Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Apr. 01, 2019 | Jun. 30, 2018 | |
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 | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Trading Symbol | PAYD | ||
Entity Common Stock, Shares Outstanding | 1,614,817 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 3,895,430 | ||
Entity Shell Company | false |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 632,331 | $ 535,520 |
Accounts receivable, net | 87,718 | 38,287 |
Funds held in trust | 203,170 | |
Prepaid expenses and other current assets | 110,028 | 44,088 |
Total current assets | 830,077 | 821,065 |
Property and equipment, net | 90,843 | 92,486 |
Other intangible assets, net | 4,290,773 | 5,502,322 |
Goodwill | 10,695,120 | |
Total assets | 5,211,693 | 17,110,993 |
Current liabilities: | ||
Accounts payable | 758,365 | 636,997 |
Note payable | 14,954 | 113,033 |
Related party notes payable | 30,176 | |
Capital leases - current portion | 8,580 | 8,459 |
Accrued expenses | 1,268,633 | 1,066,994 |
Contract liabilities | 144,221 | 279,250 |
Total current liabilities | 2,194,753 | 2,134,909 |
Long term liabilities: | ||
Capital leases - net of current portion | 12,116 | 22,494 |
Deferred tax liability | 1,088,306 | 1,269,660 |
Total liabilities | 3,295,175 | 3,427,063 |
Shareholders' (deficit) equity: | ||
Series A Preferred stock, $0.001 par value, 5,000,000 shares authorized; 3,784,712 and 3,724,547 shares issued and outstanding at December 31, 2018 and 2017, respectively; liquidation value of $11,800,316 and $11,446,138 at December 31, 2018 and 2017, respectively | 3,785 | 3,725 |
Common stock, $0.001 par value, 25,000,000 shares authorized; 1,648,657 issued and 1,614,817 outstanding at December 31, 2018 and 1,648,657 issued and 1,634,122 outstanding at December 31, 2017 | 1,649 | 1,649 |
Additional paid-in capital | 68,751,871 | 68,574,974 |
Accumulated other comprehensive income | 344,182 | 975,877 |
Accumulated deficit | (67,127,122) | (55,845,766) |
Common stock in treasury, at cost, 33,840 and 14,535 shares at December 31, 2018 and 2017, respectively | (57,847) | (26,529) |
Total shareholders' (deficit) equity | 1,916,518 | 13,683,930 |
Total liabilities and shareholders' (deficit) equity | $ 5,211,693 | $ 17,110,993 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Shareholders' equity: | ||
Preferred Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 3,784,712 | 3,724,547 |
Preferred stock, shares outstanding | 3,784,712 | 3,724,547 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 1,648,657 | 1,648,657 |
Common stock, shares outstanding | 1,614,817 | 1,634,122 |
Treasury Shares | 33,840 | 14,535 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Revenues, net | $ 9,253,450 | $ 7,571,997 |
Cost of revenues | ||
Cost of revenues | 6,777,463 | 5,395,262 |
Amortization of acquired technology | 284,720 | 291,375 |
Gross profit | 2,191,267 | 1,885,360 |
Operating expenses: | ||
Salaries and related | 970,193 | 646,195 |
General and administrative | 1,392,882 | 1,278,208 |
Loss on impairment of goodwill | 10,354,172 | 0 |
Amortization of other acquired intangible assets | 529,614 | 533,137 |
Stock-based compensation | 599,799 | 118,572 |
Operating expenses | 13,846,660 | 2,576,112 |
Loss from operations | (11,655,393) | (690,752) |
Other income (expense): | ||
Interest expense, net | (1,673) | (14,127) |
Other income, net | 65,771 | 24,960 |
Unrealized (gain) loss on stock price guarantee | (3,527) | (13,310) |
Total other (expense), net | 60,571 | (2,477) |
Loss before provision for income taxes | (11,594,822) | (693,229) |
Provision for income taxes | (63,296) | (76,209) |
Net loss | (11,531,526) | (617,020) |
Preferred share redemption discount | 250,170 | 178,080 |
Preferred dividends | (172,015) | (169,281) |
Net loss available to common stockholders | $ (11,453,371) | $ (608,221) |
Loss per share - basic and diluted | $ (7.06) | $ (0.37) |
Weighted average number of common shares outstanding - basic and diluted | 1,622,671 | 1,645,542 |
Other comprehensive income (loss): | ||
Net loss | $ (11,531,526) | $ (617,020) |
Foreign currency translation adjustments | (631,695) | 975,877 |
Comprehensive loss | $ (12,163,221) | $ 358,857 |
STATEMENTS OF CHANGES IN SHAREH
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital | Accumulated Income | Accumulated Deficit | Treasury Stock | Stock Amount [Member] | Total |
Beginning Balance, Amount at Dec. 31, 2016 | $ 3,825 | $ 1,649 | $ 68,782,432 | $ 0 | $ (55,406,826) | $ 0 | $ 0 | $ 13,381,080 |
Beginning Balance, Shares at Dec. 31, 2016 | 3,825,000 | 1,648,960 | ||||||
Cancelled common shares due to the reverse/forward split | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Repurchase of common and preferred shares, shares | (100) | 0 | (326,030) | 0 | 178,080 | (14,535) | (26,529) | (174,579) |
Repurchase of common and preferred shares, amount | $ (100,453) | $ 0 | ||||||
Foreign currency translation adjustment | 0 | 0 | $ 0 | $ 975,877 | $ 0 | $ 0 | $ 0 | $ 975,877 |
Share-based compensation expense, amount | 0 | 0 | 118,572 | 0 | 0 | 0 | 0 | 118,572 |
Net loss | 0 | 0 | 0 | 0 | (617,020) | 0 | 0 | (617,020) |
Ending Balance, Amount at Dec. 31, 2017 | $ 3,725 | $ 1,649 | $ 68,574,974 | $ 975,877 | $ (55,845,766) | $ (14,535) | $ (26,529) | $ 13,683,930 |
Ending Balance, Shares at Dec. 31, 2017 | 3,724,547 | 1,648,657 | ||||||
Repurchase of common and preferred shares, shares | (133) | 0 | (422,709) | 0 | 250,170 | (19,305) | (31,318) | (203,990) |
Repurchase of common and preferred shares, amount | $ (133,419) | $ 0 | ||||||
Foreign currency translation adjustment | $ 0 | 0 | $ 0 | $ (631,695) | $ 0 | $ 0 | $ 0 | $ (631,695) |
Share-based compensation expense, shares | 193,584 | |||||||
Share-based compensation expense, amount | $ 193 | 0 | 599,606 | 0 | 0 | 0 | 0 | 599,799 |
Net loss | 0 | 0 | 0 | 0 | (11,531,526) | 0 | 0 | (11,531,526) |
Ending Balance, Amount at Dec. 31, 2018 | $ 3,785 | $ 1,649 | $ 68,751,871 | $ 344,182 | $ (67,127,122) | $ (33,840) | $ (57,847) | $ 1,916,518 |
Ending Balance, Shares at Dec. 31, 2018 | 3,784,712 | 1,648,657 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (11,531,526) | $ (617,020) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 836,292 | 859,210 |
Loss on Impairment of goodwill | (10,354,172) | 0 |
Stock-based compensation | 599,799 | 118,572 |
Unrealized (gain) loss on stock price guarantee | 3,527 | 13,310 |
Loss on sale of property and equipment | (1,930) | 0 |
Write off of other receivables | 0 | 1,044 |
Provision for bad debt | 0 | 14,824 |
Deferred income taxes | (84,075) | (77,078) |
Changes in assets and liabilities: | ||
Accounts receivable | (53,626) | (12,717) |
Prepaid expenses and other current assets | (72,015) | 14,933 |
Accounts payable | 173,561 | 37,000 |
Accrued expenses | 208,218 | 71,948 |
Contract liabilities | (119,038) | 24,239 |
Net cash provided by (used in) operating activities | 317,219 | 448,265 |
Cash flows from investing activities: | ||
Proceeds from sale of property and equipment | 1,182 | |
Purchase of property and equipment | (31,006) | (28,710) |
Net cash used in investing activities | (29,824) | (28,710) |
Cash flows from financing activities: | ||
Payments on capital leases | (8,189) | (6,130) |
Payments on note payable | (295,491) | (55,700) |
Payments on related party note payable | (29,214) | (146,350) |
Repurchase of common and preferred shares | 0 | (26,529) |
Net cash provided by financing activities | (332,894) | (234,709) |
Effect of exchange rate changes on cash and cash equivalents | (60,860) | 45,200 |
Net change in cash and cash equivalents | (106,359) | 230,046 |
Cash and cash equivalents, beginning of year | 535,520 | 508,644 |
Cash and cash equivalents, ending of year | 632,331 | 535,520 |
Funds held in trust, beginning of year | 738,690 | 508,644 |
Funds held in trust, end of year | 623,331 | 738,690 |
Cash, cash equivalents and funds in trust, end of period | 623,331 | 738,690 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Income taxes | 1,260 | 456 |
Interest | 1,673 | 14,127 |
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Repurchase of common and preferred shares with notes payable | $ 202,656 | $ 148,050 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
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 (“BeerRun”) 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. ShipTime Canada, Inc. (“ShipTime”) has developed a SaaS-based application, which focuses on the small and medium business segments. This offering allows members to quote, process, generate labels, dispatch and track courier and LTL shipments all from a single interface. The application provides customers with a choice of today’s leading couriers and freight carriers all with discounted pricing allowing members to save on every shipment. ShipTime can also be integrated into on-line shopping carts to facilitate sales via ecommerce. We actively sell directly to small and medium businesses and through long standing partnerships with selected associations throughout Canada. |
GOING CONCERN AND MANAGEMENT_S
GOING CONCERN AND MANAGEMENT’S PLANS | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018, the Company reported a net loss of $11,531,526. The Company has an accumulated deficit of $67,127,122 and has a working capital deficit of $1,364,676 at December 31, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management feels that the addition of ShipTime’s services will return a valuable impact on the Company’s growth in the near future. The positive cash flow from operations is a significant indicator of our successful transition to the new shipping services. In addition to the existing services provided, ShipTime will launch products that are complementary to the current offering of AuctionInc and BeerRun. Combined, the Company believes that all segments of the operations will benefit from ShipTime. 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 2019 and will have a positive impact on the Company for 2019 and future years. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
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”). Principles of Consolidation The consolidated financial statements include the accounts of PAID, Inc. and its wholly owned subsidiaries, PAID Run, LLC and, ShipTime Canada. All intercompany accounts and transactions have been eliminated. On November 9, 2016, the board of directors agreed to effectuate a reverse split immediately followed by a forward split. The process was completed with FINRA on January 23, 2017. As a result of the split, every ten 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 10,989,608 to 1,098,960. All share and per share information in this Form 10-K has been retroactively adjusted to reflect the reverse stock split. Foreign Currency The currency of ShipTime, the Company’s international subsidiary, is in Canadian dollars. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at each balance sheet date. Results of operations and cash flows are translated using the average exchange rates throughout the period. The effect of exchange rate fluctuations on translation of assets and liabilities is included as a separate component of shareholders’ equity in accumulated other comprehensive income. Geographic Concentrations The Company conducts business in the U.S. and Canada. For customers headquartered in their respective countries, the Company derived approximately 95% of its revenues from Canada and 5% from the U.S. during the year ended December 31, 2018, compared to 93% of its revenues from Canada and 7% from the U.S. during the year ended December 31, 2017. At December 31, 2018, the Company maintained 100% of its net property and equipment in Canada. At December 31, 2017, the Company maintained 96% of its net property and equipment in Canada and the remaining 4% in the U.S. Comprehensive Income (Loss) Comprehensive income (loss) includes all changes in equity (net assets) during a period from non-owner sources. For the years ended December 31, 2018 and 2017, the components of comprehensive income (loss) consist solely of foreign currency translation gains (losses). Business Combinations The Company accounts for business combinations by recognizing the assets acquired and liabilities assumed at their fair values on the acquisition date. The purchase price allocation process requires management to make estimates and assumptions at the acquisition date, especially with respect to intangible assets and pre-acquisition contingencies. Examples of critical estimates in valuing certain of the intangible assets the Company has acquired or may acquire in the future include but are not limited to: unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, and estimates compared to actual results. Use of Estimates The preparation of the consolidated 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 Company’s management include, but are not limited to, the collectability of accounts receivable, the recoverability of long-lived assets and goodwill, the 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, 2018 and 2017, the Company’s financial instruments include cash and cash equivalents, accounts receivable, funds held in trust, accounts payable, notes payable, related party notes payable, and accrued expenses. The carrying amount of cash and cash equivalents, accounts receivable, funds held in trust, accounts payable, notes payable, related party notes 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 USD $250,000 and the Canadian Depositors Insurance Corporation (“CDIC”) up to CAD $100,000. At December 31, 2018, the Company had amounts that exceeded the CDIC insurance limits but none that were in excess of the FDIC insurance limits. 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, 2018 and 2017, the Company recorded a provision for doubtful accounts of $55,433. For the years ended December 31, 2018 and 2017, no revenues from any one individual customer accounted for more than 10% of the total revenues. Funds Held in Trust Funds held in trust consisted of rebates earned by ShipTime customers that have existing relationships with the Canadian Federation of Independent Business (“CFIB”). During the year ended December 31, 2018 the Company replaced its rebate program with an airlines miles program As a result, the CFIB allowed the Company to release the funds held in trust for unused customer rebates back to cash and cash equivalents. Previously, the rebate was held in escrow at CFIB for one year until earned by the customer, at which time the customer had three years after the last shipment to use the rebate after which time the rebate expired. The Company launched a program in 2018 where the customers are offered airline miles as a reward in lieu of a cash rebate. As a result, the CFIB allowed the Company to release the funds held in trust for unused customer rebates back to cash and cash equivalents. As the Company transitioned from cash rebates to airline mile rewards, customers were allowed to convert their existing cash rebate balances to airline miles at the rate of 10 miles per $1 of rebates. For the period ended December 31, 2018, the Company recognized $67,532 of other income related to these conversions as the cost of the exchanged airline miles was less than the value of the cash rebates exchanged. Unused airline miles are recorded in prepaid expenses and other current assets in the accompanying consolidated balance sheets. Advanced Royalties Advanced royalties represented amounts the Company had advanced to certain customers and were recoverable against future royalties earned by the customers. Advances were issued in either cash or shares of the Company’s common stock and advanced amounts were calculated based on the customers’ 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 a 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 and comprehensive income (loss) (see Note 10). 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 8 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 lives of the asset or the term of the lease, whichever is shorter. Expenditures for repairs and maintenance are charged to expense as incurred. Intangible Assets Intangible assets consist of patents, client lists, trade names, customer relationships, brewery and distillery management software and shipping label generation technology which are being amortized on a straight-line basis over their estimated useful lives. Currently the intangible assets are being amortized between two and 17 years. Long-Lived Assets and Goodwill 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. During the year ended December 31, 2018, the Company recorded impairment of goodwill in the amount of $10,354,172. There can be no assurance, however, that market conditions will not change or demand for the Company’s services will continue, which could result in additional impairment of long-lived assets in the future. Revenue Recognition The Company generates revenues principally from fees for coordinating shipping services, sales of shipping calculator subscriptions, brewery management software subscriptions, and client services. (see Note 4). Cost of Revenues Cost of revenues includes carrier services, web hosting, data storage, and commissions, carrier insurance costs and amortization of acquired technology. Operating Expenses Operating expenses include indirect expenses, including credit card processing fees, marketing, payroll, travel, facility costs, amortization of other intangibles and other general and administrative expenses. Advertising Advertising costs are charged to expense as incurred. For the years ended December 31, 2018 and 2017, advertising expense totaled $154,455 and $156,856, respectively, and are included in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income (loss). Share-Based Compensation The Company grants options to purchase the Company’s 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. In addition, during 2018 the Board of Directors approved the issuance of preferred shares for executive compensation. 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 Company’s 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 and comprehensive income (loss) for the years ended December 31, 2018 and 2017 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, 2018 and 2017, no excess tax benefits for tax deductions related to share-based awards were recognized from any stock options exercised in the years ended December 31, 2018 and 2017 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 Company’s income tax provision includes 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. There are no unrecognized tax benefits included in the consolidated balance sheet that would, if recognized, affect the effective tax rate. The Company’s 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 Company’s consolidated balance sheets at December 31, 2018 and 2017. The Company is subject to taxation in the U.S. and various state jurisdictions. 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, 2018, there were no dilutive shares that were included in the diluted earnings (loss) per share as their effect would have been antidilutive for the year then ended. The Company computes its loss applicable to common stockholders by subtracting dividends on preferred stock, including undeclared or unpaid dividends if cumulative, and any deemed dividends or discounts on redeemed preferred stock from its reported net loss and reports the same on the face of the consolidated statements of operations and comprehensive income (loss). 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 Company’s four reportable segments are managed separately based on fundamental differences in their operations. At December 31, 2018, the Company operated in the following four reportable segments: a) Client services; b) Shipping calculator services; c) Brewery management software; and d) Shipping coordination and label generation services. 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 Company’s chief operating decision makers are the Chief Executive Officer and Chief Financial Officer. The following table compares total revenues for the years indicated. Year Ended December 31, 2018 December 31, 2017 Client services $ 16,079 $ 22,702 Brewery management software 273,294 309,049 Shipping calculator services 176,159 205,748 Shipping coordination and label generation services 8,787,918 7,034,498 Total revenues, net $ 9,253,450 $ 7,571,997 The following table compares total loss from operations for the years indicated. Year Ended December 31, 2018 December 31, 2017 Client services $ 12,373 $ 17,380 Brewery management software 12,530 36,040 Shipping calculator services (818,317) (389,640) Shipping coordination and label generation services (10,861,979) (354,532) Total loss from operations $ (11,655,393) $ (690,752) Reclassification Certain amounts were reclassified in the accompanying consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2017 in order to conform to the current period presentation. 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. The Company is required to adopt this new authoritative guidance in the first quarter of fiscal 2019. The Company has recently evaluated ASU 2016-02; as a result, while we expect the adoption of ASU 2016-02 to have an effect on the Company’s consolidated balance sheet due to the recognition of the lease rights and obligations as assets and liabilities, we do not expect ASU 2016-02 to have a material effect on the Company’s consolidated 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. The Company is required to adopt this new authoritative guidance in the first quarter of fiscal 2019. Due to the Company’s limited involvement in investments in equity securities, the Company does not expect that this standard will have a material impact on its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230), Restricted Cash”, which enhances and clarifies the guidance on the classification and presentation of restricted cash in the statement of cash flows. The Company adopted this standard in 2018 by using the retrospective transition method, which required the following disclosures and changes to the presentation of its consolidated financial statements: cash, cash equivalents, and funds held in trust reported on the consolidated statement of cash flows now includes funds held in trust of $203,170 and $169,082 as of December 31, 2017 and December 31, 2016, respectively, as well as previously reported cash and cash equivalents. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. 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. On January 1, 2018, the Company elected to adopt the Modified Retrospective Transition method and has determined there is no impact on its consolidated financial statements (see Note 4 for additional details on this implementation and the required disclosures). In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” . In January 2017, the FASB also issued ASU 2017-04, “Intangibles - Goodwill and other (Topic 350): Simplifying the Test for Goodwill Impairment”. The amendments in this Update remove the second step of the current goodwill impairment test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The Company adopted ASU 2017-04 as of October 1, 2018, which resulted in impairment of goodwill of $10,354,172 for the year ended December 31, 2018. In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Non-Employee Share Based Payment Accounting”. The amendments in this update expand the scope of the employee based share payments to non-employees and are intended to reduce cost and complexity for share based payments to non-employees. ASU 2018-07 will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company has elected to early adopt ASU 2018-07 as of June 30, 2018, which required the Company to measure the fair value of the awards for one non-employee as of the adoption date. The new measurement did not have a material effect on the Company’s consolidated financial statements. |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | Revenue Recognition In May 2014, the FASB issued Accounting Standards Update ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which modifies how all entities recognize revenue. Topic 606 introduces a five-step model to achieve its core principle 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. We adopted Topic 606 on January 1, 2018 and have evaluated the Company’s current revenue recognition process in comparison to the adoption of Topic 606. The Company reviewed the principles of Topic 606 by taking into consideration the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Due to the nature of the Company’s product offerings and contracts associated with those products, the Company’s deliverables do not fluctuate and its revenue recognition is consistent. The Company adopted Topic 606 on January 1, 2018 using the modified retrospective transition method. The adoption of Topic 606 did not have a material effect on the Company’s consolidated financial position or results of operations, and no cumulative catch-up adjustment to the opening balance of retained earnings was required. The Company used the related practical expedients to not disclose the transaction price allocated to remaining unsatisfied obligations and when the Company expects to recognize the related revenue. Nature of Goods and Services For label generation service revenues the Company recognizes revenue when a customer has successfully prepared a shipping label and had a pickup. Customers with pickups after the end of the reporting period are recorded as contract liabilities on the consolidated balance sheets. The service is offered to consumers via an online registration and allows users to create a shipping label using a credit card on their account. ShipTime, in partnership with the Canadian Federation of Independent Businesses (“CFIB”), offered a cash rebate to its customers. Revenues were recognized net of the cash rebates, which were held in “funds held in trust” account in the accompanying consolidated balance sheets. The cash rebates are available for twelve months for future use. Rebate revenue is recognized when the rebate is used. Beginning in 2018, customers are offered airline miles as a reward in lieu of a cash rebate. As a result, the CFIB allowed the Company to release the funds held in trust for unused customer rebates back to cash and cash equivalents. As the Company transitioned from cash rebates to airline mile rewards, customers were allowed to convert their existing cash rebate balances to airline miles at the rate of 10 miles per $1 of rebates. For the year ended December 31, 2018, the Company recognized $67,532 of other income related to these conversions as the cost of the exchanged airline miles was less than the value of the cash rebates exchanged. Unused airline miles are recorded in prepaid expenses and other current assets in the accompanying consolidated balance sheets. 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 timing of the revenue recognition and cash collection may vary within a given quarter and the deposits for future services are recorded as contract liabilities on the consolidated balance sheets. Brewery management software subscribers are billed monthly at the first of the month. All payments are made via credit card for the month following. Revenue Disaggregation The Company operates in four reportable segments (see Note 3). Performance Obligations At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services). To identify the performance obligations, the Company considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Revenue is recognized when the performance obligation has been met, which is when the customer has successfully prepared a shipping label and had a pickup for shipping coordination and label generation services. The Company considers control to have transferred at that time because the Company has a present right to payment at that time, the Company has provided the shipping label, and the customer is able to direct the use of, and obtain substantially all of the remaining benefits from the shipping label. For arrangements under which the Company provides a subscription for shipping calculator services and brewery management software, the Company satisfies its performance obligations over the life of the subscription, typically twelve months or less. The Company has no shipping and handling activities related to contracts with customers. Revenues are recognized net of any taxes collected from customers, which are subsequently remitted to government authorities. Significant Payment Terms Pursuant to the Company’s contracts with its customers, amounts are collected up front primarily through credit/debit card transactions. Accordingly, the Company determined that its contracts with customers do not include extended payment terms or a significant financing component. Variable Consideration In some cases, the nature of the Company’s contracts may give rise to variable consideration, including rebates and cancellations or other similar items that generally decrease the transaction price. Variable consideration is estimated at the most likely amount that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the anticipated performance and all information (historical, current and forecasted) that is reasonably available. Revenues are recorded net of variable consideration, such as rebates and cancellations. Warranties The Company’s products and services are provided on an “as is” basis and no warranties are included in the contracts with customers. Also, the Company does not offer separately priced extended warranty or product maintenance contracts. Contract Assets Typically, the Company has already collected revenue from the customer at the time it has satisfied its performance obligation. Accordingly, the Company has only a small balance of accounts receivable, totaling $87,718 and $38,287 at December 31, 2018 and 2017, respectively. Generally, the Company does not have material amounts of contract assets since revenue is recognized as control of goods is transferred or as services are performed. Contract Liabilities (Deferred Revenue) Contract liabilities are recorded when cash payments are received in advance of the Company’s performance (including rebates). Contract liabilities were $144,221 and $279,250 at December 31, 2018 and 2017, respectively. During the year December 31, 2018, the Company recognized revenues of $157,820 related to contact liabilities outstanding at the beginning of the year. Practical Expedients and Exemptions The Company has elected the following practical expedients allowed under Topic 606: o Payment terms with the Company’s customers, which are one year or less, are not considered a significant financing component. o The Company’s performance obligations on its orders are generally satisfied within one year from a given reporting date and, therefore, the Company has omitted disclosure of the transaction price allocated to remaining performance obligations on open orders. o The Company expenses incremental direct costs of obtaining a contract (sales commissions) when incurred because the amortization period is generally 12 months or less. The Company does not incur costs to fulfill a customer contact that meet requirements for capitalization. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | At December 31, property and equipment consisted of the following: 2018 2017 Computer equipment and software $ 134,507 $ 135,271 Office furniture and equipment 54,820 69,521 Website development costs 396,559 377,052 585,886 581,844 Accumulated depreciation (495,043) (489,358) $ 90,843 $ 92,486 Depreciation expense of property and equipment for the years ended December 31, 2018 and 2017 amounted to $21,958 and $34,698, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | The Company holds several patents 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. These patents help facilitate rapid and accurate estimation of shipping costs across multiple shipping carriers and also include real-time calculation of shipping. In addition, the Company has various other intangibles from past business combinations. At December 31 intangible assets consisted of the following: 2018 2017 Patents $ 16,000 $ 16,000 Software 83,750 83,750 Trade Name 785,038 850,311 Technology 501,360 540,201 Client list / relationship 4,620,599 4,998,130 Accumulated amortization (1,715,974) (986,070) $ 4,290,773 $ 5,502,322 Amortization expense of intangible assets for the years ended December 31, 2018 and 2017 was $814,334 and $824,512, respectively. Amortization of intangible assets for the next five years ending December 31 are as follows: Year Ended December 31, 2019 455,562 2020 450,799 2021 450,799 2022 293,790 2023 293,790 Total 5 year amortization $ 1,944,740 Goodwill In 2016, the Company entered into an Amalgamation Agreement (the “Amalgamation Agreement”) with emergeIT, Inc., which does business as “ShipTime”. Of the total estimated purchase price, $9,989,685 was allocated to goodwill and was attributable to expected synergies between the combined companies, including the ability for the combined companies to estimate and process shipping calculations and support e-commerce shopping cart platforms in addition to the acquired workforce. Goodwill represented the excess of the purchase price of the acquired business over the estimated fair value of the underlying net tangible and intangible assets acquired. During the fourth quarter of 2018, the Company determined that the value of goodwill was impaired and recorded a loss on impairment of goodwill of $10,354,172. None of the goodwill was deductible for income tax purposes. For the years ended December 31, 2018 and 2017, goodwill activity was as follows; Balance, January 1, 2017 $ 9,989,685 Effect of exchange rate changes 705,435 Balance, December 31, 2017 10,695,120 Effect of exchange rate changes (340,948 ) Loss on impairment of goodwill (10,354,172 ) Balance, December 31, 2018 $ - |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | At December 31, accrued expenses consist of the following: 2018 2017 Payroll and related costs $ 169,691 $ 3,448 Professional and consulting fees 2,100 - Royalties 51,838 51,838 Stock price guarantee (see Note 10) 884,241 880,713 Other 160,763 130,995 Total $ 1,268,633 $ 1,066,994 |
OTHER LIABILITIES
OTHER LIABILITIES | 12 Months Ended |
Dec. 31, 2018 | |
Leases, Capital [Abstract] | |
OTHER LIABILITIES | Notes Payable In 2017, the Company entered into two notes payable with a shareholder to repurchase common and preferred shares. The first note was for a period of one year for CAD $120,000 with payment terms of twelve equal installments of CAD $10,328 at an interest rate of 6%. The second note was an interest-free, seven-month note for CAD $70,992 with payment terms of one payment of CAD $10,000 followed by six equal installments of CAD $10,165. Both of these notes were paid in full in 2018. In January 2018, the Company entered into a note payable with a shareholder to repurchase common and preferred shares. The note was an interest-free, eight-month note for CAD $66,708 with payment terms of one payment of CAD $10,000 followed by eight equal installments of CAD $8,101. This note was paid in full in the third quarter of 2018. In April 2018, the Company entered into a note payable with a shareholder to repurchase common and preferred shares. The note was an interest-free, fifteen-month note for CAD $72,500. The Company made payments on this note in the amount of CAD $31,726. The balance of CAD $40,774 on this note was offset in the third quarter of 2018 against a note receivable to the same party (see below). In August 2018, the Company entered into a note payable with a shareholder to repurchase common and preferred shares. The note is an interest-free, six-month note for CAD $122,400 with payment terms of six equal installments of CAD $20,400. The balance of the note payable as of December 31, 2018 was $14,954. Notes Receivable In April 2018, the Company entered into an agreement with a third party to develop software to assist with the growth of the e-commerce platform. The agreement contained a loan to a third party in the amount of $144,000 to be loaned by the Company in eighteen installments of which CAD $40,744 was actually loaned during the nine month period ended September 30, 2018. During the third quarter of 2018, the Company cancelled the agreement and called the CAD $40,774 note with the third party developer. As a result, the balance of the note receivable was offset against the CAD $72,500 note payable for the repurchase of common and preferred shares issued to the same party (see above), and no balance on the note receivable is due. Capital Lease Obligations The Company is obligated under capital leases for equipment, which expire at various dates through 2020 and 2021. The assets capitalized under these leases and associated accumulated depreciation at December 31, are as follows: 2018 2017 Property and equipment $ 45,486 $ 49,440 Accumulated depreciation (25,269) (10,986) $ 20,217 $ 38,454 Depreciation of equipment under capital leases is included in depreciation expense. Minimum future lease payments under capital lease obligations as of December 31, 2018 are as follows: Year Ended December 31, 2019 $ 10,222 2020 10,222 2021 2,736 Total future minimum lease payments 23,180 Less amount representing interest (2,484) Present value of net minimum lease payment 20,696 Less current portion (8,580) $ 12,116 |
RELATED PARTY NOTES PAYABLE
RELATED PARTY NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2018 | |
Due To Related Parties | |
RELATED PARTY NOTES PAYABLE | Prior to the acquisition of ShipTime, two notes were issued. One note was issued at an 8% interest rate and was paid in full in September 2017. A second note was issued in 2014 and renegotiated in June 2017 with a 6% interest rate and was paid in full in March 2018. At December 31, 2018 and 2017, the balance on the notes due to related parties was $0 and $30,176, respectively. Interest expense related to the notes payable totaled $1,673 and $10,731 for the years ended December 31, 2018 and 2017, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Operating Leases During the year ended December 2018, the Company elected not to renew its office lease located at 200 Friberg Parkway, Westborough, MA. In July 2016, ShipTime entered into in an office lease located at 700 Dorval Street, Oakville Ontario at a rate of CAD $2,428 per month. The term of this lease was 3 years. In March 2019, the Company entered into an office lease which extended its current lease through August 2023 at a rate of CAD $4,343 per month and included additional space. The approximate future minimum rents under the current operating leases are: Years Ended December 31, 2019 $ 29,779 2020 38,202 2021 38,202 2022 38,202 2023 25,477 $ 169,862 Stock Price Guarantee In connection with the Company’s advance royalties with a client, the Company guaranteed that shares of common stock would sell for at least $60.00 per share. If the shares are not at the required $60.00 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, 2018 and 2017, the stock price guarantee was $884,241 and $880,713, respectively, and included in accrued expenses in the consolidated balance sheets, although any required payment would be disputed by the Company. Legal Matters In the normal course of business, the Company periodically becomes involved in litigation. As of December 31, 2018, 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. 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 lease, the Company has agreed to indemnify its lessor 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_ EQUITY
SHAREHOLDERS’ EQUITY | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
SHAREHOLDERS’ EQUITY | Preferred Stock On December 19, 2016, the Company filed an amendment to its Certificate of Incorporation to authorize the issuance of 20,000,000 shares of blank-check preferred stock at $0.001 par value, of which 3,825,000 shares were reserved for the Amalgamation Agreement. 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 holders have no voting rights and have an aggregate liquidation value of $11,800,316 at December 31, 2018. The Series A Preferred Stock also 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 years ended December 31, 2018 and 2017, the annual coupon is $172,015 and $169,281, respectively, which has been added to the liquidation value of the preferred stock. The 2017 coupon is higher than that disclosed in the 2017 10-K due to a misapplication of the intended calculation of the coupon rate. The Series A Preferred Stock have no voting or conversion rights. If purchased, redeemed, or otherwise acquired (other than conversion), the preferred stock may be reissued. In April 2019, the Company will pay the annual coupon for the year ended December 31, 2017. Common Stock In November 2016, the majority shareholders approved an amendment to the Company’s Certificate of Incorporation to increase the Company’s authorized shares of common stock from 1,100,000 to 25,000,000, to issue up to 2,000,000 shares of blank check preferred stock and to make effective, a reverse stock split at a range of 1 for 500 through 1 for 3,000 immediately followed by a forward split of the outstanding common stock at an exchange rate of 50 for 1 through 300 for 1 to reduce the number of authorized shares of the Company’s common stock, subject to the Board of Directors’ discretion. In January 2017, the Company completed a reverse split of 1-for 3,000 immediately followed by a forward split of 300 for 1. As a result of the split every ten shares of common stock outstanding were consolidated into one share, reducing the number of common shares outstanding on the effective date from 10,989,608 to 1,098,960. All share and per share information on this Form 10-K has been retroactively adjusted to reflect the reverse stock split. As a result of the round up during the reverse split followed by the forward split the Company reduced its shares outstanding by 303 shares. The Company has authorized and reserved for future issuance 480,880 shares of common stock and 3,347,304 shares of preferred stock with respect to the remaining exchangeable shares to be issued as a result of the ShipTime acquisition. Share Repurchase During 2017, the Company entered into three agreements to repurchase exchangeable shares of ShipTime common stock. Each ShipTime exchangeable share exchanges into 311 preferred shares and 45 common shares of the Company. The total shares exchanged in these transactions were 14,535 common shares and 100,453 preferred shares. The allocated discount on the repurchase of the preferred stock was $1.77 per share of preferred stock and has been recorded in accumulated deficit, and reduced the net loss available to common shareholders in accordance with ASC 260-10-S99-2. The repurchase of the common shares was recorded at an allocated cost of $1.83 per share. In January 2018, the Company entered into an agreement to repurchase 109 exchangeable shares of ShipTime common stock. The total shares exchanged in this transaction were 4,905 common shares and 33,899 preferred shares of the Company. The allocated discount on the repurchase of the preferred stock was $1.87 per share and has been recorded in accumulated deficit, and reduced the net loss available to common shareholders. The repurchase of the common shares was recorded at an allocated cost of $1.59 per share. In April 2018, the Company entered in a second agreement with a shareholder to purchase 120 exchangeable shares of ShipTime common stock. The total shares exchanged in this transaction were 5,400 common shares and 37,320 preferred shares of the Company. The discount on the repurchase of preferred stock was $1.90 per share and has been recorded in accumulated deficit, and reduced the net loss available to common shareholders. The repurchase of the common shares was recorded at an allocated cost of $1.58 per share. In August 2018, the Company entered in an additional agreement with a shareholder to purchase 200 exchangeable shares of ShipTime common stock. The total shares exchanged in this transaction were 9,000 common shares and 62,200 preferred shares of the Company. The discount on the repurchase of preferred stock was $1.87 per share and has been recorded in accumulated deficit, and was added to the net loss available to common shareholders. The repurchase of the common shares was recorded at an allocated cost of $1.58 per share. Share-based Incentive Plans During the years ended December 31, 2018 and 2017, 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. In 2017 there were 37,500 stock options granted to board members. The options vested immediately and expire if not exercised within ten years, the exercise price is $3.30 per share. As a result of the issuance during 2017, the Company recorded a share-based compensation expense of $118,572. 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. The Company has three additional stock option plans that include both incentive and non-qualified stock options to be granted to certain eligible employees, non-employee directors, or consultants of the Company. The Company granted 183,700 stock options to employees and consultants during the quarter ended March 31, 2018 and an additional 31,477 during the quarter ended December 31, 2018. The options have vesting periods of immediately and over a two-year period, they expire if not exercised within ten years from grant date, and the exercise price is $4.10 and $3.50, respectively per share. During 2018, the Board of Directors voted to approve Executive Compensation by means of issuance of 193,584 preferred shares valued at $24,628. In total, during the years ended December 31, 2018 and 2017, the Company recorded share-based compensation expense of $599,799 and $118,572, respectively. During 2018, as a result of the resignation of one employee the Company recorded 23,333 expired options and an additional 16,667 that were cancelled. 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 274,823 shares reserved for future issuance under this plan. Information with respect to stock options granted under this plan during the year ended December 31, 2018 is as follows: Number of shares Weighted average exercise price per share Options outstanding at January 1, 2018 - $ - Granted 215,177 4.01 Cancelled (16,667) 4.10 Expired (23,333) 4.10 Options outstanding at December 31, 2018 175,177 $ 3.99 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, 2018 is as follows: Number of shares Weighted average exercise price per share Options outstanding at January 1, 2018 36,000 $ 0.98 Granted - - Cancelled - - Exercised - - Options outstanding at December 31, 2018 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, 2018 is as follows: Number of shares Weighted average exercise price per share Options outstanding at January 1, 2018 43,000 $ 3.00 Granted - - Cancelled - - Exercised - - Options outstanding at December 31, 2018 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, 2018 is as follows: Number of shares Weighted average exercise price per share Options outstanding at January 1, 2018 16,000 $ 23.33 Granted - - Cancelled - - Exercised - - Options outstanding at December 31, 2018 16,000 $ 23.33 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: 2018 Expected term (based upon historical experience) 5.6 years Expected volatility 218 % Expected dividends None Risk free interest rate 2.68 % For the years ended December 31, 2018 and 2017, the Company recorded share-based compensation expense related to stock options of $575,171 and $118,572, respectively, and are included in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income (loss). The Company has unrecognized share-based compensation expense of $180,941 for options outstanding as of December 31, 2018 which will be recognized in fiscal year 2019. Information pertaining to options outstanding and exercisable at December 31, 2018 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 52,500 4.93 52,500 4.93 $ 3.30 37,500 8.75 37,500 8.75 $ 3.50 31,477 9.76 10,492 9.76 $ 4.10 143,700 9.23 67,900 9.23 $ 72.50 5,000 2.86 5,000 2.86 270,177 8.27 173,392 7.67 Summary of all stock option plans during the year ended December 31, 2018 is as follows: Number of Shares Weighted Average Price Weighted Average Remaining Contractual Life (In Years) Aggregate Intrinsic Value Options exercisable at January 1, 2018 95,000 $ 5.66 Granted 215,177 4.01 Cancelled (16,667) 4.10 Expired (23,333) 4.10 Options outstanding at December 31, 2018 270,177 $ 4.58 8.27 $ 112,088 Options exercisable at December 31, 2018 173,392 $ 4.92 7.67 $ 112,088 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 share of the Company’s common stock to investors, note holders and to non-employees for service rendered or to be rendered in the future. A summary of the warrant activity during the year ended December 31, 2018 is as follows: Number of Shares Subject to Warrants Outstanding Weighted Average Exercise Price Warrants outstanding - January 1, 2018 34,425 $ 0.87 Granted - $ - Exercised - $ - Warrants outstanding and exercisable - December 31, 2018 34,425 $ 0.87 Weighted average remaining contractual life of the outstanding warrants in years 3.0 years |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | The Company’s loss before taxes includes the following components for the years ended December 31: 2018 2017 U.S. (964,658) (348,138) Foreign (10,630,164) (345,091) (11,594,822) (693,229) The Company is subject to taxation in the U.S., Canada, and Massachusetts. The provision (benefit) for income taxes for the years ended December 31 are summarized below: 2018 2017 Current: Federal $ - $ - State 456 456 Foreign 20,107 - Total current 20,563 456 Deferred: Federal - - State (1) - Foreign (83,858) (76,665) Total deferred (83,859) (76,665) Income tax provision (benefit) $ (63,296) $ (76,209) A reconciliation of income taxes computed by applying the statutory U.S. income tax rate to the Company’s loss before income taxes to the income benefit is as follows for the years ended December 31: 2018 2017 U.S. federal statutory tax rate 21.00 % 34.00 % State tax benefit, net 0.16 % 2.61 % Stock compensation (3.43) % - % Other (0.85) % (6.02) % Tax law change - % (904.97) % Impairment of goodwill (18.87) % - % Valuation allowance 2.57 % 885.38 % Effective income tax rate 0.58 % 11.00 % 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 Company’s deferred tax assets are as follows as of December 31: 2018 2017 Deferred taxes: NOLs $ 10,391,563 $ 10,526,744 Inventory and other reserves 31,892 31,892 Depreciation and amortization (1,024,619) (1,341,573) Change in value of stock 241,575 240,611 Nonqualified stock option expense 297,822 523,026 Other 96 58,896 Total deferred tax assets 9,938,329 10,039,596 Valuation allowance (11,026,635) (11,309,256) Net deferred tax liabilities $ (1,088,306) $ (1,269,660) 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 change in the valuation allowance is approximately $283,000 in 2018. As of December 31, 2018, 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, 2018, the Company had net operating loss carryforwards for state income tax purposes of approximately $11,000,000 which expire beginning in the year 2030. The Company’s federal net operating loss carryforwards generated after January 1, 2018 will not expire but can only be used to offset 80 percent of future taxable income. Utilization of 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 provisions. Such annual limitation could result in the expiration of the net operating losses and credits before their utilization. The Company has not performed an analysis to determine the limitation of the net operating loss carryforwards. A valuation allowance of 100% has been established in respect of the deferred income tax assets due to the uncertainty of the Company’s utilization of such deferred tax assets for the U.S. federal and state on each of the Company’s consolidated balance sheets at December 31, 2018 and 2017. The income tax provision at December 31, 2018 reflects a full accounting of tax filings under ASC Subtopic 740-10. Paid, Inc. is subject to U.S. federal and Massachusetts state tax. With limited exceptions, we are no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2015. Generally, the tax years remain open for examination by the federal authority under three-year statute of limitation; however, states generally keep their statute open for four years. In addition, the Company's tax years from inception are subject to limited examination by the United States and Massachusetts authorities due to the carry forward of unutilized net operating losses. ShipTime is subject to taxation in Canada and Ontario. The Company recognizes interest and penalties, as estimated or incurred, as general and administrative expense. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (“the Act”). The Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. For businesses, the Act reduces the corporate tax rate from a maximum of 35% to a flat 21% rate. The rate reduction is effective January 1, 2018. As a result of the rate reduction, the Company reduced the deferred tax asset balance as of December 31, 2017 by $6,300,000. Due to the Company’s full valuation allowance position, the Company also reduced valuation allowance by the same amount. In December 2017, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the income tax effects of the TCJA. SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting relating to the TCJA under Accounting Standards Codification Topic 740, “Income Taxes” (“ASC 740”). In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for TCJA-related income tax effects is incomplete, but the company is able to determine a reasonable estimate, it must record a provisional estimate in its financial statements. If a company cannot determine a provisional estimate to be included in its financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect before the enactment of the TCJA. The Company has completed its evaluation of the potential impacts of the TCJA on its December 31, 2018 financial statements and there is no material impact on the income tax provision due to the valuation allowance as of December 31, 2018 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | The Company has evaluated subsequent events through the filing of this Annual Report on Form 10-K, and determined that there have been no events that have occurred that would require adjustments to or additional disclosures in the consolidated financial statements, except as disclosed herein. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
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”). |
Principles of Consolidation | The consolidated financial statements include the accounts of PAID, Inc. and its wholly owned subsidiaries, PAID Run, LLC and, ShipTime Canada. All intercompany accounts and transactions have been eliminated. On November 9, 2016, the board of directors agreed to effectuate a reverse split immediately followed by a forward split. The process was completed with FINRA on January 23, 2017. As a result of the split, every ten 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 10,989,608 to 1,098,960. All share and per share information in this Form 10-K has been retroactively adjusted to reflect the reverse stock split. |
Foreign Currency | The currency of ShipTime, the Company’s international subsidiary, is in Canadian dollars. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at each balance sheet date. Results of operations and cash flows are translated using the average exchange rates throughout the period. The effect of exchange rate fluctuations on translation of assets and liabilities is included as a separate component of shareholders’ equity in accumulated other comprehensive income. |
Geographic Concentrations | The Company conducts business in the U.S. and Canada. For customers headquartered in their respective countries, the Company derived approximately 95% of its revenues from Canada and 5% from the U.S. during the year ended December 31, 2018, compared to 93% of its revenues from Canada and 7% from the U.S. during the year ended December 31, 2017. At December 31, 2018, the Company maintained 100% of its net property and equipment in Canada. At December 31, 2017, the Company maintained 96% of its net property and equipment in Canada and the remaining 4% in the U.S. |
Comprehensive Income | Comprehensive income (loss) includes all changes in equity (net assets) during a period from non-owner sources. For the years ended December 31, 2018 and 2017, the components of comprehensive income (loss) consist solely of foreign currency translation gains (losses). |
Business Combinations | The Company accounts for business combinations by recognizing the assets acquired and liabilities assumed at their fair values on the acquisition date. The purchase price allocation process requires management to make estimates and assumptions at the acquisition date, especially with respect to intangible assets and pre-acquisition contingencies. Examples of critical estimates in valuing certain of the intangible assets the Company has acquired or may acquire in the future include but are not limited to: unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, and estimates compared to actual results. |
Use of Estimates | The preparation of the consolidated 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 Company’s management include, but are not limited to, the collectability of accounts receivable, the recoverability of long-lived assets and goodwill, the 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, 2018 and 2017, the Company’s financial instruments include cash and cash equivalents, accounts receivable, funds held in trust, accounts payable, notes payable, related party notes payable, and accrued expenses. The carrying amount of cash and cash equivalents, accounts receivable, funds held in trust, accounts payable, notes payable, related party notes 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 USD $250,000 and the Canadian Depositors Insurance Corporation (“CDIC”) up to CAD $100,000. At December 31, 2018, the Company had amounts that exceeded the CDIC insurance limits but none that were in excess of the FDIC insurance limits. 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, 2018 and 2017, the Company recorded a provision for doubtful accounts of $55,433. For the years ended December 31, 2018 and 2017, no revenues from any one individual customer accounted for more than 10% of the total revenues. |
Funds Held in Trust | Funds held in trust consisted of rebates earned by ShipTime customers that have existing relationships with the Canadian Federation of Independent Business (“CFIB”). During the year ended December 31, 2018 the Company replaced its rebate program with an airlines miles program As a result, the CFIB allowed the Company to release the funds held in trust for unused customer rebates back to cash and cash equivalents. Previously, the rebate was held in escrow at CFIB for one year until earned by the customer, at which time the customer had three years after the last shipment to use the rebate after which time the rebate expired. The Company launched a program in 2018 where the customers are offered airline miles as a reward in lieu of a cash rebate. As a result, the CFIB allowed the Company to release the funds held in trust for unused customer rebates back to cash and cash equivalents. As the Company transitioned from cash rebates to airline mile rewards, customers were allowed to convert their existing cash rebate balances to airline miles at the rate of 10 miles per $1 of rebates. For the period ended December 31, 2018, the Company recognized $67,532 of other income related to these conversions as the cost of the exchanged airline miles was less than the value of the cash rebates exchanged. Unused airline miles are recorded in prepaid expenses and other current assets in the accompanying consolidated balance sheets. |
Advanced Royalties | Advanced royalties represented amounts the Company had advanced to certain customers and were recoverable against future royalties earned by the customers. Advances were issued in either cash or shares of the Company’s common stock and advanced amounts were calculated based on the customers’ 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 a 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 and comprehensive income (loss) (see Note 10). |
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 8 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 lives of the asset or the term of the lease, whichever is shorter. Expenditures for repairs and maintenance are charged to expense as incurred. |
Intangible Assets | Intangible assets consist of patents, client lists, trade names, customer relationships, brewery and distillery management software and shipping label generation technology which are being amortized on a straight-line basis over their estimated useful lives. Currently the intangible assets are being amortized between two and 17 years. |
Long-Lived Assets and Goodwill | 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. During the year ended December 31, 2018, the Company recorded impairment of goodwill in the amount of $10,354,172. There can be no assurance, however, that market conditions will not change or demand for the Company’s services will continue, which could result in additional impairment of long-lived assets in the future. |
Revenue Recognition | The Company generates revenues principally from fees for coordinating shipping services, sales of shipping calculator subscriptions, brewery management software subscriptions, and client services. (see Note 4). |
Cost of Revenues | Cost of revenues includes carrier services, web hosting, data storage, and commissions, carrier insurance costs and amortization of acquired technology. |
Operating Expenses | Operating expenses include indirect expenses, including credit card processing fees, marketing, payroll, travel, facility costs, amortization of other intangibles and other general and administrative expenses. |
Advertising | Advertising costs are charged to expense as incurred. For the years ended December 31, 2018 and 2017, advertising expense totaled $154,455 and $156,856, respectively, and are included in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income (loss). |
Share-Based Compensation | The Company grants options to purchase the Company’s 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. In addition, during 2018 the Board of Directors approved the issuance of preferred shares for executive compensation. 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 Company’s 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 and comprehensive income (loss) for the years ended December 31, 2018 and 2017 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, 2018 and 2017, no excess tax benefits for tax deductions related to share-based awards were recognized from any stock options exercised in the years ended December 31, 2018 and 2017 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 Company’s income tax provision includes 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. There are no unrecognized tax benefits included in the consolidated balance sheet that would, if recognized, affect the effective tax rate. The Company’s 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 Company’s consolidated balance sheets at December 31, 2018 and 2017. The Company is subject to taxation in the U.S. and various state jurisdictions. 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, 2018, there were no dilutive shares that were included in the diluted earnings (loss) per share as their effect would have been antidilutive for the year then ended. The Company computes its loss applicable to common stockholders by subtracting dividends on preferred stock, including undeclared or unpaid dividends if cumulative, and any deemed dividends or discounts on redeemed preferred stock from its reported net loss and reports the same on the face of the consolidated statements of operations and comprehensive income (loss). |
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 Company’s four reportable segments are managed separately based on fundamental differences in their operations. At December 31, 2018, the Company operated in the following four reportable segments: a) Client services; b) Shipping calculator services; c) Brewery management software; and d) Shipping coordination and label generation services. 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 Company’s chief operating decision makers are the Chief Executive Officer and Chief Financial Officer. The following table compares total revenues for the years indicated. Year Ended December 31, 2018 December 31, 2017 Client services $ 16,079 $ 22,702 Brewery management software 273,294 309,049 Shipping calculator services 176,159 205,748 Shipping coordination and label generation services 8,787,918 7,034,498 Total revenues, net $ 9,253,450 $ 7,571,997 The following table compares total loss from operations for the years indicated. Year Ended December 31, 2018 December 31, 2017 Client services $ 12,373 $ 17,380 Brewery management software 12,530 36,040 Shipping calculator services (818,317) (389,640) Shipping coordination and label generation services (10,861,979) (354,532) Total loss from operations $ (11,655,393) $ (690,752) |
Reclassification | Certain amounts were reclassified in the accompanying consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2017 in order to conform to the current period presentation. |
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. The Company is required to adopt this new authoritative guidance in the first quarter of fiscal 2019. The Company has recently evaluated ASU 2016-02; as a result, while we expect the adoption of ASU 2016-02 to have an effect on the Company’s consolidated balance sheet due to the recognition of the lease rights and obligations as assets and liabilities, we do not expect ASU 2016-02 to have a material effect on the Company’s consolidated 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. The Company is required to adopt this new authoritative guidance in the first quarter of fiscal 2019. Due to the Company’s limited involvement in investments in equity securities, the Company does not expect that this standard will have a material impact on its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230), Restricted Cash”, which enhances and clarifies the guidance on the classification and presentation of restricted cash in the statement of cash flows. The Company adopted this standard in 2018 by using the retrospective transition method, which required the following disclosures and changes to the presentation of its consolidated financial statements: cash, cash equivalents, and funds held in trust reported on the consolidated statement of cash flows now includes funds held in trust of $203,170 and $169,082 as of December 31, 2017 and December 31, 2016, respectively, as well as previously reported cash and cash equivalents. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. 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. On January 1, 2018, the Company elected to adopt the Modified Retrospective Transition method and has determined there is no impact on its consolidated financial statements (see Note 4 for additional details on this implementation and the required disclosures). In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” . In January 2017, the FASB also issued ASU 2017-04, “Intangibles - Goodwill and other (Topic 350): Simplifying the Test for Goodwill Impairment”. The amendments in this Update remove the second step of the current goodwill impairment test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The Company adopted ASU 2017-04 as of October 1, 2018, which resulted in impairment of goodwill of $10,354,172 for the year ended December 31, 2018. In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Non-Employee Share Based Payment Accounting”. The amendments in this update expand the scope of the employee based share payments to non-employees and are intended to reduce cost and complexity for share based payments to non-employees. ASU 2018-07 will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company has elected to early adopt ASU 2018-07 as of June 30, 2018, which required the Company to measure the fair value of the awards for one non-employee as of the adoption date. The new measurement did not have a material effect on the Company’s consolidated financial statements. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 2018 2017 Computer equipment and software $ 134,507 $ 135,271 Office furniture and equipment 54,820 69,521 Website development costs 396,559 377,052 585,886 581,844 Accumulated depreciation (495,043) (489,358) $ 90,843 $ 92,486 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 2018 2017 Patents $ 16,000 $ 16,000 Software 83,750 83,750 Trade Name 785,038 850,311 Technology 501,360 540,201 Client list / relationship 4,620,599 4,998,130 Accumulated amortization (1,715,974) (986,070) $ 4,290,773 $ 5,502,322 |
Future amortization expense | Year Ended December 31, 2019 455,562 2020 450,799 2021 450,799 2022 293,790 2023 293,790 Total 5 year amortization $ 1,944,740 |
Activity of goodwill | Balance, January 1, 2017 $ 9,989,685 Effect of exchange rate changes 705,435 Balance, December 31, 2017 10,695,120 Effect of exchange rate changes (340,948 ) Loss on impairment of goodwill (10,354,172 ) Balance, December 31, 2018 $ - |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued expenses | 2018 2017 Payroll and related costs $ 169,691 $ 3,448 Professional and consulting fees 2,100 - Royalties 51,838 51,838 Stock price guarantee (see Note 10) 884,241 880,713 Other 160,763 130,995 Total $ 1,268,633 $ 1,066,994 |
OTHER LIABILITIES (Tables)
OTHER LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Leases, Capital [Abstract] | |
Capital lease obligations | 2018 2017 Property and equipment $ 45,486 $ 49,440 Accumulated depreciation (25,269) (10,986) $ 20,217 $ 38,454 |
Future Minimum Lease Payments | Year Ended December 31, 2019 $ 10,222 2020 10,222 2021 2,736 Total future minimum lease payments 23,180 Less amount representing interest (2,484) Present value of net minimum lease payment 20,696 Less current portion (8,580) $ 12,116 |
SHAREHOLDERS_ (DEFICIT) EQUITY
SHAREHOLDERS’ (DEFICIT) EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | 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 52,500 4.93 52,500 4.93 $ 3.30 37,500 8.75 37,500 8.75 $ 3.50 31,477 9.76 10,492 9.76 $ 4.10 143,700 9.23 67,900 9.23 $ 72.50 5,000 2.86 5,000 2.86 270,177 8.27 173,392 7.67 Summary of all stock option plans during the year ended December 31, 2018 is as follows: Number of Shares Weighted Average Price Weighted Average Remaining Contractual Life (In Years) Aggregate Intrinsic Value Options exercisable at January 1, 2018 95,000 $ 5.66 Granted 215,177 4.01 Cancelled (16,667) 4.10 Expired (23,333) 4.10 Options outstanding at December 31, 2018 270,177 $ 4.58 8.27 $ 112,088 Options exercisable at December 31, 2018 173,392 $ 4.92 7.67 $ 112,088 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | 2018 Expected term (based upon historical experience) 5.6 years Expected volatility 218 % Expected dividends None Risk free interest rate 2.68 % |
Warrant [Member] | |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Number of Shares Subject to Warrants Outstanding Weighted Average Exercise Price Warrants outstanding - January 1, 2018 34,425 $ 0.87 Granted - $ - Exercised - $ - Warrants outstanding and exercisable - December 31, 2018 34,425 $ 0.87 Weighted average remaining contractual life of the outstanding warrants in years 3.0 years |
Non Qualified Stock Option 2018 Plan [Member] | |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Number of shares Weighted average exercise price per share Options outstanding at January 1, 2018 36,000 $ 0.98 Granted - - Cancelled - - Exercised - - Options outstanding at December 31, 2018 36,000 $ 0.98 |
Non Qualified Stock Option 2012 Plan [Member] | |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Number of shares Weighted average exercise price per share Options outstanding at January 1, 2018 36,000 $ 0.98 Granted - - Cancelled - - Exercised - - Options outstanding at December 31, 2018 36,000 $ 0.98 |
Non Qualified Stock Option 2011 Plan [Member] | |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Number of shares Weighted average exercise price per share Options outstanding at January 1, 2018 43,000 $ 3.00 Granted - - Cancelled - - Exercised - - Options outstanding at December 31, 2018 43,000 $ 3.00 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income tax provision | 2018 2017 Current: Federal $ - $ - State 456 456 Foreign 20,107 - Total current 20,563 456 Deferred: Federal - - State (1) - Foreign (83,858) (76,665) Total deferred (83,859) (76,665) Income tax provision (benefit) $ (63,296) $ (76,209) |
Effective Income Tax Rate | 2018 2017 U.S. federal statutory tax rate 21.00 % 34.00 % State tax benefit, net 0.16 % 2.61 % Stock compensation (3.43) % - % Other (0.85) % (6.02) % Tax law change - % (904.97) % Impairment of goodwill (18.87) % - % Valuation allowance 2.57 % 885.38 % Effective income tax rate 0.58 % 11.00 % |
Components of Deferred Tax assets and liabilities | 2018 2017 Deferred taxes: NOLs $ 10,391,563 $ 10,526,744 Inventory and other reserves 31,892 31,892 Depreciation and amortization (1,024,619) (1,341,573) Change in value of stock 241,575 240,611 Nonqualified stock option expense 297,822 523,026 Other 96 58,896 Total deferred tax assets 9,938,329 10,039,596 Valuation allowance (11,026,635) (11,309,256) Net deferred tax liabilities $ (1,088,306) $ (1,269,660) |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Line Items] | ||
FDIC Indemnification Asset | $ 250,000 | |
Allowance for Doubtful Accounts | 55,434 | $ 40,609 |
Allowance for Doubtful Accounts Receivable, Write-offs | 0 | 1,044 |
Advertising Expense | $ 156,856 | 7,854 |
Share-Based Compensation Arrangement By Share-Based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | |
Unrecognized Tax Benefits, Ending Balance | $ 6,000,000 | |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense | $ 0 | $ 0 |
Minimum [Member] | ||
Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Finite-Lived Intangible Asset, Useful Life | 2 years | |
Maximum [Member] | ||
Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 8 years | |
Finite-Lived Intangible Asset, Useful Life | 17 years |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Abstract] | ||
Computer equipment and software | $ 134,507 | $ 135,271 |
Office furniture and equipment | 54,820 | 69,521 |
Website development costs | 396,559 | 377,052 |
Property, Plant and Equipment, Gross | 585,886 | 581,844 |
Accumulated depreciation | (495,043) | (489,358) |
Property, Plant and Equipment, Net | $ 90,843 | $ 92,486 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 21,958 | $ 34,698 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Patents | $ 16,000 | $ 16,000 |
Software | 83,750 | 83,750 |
Trade Name | 785,038 | 850,311 |
Technology | 501,360 | 540,201 |
Client list/ relationship | 4,620,599 | 4,998,130 |
Accumulated amortization | (1,715,974) | (986,070) |
Intangible asset, net | $ 4,290,773 | $ 5,502,322 |
INTANGIBLE ASSETS (Details 1)
INTANGIBLE ASSETS (Details 1) | Dec. 31, 2018USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2019 | $ 455,562 |
2020 | 450,799 |
2021 | 450,799 |
2022 | 293,790 |
2023 | 293,790 |
Total | $ 1,944,740 |
INTANGIBLE ASSETS (Details 2) (
INTANGIBLE ASSETS (Details 2) (USD $) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Intangible Assets Details 2 | ||
Beginning Balance | $ 10,695,120 | $ 9,989,685 |
Effect of exchange rate changes | (340,948) | 705,435 |
Loss on impairment of goodwill | (10,354,172) | 0 |
Ending Balance | $ 10,695,120 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of Intangible Assets | $ 814,334 | $ 924,512 |
Goodwill, acquisition | $ 9,989,685 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Payroll and related costs | $ 169,691 | $ 3,448 |
Professional and consulting fees | 2,100 | 0 |
Royalties | 51,838 | 51,838 |
Stock price guarantee | 884,241 | 880,713 |
Other | 160,763 | 130,995 |
Total | $ 1,268,633 | $ 1,066,994 |
OTHER LIABILITIES (Details)
OTHER LIABILITIES (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Leases, Capital [Abstract] | ||
Property and equipment | $ 45,486 | $ 49,440 |
Accumulated depreciation | (25,269) | (10,986) |
Capital Leases, Balance Sheet, Assets by Major Class, Net | $ 20,217 | $ 38,454 |
OTHER LIABILITIES (Details 1)
OTHER LIABILITIES (Details 1) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Leases, Capital [Abstract] | ||
2019 | $ 10,222 | |
2020 | 10,222 | |
2021 | 2,736 | |
Total future minimum lease payments | 23,180 | |
Less amount representing interest | (2,484) | |
Present value of net minimum lease payments | 20,696 | |
Less current portion | (8,580) | $ (8,459) |
Capital leases - net of current | $ 12,116 | $ 22,494 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 29,779 |
2020 | 38,202 |
2021 | 38,202 |
2022 | 38,202 |
2023 | 25,477 |
Total | $ 169,862 |
SHAREHOLDERS_ (DEFICIT) EQUIT_2
SHAREHOLDERS’ (DEFICIT) EQUITY (Details) | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Stock Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares, Options outstanding, Beginning | shares | 95,000 |
Number of shares, Granted | shares | 215,177 |
Number of shares, Cancelled | shares | (16,667) |
Number of shares, Exercised | shares | (23,333) |
Number of shares, Options outstanding, Ending | shares | 270,177 |
Weighted average exercise price, Options Outstanding, Beginning | $ / shares | $ 5.66 |
Weighted average exercise price, Granted | $ / shares | 4.01 |
Weighted average exercise price, Cancelled | $ / shares | 4.10 |
Weighted average exercise price, Exercised | $ / shares | 4.10 |
Weighted average exercise price, Options Outstanding, Ending | $ / shares | $ 4.58 |
Warrant [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares, Options outstanding, Beginning | shares | 34,425 |
Number of shares, Granted | shares | 0 |
Number of shares, Exercised | shares | 0 |
Number of shares, Options outstanding, Ending | shares | 34,425 |
Weighted average exercise price, Options Outstanding, Beginning | $ / shares | $ 0.87 |
Weighted average exercise price, Granted | $ / shares | |
Weighted average exercise price, Exercised | $ / shares | |
Weighted average exercise price, Options Outstanding, Ending | $ / shares | $ 0.87 |
Stock Option Plan 2002 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares, Options outstanding, Beginning | shares | 16,000 |
Number of shares, Granted | shares | 0 |
Number of shares, Cancelled | shares | 0 |
Number of shares, Exercised | shares | 0 |
Number of shares, Options outstanding, Ending | shares | 16,000 |
Weighted average exercise price, Options Outstanding, Beginning | $ / shares | $ 23.33 |
Weighted average exercise price, Granted | $ / shares | 0 |
Weighted average exercise price, Cancelled | $ / shares | 0 |
Weighted average exercise price, Exercised | $ / shares | 0 |
Weighted average exercise price, Options Outstanding, Ending | $ / shares | $ 23.33 |
Non Qualified Stock Option 2011 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares, Options outstanding, Beginning | shares | 43,000 |
Number of shares, Granted | shares | 0 |
Number of shares, Cancelled | shares | 0 |
Number of shares, Exercised | shares | 0 |
Number of shares, Options outstanding, Ending | shares | 43,000 |
Weighted average exercise price, Options Outstanding, Beginning | $ / shares | $ 3 |
Weighted average exercise price, Granted | $ / shares | 0 |
Weighted average exercise price, Cancelled | $ / shares | 0 |
Weighted average exercise price, Exercised | $ / shares | 0 |
Weighted average exercise price, Options Outstanding, Ending | $ / shares | $ 3 |
Non Qualified Stock Option 2012 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares, Options outstanding, Beginning | shares | 36,000 |
Number of shares, Granted | shares | 0 |
Number of shares, Cancelled | shares | 0 |
Number of shares, Exercised | shares | 0 |
Number of shares, Options outstanding, Ending | shares | 36,000 |
Weighted average exercise price, Options Outstanding, Beginning | $ / shares | $ 0.98 |
Weighted average exercise price, Granted | $ / shares | 0 |
Weighted average exercise price, Cancelled | $ / shares | 0 |
Weighted average exercise price, Exercised | $ / shares | 0 |
Weighted average exercise price, Options Outstanding, Ending | $ / shares | $ 0.98 |
Non Qualified Stock Option 2018 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares, Options outstanding, Beginning | shares | 0 |
Number of shares, Granted | shares | 215,177 |
Number of shares, Cancelled | shares | (16,667) |
Number of shares, Exercised | shares | (23,333) |
Number of shares, Options outstanding, Ending | shares | 175,177 |
Weighted average exercise price, Options Outstanding, Beginning | $ / shares | $ 0 |
Weighted average exercise price, Granted | $ / shares | 4.01 |
Weighted average exercise price, Cancelled | $ / shares | 4.10 |
Weighted average exercise price, Exercised | $ / shares | 4.10 |
Weighted average exercise price, Options Outstanding, Ending | $ / shares | $ 3.99 |
SHAREHOLDERS_ (DEFICIT) EQUIT_3
SHAREHOLDERS’ (DEFICIT) EQUITY (Details 1) | 12 Months Ended |
Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (based upon historical experience) | 5 years 7 months |
Expected volatility | 218.00% |
Expected dividends | 0.00% |
Risk free interest rate | 2.68% |
SHAREHOLDERS_ (DEFICIT) EQUIT_4
SHAREHOLDERS’ (DEFICIT) EQUITY (Details 2) | Dec. 31, 2018$ / sharesshares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options Outstanding, Number of Shares | 270,177 |
Options Exercisable, Number of Shares | 173,392 |
Exercise Price Range 1 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise Prices | $ / shares | $ 0.98 |
Options Outstanding, Number of Shares | 52,500 |
Options Exercisable, Number of Shares | 52,500 |
Exercise Price Range 2 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise Prices | $ / shares | $ 3.30 |
Options Outstanding, Number of Shares | 37,500 |
Options Exercisable, Number of Shares | 37,500 |
Exercise Price Range 3 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise Prices | $ / shares | $ 3.50 |
Options Outstanding, Number of Shares | 31,477 |
Options Exercisable, Number of Shares | 110,492 |
Exercise Price Range 4 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise Prices | $ / shares | $ 4.10 |
Options Outstanding, Number of Shares | 143,700 |
Options Exercisable, Number of Shares | 67,900 |
Exercise Price Range 5 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise Prices | $ / shares | $ 2.50 |
Options Outstanding, Number of Shares | 5,000 |
Options Exercisable, Number of Shares | 5,000 |
SHAREHOLDERS_ (DEFICIT) EQUIT_5
SHAREHOLDERS’ (DEFICIT) EQUITY (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation | $ 599,799 | $ 118,572 |
Common shares outstanding | 1,614,817 | 1,634,122 |
Common Stock, Shares Authorized | 25,000,000 | 25,000,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | ||
Federal | $ 0 | $ 0 |
State | 456 | 456 |
Foreign | 20,107 | 0 |
Total current | 20,563 | 456 |
Deferred: | ||
Federal | 0 | 0 |
State | (1) | 0 |
Foreign | (83,858) | (76,665) |
Total deferred | (84,075) | (77,078) |
Income tax provision (benefit) | $ (63,296) | $ (76,209) |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
U.S. federal statutory tax rate | 21.00% | 34.00% |
State tax benefit, net | 0.16% | 2.61% |
Stock compensation | (3.43%) | 0.00% |
Tax law change | 0.00% | (904.97%) |
Other | (0.85%) | (6.02%) |
Impairment of goodwill | (18.87%) | 0.00% |
Valuation allowance | 2.57% | 885.38% |
Effective income tax rate | 0.58% | 11.00% |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred taxes: | ||
NOL's | $ 10,391,563 | $ 10,526,744 |
Inventory and other reserves | 31,892 | 31,892 |
Depreciation and amortization | (1,024,619) | (1,341,573) |
Change in value of stock | 241,575 | 240,611 |
NQ stock option expense | 297,822 | 523,026 |
Other | 96 | 58,896 |
Total deferred tax assets | 9,938,329 | 10,039,596 |
Valuation allowance | (11,026,635) | (11,309,256) |
Net deferred tax assets | $ (1,088,306) | $ (1,269,660) |