What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-31 compared with 2022-03-31 · 427 added, 447 removed, 882 unchanged (50% of the section changed)

7 unchanged sentences

We continued to review new procedures and controls in 2022 and have taken steps to remediate the material weaknesses at the entity and activity levels, and to review further our procedures and controls in 2023.

In addition, we expect to make additional changes to our infrastructure, personnel and related processes that we believe are also reasonably likely to strengthen and materially affect our internal control over financial reporting.

In addition, we expect to continue improve our infrastructure, personnel and related processes in order to strengthen and materially affect our internal control over financial reporting.

Prior to the complete remediation of these material weaknesses, there remains risk that the processes and procedures on which we currently rely will fail to be sufficiently effective, which could result in material misstatement of our financial position or results of operations and require a restatement.

40 unchanged sentences

Steps taken towards Remediation for an Ineffective Control Environment:

The Company has included in its hiring process supplemental documentation regarding the internal control, insider trading and other Corporate matters

The Company meets monthly in a town hall style with the opportunity to convey best practices for public companies.

On an annual basis, the Company distributes the employee handbook which includes public company policies and practices, Corporate Disclosure and Insider Trading policies and a Communication Policy.

The Company meets monthly in a town hall style meeting led by the CEO.

This provides an ongoing opportunity to convey best practices for public companies.

Management and the Board formally meet to discuss our filings.

During these discussions, our auditors, and legal counsel may present to the Company various information which may be of material importance to our financial reporting and internal controls.

The Company has made improvements by designing and drafting a corporate governance policy which has been approved by the Board of Directors, which documents the role of the Board and management, functions of the Board, role of the Audit Committee, agenda items for Board meetings, recoupment of unearned compensation, indemnification, reporting of concerns and complaints, and director access to management.

The Board of Directors has appointed a Compensation Committee Chairman to oversee matters relating to employment, personnel and independent contractors.

14 unchanged sentences

The Company meets regularly throughout the year to review operating results, policies and procedures, and staff reviews and practices.

New management personnel are required to review their procedures and policies to make sure they are effective.

The Company is evaluating the procedure and polices that have material weakness and developing corrective action plans to strengthen our internal controls.

Senior Management meets weekly to discuss day to day operations and team successes.

Managers work with team members in one-on-one meetings to continue to monitor employee activity.

The Company has made changes to its policies and procedures with regard to its financial reporting systems.

1 unchanged sentence

Management and staff are more integrated into the review process.

Finance staff is required to review expenses for proper approval and accounting treatment.

Managers and staff are required to have expenditures pre-approved by their supervisor.

All significant expenditures require multiple approvals including Company officers.

Daily financial summaries are distributed to senior management to review gross margins, cash receipts and customer activity to evaluate for fraudulent or inconsistent behavior.

20 unchanged sentences

The Company continues to document new processes and procedures to assure employees are following proper protocols with regard to activity that has an effect on the financial transactions of the Company.

Steps taken towards Remediation of Expenditures and Accounts Payable:

Expenses are reviewed as incurred for proper accounting treatment and approval, department heads are responsible for budgeting and reviewing all expenses for their department.

The Vendor Master File is reviewed for updates and changes and any changes are analyzed and monitored for their activity and frequency.

Management evaluates all new client relationships for savings opportunities and value.

The Chief Financial Officer is required to review and approve all cash disbursements.

Policies for accounts payable approvals and payments have been reviewed with all department heads.

Steps taken towards Remediation of Financial Closing:

4 unchanged sentences

Therefore, while we believe these changes are effective at mitigating risk of material error, there continues to be additional work required for us to conclude that this control area is operating effectively.

Therefore, as noted in the Management's Report on Internal Control over Financial Reporting, we consider  this control area within the activity level control to constitute a material weakness.

Therefore, as noted in the Management's Report on Internal Control over Financial Reporting, we consider this control area within the activity level control to constitute a material weakness.

A factor for our internal control deficiencies is the small size of the Company and the lack of a financial expert on the Audit Committee of the Board of Directors and other corporate governance controls. 

6 unchanged sentences

The Company has implemented a substantial number of policies and procedures with regard to financial reporting, specifically in terms of segregation of duties.

The CEO/CFO has worked with the SVP Finance and management to identify areas of improvement and together they created appropriate written procedures for approvals and spending limits for individuals within the Company.

The CEO/CFO has worked with the SVP of Finance and management to identify areas of improvement and together they created appropriate written procedures for approvals and spending limits for individuals within the Company.

Departmental budgets have been established and all transactions are reviewed monthly.

4 unchanged sentences

Not applicable.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

39 unchanged sentences

Bradley holds a Bachelor of Arts degree from McMaster University and a certificate in Business Strategy from Cornell University.

David Scott  currently serves as COO of PAID.

Prior, he served as the Director of Technology joining the Company in 2017.

Scott leads the Development and IT teams from requirements through to implementation while supporting Sales, Marketing & Customer Success.

Scott has completed courses in Computer Science at both Mohawk College and McMaster University.

David Scott  currently serves as the COO of PAID, having previously served as the Director of Technology joining the Company in 2017.

With a computer science background from Mohawk College and McMaster University, Mr.

Scott has played a pivotal role in driving technological advancements and operational efficiency at PAID.

As COO, he continues to foster innovation, optimize processes, and nurture a collaborative work culture, solidifying Paid's position as a leading force in the industry.

The Company has not made any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.

25 unchanged sentences

These persons are required by SEC regulation to furnish the Company with copies of all such reports they file.

To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and representations that no other reports were required, all Section 16(a) filing requirements applicable to its officers and directors and beneficial owners of more than 10% of the Company's stock, have been complied with for the period which this Form 10-K relates except that Mr.

Scott was due to file a Form 3 on June 20, 2021 and is late and not yet filed.

Executive Compensation

6 unchanged sentences

Lewis shall receive an annualized salary of $300,000 and may qualify for a bonus.

Lewis also received 250,000 shares of Company common stock as a signing bonus, of which 125,000 shares may be repurchased at $1.91 per share in the event that Mr.

Lewis also received 250,000 shares of Company’s common stock as a signing bonus, of which 125,000 shares may be repurchased at $1.91 per share in the event that Mr.

Lewis terminates his employment prior to January 1, 2022. 

2 unchanged sentences

By separate agreement dated March 29, 2021, Mr.

Lewis is also bound by a non-competition restriction for a period of 12 months following termination. 

Lewis is also bound by a non-competition restriction for a period of 12 months following termination. On March 21, 2023, the Board of Directors approved a renewal of Mr.

Lewis’s employment agreement. 

The Amendment to the Employment Agreement is for a two-year term with automatic one-year renewals subject to 12 months’

notice of termination by the Company. 

Lewis shall receive an annualized salary of $321,000 and may qualify for a bonus. 

Lewis also received 250,000 shares of the Company’s common stock of which 125,000 shares may be repurchased at $0.01 per share in the event that Mr.

Lewis terminates his employment agreement prior to January 1, 2024. On March 23, 2023, the Board of Directors approved the terms of an employment contract for David Scott, the Company’s COO. 

The Employment Agreement as executed is for a one-year term with automatic one-year renewals subject to 6 months’

notice of termination by the Company. 

Scott shall receive an annualized salary of $214,000 CAD and may qualify for a bonus. 

Scott will also receive $25,000 USD shares of the Company’s common stock which may be repurchased at $0.01 per share in the event that Mr.

Scott terminates his employment agreement prior to April 1, 2024. 

Compensation to the Named Executive Officers

1 unchanged sentence

Summary Compensation Table

Name and Principal Position

Option Awards ($)

Principal Position

Austin Lewis, IV (1)(2)(4)(7) (CFO, CEO)

3 unchanged sentences

Scott was promoted to Chief Operating Officer on May 1, 2020.

Scott received 15,000 non-qualified options on February 13, 2019 and 15,000 on August 13, 2019.

On November 10, 2020 he was awarded an additional 40,000 non-qualified options.

Lewis’ bonus of 1,050,000 shares for 2019 and 2020 was approved by the Board of Directors on March 29, 2021 and was valued at $1.91 per share based on the close price of the Company’s common stock at March 29, 2021.

Lewis received 250,000 shares on March 29, 2021 valued at $1.91 per share.

Scott received 11,312 shares on June 18, 2021 valued at $2.21 per share.

Scott received 13,021 shares on June 16, 2022 valued at $1.92 per share.

Lewis’ bonus of $109,574 to be paid out in 2023 in cash and shares for 2022 was approved by the Board of Directors on March 21, 2023.

31,307 shares were valued at $1.75 per share based on the close price of the Company's common stock at March 20, 2023.

Scott’s bonus for 2022 includes $54,787 to be paid out in 2023 in cash and shares, which was approved by the Board of Directors on March 21, 2023.

7,827 shares were valued at $1.75 per share based on the close price of the Company’s common stock at March 20, 2023.

The following tables set forth certain information related to outstanding equity awards as of December 31, 2022 for our executive officers.

Option Awards

Number of Securities Underlying Unexercised Options (#) Exercisable

Number of Securities Underlying Unexercised Options (#) Unexercisable

Equity Incentive Plan Awards:

Number of Securities Underlying Unexercised Unearned Options (#)

Option Exercise Price ($)

Option Expiration Date

Austin Lewis IV

CFO, (PFO), (PEO)

On August 26, 2016, the Board of Directors approved to vote to reprice 53,500 stock options and fully vest any unvested options for two employees and three board members.

The exercise price was lowered to $0.975 which reflects the market value of the stock.

In 2020, a number of non-executive employees and non-employee directors received compensation though cash and through stock option grants under the Company’s 2018 Non-Qualified Stock Option Plan.

Unexercisable

Equity Incentive

In 2021, a number of non-executive employees and non-employee directors received compensation through cash and through stock option grants under the Company’s 2018 Non-Qualified Stock Option Plan.

The Company granted 22,300 stock options to employees and consultants during the year ended December 31, 2021. 

The options have vesting periods of immediately and over a three-year period, they expire if not exercised within ten years from grant date, and the exercise price was $2.885 per share.

During the year ended December 31, 2021, the Company granted 22,300 stock option to employees. 

The options vest over a three-year period, they expire if not exercised within ten years from grant date, and the exercise prices ranged from $1.91 to $2.68.

As a result of the issuances and the expense recorded on previously issued stock options, in addition to the accrued common stock bonus and other stock issuances, the Company recorded share-based compensation expense of $603,533 and $2,133,808 during the years ended December 31, 2021 and 2020, respectively.

As a result of these issuances and the expense recorded on previously issued stock options, The Company recorded share-based compensation expense of $172,488 and $603,533 during the years ended December 31, 2022 and 2021, respectively.

On August 13, 2020, the Board of Directors approved cash compensation to board members equal to $4,000, payable in equal installments quarterly, plus an additional $6,000 for each chairperson payable in equal installments quarterly.

There were no options granted to executives in 2022.

For 2023 the board compensation will include options to purchase shares of the Company’s common stock of 5,000 shares for board members and an additional 10,000 shares for committee chairmen. 

The following table provides compensation information for the one-year period ended December 31, 2022 for the only non-employee members of our Board of Directors.

6 unchanged sentences

To the knowledge of the management of the Company the following table sets forth the beneficial ownership of our common stock as of March 31, 2023 of each of our directors and executive officers, and all of our directors and executive officers as a group, and other beneficial owners holding more than five percent of the Company’s issued and outstanding shares.

Amount and Nature of Beneficial Ownership

Percent of Class (3)

Amount and Nature of

Beneficial Ownership

Austin Lewis, IV

2 unchanged sentences

All directors beneficial owners

Included are options to purchase 30,000 shares of the Company’s common stock.

Includes options to purchase 65,000 shares of the Company's common stock.

Includes options to purchase 98,000 shares of the Company’s common stock.

Percentages are calculated on the basis of the amount of outstanding securities plus for such person or group, any securities that person or group has the right to acquire within 60 days.

Included in this amount are shares authorized and reserved for future issuance from exchangeable shares.

Includes options to purchase 35,000 shares of the Company's common stock.

Includes options to purchase 47,500 shares of the Company's common stock.

Includes options to purchase 50,000 shares of the Company’s common stock.

Includes options to purchase 82,500 shares of the Company’s common stock.

Includes options to purchase 80,000 shares of the Company’s common stock

To the knowledge of the management of the Company, based solely on our review of SEC filings, three shareholders are the beneficial owner of more than five percent of the Company’s common stock.

The information regarding the Company's “Equity Compensation Plan Information”

The information regarding the Company’s “Equity Compensation Plan Information”

is incorporated herein by reference in Part II, Item 5 of this Annual Report on Form 10-K.

7 unchanged sentences

Our board of directors currently consists of three members.

Our board of directors determined that the three directors, Andrew Pilaro, Laurie Bradley and David Ogden, are independent under the standards of the “Nasdaq Global Market" pursuant to Nasdaq Listing Rule 5605.

Our board of directors determined that the three directors, Andrew Pilaro, Laurie Bradley and David Ogden, are independent under the standards of the “Nasdaq Global Market”

pursuant to Nasdaq Listing Rule 5605.

Principal Accountant Fees and Services

9 unchanged sentences

The Audit Committee is required to pre-approve all non-audit services to be performed by the auditor.

The percentage of hours expended on the principal accountant's engagement to audit the Company's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was 0%.

The percentage of hours expended on the principal accountant’s engagement to audit the Company’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was 0%.

Exhibits and Financial Statement Schedules

7 unchanged sentences

Form 10-K Summary

EXHIBIT INDEX

Description of Exhibits

Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to Form 8-K, filed on November 25, 2003)

Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K, filed on December 8, 2004)

Certificates of Amendment of Certificate of Incorporation of the Company effective December 30, 2016 (incorporated by reference to Exhibit 3.1 to Form 8-K filed on December 23, 2016)

Amendment No.

1 to Bylaws effective December 30, 2016 (incorporated by reference to Exhibit 3.2 to Form 8-K filed on December 23, 2016)

Specimen of certificate for Common Stock (incorporated by reference to Exhibit 4.1 to Form SB-2/A filed on December 1, 2000)

2002 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 10.17 to Form 10-KSB filed on March 31, 2003)

2011 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 99.1 to Form S-8 filed on February 2, 2011)

2018 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 10.35 to Form 10-K filed on April 1, 2019 )

2012 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on October 18, 2012)

Agreement for Non-Qualified Stock Option under the PAID, Inc.

2012 Non-Qualified Stock Option Plan awarded to W.

Austin Lewis, IV, dated October 15, 2012 (incorporated by reference to Exhibit 10.2 to Form 10-Q filed on October 18, 2012)

Agreement for Non-Qualified Stock Option under the PAID, Inc.

2011 Non-Qualified Stock Option Plan awarded to W.

Austin Lewis, IV, dated August 8, 2012 (incorporated by reference to Exhibit 10.3 to Form 10-Q filed on October 18, 2012)

Amalgamation Agreement dated September 1, 2016 by and among PAID, Inc., emergeIT, Inc., 2534845 Ontario Inc.

and 2534841 Ontario Inc.

(incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 23, 2016)

Exchange and Call Rights Agreement (incorporated by reference to Exhibit 10.2 to Form 8-K filed on December 23, 2016)

Support Agreement (incorporated by reference to Exhibit 10.4 to Form 8-K filed on December 23, 2016)

Employment Agreement for Allan Pratt (incorporated by reference to Exhibit 10.6 to Form 8-K filed on December 23, 2016)

Employment Agreement for W.

Austin Lewis IV dated March 29, 2021 (incorporated by reference to Exhibit 10.11 to Form 10-K filed on March 31, 2021)

Non-Compete Agreement for W.

Austin Lewis IV dated March 29, 2021 (incorporated by reference to Exhibit 10.12 to Form 10-K filed on March 31, 2021)

Addendum to Employment Agreement for W.

Austin Lewis IV dated March 21, 2023

Employment Agreement for David Scott dated March 29, 2023

CFO Certification required under Section 302 of Sarbanes-Oxley Act of 2002

CEO and CFO Certification required under Section 906 of Sarbanes-Oxley Act of 2002

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension Schema

Inline XBRL Taxonomy Extension Calculation Linkbase

Inline XBRL Taxonomy Extension Definition Linkbase

Inline XBRL Taxonomy Extension Label Linkbase

Inline XBRL Taxonomy Extension Presentation Linkbase

Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

*filed herewith

+Indicates a management contract or any compensatory plan, contract or arrangement

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

3 unchanged sentences

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Andrew Pilaro

/s/ Andrew Pilaro

Andrew Pilaro

March 31, 2023

/s/ Laurie Bradley

/s/ Laurie Bradley

Laurie Bradley

March 31, 2023

& SUBSIDIARIES

INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of December 31, 2021, and 2020

Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years ended December 31, 2021, and 2020

Consolidated Statements of Changes in Shareholders' Equity for the Years ended December 31, 2021, and 2020

Consolidated Statements of Cash Flows for the Years ended December 31, 2021, and 2020

Consolidated Balance Sheets as of December 31, 2022 and 2021

Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years ended December 31, 2022 and 2021

Consolidated Statements of Changes in Shareholders’

Equity for the Years ended December 31, 2022 and 2021

Consolidated Statements of Cash Flows for the Years ended December 31, 2022 and 2021

Notes to Consolidated Financial Statements

20 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

1 unchanged sentence

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Liquidity Assessment

Collectability of Note Receivable

Critical Audit Matter Description

Management has prepared the Company’s consolidated financial statements on a going concern basis, which contemplates the continuity of operations, and the realization of assets and the satisfaction of liabilities in the normal course of business. 

As discussed in Note 2, the Company incurred an operating loss for the year ended December 31, 2021, but had positive working capital as of December 31, 2021 and net cash provided by operating activities for the year ended December 31, 2021. 

Management assesses whether the Company has sufficient liquidity to fund its costs for the next twelve months from the consolidated financial statements issuance date in order to determine if there is substantial doubt about the Company’s ability to continue as a going concern. 

In the preparation of this liquidity assessment, management applies judgment to estimate the projected cash flows of the Company, which are based on known or planned cash requirements for operating costs as well as planned costs for ongoing efforts to develop technologies to maintain competitive advantage. 

The principal consideration for our determination that performing procedures relating to the liquidity assessment is a critical audit matter is the significant judgments made by management when assessing whether the Company has sufficient liquidity. 

We determined there is significant estimation and execution uncertainty regarding the Company’s future cash flows and the risk of bias in management’s judgments and assumptions in estimating these cash flows.

As discussed in Note 5 to the consolidated financial statements, on October 13, 2022, the Company entered in a Securities Purchase Agreement with respect to a secured $1,875,000 convertible note (“Convertible Note”) made by a noteholder (“Noteholder”). 

The Convertible Note was purchased at a 20% ($375,000) original issue discount and is subject to a 9-month maturity, after which, if unpaid will then carry a 20% interest rate.

The Company has the option to convert the Convertible Note into shares of common stock of the Noteholder. 

The Convertible Note is secured by essentially all assets of the Noteholder. 

As additional consideration, the Company received a 5-year warrant to purchase shares of common stock of the Noteholder. 

The shares are subject to certain piggyback registration rights under a Registration Rights Agreement. 

The warrant is offered at 50% of the original principal amount and will be valued at the price per share of common stock paid in the first liquidity event following October 19, 2022. 

The warrants expire five years from the original issue date. 

Management assesses whether the Convertible Note will be collectable in order to determine if there is a need for an allowance to be recognized. 

As the Noteholder is an early-stage entity with limited operating history and no audited financial information, management applies judgment to determine collectability based on its knowledge of the Noteholder.

The principal consideration for our determination that performing procedures relating to the collectability of the Convertible Note is a critical audit matter is the extent and subjective nature of management judgment required with respect to assessing the collectability of the Convertible Note. 

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s assertion as to its ability to continue as a going concern included the following, among others:

We gained an understanding of the Company’s process relating to the preparation of projected information and considerations of the Company’s obligations.

We tested the reasonableness of the projected revenues and expenses, and uses and sources of cash used in management’s assessment of whether the Company has sufficient liquidity to fund operations for at least one year from the consolidated financial statements issuance date.

This testing included inquiries with management, comparison of prior period projections to actual results, and consideration of positive and negative evidence impacting management’s projections.

We evaluated the reasonableness of management’s assumptions related to the likelihood that the Company would be able to reduce operating expenditures if required.

KMJ Corbin & Company LLP

Our audit procedures related to the Company’s assertion as to the collectability of the Convertible Note included the following, among others:

We obtained a copy of the securities purchase agreement, security agreement, registration rights agreement, convertible note, and common stock purchase warrant agreement and examined the terms of such agreements in detail.

We obtained and tested for reasonableness management’s analysis to support the collectability of the Convertible Note balance.

This testing included inquiries with management, understanding the technology of the Noteholder through reading Noteholder technical presentations and the Noteholder’s website, obtaining evidence of outside interest in the Noteholder’s technology, and assessing the security position of the Company.

We obtained from management the unaudited internal 2022 financial information of the Noteholder to assess the financial viability of the Noteholder.

/s/ KMJ Corbin & Company LLP

We have served as the Company’s auditor since 2013.

1 unchanged sentence

March 31, 2023

& SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

7 unchanged sentences

215,109  

Note receivable, net of discount  

1,604,167  

Prepaid expenses and other current assets

15 unchanged sentences

$ 6,496,350  

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES AND SHAREHOLDERS’

Current liabilities:

2 unchanged sentences

$ 1,625,588  

Finance leases - current portion

Income tax payable

674,921  

Accrued expenses

3 unchanged sentences

13,020  

11,154  

Operating lease obligations –

9 unchanged sentences

25,187  

61,794  

Deferred tax liability, net

1 unchanged sentence

838,312  

Uncertain tax position liability  

265,167  

Total liabilities

2 unchanged sentences

Commitments and contingencies

Shareholders' equity:

Shareholders’

Series A Preferred stock, $ 0.001 par value, 5,000,000 shares authorized;

1 unchanged sentence

Common stock, $ 0.001 par value, 25,000,000 shares authorized;

7,807,103 shares issued and 7,773,263 shares outstanding at December 31, 2021, 6,489,004 shares issued and 6,455,164 outstanding at December 31, 2020

7,840,124 shares issued and 7,696,487 shares outstanding at December 31, 2022, 7,807,103 shares issued and 7,773,263 shares outstanding at December 31, 2021

Accrued common stock bonus

9 unchanged sentences

( 70,322,550 )

Common stock in treasury, at cost, 33,840 shares at December 31, 2021 and 2020

Common stock in treasury, at cost, 143,637 and 33,840 shares at December 31, 2022 and 2021, respectively

( 164,840 )  

Total shareholders' equity

Total shareholders’

3,372,112  

2,908,678  

Total liabilities and shareholders' equity

Total liabilities and shareholders’

$ 6,421,724  

1 unchanged sentence

See accompanying notes to consolidated financial statements

& SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

1 unchanged sentence

Revenues, net

$ 14,889,716  

$ 12,920,789  

Cost of revenues

11,436,235  

9,809,500  

3,453,481  

3,111,289  

Operating expenses:

Salaries and related  

1,803,173  

1,530,151  

Salaries and related

General and administrative

1,046,711  

800,996  

Amortization of intangible assets

490,567  

458,915  

Share-based compensation

603,533  

2,452,701  

Total operating expenses

3,943,984  

5,242,763  

Loss from operations

( 2,131,474 )

Income (loss) from operations

Other income (expense):

Other income, net

21,128  

Loss before income tax provision

( 490,503 )  

( 2,110,346 )

Income tax provision

206,257  

122,207  

( 696,760 )  

( 2,232,553 )

Preferred dividends

Net loss available to common shareholders

$ ( 696,760 )  

( 2,261,085 )

Income (loss) before income tax (benefit) provision

Income tax (benefit) provision

Net income (loss)

Net income (loss) per share –

$ ( 0.09 )  

Net income (loss) per share –

$ ( 0.09 )  

Weighted average number of common shares outstanding –

7,444,732  

5,469,908  

Weighted average number of common shares outstanding –

7,444,732  

5,469,908  

Consolidated statements of comprehensive income (loss):

$ ( 696,760 )  

$ ( 2,232,553 )

Other comprehensive income:

Net income (loss)

Other comprehensive income (loss):

Foreign currency translation adjustments

19,306  

57,867  

Comprehensive loss

$ ( 677,454 )  

$ ( 2,174,686 )

Comprehensive income (loss)

See accompanying notes to consolidated financial statements

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

& SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Preferred Stock

Accrued Common Stock

Additional Paid-in

Accumulated Other Comprehensive

Treasury Stock

 Bonus  

Capital  

Income  

Deficit  

Accrued Common Stock Bonus

Additional Paid-in Capital

Other Comprehensive Income

Accumulated Deficit

Balance, January 1, 2021

4,438,578  

$ 4,439  

1,648,657  

$ 1,649  

$ 69,242,412  

$ 512,894  

$ ( 67,008,347 )  

( 33,840 )  

$ ( 57,847 )  

$ 2,695,200  

Foreign currency translation adjustment

57,867  

Preferred dividends paid

( 26,252 )  

Share-based compensation expense

2,005,500  

128,308  

2,133,808  

Exchange of Preferred to Common

( 4,565,305 )  

( 4,566 )  

4,566,227  

Preferred dividends paid in shares

126,727  

358,511  

( 358,638 )  

Warrant reprice

318,893  

Warrant exercise

274,120  

35,362  

35,636  

( 2,232,553 )  

Issuance of common stock for accrued bonus and signing bonus

Issuance of common stock for compensation

Balance December 31, 2021

6,489,004  

2,005,500  

70,083,486  

570,761  

( 69,625,790 )  

( 33,840 )  

( 57,847 )  

2,982,599  

Foreign currency translation adjustment

19,306  

Share-based compensation expense

324,783  

Issuance of common stock for accrued bonus and signing bonus

1,300,000  

( 2,005,500 )  

2,242,950  

238,750  

Repurchase of common stock for treasury

Option exercise

Issuance of common stock for compensation

18,099  

39,982  

40,000  

( 696,760 )  

Balance December 31, 2022

7,807,103  

$ 7,807  

$ 72,691,201  

$ 590,067  

$ ( 70,322,550 )  

( 33,840 )  

$ ( 57,847 )  

$ 2,908,678  

See accompanying notes to consolidated financial statements

& SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

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Cash flows from operating activities:

$ ( 696,760 )  

$ ( 2,232,553 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

511,698  

488,745  

Amortization of operating lease right-of-use assets

33,447  

28,545  

Provision for bad debts

20,125  

Gain on sale of property and equipment

Provision for bad debts, net

Accretion of discount on note receivable

Gain on write off of other payables

Share-based compensation

603,533  

2,452,701  

Deferred income taxes

( 131,204 )  

Changes in assets and liabilities:

Accounts receivable

( 41,710 )  

Prepaid expenses and other current assets

20,143  

Accounts payable

837,650  

546,859  

Income tax payable and uncertain tax position liability

Accrued expenses

99,153  

63,460  

Contract liabilities

Operating lease obligations

( 34,654 )  

Net cash provided by operating activities

1,203,354  

1,100,809  

Cash flows from investing activities:

Proceeds from sale of property and equipment

Issuance of note receivable

Purchase of property and equipment

( 1,120 )  

Net cash provided by (used in) investing activities

( 1,120 )  

Net cash used in investing activities

Cash flows from financing activities:

Payments on finance leases

( 2,907 )  

Proceeds from warrant exercise

35,636  

Payments of preferred dividends

Proceeds from option exercise

Repurchase of common stock

Net cash used in financing activities

( 2,907 )  

Effect of exchange rate changes on cash and cash equivalents

( 3,850 )  

67,024  

Net change in cash and cash equivalents

1,195,477  

1,168,329  

Cash and cash equivalents, beginning of year

1,644,210  

475,881  

Cash and cash equivalents, end of year

$ 2,839,687  

$ 1,644,210  

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

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Issuance of common shares in settlement of accrued expenses

$ 2,005,500  

Issuance of preferred shares for settlement of dividends

$ 358,638  

See accompanying notes to consolidated financial statements

& SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022 AND 2021

(“PAID”, the “Company”, “we”, “us”, or “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.

Paid also offers BeerRun Software which 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 province.

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.

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We actively sell directly to small and medium businesses and through long standing partnerships with selected associations throughout Canada. 

PaidPayments provides commerce solutions to small - and medium-sized businesses by enabling them to sell their goods and services, accept payment, and create repeat sales though an online payment processing solution.

PaidPayments provides commerce solutions to small –

and medium-sized businesses by enabling them to sell their goods and services, accept payment, and create repeat sales though an online payment processing solution.

The Company has operated as a Payment Facilitator since 2019, which enables our merchants to get the benefit of instant boarding and discounted rates.

Our platform provides all aspects required for payment processing, including merchant boarding, underwriting, fraud monitoring, settlement, funding to the sub-merchant, and monthly reporting and statements.

The Company controls all of these necessary aspects in the payment process and is then able to supply a one -step boarding process for our partners and value-added resellers.

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LIQUIDITY AND MANAGEMENT ’

For the year ended December 31, 2021, the Company reported cash and cash equivalents of $ 2,839,687 and cash flow from operations of $ 1,203,354 and had working capital of $ 495,446 . 

The Company has reported an operating loss of $ 490,503 for the year ended December 31, 2021 and has an accumulated deficit of $ 70,322,550 at December 31, 2021.

Management believes that the continued growth of the new PAID platform of services in addition to the continued profitability of ShipTime’s services will return a valuable impact on the Company’s success in the future.

The ongoing positive cash flows from operations is a significant indicator of our successful transition to the new shipping and eCommerce services.

In addition to the existing services provided, ShipTime will launch products in the United States that are complementary to the current offerings.

The Company also continues to seek alternate sources of capital to support future operations.

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 March 2023 and will have a positive impact on the Company for the foreseeable future.

As of December 31, 2022, the Company reported cash and cash equivalents of $ 1,787,248 and had working capital of $ 1,635,370 . 

The Company has reported operating income of $ 58,993 and cash flows from operations of $ 801,412 for the year ended December 31, 2022 and has an accumulated deficit of $ 69,670,404 at December 31, 2022.

Management believes that the Company has adequate cash resources to fund operations during the next 12 months after the filing of this annual report on Form 10 -K.

However, there can be no assurance that anticipated growth in new business will occur, and that the Company will be successful in launching new products and services.

Management continues to seek alternative sources of capital to support the growth of future operations.

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 March 2024 and will have a positive impact on the Company for the foreseeable future.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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For customers headquartered in their respective countries, the Company derived approximately 99 % of its revenues from Canada and 1 % from the U.S.

during the year ended December 31, 2021, compared to 96 % of its revenues from Canada and 4 % from the U.S.

during the year ended December 31, 2020.

during the years ended December 31, 2022 and 2021.

At December 31, 2022 and 2021, the Company maintained 100 % of its net property and equipment in Canada.

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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 periods.

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, the valuation of deferred tax assets and liabilities, renewal periods and discount rates for leases and the valuation of share-based transactions.

Significant estimates made by the Company’s management include, but are not limited to, the collectability of accounts and note receivable, the recoverability of long-lived assets, the valuation of deferred tax assets and liabilities, renewal periods and discount rates for leases and the valuation of share-based transactions.

Actual results could materially differ from those estimates.

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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, 2021 and 2020, the Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses.

The carrying amount of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximates fair value due to the short-term maturities of these instruments.

At December 31, 2022 and 2021, the Company’s financial instruments include cash and cash equivalents, accounts receivable, note receivable, accounts payable, and accrued expenses.

The carrying amount of cash and cash equivalents, accounts receivable, note receivable, accounts 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 initial maturities 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 Risk

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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.

Exposure to losses on accounts receivable 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, 2021, and 2020, the Company recorded a provision for doubtful accounts of $ 0 and $ 20,125 , respectively.

As of December 31, 2022 and 2021, the Company recorded an allowance for doubtful accounts of $ 36,845 and $ 0 , respectively.

For the years ended December 31, 2022 and 2021, no revenues from any one individual customer accounted for more than 10% of the total revenues.

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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.

Depreciation is computed using the straight-line method over the estimated useful lives of three to eight years.

Any leasehold improvements are depreciated at the lesser of the useful life of the asset or the lease term.

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Cost of Revenues

Cost of revenues includes carrier services, web hosting, data storage, and commissions, carrier insurance costs and merchant processing interchange fees.

Cost of revenues includes carrier services, web hosting, data storage, commissions, carrier insurance costs and merchant processing interchange fees.

Operating Expenses

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The benefits provided under these plans are share-based payments that the Company accounts for using the fair value method.

In addition, the Board of Directors approved an amendment to ShipTime’s December 30, 2016 Warrant Agreement with an entity controlled by the Company’s CEO/CFO to reprice the outstanding warrants. 

In addition, in 2021 the Board of Directors approved an amendment to ShipTime’s December 30, 2016 Warrant Agreement with an entity controlled by the Company’s CEO/CFO to reprice the outstanding warrants. 

The modification of the warrant resulted in a charge to the Company’s share-based compensation expense.

In addition, during 2021, the Company’s board of directors granted shares of common stock valued at the closing price on the date of the grant, for 2019 and 2020 bonuses and a 2021 signing bonus to the CEO/CFO (see Note 10 ).

The Company  recorded $ 82,180 for share-based bonus payments related to 2022 which were approved by the Board of Directors on March 

The shares of common stock were issued to the CEO/CFO, one additional officer and one employee.

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.

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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.

An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained (see Note 11 ).

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 the Company’s consolidated balance sheets at December 31, 2021 and 2020.

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 shareholders 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 years ended December 31, 2021 and 2020, there were no dilutive shares that were included in the diluted earnings (loss) per share as their effect would have been anti-dilutive for the years then ended.

The Company computes its income (loss) available to common shareholders 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 income (loss) and reports the same on the face of the consolidated statements of operations and comprehensive income (loss).

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the years ended December 31:

Net loss available to common shareholders  

The Company is subject to taxation in the U.S., and Canada and various state jurisdictions.

Income (Loss) Per Common Share

Basic income (loss) per share represent income (loss) divided by the weighted-average number of common shares outstanding during the period.

Diluted income (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 income (loss) per share in 2021 because they would reduce the reported loss per share and therefore have an anti-dilutive effect.

For the year ended December 31, 2022 there were approximately 11,400 dilutive shares that were included in the diluted income (loss) per share.

The following is a reconciliation of the numerators and denominators of the basic and diluted income (loss) per share computations for the years ended December 31:

Net income (loss)

$ 652,146  

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Effect of dilutive securities

11,391  

Diluted weighted-average shares outstanding

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7,444,732  

Net loss per share attributed to common shareholders –

Net income (loss) per share –

$ 0.08  

Net loss per share attributed to common shareholders - diluted

Net income (loss) per share –

$ 0.08  

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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 five reportable segments are managed separately based on fundamental differences in their operations.

At December 31, 2021, the Company operated in the following five reportable segments:

The Company’s six reportable segments are managed separately based on fundamental differences in their operations.

At December 31, 2022, the Company operated in the following six reportable segments:

Client services;

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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 Company’s chief operating decision maker is the Chief Executive Officer/Chief Financial Officer.

The following table compares total revenues for the years indicated.

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$ 3,141  

$ 3,541  

Brewery management software

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22,872  

27,845  

Merchant processing services

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$ 2,529  

$ 2,775  

Brewery management software

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( 171,943 )  

( 2,974,212 )

Total loss from operations

Total income (loss) from operations

$ 58,993  

$ ( 490,503 )

During 2021, the Company recorded depreciation and amortization expense of $ 511,698 which was solely related to the shipping coordination and label generations service segment of the Company.

During 2022 and 2021, the Company recorded depreciation and amortization expense of $ 325,940 and $ 511,698 , respectively, which was solely related to the shipping coordination and label generations service segment of the Company.

During 2022, the Company reclassified expenses of $ 537,602 related to transfer price adjustments from corporate operations segment to shipping coordination and label generations services segment for the year ended 2021 to conform to the 2022 presentation.

Reclassifications

Certain amounts were reclassified in the accompanying consolidated balance sheet as of December 31, 2021 in order to conform to the current period presentation.

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU No.

2019 - 12, Income Taxes (Topic 740 ):

“Simplifying the Accounting for Income Taxes”

to identify, evaluate, and improve areas of GAAP for which costs and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements.

The amendments for ASU No.

2019 - 12 simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

The Company’s adoption of ASU No.

2019 - 12 in January 2021 had no impact on its consolidated financial position, results of operations, cash flows or disclosures.

There were no new accounting pronouncements issued by the FASB during the year that would apply to the Company and would have a material impact on its consolidated financial position or results of operations.

REVENUE FROM CONTRACTS WITH CUSTOMERS

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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. 

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. 

Beginning in 2018, customers were offered airline miles as a reward for using the shipping coordination and label generation services. 

For label generation service revenues, the Company recognizes revenue when a customer has successfully prepared a shipping label and had a pickup.

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.

Beginning in 2018, customers were offered airline miles as a reward for using the shipping coordination and label generation services.

Our affiliated partner, Canadian Federation of Independent Businesses (“CFIB”) has allowed us to provide this benefit to their members.

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Revenue Disaggregation

The Company operates in five reportable segments (see Note 3 ).

The Company operates in six reportable segments (see Note 3 ).

Performance Obligations

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During the years ended December 31, 2022 and 2021, the Company recognized revenues of $ 11,154 and $ 9,046 , respectively, related to contract liabilities outstanding at the beginning of each year.

NOTE RECEIVABLE

On October 13, 2022, the Company entered in a Securities Purchase Agreement (“SPA”) with respect to a secured $ 1,875,000 convertible note (“Convertible Note”) made by Embolx, Inc.

(“Noteholder”), a California corporation. 

The Convertible Note was purchased at a 20 % ($ 375,000 ) original issue discount and is subject to a 9 -month maturity, after which, if unpaid will then carry a 20 % interest rate.

The Company has recognized $ 104,167 in other income related to accretion of the discount on the Convertible Note for the year ended December 31, 2022. 

The Company has the option to convert the Convertible Note into shares of common stock of the Noteholder. 

The Convertible Note is secured by essentially all assets of the Noteholder. 

Under the SPA, the Company has a right to purchase additional notes and receive warrants on the same terms for a total potential investment amount of $ 2,000,000 with an additional over-allotment option of $ 500,000 as defined in the SPA. 

As additional consideration, the Company received a 5 -year warrant to purchase shares of common stock of the Noteholder. 

The shares are subject to certain piggyback registration rights under a Registration Rights Agreement. 

The warrant is offered at 50 % of the original principal amount and will be valued at the price per share of common stock paid in the first liquidity event following October 19, 2022. 

The warrants expire five years from the original issue date.

PROPERTY AND EQUIPMENT

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Computer equipment and software

$ 139,769  

$ 140,775  

Office furniture and equipment

66,644  

70,814  

Website development costs

396,997  

402,975  

603,410  

614,564  

Accumulated depreciation

( 579,923 )  

$ 23,487  

$ 40,493  

Depreciation expense of property and equipment for the years ended December 31, 2022 and 2021 amounted to $ 14,900 and $ 21,131 , respectively.

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At December 31, 2022, intangible assets consisted of the following:

Technology & Software

Customer Relationships

Patents  

Trade Name  

Technology & Software  

Customer Relationships  

Gross carrying amount

$ 16,000  

$ 789,212  

$ 587,776  

$ 4,644,033  

$ 6,037,021  

Accumulated amortization

( 16,000 )  

( 789,212 )  

( 587,776 )  

( 1,980,722 )  

( 3,373,710 )

$ 2,663,311  

At December 31, 2021, intangible assets consisted of the following:

Technology & Software

Customer Relationships

Patents  

Trade Name  

Technology & Software  

Customer Relationships  

Gross carrying amount

$ 16,000  

$ 846,186  

$ 624,162  

$ 4,963,860  

$ 6,450,208  

Accumulated amortization

( 16,000 )  

( 843,240 )  

( 624,162 )  

( 1,791,608 )  

( 3,275,010 )

$ 2,946  

$ 3,172,252  

$ 3,175,198  

Amortization expense of intangible assets for the years ended December 31, 2022 and 2021 was $ 311,809 and $ 490,567 , respectively.

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Year Ended December 31,

$ 295,352  

295,352  

Total 5-year amortization

$ 1,476,760  

ACCRUED EXPENSES

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Payroll and related costs

$ 195,803  

$ 58,182  

Professional and consulting fees

26,070  

40,075  

47,803  

Accrued cost of revenues

168,657  

212,020  

22,228  

31,902  

$ 430,858  

$ 376,387  

COMMITMENTS AND CONTINGENCIES

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During 2021, the Company was notified of a dispute related to its non-renewal of the employment agreement with Mr.

Allan Pratt, the Company's former President, CEO and Chairman.

On or around January 2020, the Company had allowed the Mr.

Allan Pratt, the Company’s former President, CEO and Chairman.

On or around January 2020, the Company had allowed Mr.

Pratt’s employment agreement to not renew, but Mr.

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Around the same time that Mr.

Pratt’s employment term expired, the Company’s Board of Directors voted to reduce the size of the Board from five to three, and Mr.

Pratt’s employment term expired, the Company’s Board of Directors voted to reduce the size of the Board from five to three members, and Mr.

Pratt and Mr.

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More than a year later, in 2021, Mr.

Pratt filed a claim in Delaware courts to contest that decision. 

Pratt filed a claim in Delaware courts to contest that decision. In July 2022, Mr.

Pratt amended the complaint to dispute the proper authorization of a stock bonus that was awarded to the Company’s CEO in March 2021 ( see Note 10 ). 

The Company has not recorded a reserve as the outcome of these matters cannot be determined.

Indemnities and Guarantees

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SHAREHOLDERS ’

Preferred Stock

The Company’s amended Certificate of Incorporation authorizes the issuance of 20,000,000 shares of blank-check preferred stock at $ 0.001 par value.

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The Series A Preferred Stock carries a coupon payment obligation of 1.5 % of the liquidation value per share ($ 3.03 ) per year in cash or additional Series A Preferred Stock, calculated by taking the 30 -day average closing price for a share of common stock for the month immediately preceding the coupon payment date which is made annually.

For the year ended December 31, 2020, the annual coupon was $ 28,532 .

The Series A Preferred Stock has no voting or conversion rights.

If purchased, redeemed, or otherwise acquired (other than conversion), the preferred stock may be reissued.

The Company paid the 2018 and 2019 coupon payments totaling $ 358,638 by issuing 126,727 preferred shares and a cash payment of $ 26,252 for the 2020 coupon payment through March 2020.

In 2020, all 4,565,305 shares of Series A Preferred Stock were exchanged for common stock (see below).

As of December 31, 2022 and 2021, there are no outstanding shares of Series A Preferred Stock.

In February 2020, ShipTime Canada amended its rights to exchange one share of ShipTime Canada stock from 45 PAID common shares and 311 PAID preferred shares to 356 PAID common shares.

The Company made available to its ShipTime Canada exchangeable preferred shareholders the one -time option to convert existing book entry preferred shares and exchangeable rights to preferred shares into PAID common shares.

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Furthermore, because of the amended exchange rights, the Company reflected an additional exchange of PAID Series A Preferred Stock shares totaling 2,089,298 to PAID common shares, representing the additional amount of PAID common shares that will be issued to the ShipTime shareholders upon the exchange.

During 2020, two shareholders sold 500 ShipTime exchangeable shares which were subsequently exchanged for 178,000 common shares.

In total, the Company has reserved for future issuance of 2,106,808 shares of PAID common stock with respect to the remaining 5,918 exchangeable shares to be issued as a result of the ShipTime acquisition which are considered issued and outstanding as of December 31, 2022 for financial reporting purposes.

During 2020, the Company issued 274,120 shares of PAID common stock as a result of the exercise of an investor warrant for 770 ShipTime exchangeable shares.

The Company received gross proceeds of $ 35,636 in connection with the warrant exercise. 

On March 29, 2021, the Company's Board of Directors authorized the issuance of 1,050,000 bonus shares of PAID common stock to the CEO/CFO for services rendered during 2019 and 2020.

This bonus was valued at $ 2,005,500 based on the closing price of the Company's common stock at March 29, 2021 and was recorded in accrued common stock bonus in shareholders’

On March 29, 2021, the Company’s Board of Directors authorized the issuance of 1,050,000 bonus shares of PAID common stock to the CEO/CFO for services rendered during 2019 and 2020.

This bonus was valued at $ 2,005,500 based on the closing price of the Company’s common stock at March 29, 2021 and was recorded in accrued common stock bonus in shareholders’

equity at December 31, 2020.

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All of these shares were issued on March 31, 2021. 

During 2021, the Company issued 18,099 shares valued at $ 2.21 per share for a total of $ 40,000 to two employees as bonus compensation which is included in share-based compensation.

The shares were issued pursuant to the exemption from registration provided by Section 4 (a)( 2 ) of the Securities Act and Rule 506 of the SEC’s Regulation D thereunder.

During the second quarter of 2021, the Company issued 18,099 shares valued at $ 2.21 per share for a total of $ 40,000 to two employees as bonus compensation which is included in share-based compensation in the condensed statements of operations and comprehensive income (loss) for the year ended December 31, 2021.

During the second quarter of 2022, the Company issued 13,021 shares valued at $ 1.92 per share for a total share-based compensation expense of $ 25,000 to one employee as bonus compensation which is included in share-based compensation in the consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2022. 

The shares were issued pursuant to the exemption for registration provided by Section 4 (a)( 2 ) of the Securities Act and Rule 506 of the SEC’s Regulation D thereunder.

On March 21, 2023, the Company’s Board of Directors authorized the issuance of 46,961 bonus shares of PAID common stock to the CEO/CFO, one additional officer and one employee for services rendered during 2022.

This bonus was valued at $ 82,180 based on the closing price of the Company’s common stock at March 20, 2023 and is recorded in accrued common stock bonus in shareholders’

equity at December 31, 2022. 

These shares were issued in March 2023.

Share-Based Incentive Plans

During the years ended December 31, 2022 and 2021, the Company had four stock option plans that include both incentive and non-qualified options to be granted to certain eligible employees, non-employee directors, or consultants of the Company.

On March 23, 2018, the Board of Directors voted to approve the 2018 Stock Option Plan which reserves 450,000 non-qualified stock options to be granted to employees. 

On November 10, 2020, the board voted to increase the 2018 Stock Option Plan from 450,000 options to 900,000 options. 

For the year ended December 31, 2020, the Company granted 105,000 stock options to employees, consultants and directors. 

The 2020 options have vesting periods of immediately and over a three -year period, they expire if not exercised within ten years from grant date, and the exercise price is $ 2.885 per share.   

During 2020, as a result of the termination of several employees, the Company recorded 61,948 expired options and an additional 20,459 stock options that were cancelled.

For the year ended December 31, 2021, the Company granted 22,300 stock options to employees. 

The 2021 options have a three -year vesting period, they expire if not exercised within ten years from the grant date, and the exercise price ranges from $ 1.91 to $ 2.68 per share. 

During 2021, options granted to purchase 6,000 shares of the Company’s common stock were cancelled due to the expiration of the ten -year term and an additional 17,090 were forfeited as a result of the termination of several employees. 

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.

On November 10, 2020, the board voted to increase the 2018 Stock Option Plan from 450,000 options to 900,000 options.

During 2021, the Company granted 10,000 stock options to one employee.

These options have a three -year vesting schedule with one - third vesting immediately, one - third vesting in 18 months and the final one - third vesting in 36 months.

The options expire if not exercised in ten years from the grant date, and their exercise price is $ 1.91 per share.

On October 14, 2022, the Company received a notice of exercise of options to purchase 20,000 common shares of the Company’s stock.

The options were exercised at $ 0.975 per share and the Company received proceeds of $ 19,500 .

During 2022, options granted to purchase 12,000 shares of the Company’s common stock were cancelled due to the expiration of the ten -year term.

Active Plans:

On March 23, 2018, the Company adopted the 2018 Non-Qualified Stock Option Plan (the "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.

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Information with respect to stock options granted under this plan during the year ended December 31, 2022 is as follows:

Number of shares

Weighted average exercise price per share

Options outstanding at January 1, 2022

1 unchanged sentence

$ 3.17  

22,300  

Cancelled/Expired

( 17,090 )  

Options outstanding at December 31, 2022

1 unchanged sentence

$ 3.17  

On October 15, 2012, the Company adopted the 2012 Non-Qualified Stock Option Plan (the "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.

2 unchanged sentences

Information with respect to stock options granted under this plan during the year ended December 31, 2022 is as follows:

Number of shares

Weighted average exercise price per share

Options outstanding at January 1, 2022

1 unchanged sentence

$ 0.98  

( 2,000 )  

( 20,000 )  

Options outstanding at December 31, 2022

1 unchanged sentence

$ 0.98  

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.

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 to $ 3.30 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.

1 unchanged sentence

Information with respect to stock options granted under this plan during the year ended December 31, 2022 is as follows:

Number of shares

Weighted average exercise price per share

Options outstanding at January 1, 2022

8 unchanged sentences

Information with respect to stock options granted under this plan during the year ended December 31, 2022 is as follows:

Number of shares

Weighted average exercise price per share

Options outstanding at January 1, 2022

4 unchanged sentences

Options outstanding at December 31, 2022

10,000  

$ 0.98  

Fair value of issuances

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

The Company did not grant any options to purchase Company stock during the year ended December 31, 2022.

The fair value of the Company’s 2021 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 (see below). 

Expected term (based upon historical experience) (in years)

Expected volatility  

5.5 - 5.8  

Expected dividends  

Risk free interest rate  

Expected volatility

117 - 159 %  

Expected dividends

Risk free interest rate

0.73 - 1.24 %  

For the years ended December 31, 2022 and 2021, the Company recorded total share-based compensation expense related to the common stock bonuses, other stock issuances, and stock options of $ 172,488 and $ 603,533 , respectively, which is recorded in share-based compensation expense in the accompanying consolidated statements of operations and comprehensive income (loss).

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

The Company has unrecognized share-based compensation expense of $ 57,958 for options outstanding as of December 31, 2022 which will be recognized over the weighted average period of approximately one year.

Information pertaining to options outstanding and exercisable at December 31, 2022 is as follows:

2 unchanged sentences

Exercise Prices

Number of shares

Weighted Average Remaining contractual Life (In Years)

Number of shares

Weighted Average Remaining contractual Life (In Years)

Life (In Years)

$ 0.98  

24 unchanged sentences

Summary of all stock option plans activity during the year ended December 31, 2022 is as follows:

Number of Shares

Weighted Average Price

Weighted Average Remaining Contractual Life (In Years)

Aggregate Intrinsic Value

Life (In Years)

Options outstanding at January 1, 2022

1 unchanged sentence

$ 2.90  

22,300  

Cancelled/Expired

( 12,000 )  

( 20,000 )  

Options outstanding and expected to vest at December 31, 2022

6 unchanged sentences

$ 6,338  

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.

From time to time, the Company issues warrants to purchase shares of the Company’s common stock to investors, note holders and to non-employees for services rendered or to be rendered in the future.

On August 14, 2020, the Board of Directors approved an amendment to ShipTime’s December 30, 2016 Warrant Agreement with an entity controlled by the Company’s CEO/CFO to reprice the outstanding warrants.

The modification of the warrant resulted in a charge to the Company’s share-based compensation expense of $ 318,893 . 

As of December 31, 2021 and 2020, there were no outstanding warrants.

The Company’s loss before income tax provision includes the following components for the years ended December 31:

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 at December 31, 2022.

The Company’s income (loss) before income tax (benefit) provision includes the following components for the years ended December 31:

$ ( 77,704 )  

$ ( 1,143,578 )

273,359  

653,075  

$ 195,655  

$ ( 490,503 )

The Company is subject to taxation in the U.S., Canada, and Massachusetts.

The provision for income taxes for the years ended December 31 are summarized below:

The (benefit) provision for income taxes for the years ended December 31 are summarized below:

( 364,879 )  

336,568  

Total current

( 363,523 )  

337,024  

( 92,968 )  

Total deferred

Income tax provision

( 92,968 )  

Income tax (benefit) provision

$ ( 456,491 )  

$ 206,257  

A reconciliation of income taxes computed by applying the statutory U.S.

income tax rate to the Company’s loss before income tax provision to the income tax provision is as follows for the years ended December 31:

income tax rate to the Company’s income (loss) before income tax (benefit) provision to the income tax (benefit) provision is as follows for the years ended December 31:

federal statutory tax rate

3 unchanged sentences

Attributes expiration

Return to Provision

NOL Adjustment

Unrecognized tax benefit

Interest and penalties

4 unchanged sentences

Deferred taxes:

$ 7,495,858  

$ 9,122,325  

Inventory and other reserves

31,340  

24,128  

Stock based compensation expense

196,700  

296,657  

Lease liability

16,125  

14,695  

Total deferred tax assets

7,744,572  

9,466,928  

Depreciation and amortization

( 668,359 )  

Right-of-use assets

( 6,112 )  

Valuation allowance

( 7,778,053 )  

( 9,504,575 )

Net deferred tax liabilities

$ ( 707,952 )  

$ ( 838,312 )

Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain.

1 unchanged sentence

The reduction in the valuation allowance is approximately $ 1,727,000 and $ 884,000 in 2022 and 2021, respectively.

As of December 31, 2021, the Company had net operating loss carryforwards for federal income tax purposes of approximately $ 39,069,000 .

Of the total amount approximately $ 1,931,000 were generated after January 1, 2018, and therefore will not expire but can only be used to offset 80 percent of future taxable income.

The remaining amount of approximately $ 37,138,000 expire beginning in the year 2022.

As of December 31, 2022, the Company had net operating loss carryforwards for federal income tax purposes of approximately $ 32,917,000 . 

Of the total amount approximately $ 902,000 were generated after January 1, 2018, and therefore will not expire but can only be used to offset 80 percent of future taxable income. 

The remaining amount of approximately $ 32,015,000 expires beginning in the year 2023.

As of December 31, 2022, the Company had net operating loss carryforwards for state income tax purposes of approximately $ 9,229,000 which expire beginning in the year 2031.

As of December 31, 2022, the Company also had Canada net operating loss carryforwards of $ 1,670,000 which expire beginning in the year 2039.

Utilization of the net operating losses may be subject to substantial annual limitation due to federal and state ownership change limitation provided by the Internal Revenue Code and similar state provisions.

8 unchanged sentences

federal, state and local income tax examinations by tax authorities for years before 2019.

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.

Generally, the tax years remain open for examination by the federal and Massachusetts authorities under three -year statute of limitation.

In addition, the Company's tax years starting 2003 and 2011 are subject to limited examination by the United States and Massachusetts authorities, respectively, due to the carry forward of unutilized net operating losses.

ShipTime is subject to taxation in Canada and Ontario.

The foreign subsidiary is generally subject to examination for four years following the later of:

( 1 ) the year in which the tax obligation originated or ( 2 ) the year the tax return is filed. 

ShipTime is not currently under examination by the local tax authority. 

The Company recognizes interest and penalties related with income taxes, as estimated or incurred, as a part of the income tax provision. 

As of December 31, 2022, and 2021 the Company accrued $ 16,064 and $ 70,060 of interest and penalties related to foreign income taxes. 

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID- 19 pandemic.

The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021.

In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

Due to the Company's history of net operating losses, the CARES Act is not expected to have a material impact on the Company's financial statements.

On December 27, 2020, the United States enacted the Consolidated Appropriations Act of 2021 (“CAA”).

The CAA includes provisions extending certain CARES Act provisions and adds coronavirus relief, tax and health extenders.

The Company will continue to evaluate the impact of the CAA and its impact on our financial statements in 2022 and beyond.

The Tax Cuts and Jobs Act requires taxpayers to capitalize and amortize research and development (“R&D”) expenditures under Section 174 for tax years beginning after December 31, 2021. 

This rule became effective for the Company during the year but did not result in the capitalization of R&D costs. 

This rule is also in effect for its foreign subsidiary and the calculation of global intangible low-tax income (“GILTI”), of which approximately $ 900,000 of R&D costs related with internally developed software have been capitalized. 

The Company will amortize these costs for tax purposes over five years if the R&D was performed in the U.S.

and over 15 years if the R&D was performed outside the U.S.

The evaluation of uncertainty in a tax position is a two -step process.

The first step involves recognition.

The Company determines whether it's more likely than not that a tax position will be sustained upon tax examination including any resolution of any related appeals or litigation, based on only the technical merits of the position.

The technical merits of a tax position are derived from both statutory and judicial authority (legislation and statutes, legislative intent, regulations, rulings, and case law) and their applicability to the facts and circumstances of the tax position.

If a tax position does not meet the more-likely-than- not recognition threshold, the benefit of that position is not recognized in the consolidated financial statements.

The second step is measurement.

A tax position that meets the more-likely-than- not recognition threshold is measured to determine the amount of benefit to recognize in the consolidated financial statements.

The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate resolution with a taxing authority.

Uncertain tax positions are reviewed on an ongoing basis and are adjusted after considering facts and circumstances, including progress of tax audits, developments in case law and closing of statutes of limitation.

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits at the beginning and end of the years ended December 31, 2022 and 2021:

Gross unrecognized tax benefits at the beginning of the year

Increases related to current year positions

Increases (decreases) related to prior year positions

691,675  

Expiration of unrecognized tax benefits

Gross unrecognized tax benefits at the end of the year

$ 691,675  

The amount of unrecognized tax benefits that would impact the Company’s effective tax rate, if recognized, is $ 707,738 (including estimated penalties and interest). 

The amount of the increase during 2022 is primarily related to transfer pricing policy changes applicable to prior years that were implemented during 2022.

The Company does not believe its unrecognized tax benefits will change during the next twelve months.

We have an operating lease for our corporate offices in Canada and finance leases for furniture and equipment, which expired in June 2021.

Our leases have remaining lease terms of nineteen months to twenty months, and our primary operating leases include options to extend the leases for four years.

Our leases have remaining lease terms of seven months to eight months, and our primary operating leases include options to extend the leases for four years.

Future renewal options that are not likely to be executed as of the balance sheet date are excluded from right-of-use assets and related lease liabilities.

5 unchanged sentences

Operating lease cost

$ 39,324  

$ 40,796  

Finance lease cost:

Amortization of leased assets

$ 5,557  

Interest on lease liabilities

Total finance lease cost

$ 5,643  

Supplemental cash flow information related to leases for the years ended December 31, was as follows:

1 unchanged sentence

Operating cash flows from operating leases

$ 38,355  

$ 42,006  

Operating cash flows from finance leases

Financing cash flows from finance leases

$ 2,907  

Right-of-use assets obtained in exchange for lease obligations:

2 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

Operating leases:

December 31, 2022

December 31, 2021

Operating leases:

Operating lease right-of-use assets

$ 23,063  

$ 61,040  

Current portion of operating lease obligations

$ 22,199  

$ 36,123  

Operating lease obligations, net of current portion

25,187  

Total operating lease liabilities

Finance leases:

Property and equipment, at cost

Accumulated depreciation

Property and equipment, net

Current portion of finance lease obligations

Finance lease obligations, net of current portion

Total finance lease liabilities

$ 22,199  

$ 61,310  

December 31, 2022

Weighted Average Remaining Lease Term (in years)

Operating lease

Finance leases

Weighted Average Remaining Lease Term

Operating lease (in years)

Weighted Average Discount Rate

Operating lease

Finance leases

Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019.

1 unchanged sentence

Years ending December 31,

$ 23,751  

Total lease liabilities

23,751  

Less amount representing interest

22,199  

Less current portion

SUBSEQUENT EVENTS

On March 21, 2023, the Board of Directors approved the issuance of 250,000 shares of PAID common stock valued at $ 437,500 and is to be recorded as share-based compensation in 2023 as it relates to the renewal of the employment agreement of W.

Austin Lewis IV, of which 125,000 of the shares are subject to repurchase at $ 0.01 per share if Mr.

Lewis terminates employment prior to January 1, 2024, as defined in the employment agreement. 

The Board of Directors also approved the allocation of the 2022 bonus accrual to be paid out in cash and shares of which $ 82,180 has been recorded as share-based compensation expense for the year ended December 31, 2022. 

Option compensation for the board positions was increased to 10,000 common stock options per committee head from 5,000 common stock options per committee head and was approved by the Board of Directors.

 A total of 46,961 shares of common stock were issued to officers and one employee in March 2023.

The Board of Directors has approved the terms of an employment agreement of the Company’s COO, David Scott. 

The employment agreement for $ 214,000 CAD annually includes the issuance of common stock valued at $ 25,000 USD which are subject to repurchase at $0.01 in the event that Mr.

Scott terminates his employment agreement prior to April 1, 2024.

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 adjustment to or additional disclosure in the consolidated financial statements, except as disclosed herein.

EXHIBIT INDEX

Description of Exhibits

Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to Form 8-K, filed on November 25, 2003)

Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K, filed on December 8, 2004)

Certificates of Amendment of Certificate of Incorporation of the Company effective December 30, 2016 (incorporated by reference to Exhibit 3.1 to Form 8-K filed on December 23, 2016)

Amendment No.

1 to Bylaws effective December 30, 2016 (incorporated by reference to Exhibit 3.2 to Form 8-K filed on December 23, 2016)

Specimen of certificate for Common Stock (incorporated by reference to Exhibit 4.1 to Form SB-2/A filed on December 1, 2000)

Agreement dated November 21, 2008, by and between the Company and Lewis Asset Management Equity Fund, LLP with respect to the purchase of 2,500,000 shares at $.20 per share (incorporated by reference to Exhibit 4.2 to Form 10-KSB filed on March 31, 2009)

Form of Warrant to Lewis Asset Management with respect to Promissory Note dated April 29, 2009 (incorporated by reference to Exhibit 4.2 to Form 10-Q filed on May 12, 2009)

2002 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 10.17 to Form 10-KSB filed on March 31, 2003)

2011 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 99.1 to Form S-8 filed on February 2, 2011)

2018 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 10.35 to Form 10-K filed on April 1, 2019 )

2012 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on October 18, 2012)

Agreement for Non-Qualified Stock Option under the PAID, Inc.

2012 Non-Qualified Stock Option Plan awarded to W.

Austin Lewis, IV, dated October 15, 2012 (incorporated by reference to Exhibit 10.2 to Form 10-Q filed on October 18, 2012)

Agreement for Non-Qualified Stock Option under the PAID, Inc.

2011 Non-Qualified Stock Option Plan awarded to W.

Austin Lewis, IV, dated August 8, 2012 (incorporated by reference to Exhibit 10.3 to Form 10-Q filed on October 18, 2012)

Amalgamation Agreement dated September 1, 2016 by and among PAID, Inc., emergeIT, Inc., 2534845 Ontario Inc.

and 2534841 Ontario Inc.

(incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 23, 2016)

Exchange and Call Rights Agreement (incorporated by reference to Exhibit 10.2 to Form 8-K filed on December 23, 2016)

Support Agreement (incorporated by reference to Exhibit 10.4 to Form 8-K filed on December 23, 2016)

10.10+  

Employment Agreement for Allan Pratt (incorporated by reference to Exhibit 10.6 to Form 8-K filed on December 23, 2016)

Employment Agreement for W.

Austin Lewis IV (incorporated by reference from Exhibit 10.11to Form 10-K filed on March 31, 2021 )

Non-Compete Agreement for W.

Austin Lewis IV (incorporated by reference from Exhibit 10.12to Form 10-K filed on March 31, 2021)

CFO Certification required under Section 302 of Sarbanes-Oxley Act of 2002

CEO and CFO Certification required under Section 906 of Sarbanes-Oxley Act of 2002

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension Schema

Inline XBRL Taxonomy Extension Calculation Linkbase

Inline XBRL Taxonomy Extension Definition Linkbase

Inline XBRL Taxonomy Extension Label Linkbase

Inline XBRL Taxonomy Extension Presentation Linkbase

Cover Page Interactive Data File (embedded within the Inline XBRL Document and included in Exhibit 101)

*filed herewith

+Indicates a management contract or any compensatory plan, contract or arrangement

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures