Paid, Inc. Reports Q1 2005 Results; Revenues Up 123%

Paid, Inc. Reports Q1 2005 Results; Revenues Up 123%

* New revenues from fan clubs and sports marketing

WORCESTER, Mass., May 16 /PRNewswire-FirstCall/ -- Paid, Inc. (BULLETIN BOARD: PAYD.OB - News) today announced that its revenues for Q1 2005 were up 123% to $859,700, an increase of $473,700 from the comparable quarter in 2004, in which revenues were $386,000. The reason for the increase in revenues was new revenues of $389,100 from the Company's recently established sports marketing and fan club membership services coupled with approximately $84,000 more sales of Company-owned product for the quarter compared to Q1 2004. Paid, Inc. realized a net loss for the quarter of $979,000, or $.01 per share, as compared to a loss of $850,900, or $.01 per share for Q1 2004.

"As we projected previously, we're realizing major increases in revenue from fan club management and other services to celebrities," said Greg Rotman, CEO of Paid, Inc. "Our revenues and expenses are tracking as anticipated and we firmly believe that as we complete the transition to our celebrity services business, our revenues will continue to increase exponentially, while expenses will decline then level out, resulting in much improved profit margins."

Revenue Sources Shift to Fan Clubs and Sports Marketing

The sources of Paid's revenues have changed dramatically since 2004. During the fourth quarter of 2004 Paid, Inc. acquired the operating assets of K Sports & Entertainment LLC ("K Sports"), a sports marketing business, and entered into a contract to host and manage the fan club web site for a major performing artist. These two sources account for $389,100 of revenues in 2005. The new revenues from Fan club membership and related merchandise sales were $268,000, accounting for 31% of gross revenues, while sports marketing revenues were $121,100, 14% of gross revenues. There were no revenues from these sources in Q1 2004.

In Q1 2005, $467,100, equal to 54% of the gross revenues, were attributable to 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, as compared to $383,100, equal to 99%, of gross revenues coming from these sources in Q1 2004. In Q1, 2005, advertising and web hosting fees were $3,500 or less than 1% of gross revenues as compared to $2,900 in 2004.

Gross profit from Company-owned product sales for the quarter was approximately $90,800, $91,400 less than the comparable quarter in 2004. Since gross margin percentages on Company-owned product dropped from 48% to 19%, and sales of Company-owned product were $84,000 higher in the first quarter of 2005, the Company produced $92,400 fewer gross margin dollars in 2005. The increase in sales is attributable to listing higher priced goods in 2005 than in 2004. But this was offset by a continuing decline in traffic on eBay auctions where the product was sold, resulting in less competitive bidding.

Operating Expenses Up Due to New Business Ramp Up

Total operating expenses for Q1 2005 were $1,217,300, compared to $907,700 for the corresponding period in 2004, an increase of $309,600. Sales, general and administrative ("SG&A") expenses for the quarter were $1,105,400, compared to $760,100 for Q1, 2004. The increase of $345,300 in SG&A costs includes increases in payroll of $150,000, advertising of $16,500, professional fees of $118,800, and other costs of $90,800 offset by a decrease in depreciation and amortization of $31,000 as older assets become fully depreciated and amortized. The additional payroll and other costs are attributable to additional personnel, professional fees, travel, and shipping and postage related to the integration and development of K Sports and fan club services. Costs associated with planning, maintaining and operating Paid's web sites for Q1 2005 decreased $35,700 from 2004. This decrease is due primarily to lower depreciation as certain web site development costs became fully depreciated in 2005.

Interest Expense Decreases

In Q1, 2005, Paid, Inc incurred interest charges of approximately $93,800 principally associated with one convertible note, compared to interest charges of $128,200 for the corresponding period in 2004. The decrease of $34,500 is attributable to lower amortization of beneficial conversion features in 2005 offset by interest on short term debt. The Company's outstanding convertible debt held by Augustine Fund, L.P., the Series A Note, in the original principal amount of $3,000,000 was completely retired as of March 31, 2005 through the conversion of principal into common stock. The Series B Note has a principal amount outstanding as of March 31, 2005 of $2,250,000.

Operating Cash Flows

A summarized reconciliation of the Company's net losses to cash used in operating activities for Q1 2005 compared to Q1 2004 is as follows:

2005 2004
---------- -----------
Net loss $ (978,900) $(850,900)
Depreciation and amortization 229,600 293,400
Amortization of unearned
compensation 15,000 -
Amortization of beneficial
conversion discount and debt
discount 30,100 80,100
Common stock issued in payment
of services 376,500 315,400
Common stock issued in payment
of interest 8,000 ---
Changes in current assets and
liabilities 215,900 (44,300)

---------- -----------

Net cash used in operating
activities $(103,800) $(206,300)
=========== ===========

Guidance

"A major highlight of the first quarter has been our remarkable increase in revenues from the Celebrity Services division, which is on par with our previously announced growth strategy. We believe this is just the tip of the iceberg," Rotman stated. "As we have noted in investor calls and press releases, we are committed to engaging fans in activities year round and setting new standards of excellence in this industry. We're already generating sizeable revenues from fan club membership fees and merchandise sales and we've only just begun to offer value-added fan club experience and concert ticket packages which is where the lion's share of the revenue potential lies."

"We're steadily adding new artists to our client roster, such as The Cars, Darryl 'DMC' McDaniels and Rockapella, who we've signed since the first of the year," Rotman noted. "The feedback we've received from fan club members so far has all been extremely positive and word is quickly spreading within the industry. More and more artists are contacting us now about using our services, making it a much easier sales process. We are focusing on artists who care about their fans and who are committed to working with us to deliver more of what the fans want. Fan-conscious artists provide the best revenue potential because they are willing to participate in the types of fan experience packages that fans are willing to pay top dollar for and it is easier to expand sales with a contented fan base than it is to win new fans to replace disenchanted ones."

"In a move to increase profit margins, we're changing our distribution model from the less profitable eBay auction-based model to a more profitable artist-based one. With our base of celebrity clients we now have access to a more targeted and higher level of consumer than what eBay offers, so we no longer need to use eBay as an intermediary," Rotman noted. "Moving forward, more of our Company-owned product will be sold via Rotman Auction and the celebrity web sites, which will eliminate fees paid to eBay and significantly reduce our staffing costs, leading to increased profit margins."

"Our patent application continues to proceed through the U.S. Patent and Trademark Office (USPTO) and our dialogue with them through Hunton & Williams, LLP, our renowned patent legal counsel, has been very positive. We've responded to all the USPTO requests at this time and we're anticipating a response within the next few weeks," Rotman said. "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 millions of ecommerce entities and online auction sellers."

For Paid Inc.'s full 10-Q Financial Report, please cut and paste the following link in your browser: http://www.sec.gov/Archives/edgar/data/1017655/000116923205002687/0001169232- 05-002687-index.htm

About Paid, Inc.:

Paid, Inc. provides services to celebrities and sports figures, including hosting and management of official web sites and fan-club services. The Company sponsors autograph signing events and other sports marketing services for sports clientele. Paid, Inc.'s Celebrity Services offer famous people official web sites and fan-club services including e-commerce storefronts, articles, polls, message boards, contests, biographies and custom features to attract tens of thousands of visitors daily. Using proprietary technology, Paid's innovative products and services are utilized in online auction management, ecommerce and web site development and hosting. Paid's Auction Inc brand auction management and shipping calculation software utilizes Paid's patent-pending process technologies to streamline back-office and shipping processes for online auctions and e-commerce. Paid's Rotman Auction is an eBay Platinum Powerseller that sells thousands of items -- primarily sports, Hollywood and Americana collectibles and memorabilia -- each week on eBay. The company also builds and maintains large database-driven portals across a broad array of industries. The Company's common stock is traded on the Nasdaq OTC Bulletin Board under the symbol PAYD. For further information visit http://www.paid.com/.

Forward Looking Statements:

This Press Release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are based upon current expectations or beliefs, as well as a number of assumptions about future events, including matters related to the Company's operations, expectations about celebrity client activities and fan clubs, and the Company's pending patent. Although the Company believes that the expectations reflected in the forward-looking statements and the assumptions upon which they are based are reasonable, it can give no assurance that such expectations and assumptions will prove to have been correct. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties. In addition, other factors that could cause actual results to differ materially are discussed in the Company's most recent filings, including Form 10-KSB with the Securities and Exchange Commission.

CONTACTS
Media Contact: Julie Shepherd of Accentuate PR, (815) 479-1833,
Julie@paid.com
Investors, Jens Dalsgaard of Redwood Consultants, LLC, (415) 884-0348,
jnsd@aol.com

Source: Paid, Inc.

CONTACT: Media Contact: Julie Shepherd of Accentuate PR,
+1-815-479-1833, Julie@paid.com; or Investors, Jens Dalsgaard of Redwood
Consultants, LLC, +1-415-884-0348, jnsd@aol.com

Web site: http://www.paid.com/

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