Worcester, Massachusetts – (The Hosting News) – May 17, 2006 – Celebrity web hosting and services provider, Paid, Inc., has experienced an increase in revenues for Q1 2006 with $2,806,800, 225% higher than the comparable quarter in 2005, in which revenues were $859,700.
Greg Rotman, CEO of Paid Inc. commented, ”Paid achieved record sales results and closed the gap on profitability as a result of the continuing execution of its new business strategy developed in 2005. Last year we shifted our focus on the expansion of our celebrity services business and decided to close out our sales on eBay and reduce our other online auction sales in an effort to embrace a more lucrative market space. We realized major increases in revenue from fan club management and other services to celebrities and our expenses began to level out, resulting in a much-improved bottom line. We anticipate continued increases in revenues from fan club memberships, merchandise, and fan experiences from tours, products and services related to several other performing artists.”
Paid’s revenue sources have changed dramatically as a result of the strategic shift toward celebrity services, as illustrated below in the revenue percentages derived from each source in the first quarter since 2004.
Revenue from fan club membership and related merchandise sales in first quarter 2006 were $2,645,400 compared to $268,000 in the year ago quarter. Gross sales of the Company’s own product, including products obtained through live autograph signings, and fees from buyers and sellers through the Rotman Auction operations, were $48,800 in first quarter 2006, compared to $467,100 in the comparable 2005 quarter. Sports marketing revenue in first quarter 2006 was $89,100 compared to $121,100 in the year ago quarter.
Total operating expenses for the three months ended March 31, 2006 were $1,080,600, compared to $1,217,300 for the corresponding period in 2005, a decrease of $136,700.
Sales, general and administrative (”SG and A”) expenses for first quarter 2006 were $946,200, compared to $1,105,400 for the first quarter of 2005. The decrease of $159,200 in SG&A costs includes decreases in payroll and related costs of $51,800, depreciation and amortization of $210,400 as certain assets became fully depreciated during 2006 and 2005, and professional fees of $75,900, offset by increases in travel of $41,300, credit card commissions of $27,400, and postage and shipping costs of $41,900. The travel, credit card commissions and postage and shipping increases are all principally attributable to the tour of a major performing artist.
In Q1, 2006, Paid, Inc incurred interest charges of approximately $26,700 principally associated with convertible debt, compared to interest charges of $93,800 for the corresponding period in 2005. $36,900 of the decrease is attributable to lower balances of interest-bearing debt in 2006 and $30,100 to lower amortization of beneficial conversion features. The Company’s outstanding convertible debt held by Augustine Fund, L.P., the Series B Note, had a principal amount outstanding as of March 31, 2006 of $1,150,000.
Paid, Inc. realized a net loss for the first quarter of 2006 of $276,300, compared to a loss of $978,900 for the comparable 2005 quarter. Losses for the first quarters of both years represented less than $.01 per share.
At March 31, 2006, total assets of the Company were $2,931,500 compared to $4,229,600 at December 31, 2005. The decrease was primarily due lower cash and deferred expenses of $1,389,000 associated with the conclusion of entertainment events held during the first quarter of 2006. The Company also reports $1,335,900 lower related liabilities to customers, in the form of deferred revenues and customer refunds payable, at March 31, 2006 than at December 31, 2005.
Paid had cash and cash equivalents of $408,900 at March 31, 2006, compared to $1,503,000 at yearend 2005; $51,600 of working capital at March 31, 2006 compared to $152,300 at yearend 2005; and current liabilities were $2,570,800 at March 31, 2006 compared to $3,787,695 at December 31, 2005.
Current liabilities decreased at March 31, 2006 compared to December 31, 2005 primarily due to the decrease in deferred revenues of $2,084,600 and an increase in customer refunds payable of $748,700 associated with the cancellation of a major performing artist’s tour late in the first quarter of 2006 and fewer scheduled future events for other artists.
Mr. Rotman continued, ”We’re extremely excited about our progress thus far in 2006. Our strategic shift away from our previous low-margin eBay auction-based model to a more profitable artist-based business model has successfully enabled us to generate higher revenues. During our first quarter this year, we were also able to start reducing expenses since we are emerging from the ramp up phase of our celebrity services business. We plan to continue pursuing and expanding our celebrity services business strategy.”
Mr. Rotman went on to note, ”To date, the majority of our revenue in the celebrity services business has been from ticket and fan experience package sales for performing artists and we expect that to continue to grow in 2006 and beyond as we add new artists and our reputation for delivering excellent product and service to fans grows.”
Mr. Rotman concluded, ”We expect to soon announce a new area of our celebrity services business that will help celebrities further monetize their brands year-round and create an additional revenue stream that will be independent of our clients’ tour and performance schedules. The U.S. Patent and Trademark Office (USPTO) has stated that they will soon be issuing a response to our January submissions of additional documentation to them relative to our pending patent application and we will update shareholders immediately of the status. As we’ve previously stated, we believe that there is the potential to generate substantial revenues from licensing our patent-pending shipping calculation software to ecommerce entities and online auction sellers.”
Paid, Inc.’s celebrity services provides famous people with official web sites and fan club services that include e-commerce storefronts, ticketing and fan experience packages, and web site content. The Company also sponsors autograph signing events and other sports marketing services for sports clientele. Using proprietary patent-pending technology, Paid’s patent-pending AuctionInc brand shipping calculation and auction management software and services are utilized to streamline online auctions, ecommerce and web site development and hosting.
To learn more about Paid, Inc.’s First Quarter 2005 10-QSB Report, please visit: www.sec.gov.
For more information about Paid, please visit: http://www.paid.com.