Note 9 - Shareholders' Equity

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Shareholders' Equity and Share-based Payments [Text Block]

NOTE 9. SHAREHOLDERS’ EQUITY

          Preferred Stock

            The Company’s amended Certificate of Incorporation authorizes the issuance of 20,000,000 shares of blank-check preferred stock at $0.001 par value. The Board of Directors will be authorized to fix the designations, rights, preferences, powers and limitations of each series of the preferred stock.

The Company filed a Certificate of Designations effective on December 30, 2016 which sets aside 5,000,000 shares of Preferred Stock as Series A Preferred Stock. The Series A Preferred Stock carries a coupon payment obligation of 1.5% of the liquidation value per share ($3.03) per year in cash or additional Series A Preferred Stock, calculated by taking the 30-day average closing price for a share of common stock for the month immediately preceding the coupon payment date which is made annually. For the year ended December 31, 2020, the annual coupon was $28,532. The Series A Preferred Stock has no voting or conversion rights. If purchased, redeemed, or otherwise acquired (other than conversion), the preferred stock may be reissued. The Company paid the 2018 and 2019 coupon payments totaling $358,638 by issuing 126,727 preferred shares and a cash payment of $26,252 for the 2020 coupon payment through March 2020. In 2020, all 4,565,305 shares of Series A Preferred Stock were exchanged for common stock (see below). As of December 31, 2021 and 2020, there are no outstanding shares of Series A Preferred Stock.

    Common Stock

In February 2020, ShipTime Canada amended its rights to exchange one share of ShipTime Canada stock from 45 PAID common shares and 311 PAID preferred shares to 356 PAID common shares. The Company made available to its ShipTime Canada exchangeable preferred shareholders the one-time option to convert existing book entry preferred shares and exchangeable rights to preferred shares into PAID common shares. As a result, certain ShipTime exchangeable shareholders exercised their rights to receive 1,461,078 shares of PAID Series A Preferred Stock for 1,461,078 shares of PAID common stock. At the same time, the Company made available to its Series A Preferred Stock shareholder the option to exchange existing Series A preferred shares for PAID common shares. The exchange was offered on a one-to-one basis. Shareholders holding 1,015,851 shares of Series A Preferred Stock exchanged such shares for 1,015,851 shares of PAID common stock. Furthermore, because of the amended exchange rights, the Company reflected an additional exchange of PAID Series A Preferred Stock shares totaling 2,089,298 to PAID common shares, representing the additional amount of PAID common shares that will be issued to the ShipTime shareholders upon the exchange. During 2020, two shareholders sold 500 ShipTime exchangeable shares which were subsequently exchanged for 178,000 common shares. In total, the Company has reserved for future issuance of 2,213,608 shares of PAID common stock with respect to the remaining 6,218 exchangeable shares to be issued as a result of the ShipTime acquisition which are considered issued and outstanding as of December 31, 2021 for financial reporting purposes.

During 2020, the Company issued 274,120 shares of PAID common stock as a result of the exercise of an investor warrant for 770 ShipTime exchangeable shares. The Company received gross proceeds of $35,636 in connection with the warrant exercise.  On March 29, 2021, the Company's Board of Directors authorized the issuance of 1,050,000 bonus shares of PAID common stock to the CEO/CFO for services rendered during 2019 and 2020.  This bonus was valued at $2,005,500 based on the closing price of the Company's common stock at March 29, 2021 and was recorded in accrued common stock bonus in shareholders’ equity at December 31, 2020. Also, at March 29, 2021, the Company’s Board of Directors authorized the issuance of an additional 250,000 shares to the CEO/CFO as a one-time sign-on bonus resulting in a share-based compensation expense of $477,500, which was recognized ratably during 2021 as the bonus shares were subject to repurchase if the CEO/CFO terminated employment through January 1, 2022. All of these shares were issued on March 31, 2021.  During 2021, the Company issued 18,099 shares valued at $2.21 per share for a total of $40,000 to two employees as bonus compensation which is included in share-based compensation. The shares were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506 of the SEC’s Regulation D thereunder.

Share-Based Incentive Plans

During the years ended December 31, 2021 and 2020, the Company had four 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.

On March 23, 2018, the Board of Directors voted to approve the 2018 Stock Option Plan which reserves 450,000 non-qualified stock options to be granted to employees.  On November 10, 2020, the board voted to increase the 2018 Stock Option Plan from 450,000 options to 900,000 options.  For the year ended December 31, 2020, the Company granted 105,000 stock options to employees, consultants and directors.  The 2020 options have vesting periods of immediately and over a three-year period, they expire if not exercised within ten years from grant date, and the exercise price is $2.885 per share.    During 2020, as a result of the termination of several employees, the Company recorded 61,948 expired options and an additional 20,459 stock options that were cancelled. For the year ended December 31, 2021, the Company granted 22,300 stock options to employees.  The 2021 options have a three-year vesting period, they expire if not exercised within ten years from the grant date, and the exercise price ranges from $1.91 to $2.68 per share.  During 2021, options granted to purchase 6,000 shares of the Company’s common stock were cancelled due to the expiration of the ten-year term and an additional 17,090 were forfeited as a result of the termination of several employees. 

Active Plans:

2018 Plan

On March 23, 2018, the Company adopted the 2018 Non-Qualified Stock Option Plan (the "2018 Plan"). The purpose of the 2018 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 have a vesting period that ranges from one hundred percent on the date of grant to fully vest over a two-year period. There are currently 586,000 shares reserved for future issuance under this plan. Information with respect to stock options granted under this plan during the year ended December 31, 2021 is as follows:

	Number of shares			Weighted average exercise price per share
Options outstanding at January 1, 2021		308,790		$	3.24
Granted		22,300			2.19
Cancelled/Expired		(17,090	)		3.13
Exercised		-			-
Options outstanding at December 31, 2021		314,000		$	3.17

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 year ended December 31, 2021 is as follows:

	Number of shares		Weighted average exercise price per share
Options outstanding at January 1, 2021		36,000	$	0.98
Granted		-		-
Cancelled		-		-
Exercised		-		-
Options outstanding at December 31, 2021		36,000	$	0.98

2011 Plan

On February 1, 2011, the Company adopted the 2011 Non-Qualified Stock Option Plan (the "2011 Plan"). Under the 2011 Plan, employees and consultants may elect to receive their gross compensation in the form of options, exercisable at $0.98 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 one-third vesting in 36 months from the date of the grant. There are no shares reserved for issuance under this plan. Information with respect to stock options granted under this plan during the year ended December 31, 2021 is as follows:

	Number of shares		Weighted average exercise price per share
Options outstanding at January 1, 2021		43,000	$	3.00
Granted		-		-
Cancelled		-		-
Exercised		-		-
Options outstanding at December 31, 2021		43,000	$	3.00

2002 Plan

The 2002 Stock Option Plan (“2002 Plan”) provides for the award of qualified and non-qualified options for up to 60,000 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. There are no shares reserved for issuance under this plan. Information with respect to stock options granted under this plan during the year ended December 31, 2021 is as follows:

	Number of shares			Weighted average exercise price per share
Options outstanding at January 1, 2021		16,000		$	23.33
Granted		-			-
Cancelled/Expired		(6,000	)		60.58
Exercised		-			-
Options outstanding at December 31, 2021		10,000		$	0.98

Fair value of issuances

The fair value of the Company's option grants under the 2018, 2012, 2011, and 2002 Plans was estimated at the date of grant using the Black-Scholes-Merton model with the following weighted average assumptions:

	2021				2020
Expected term (based upon historical experience) (in years)	5.5	-	5.8		5.0	-	5.8
Expected volatility	117	-	159	%	143	-	159	%
Expected dividends	None				None
Risk free interest rate	0.73	-	1.24	%			0.46	%

For the years ended December 31, 2021 and 2020, the Company recorded total share-based compensation expense related to the common stock bonuses, other stock issuances, and stock options of $603,533 and $2,133,808, respectively, which is recorded in share-based compensation expense in the accompanying consolidated statements of operations and comprehensive income (loss).

The Company has unrecognized share-based compensation expense of $123,252 for options outstanding as of December 31, 2021 which will be recognized over the weighted average period of approximately two years.

Information pertaining to options outstanding and exercisable at December 31, 2021 is as follows:

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)
$	0.98		51,500		1.96		51,500		1.96
$	1.91		10,000		9.25		3,333		9.25
$	2.21		7,000		9.45		2,333		9.45
$	2.68		5,300		9.87		1,767		9.87
$	2.89		105,000		8.87		51,667		8.87
$	2.92		52,500		7.13		47,500		7.13
$	3.00		52,500		7.62		47,500		7.62
$	3.30		37,500		5.75		37,500		5.75
$	3.50		3,000		6.76		3,000		6.76
$	4.10		78,700		6.23		78,700		6.23
			403,000		6.81		324,800		6.33

Summary of all stock option plans activity during the year ended December 31, 2021 is as follows:

	Number of Shares			Weighted Average Price		Weighted Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value
Options outstanding at January 1, 2021		403,790		$	3.81
Granted		22,300			2.19
Cancelled/Expired		(23,090	)		18.06
Exercised		-			-
Options outstanding and expected to vest at December 31, 2021		403,000		$	2.90		6.81	$	94,003
Options exercisable at December 31, 2021		324,800		$	2.94		6.33	$	87,469

The aggregate intrinsic value of options is calculated as the difference between the exercise price of options and the fair value of the Company’s common stock.  

Warrants

From time to time, the Company issues warrants to purchase shares of the Company’s common stock to investors, note holders and to non-employees for services rendered or to be rendered in the future. On August 14, 2020, the Board of Directors approved an amendment to ShipTime’s December 30, 2016 Warrant Agreement with an entity controlled by the Company’s CEO/CFO to reprice the outstanding warrants. The modification of the warrant resulted in a charge to the Company’s share-based compensation expense of $318,893.  As of December 31, 2021 and 2020, there were no outstanding warrants.