form S-8 to register 600,000 shares of its common stock. Under the 2011 Plan, employees and consultants may elect to receive their gross compensation in the form of options, exercisable at $0.05 per share, to acquire the number of shares of the Company's common stock equal to their gross compensation divided by the fair value of the stock on the date of grant. The options granted have a 10 year contractual term and have vesting periods that range from one hundred percent on the date of grant to one third immediately, one third vesting in 18 months and the final on third vesting in 36 months from the date of the grant. Information with respect to stock options granted under this plan during the years ended December 31, 2015 and 2014 is as follows:
At December 31, 2015 there are no shares reserved for issuance under this plan.
2002 Plan
The 2002 Stock Option Plan (2002 Plan) provides for the award of qualified and non-qualified options for up to 600,000 shares. The options granted have a ten-year contractual term and have a vesting schedule of either immediately, two years, or four years from the date of grant. Information with respect to stock options granted under this plan during the years ended December 31, 2015, and 2014 is as follows:
There are currently no shares reserved for issuance under this plan.
Fair value of issuances
The fair value of the Company's option grants under the 2012, 2011, and 2002 Plans was estimated at the date of grant using the Black-Scholes model with the following weighted average assumptions:
For the years ended December 31, 2015 and 2014, the Company recorded share-based compensation expense related to stock options of $181,365 and $247,807 and are included in operating expenses in the accompanying consolidated statements of operations, respectively.
On November 2, 2015 the Board of Directors approved to vote to reprice 435,000 stock options for one employee and three board members. The grant price was lowered to $0.15 which reflects the market value of the stock. The repriced options continue to vest according to the original grant dates. The incremental expense for the repricing of the options was approximately $17,000.
The Company had an aggregate of $50,743 of unrecognized share-based compensation expense for options outstanding as of December 31, 2015, which is expected to be recognized over a weighted average period of 1.10 years.
Information pertaining to options outstanding and exercisable at December 31, 2015 is as follows:
Summary of all stock option plans during the years ended December 31, 2015 and 2014 is as follows:
Warrants
From time to time, the Company issues warrants to purchase share of the Companys common stock to investors, note holders and to non-employees for service rendered or to be rendered in the future.
In November 2015, the Company issued warrants to purchase 2,057,143 shares of the Companys common stock to investors at the price of $0.09 per share. The warrants expire five years following the warrant issuance date, and vest immediately.
A summary of the warrant activity during the year ended December 31, 2015 is as follows:
|
INCOME TAXES |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | The Company is subject to taxation in the United States and Massachusetts. The provision for income taxes for the years ended December 31, 2015 and 2014 are summarized below:
A reconciliation of income taxes computed by applying the statutory U.S. income tax rate to the Companys loss before income taxes to the income provision is as follows:
Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Companys deferred tax assets are as follows:
Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by approximately $176,400 in 2015.
As of December 31, 2015, the Company had net operating loss carryforwards for federal income tax purposes of approximately $46,000,000 which expire beginning in the year 2019. As of December 31, 2015, the Company had net operating loss carryforwards for state income tax purposes of approximately $8,000,000 which expire beginning in the year 2015.
Utilization of the net operating losses may be subject to substantial annual limitation due to federal and state ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such annual limitations could result in the expiration of the net operating losses ad credits before their utilization. The Company has not performed an analysis to determine the limitation of the net operating loss carryforwards.
|
SEGMENT REPORTING |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING |
The Company reports information about segments of its business in its annual financial statements and reports selected segment information in its quarterly reports. The Company also reports on its entity-wide disclosures about the products and services it provides and reports revenues and its major customers. The Companys three reportable segments, entertainment services, brewery management software and shipping calculator services, are managed separately based on fundamental differences in their operations.
The Company evaluates performance and allocates resources based upon operating income. The accounting policies of the reportable segments are the same as those described in this summary of significant accounting policies. The Companys chief operating decision maker is the President, Chief Executive Officer and Chief Financial Officer.
The following table compares total revenues for the years indicated.
The following table compares total income (loss) from operations for the years indicated.
|
SUBSEQUENT EVENTS |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | From January 1, 2016 through the filing date of this Annual Report, the Company issued a total of 2,057,143 shares of common stock for gross proceeds of $180,000 for the exercise of warrants.
On December 20, 2013, the Company filed a patent infringement lawsuit against eBay Inc. in the United States District Court for the District of Massachusetts in December 2013 related to Company patents for real-time calculation of shipping, insurance and taxes online. The case is now settled pursuant to a Confidential Settlement and License Agreement dated March 11, 2016. Under the agreement, the Company received $53,500 after costs as full and final payment for such settlement of the lawsuit and non-exclusive licensing of the Companys patents.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||
Accounting Policies [Abstract] | ||||||||||
Presentation and Basis of Consolidated Financial Statements |
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
On October 7, 2015, the board of directors agreed to effectuate a reverse split of the Companys common stock. The process was completed with FINRA on November 13, 2015. As a result of the split every fifty shares of common stock outstanding prior to the reverse split were consolidated into one share, reducing the number of common shares outstanding on the effective date from 446,623,300 to 8,932,466. All share and per share information on this Form 10-K has been retroactively adjusted to reflect the reverse stock split.
The Company has evaluated subsequent events through the filing date of this Form 10-K, and determined that no subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the notes, other than as disclosed in the accompanying notes. |
|||||||||
Principles of Consolidation | The consolidated financial statements include the accounts of PAID, Inc. and its wholly owned subsidiary, PAID Run, LLC. All intercompany accounts and transactions have been eliminated. |
|||||||||
Use of Estimates | The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by the Companys management include, but are not limited to, the collectability of accounts receivable, the recoverability of long-lived assets, valuation of deferred tax assets and liabilities and the estimated fair value of the royalty and advance guarantees, and share-based transactions. Actual results could materially differ from those estimates. |
|||||||||
Fair Value Measurements | The Company measures the fair value of certain of its financial assets on a recurring basis. A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
At December 31, 2015 and 2014, the Companys financial instruments include cash and cash equivalents, accounts receivable, other receivables, accounts payable, capital leases, note payable and accrued expenses. The carrying amount of cash and cash equivalents, accounts receivable, other receivables, accounts payable, capital leases, note payable and accrued expenses approximates fair value due to the short-term maturities of these instruments. |
|||||||||
Cash and Cash Equivalents | The Company considers all highly liquid temporary cash investments with an initial maturity of three months or less to be cash equivalents. Management believes that the carrying amounts of cash equivalents approximate their fair value because of the short maturity period. |
|||||||||
Concentration of Credit Risk |
The Company maintains cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At December 31, 2015, the Company had no amounts in these accounts in excess of the FDIC insurance limit. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk related to these deposits.
The Company extends credit based on an evaluation of the customer's financial condition, generally without requiring collateral. Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses. Although the Company expects to collect amounts due, actual collections may differ from the estimated amounts. As of December 31, 2015 and 2014, the Company recorded a provision for doubtful accounts of $40,609 and $38,609, respectively.
For the year ended December 31, 2015 no revenues from any one individual client accounted for more than 10% of the total revenues compared to one client in 2014. The one client accounted for approximately 65% of total revenues in 2014. |
|||||||||
Other Receivables | Other receivables consisted of shares of our common stock held by the Companys landlord, Carruth Capital, which were available-for-sale. During the year ended December 31, 2015, the Company liquidated the 2,528,091 shares held by Carruth Capital. During 2015, the Company recorded an impairment of these shares when the market price decreased. For the year ended December 31, 2015 and 2014, the write down of other receivables was $115,913 and $334,719. |
|||||||||
Inventories | Inventories consisted of merchandise for sale and were stated at the lower of average cost or market determined on a first-in, first-out (FIFO) method. When a purchase contained multiple copies of the same item, they were stated at average cost.
At each balance sheet date, the Company evaluated its ending inventory quantities on hand and on order and recorded a provision for excess quantities and obsolescence. Among other factors, the Company considered historical demand and forecasted demand in relation to the inventory on hand, competitiveness of product offerings, market conditions and product life cycles when determining obsolescence and net realizable value. In addition, the Company considered changes in the market value of components in determining the net realizable value of its inventory. Provisions were made to reduce excess or obsolete inventories to their estimated net realizable values. Once established, write-downs were considered permanent adjustments to the cost basis of the excess or obsolete inventories. |
|||||||||
Advanced Royalties | Advanced royalties represent amounts the Company has advanced to certain clients and are recoupable against future royalties earned by the clients. Advances are issued in either cash or shares of the Companys common stock and advanced amounts are calculated based on the clients projected earning potential over a fixed period of time. Advances made by issuing common stock or common stock options are recorded at their fair value on the date of issue. If the shares do not reach the required price per share, the Company has the option of issuing additional shares or making cash payment of the difference between the sales price and the fair value of the stock. The Company records a liability for the difference between the fair value of the stock and the guaranteed sales price amount. The change in fair value of the stock price guarantee is recorded in the accompanying consolidated statements of operations (see Note 8). |
|||||||||
Property and Equipment | Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of 3 to 5 years. Any leasehold improvements are depreciated at the lesser of the useful life of the asset or the lease term. Equipment purchased under capital leases is amortized on a straight-line basis over the estimated useful life of the asset or the term of the lease, whichever is shorter. |
|||||||||
Intangible Assets | Intangible assets consist of patents, client lists and brewery and distillery management software which are being amortized on a straight-line basis over their estimated useful life. Currently there are intangible assets that are being amortized over 3 and 17 years. |
|||||||||
Long-Lived Assets | The 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. 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 for long lived assets were incurred during the years ended December 31, 2015 and 2014. There can be no assurance, however, that market conditions will not change or demand for the Companys services will continue, which could result in impairment of long-lived assets in the future. |
|||||||||
Revenue Recognition | The Company generates revenue principally from sales of shipping calculator subscriptions, brewery management software subscriptions, and client services.
The Company recognizes revenues in accordance with the FASB ASC Topic 605. Accordingly, the Company recognizes revenues when there is persuasive evidence that an arrangement exists, product delivery and acceptance have occurred, the sales price is fixed or determinable, and collectability of the resulting receivable is reasonably assured.
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 payments for shipping calculator services are made via credit card for the month preceding the service and are recorded as deferred revenues until the service has been provided. Brewery management software subscribers are billed on a calendar month at the first of the month with payments processed via credit card for the month following.
Client services revenues include web development and design, creative services, marketing services and general business consulting services. For contracts that are of a short duration and fixed price, revenue is recognized when there are no significant obligations and upon acceptance by the customer of the completed project. Revenues on longer-term fixed price contracts are recognized using the percentage-of-completion method. Services that are performed on a time and material basis are recognized as the related services are performed.
Historically, the Company also generated revenues from sales of fan experiences, fan club membership fees, commissions and tour merchandise sales. These revenues were recognized in accordance with FASB ASC Topic 605. The Company does not expect significant future revenues related to these sales.
|
|||||||||
Cost of Revenues | Cost of revenues includes web hosting, data storage, and commissions. Historically cost of revenues also included event tickets, ticketing and venue fees, shipping and handling fees, merchandise and royalties paid to clients. |
|||||||||
Operating Expenses | Operating expenses include indirect client related expenses, including credit card processing fees, payroll, travel, facility costs, and other general and administrative expenses. |
|||||||||
Advertising | Advertising costs are charged to expense as incurred. For the years ended December 31, 2015 and 2014, advertising expense totaled $24,111 and $6,125, respectively, and are included in operating expenses in the accompanying consolidated statements of operations. |
|||||||||
Share-Based Compensation | The Company grants options to purchase the Companys common stock to employees, directors and consultants under stock option plans. The benefits provided under these plans are share-based payments that the Company accounts for using the fair value method.
The fair value of each option award is estimated on the date of grant using a Black-Scholes-Merton option pricing model (Black-Scholes-Merton model) that uses assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, expected stock price volatility, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. Expected volatilities are based on the historical volatility of the Companys common stock. The expected terms of options granted are based on analyses of historical employee termination rates and option exercises. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant. Since the Company does not expect to pay dividends on common stock in the foreseeable future, it estimated the dividend yield to be 0%.
Share-based compensation expense recognized during a period is based on the value of the portion of share-based payment awards that is ultimately expected to vest and is amortized under the straight-line attribution method. As share-based compensation expense recognized in the accompanying consolidated statements of operations for the years ended December 31, 2015 and 2014 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. The fair value method requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates forfeitures based on historical experience. Changes to the estimated forfeiture rate are accounted for as a cumulative effect of change in the period the change occurred.
Since the Company has a net operating loss carry-forward as of December 31, 2015 and 2014, no excess tax benefits for tax deductions related to share-based awards were recognized from stock options exercised in the years ended December 31, 2015 and 2014 that would have resulted in a reclassification from cash flows from operating activities to cash flows from financing activities. |
|||||||||
Income Taxes | The Company accounts for income taxes and the related accounts under the liability method. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the income tax bases of assets and liabilities. A valuation allowance is applied against any net deferred tax asset if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Therefore, the Company has recorded a full valuation allowance against the net deferred tax assets. The Companys income tax provision consists of state minimum taxes.
The Company recognizes any uncertain income tax positions on income tax returns at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.
The total unrecognized tax benefit resulting in an increase in deferred tax assets and corresponding increase in the valuation allowance at December 31, 2015 is approximately $176,000. There are no unrecognized tax benefits included in the consolidated balance sheet that would, if recognized, affect the effective tax rate.
The Companys policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had $0 accrued for interest and penalties on each of the Companys consolidated balance sheets at December 31, 2015 and 2014.
The Company is subject to taxation in the U.S. and various state jurisdictions. The Companys tax years for 2012 and forward for federal and 2011 and forward for state purposes are subject to examination by the U.S., Massachusetts and New Jersey tax authorities due to the carry-forward of unutilized net operating losses. The Company does not foresee material changes to its gross uncertain income tax position liability within the next twelve months. |
|||||||||
Earnings (Loss) Per Common Share | Basic earnings (loss) per share represent income (loss) available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income (loss) that would result from the assumed issuance. 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 earnings (loss) per share because they would reduce the reported loss per share and therefore have an anti-dilutive effect.
For the year ended December 31, 2015, there were no dilutive shares that were excluded from the diluted earnings (loss) per share as their effect would have been antidilutive for the year then ended. |
|||||||||
Segment Reporting | The Company reports information about segments of its business in its annual consolidated financial statements and reports selected segment information in its quarterly reports issued to shareholders. The Company also reports on its entity-wide disclosures about the products and services it provides and reports revenues and its major customers. The Companys three reportable segments are managed separately based on fundamental differences in their operations. At December 31, 2015, the Company operated in the following three reportable segments (see Note 11):
The Company evaluates performance and allocates resources based upon operating income. The accounting policies of the reportable segments are the same as those described in this summary of significant accounting policies. The Companys chief operating decision maker is the President, Chief Executive Officer and Chief Financial Officer.
|
|||||||||
Reclassifications | Certain reclassifications have been made to the prior period consolidated financial statement presentation to conform to the current period consolidated financial statement presentation. Certain expenses that were previously classified as operating expenses were reclassified to cost of revenues. The reclassifications did not have any effect on reported net losses for any period presented. |
|||||||||
Recent Accounting Pronouncements | In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases, which requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018 with early adoption permitted. While the Company is still evaluating ASU 2016-02, the Company expects the adoption of ASU 2016-02 to have a material effect on the Companys financial condition due to the recognition of the lease rights and obligations as assets and liabilities. The Company does not expect ASU 2016-02 to have a material effect on the Companys results of operations and cash flows.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation and disclosure of financial statements. This guidance will be effective in the first quarter of fiscal year 2019 and early adoption is not permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes, an update to accounting guidance to simplify the presentation of deferred income taxes. The guidance requires an entity to classify all deferred tax liabilities and assets, along with any valuation allowance, as noncurrent in the balance sheet. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2016, including interim periods within these reporting periods. Early adoption is permitted. The Company has elected to early adopt ASU 2015-17 during the year ended December 31, 2015 with retrospective application. The adoption of ASU 2015-17 did not have a material impact on the Company's consolidated financial statements.
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern. Currently, there is no guidance in U.S. GAAP about managements responsibility to evaluate whether there is substantial doubt about an entitys ability to continue as a going concern or to provide related footnote disclosures. The amendments require management to assess an entitys ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of managements plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of managements plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the reporting periods beginning after December 15, 2016 and early application is permitted. Management is currently assessing the impact the adoption of ASU 2014-15 will have on our consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This updated guidance supersedes the current revenue recognition guidance, including industry-specific guidance. The updated guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict 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. The updated guidance is effective for interim and annual periods beginning after December 15, 2016, and early adoption is not permitted. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 until December 15, 2017. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. The Company is currently evaluating which transition method it will adopt and the expected impact of the updated guidance, but does not believe the adoption of the updated guidance will have a significant impact on its consolidated financial statements. |
PROPERTY AND EQUIPMENT (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment |
|
INTANGIBLE ASSETS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets |
|
ACCRUED EXPENSES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Accrued expenses |
|
LONG-TERM LIABILITIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||
Leases, Capital [Abstract] | |||||||||||||||||||||||||||||||||||||
Capital lease obligations |
|
||||||||||||||||||||||||||||||||||||
Future Minimum Lease Payments |
|
COMMITMENTS AND CONTINGENCIES (Tables) |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||
Future Minimum Rent |
|
SHAREHOLDERS’ (DEFICIT) EQUITY (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrant [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non Qualified Stock Option 2012 Plan [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non Qualified Stock Option 2011 Plan [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Plan 2002 [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] |
|
INCOME TAXES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax provision | The Company is subject to taxation in the United States and Massachusetts. The provision for income taxes for the years ended December 31, 2015 and 2014 are summarized below:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effective Income Tax Rate |
A reconciliation of income taxes computed by applying the statutory U.S. income tax rate to the Companys loss before income taxes to the income provision is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Deferred Tax assets and liabilities |
Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Companys deferred tax assets are as follows:
|
SEGMENT REPORTING (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | The following table compares total revenues for the years indicated.
The following table compares total income (loss) from operations for the years indicated.
|
MANAGEMENT'S PLANS (Details Textual) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Managements Plan [Abstract] | ||
Net loss | $ 1,309,497 | $ 1,665,770 |
Accumulated deficit | 55,059,245 | 53,749,748 |
Net Cash Provided by (Used in) Operating Activities, Continuing Operations | $ 578,209 | $ 497,312 |
PROPERTY AND EQUIPMENT (Details) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Computer equipment and software | $ 125,830 | $ 125,830 |
Office furniture and equipment | 19,580 | 19,580 |
Website development costs | 314,190 | 314,190 |
Property, Plant and Equipment, Gross | 459,600 | 459,600 |
Accumulated depreciation | (450,767) | (441,111) |
Property, Plant and Equipment, Net | $ 8,833 | $ 18,489 |
PROPERTY AND EQUIPMENT (Details Textual) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 9,656 | $ 25,125 |
INTANGIBLE ASSETS (Details) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Patents | $ 16,000 | $ 16,000 |
Software | 83,750 | 0 |
Client List | 213,750 | 0 |
Accumulated amortization | (36,622) | (11,758) |
Intangible asset, net | $ 276,878 | $ 4,242 |
INTANGIBLE ASSETS (Details Textual) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Oct. 07, 2015 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Purchase price and additional development for assets, cash | $ 297,500 | ||
Amortization of Intangible Assets | $ 24,864 | $ 942 | |
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | 100,000 | ||
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 100,000 | ||
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 100,000 | ||
Finite-Lived Intangible Assets, Amortization Expense, Year Four | $ 900 |
ACCRUED EXPENSES (Details) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Payables and Accruals [Abstract] | ||
Payroll and related costs | $ 3,686 | $ 2,019 |
Royalties | 51,838 | 80,572 |
Stock price guarantee | 913,582 | 554,732 |
Other | 32,253 | 36,696 |
Total | $ 1,001,359 | $ 674,019 |
LONG-TERM LIABILITIES (Details) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Leases, Capital [Abstract] | ||
Property and equipment | $ 83,000 | $ 83,000 |
Accumulated depreciation | (83,000) | (77,500) |
Capital Leases, Balance Sheet, Assets by Major Class, Net | $ 0 | $ 5,500 |
LONG-TERM LIABILITIES (Details 1) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Leases, Capital [Abstract] | ||
2016 | $ 3,141 | |
Less amount representing interest | (44) | |
Present value of net minimum lease payments | 3,097 | |
Less current portion | (3,097) | $ (15,223) |
Capital leases - net of current | $ 0 | $ 3,095 |
COMMITMENTS AND CONTINGENCIES (Details) |
Dec. 31, 2015
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2016 | $ 13,000 |
COMMITMENTS AND CONTINGENCIES (Details Textual) - USD ($) |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Nov. 30, 2013 |
Mar. 29, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Commitments and Contingencies Disclosure [Line Items] | |||||
Stock Issued During Period, Shares, Lease Payment (in shares) | 6,082,985 | ||||
Common Stock, Closing Market Price (in dollars per share) | $ 0.21 | ||||
Lessee Leasing Arrangements, Operating Leases, Term of Contract | 5 years | ||||
Lease Commitment, Forfeiture Of Security Deposit | $ 83,134 | ||||
TerminationFee | $ 166,865 | ||||
Other Receivables | $ 0 | $ 120,338 | |||
Subsequent Event [Member] | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Lawsuit settlement payment | $ 53,500 | ||||
Stock Market Price Guarantee [Member] | |||||
Commitments and Contingencies Disclosure [Line Items] | |||||
Share Price | $ 6.00 | ||||
Guaranteed Benefit Liability, Net | $ 913,582 | $ 554,732 |
SHAREHOLDERS’ (DEFICIT) EQUITY (Details) - Non Qualified Stock Option 2012 Plan [Member] - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares, Options outstanding, Beginning | 300,000 | 180,000 |
Number of shares, Granted | 0 | 120,000 |
Number of shares, Cancelled | 0 | 0 |
Number of shares, Exercised | 0 | 0 |
Number of shares, Options outstanding, Ending | 300,000 | 300,000 |
Weighted average exercise price, Options Outstanding, Beginning | $ 5.10 | $ 2.70 |
Weighted average exercise price, Granted | 0.00 | 2.70 |
Weighted average exercise price, Cancelled | 0.00 | 0.00 |
Weighted average exercise price, Exercised | 0.00 | 0.00 |
Weighted average exercise price, Options Outstanding, Ending | $ 0.28 | $ 5.10 |
SHAREHOLDERS’ (DEFICIT) EQUITY (Details 1) - Non Qualified Stock Option 2011 Plan [Member] - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares, Options outstanding, Beginning | 60,000 | 45,000 |
Number of shares, Granted | 0 | 15,000 |
Number of shares, Cancelled | 0 | 0 |
Number of shares, Exercised | 0 | 0 |
Number of shares, Options outstanding, Ending | 60,000 | 60,000 |
Weighted average exercise price, Options Outstanding, Beginning | $ 6.05 | $ 5.75 |
Weighted average exercise price, Granted | 0.00 | 2.70 |
Weighted average exercise price, Cancelled | 0.00 | 0.00 |
Weighted average exercise price, Exercised | 0.00 | 0.00 |
Weighted average exercise price, Options Outstanding, Ending | $ 3.58 | $ 6.05 |
SHAREHOLDERS’ (DEFICIT) EQUITY (Details 2) - Stock Option Plan 2002 [Member] - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares, Options outstanding, Beginning | 160,000 | 160,000 |
Number of shares, Granted | 0 | 0 |
Number of shares, Cancelled or Expired | 0 | 0 |
Number of shares, Exercised | 0 | 0 |
Number of shares, Options outstanding, Ending | 160,000 | 160,000 |
Weighted average exercise price, Options Outstanding, Beginning | $ 4.75 | $ 4.75 |
Weighted average exercise price, Granted | 0.00 | 0.00 |
Weighted average exercise price, Cancelled or Expired | 0.00 | 0.00 |
Weighted average exercise price, Exercised | 0.00 | 0.00 |
Weighted average exercise price, Options Outstanding, Ending | $ 2.37 | $ 4.75 |
INCOME TAXES (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Current: | ||
Federal | $ 0 | $ 0 |
State | 975 | 2,430 |
Total current | 975 | 2,430 |
Deferred: | ||
Federal | 571,125 | (846,000) |
State | (372,409) | (424,000) |
Change in valuation allowance | (198,716) | 176,400 |
Total deferred | 0 | 0 |
Income tax provision (benefit) | $ 975 | $ 2,430 |
INCOME TAXES (Details 1) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Tax Disclosure [Abstract] | ||
U.S. federal statutory tax rate | 34.00% | 34.00% |
State tax benefit, net | (0.02%) | (0.04%) |
Gain on stock price guarantee | 0.00% | 0.00% |
Other | (0.02%) | (0.24%) |
Valuation allowance | (33.99%) | (33.92%) |
Effective income tax rate | (0.03%) | (0.20%) |
INCOME TAXES (Details 2) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Deferred tax assets: | ||
NOL's | $ 16,247,000 | $ 16,311,000 |
State taxes | (308,800) | (435,000) |
Inventory and other reserves | 42,800 | 194,000 |
Depreciation and amortization | 6,600 | 1,000 |
Change in value of stock | 435,100 | 238,000 |
NQ stock option expense | 736,700 | 674,000 |
Total deferred tax assets | 17,159,400 | 16,983,000 |
Valuation allowance | (17,159,400) | (16,983,000) |
Net deferred tax assets | $ 0 | $ 0 |
INCOME TAXES (Details Textual) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Operating Loss Carryforwards [Line Items] | ||
Valuation allowance increase | $ (198,716) | $ 176,400 |
Domestic Tax Authority [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating Loss Carryforwards | $ 46,000,000 | |
Operating Loss Carryforwards Expiration Period | 2019 | |
State and Local Jurisdiction [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating Loss Carryforwards | $ 8,000,000 | |
Operating Loss Carryforwards Expiration Period | 2014 |
SEGMENT REPORTING (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Net revenue from external customers: | ||
Entertainment services | $ 28,392 | $ 647,509 |
Brewery management software | 80,838 | 0 |
Shipping calculator services | 163,690 | 149,246 |
Total revenues | 272,920 | 796,756 |
Operating income (loss) from operations: | ||
Entertainment services | 20,432 | (344,974) |
Brewery management software | 13,844 | 0 |
Shipping calculator services | (868,076) | (793,337) |
Total income (loss) from operations | $ (833,800) | $ (1,138,311) |
SUBSEQUENT EVENTS (Details Textual) - USD ($) |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 29, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Subsequent Event [Line Items] | |||
Stock Issued During Period, Shares, New Issues | 2,057,143 | ||
Proceeds from Issuance of Common Stock | $ 375,000 | $ 525,000 | |
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Stock Issued During Period, Shares, New Issues | 2,057,143 | ||
Proceeds from Issuance of Common Stock | $ 180,000 | ||
Lawsuit settlement payment | $ 53,500 |
I,7%
MU:_-T=HV>B^+JEG.CFU[>HSC9GNT9=8\N).M_).]J\NL];?U(6Y.M -YIH%2KK#,ITKFL'$2,NYOK\I4-P84>B,X+9,H3=J1:*N^8LQD$A]
M"XX;A;LH"BT))=)M%'1 P$ $>";$-X(O'9XB\WE]
MHX;FF9(C4E,O>NI:'AUB6[G2&7VA_)W-3%OK)2?[*,,7)S1CB@E#5I@; EOU
MQ079 'E\E<0.11!T0[X!<.0@@5X.&>4T_I)'C4%7/
M592P!2CB-(LHS2)"@P.:04,OXN0@QWE ,U>!. B-@M (" E Z"P$I)B&-51'
M9/:*"8WCL"@.B^ L APVBX,8*E"(,Y>Q@K+%#9P\BI-'JNZ&@R+JH/A"U17S
M? #!8=7-57>8D(*1.(YK;+%> +Y0>*/HZDOBG 1E44=D-TH/WFA,\ O%-XJN
M$L]I#A@-<2)"5F",V0VH:"M[A"@"Q4(H-.L!=SG&.0B+,":$]C(Q#)M7=M'.
M.Z%V?LSI9"V/O7&-\^)T&J6/?I(&YRLW8OV8^'!3E0>^$[^XVC6]3EZDL&
MCX2ME$984'!O^\C>_@F8-JW8&K=D=JV&L3ALC#R 1;":T10_I']:9Q^3
M!3Q?&^_1=(K,K(R*=)K"0S>+-(Z6:6W0%ZL[.";NH;+QJ=/E1^@D+[+ZPEP6
MZ4.2S:+T$[#;$C8<1Y=3J]-@+K41SCXFRRGL=9$_)8M5UM+U=;X"HM_D.);9@+$>)O!3*6MQJ?> (&4V1_;IK/M,*ZD
M:++Y#7 RP-D0)Y\:T&1 C@&,9+:N)Z)(D0L^!&+\%STQOSS>(KUSE9FT&V77
M=&52SUX*^!7EX&("39K'40.7FEM%N5:@#PG0 #,%]%) ZT<+?YS>"8"\ 9 -
MD-R4D3AEC!IL-=V8)(NBR"GE?ZH;F,0+DWA@4@=FU&2+-!N$4Q=FK;H#DGI!
M4@](YH"DJQ0P]I"L97=(,B])YB'!#DFV2O$%91ETSYI'%L