Paid Inc. Revenues up 74% for Second Quarter 2005 and up 99% Year to Date Due to New Revenue Sources and Increased Sales

Paid Inc. Revenues up 74% for Second Quarter 2005 and up 99% Year to Date Due to New Revenue Sources and Increased Sales

WORCESTER, Mass., Aug. 15 /PRNewswire-FirstCall/ -- Paid, Inc. (BULLETIN BOARD: PAYD) posted its fourth consecutive quarter of double digit revenue growth as it announced revenues are up 74% for the second quarter of 2005 compared to second quarter 2004. For the three months ended June 30, 2005, revenues were $633,400, representing an increase of $270,100, or 74%, from the three months ended June 30, 2004, in which revenues were $363,300. Paid Inc. realized a net loss Q2 2005 of $462,100, or less than $.01 per share, a 53% decrease from the loss of $864,700, or $.01 per share for Q2 2004.

"We're very pleased with our increased revenues within our traditional revenue base and the revenue being generated from our new celebrity services division, which now accounts for 38% of gross revenues," said Paid CFO Richard Rotman. "As previously announced, during first half of 2005 we successfully transitioned distribution of Company-owned product from eBay auction sales to direct sales on our Rotman Auction and celebrity web sites and to a wholesale distributor network. These distribution methods require far fewer human resources to process equivalent amounts of inventory. While severance pay for some of the eliminated positions and the additional celebrity services staffing increased our operating expenses slightly over the previous comparable quarter, we anticipate marked reductions in operating expenses as a percentage of revenues in the future."

Revenues up 74% for Q2, 99% YTD

Paid's celebrity services division posted strong growth and accounted for a large portion of the increase. Fan club membership and related merchandise sales revenues were $137,800, accounting for 21% of gross revenues, and sports marketing revenues were $108,800 from the Company's K Sports & Entertainment subsidiary that it acquired in 2004 accounting for 17% of gross revenues. The majority (57%) of the Company's revenues, accounting for $366,000, were still attributable to its traditional 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. Advertising and web hosting fees were $8,100 or less than 1% of gross revenues during second quarter 2004. In contrast, during the comparable quarter in 2004, sales of Company owned product through the Rotman Auction operations were $352,100, or 94% of gross sales, and advertising and web hosting fees were $5,800, or less than 2% of gross revenues.

The reason for the increase in revenues was higher sales of Company owned product of approximately $13,800 from the same period in 2004 and $246,600 of revenues from Paid's recently established sports marketing and fan club membership services, including revenues to host and manage the fan club web site for a major performing artist.

For the six months ended 2005, revenues were $1,493,000, an increase of $743,700, or 99%, from the six months ended June 30, 2004, in which revenues were $749,300. During the first half of 2005, 56% of revenues were attributable to sales of the Company's own product compared to 96% for the comparable period in 2004. Gross sales of the Company's own product were $833,000 compared to $730,600 for the comparable period. Revenue from fan club membership and related merchandise sales revenues were $405,700, 27% of gross revenues, sports marketing revenues were $229,900, 15% of gross revenues, totaling $635,700 in new revenues. Advertising and web hosting fees were $11,000 or less than 1% of gross revenues during the six months ended June 30, 2005 as compared to $6,300, or 1% of gross revenues for the comparable period in 2004.

Gross Profits Up

Gross profit from Company owned product sales for Q2 2005 was approximately $226,700, $38,100 more than in 2004. Since gross margin percentages on Company owned product increased from 53% to 62%, and sales of Company owned product were $13,800 higher in Q2 2005, the Company produced $38,100 more gross margin dollars in 2005. The increase in sales is attributable to listing higher priced goods in 2005 than in 2004. The increase in gross profit margin is attributable to the effect on cost of sales of the settlement with Leslie Rotman with respect to the movie poster inventory offset by a continuing decline in traffic/less competitive bidding on eBay.

Operating Expenses Up Slightly

Total operating expenses for Q2 2005 were $1,083,300, compared to $934,600 for the corresponding period in 2004, an increase of $148,700. Sales, general and administrative ("SG&A") expenses for Q2 2005 were $907,400, compared to $705,900 in Q2 2004. The increase of $201,500 in SG&A costs includes increases in payroll of $118,800, professional fees of $63,000, and other costs of $25,700 offset by a decrease in depreciation and amortization of $18,000 as older assets become fully depreciated and amortized. The additional SG&A 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 our web sites for Q2 2005 decreased $53,000 from 2004. This decrease is due primarily to lower depreciation as certain website development costs became fully depreciated in 2005.

Total operating expenses for the six months ended June 30, 2005 were $2,300,600, compared to $1,842,400 for the corresponding period in 2004, an increase of $458,200. SG&A expenses for the first half of 2005 were $2,012,800, compared to $1,466,000 for the comparable period 2004. The increase of $546,800 in SG&A costs includes increases in payroll of $268,800, advertising of $20,000, professional fees of $181,800, and other costs of $116,500 offset by a decrease in depreciation and amortization of $49,600 as older assets become fully depreciated and amortized.

Other Income

For Q2 2005 other income increased by $325,000 from the comparable 2004 period. This increase is attributable to a portion of the previously announced settlement with Leslie Rotman offset by realized and unrealized losses on the fair value of the investment in call options.

Interest Expense Decreases by 52%

For Q2 2005, the Company incurred interest charges of approximately $78,500 principally associated with one convertible note, compared to interest charges of $127,600 for the corresponding period in 2004. The decrease of $49,000 is attributable to lower amortization of beneficial conversion features in 2005 offset by interest on short term debt. As of the end of Q2 2005, the Series A Note, an 8% convertible note in the amount of $3 million, with Augustine Fund, L.P. has been paid in full through a series of conversions to common stock. During the first half of 2005 the remaining $251,892 balance was converted into 1,412,942 common shares at prices ranging from $.149 to $.213 per share.

Operating Cash Flows

A summarized reconciliation of the Company's net losses to cash used in operating activities during Q2, 2005 compared to Q2, 2004, is as follows:

2005 2004
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Net loss $(1,440,000) $(1,715,500)
Depreciation and amortization 458,300 572,500
Amortization of unearned compensation 30,000 --
Amortization of beneficial conversion
discount and debt discount 60,500 159,600
Common stock issued in payment
of services 967,600 544,400
Common stock issued in payment of interest 8,000 --
Receipt of call options, net of related Losses (454,500) --
Changes in current assets and liabilities 174,100 60,900
--------- ---------
Net cash used in operating activities $(196,000) $(378,100)
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10-QSB Filing is available in its entirety at http://www.sec.gov/

Guidance

"During a series of announcements over the past year, we've shared our vision for the growth of our celebrity services division, and that is coming to fruition," stated Paid CEO Greg Rotman. "As projected, year over year we're seeing a dramatic increase in gross revenues and we anticipate steady continued growth as we expand our customer base and offering, and begin to execute proposed fan experience and ticketing programs for select clients."

"We've been building our celebrity services offering to meet a major market need for a responsive, creative and customer service-oriented provider of fan club services, event ticketing and merchandising for a broad array of music and entertainment celebrities," Greg noted. "Our team has been thinking outside the box to raise the bar for fan club activities and services. The industry is sitting up and taking notice. Our fan club activities to date have been extremely well-received and fan and artist feed back have been entirely positive, so we're certain we're on the right path. We've instituted automation where appropriate to cost-effectively process customer orders, yet provide a high level of personal customer service. The program is replicable across a broad range of celebrities, enabling us to realize economies of scale as we grow."

"Kristen Kuliga has done a remarkable job in leading the celebrity services team and overseeing the programs for the artists," Greg stated. "She has assembled a stellar team that is doing a superb job of executing all our new initiatives. Concurrently, Kristen is continuing to grow the K Sports and Marketing company we acquired by securing agent contracts with numerous additional NFL players and providing marketing services to a growing roster of major sports celebrities and entities."

"We have been making major progress toward profitability," Greg said. "In addition to growing our revenues, we continue to improve our efficiency. After many years selling Hollywood and sports memorabilia on eBay, we made the tough decision to transition to a more profitable distribution model and scale back our sales of Hollywood memorabilia. With our unique business model of managing celebrity web sites and hosting live celebrity autograph signings, it is much more cost effective to move autographed merchandise through our own hosted web sites and sell it to wholesalers, even though it meant eliminating some employee positions. We believe these moves will make us a stronger, more agile company and we're already beginning to realize the efficiencies of these changes."

The Company continues to work with the U.S. Patent and Trademark Office (USPTO) on its pending patent applications for shipping calculation processes. The majority of the development costs on the software surrounding the shipping calculation technologies are behind the Company.

"We and our legal counsel at Hunton & Williams are optimistic that we'll eventually have a decision from the USPTO on our patent applications which may enable us to aggressively pursue licensing agreements related to shipping calculation technology," Rotman said.

About Paid, Inc.:

Paid, Inc. provides services to celebrities and sports figures, including hosting and management of official web sites and fan-club services. 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. The Company also sponsors autograph signing events and other sports marketing services for sports clientele. Using proprietary technology, Paid's innovative products and services are utilized in online auction management, ecommerce and web site development and hosting. Paid's AuctionInc 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. 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/.

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 and expectations regarding their activities with Bronson Arroyo. 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: Julie Shepherd, Accentuate Inc., 815 479 1833, Julie@paid.com

Source: Paid, Inc.

CONTACT: Julie Shepherd for Paid, Inc., +1-815-479-1833, Julie@paid.com

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

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