What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-04-01 compared with 2023-03-31 · 351 added, 625 removed, 684 unchanged (59% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 

The Company's management, including the Chief Executive Officer /Chief Financial Officer of the Company, as its principal financial officer has evaluated the effectiveness of the Company's “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Based upon this evaluation, the Chief Executive Officer/Chief Financial Officer has concluded that, as of December 31, 2023, the Company's disclosure controls and procedures were not effective, due to material weaknesses in internal control over financial reporting, for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time period specified by the Securities and Exchange Commission's rules and forms, and is accumulated and communicated to the Company's management, including its principal executive/financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As described in our accompanying Management's Annual Report on Internal Control over Financial Reporting , we have identified four remaining material weaknesses in internal controls over financial reporting.

Because of these remaining material weaknesses, we concluded that, as of December 31, 2021, our internal control over financial reporting was not effective based on the criteria outlined in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Because of these remaining material weaknesses, we concluded that, as of December 31, 2023 our internal control over financial reporting was not effective based on the criteria outlined in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

We continued to review new procedures and controls in 2023 and have taken steps to remediate the material weaknesses at the entity and activity levels, and to review further our procedures and controls in 2024.

22 unchanged sentences

Entity Level Controls

Ineffective control environment, including lack of corporate governance

Ineffective communication of information

Ineffective monitoring of activities

Activity Level Controls

Lack of procedures and control documentation

Inadequate Entity Level Controls          

Ineffective Control Environment, Including Lack of Corporate Governance

The Control Environment is the tone of an organization and how the tone influences the control consciousness of its people.

Control Environment factors include, the integrity, ethical values, and competence of the entity’s people;

management’s philosophy and operating style;

Control Environment factors include, the integrity, ethical values, and competence of the entity’s people;

management’s philosophy and operating style;

the way management assigns authority and responsibility;

1 unchanged sentence

and the attention and direction provided by the audit committee and board of directors.

The Control Environment includes the Company’s Corporate Governance which is made up of a set of practices, policies, laws, and principals, designed to provide guidance and structure to directors, managers, and employees with a clear view of corporate goals and business objectives.

These processes and procedures need to be clearly defined, presented and administered to each participant in the organization, and should document the distribution of rights and responsibilities among employees, management, clients and customers.

Steps taken towards Remediation for an Ineffective Control Environment:

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.

5 unchanged sentences

Steps taken towards Remediation of Ineffective Communication of Information:

Enhanced the documentation and procedures of our information technology to control assurance that changes to financial applications are properly authorized and tested and that access to our information systems and financial applications are appropriately restricted.

Technology staff has implemented a documenting and sharing process for software development.

Updated our information systems user profiles and passwords to improve access controls.

Implemented improvements to our information systems to further address control deficiencies.

Updated secure backup procedures with best practice methodologies for protecting our financial data in case of a problem.

Enhanced the documentation of certain core proprietary technologies so that there is more redundancy and protection of corporate assets.

Daily sales activity is distributed to senior management for review of accuracy.

Newly formed Human Resource department monitors the employee concerns and is the primary distributor of Company emails, updates and policy changes to all employees.

The Information Technology department documents and distributes to the employees any updates to our software including enhancements and bug fixes.

Ineffective Monitoring of Activities

1 unchanged sentence

Steps taken towards Remediation of Ineffective Monitoring of Activities:

The Company has reorganized the organizational reporting structure to enable greater oversight and control of operations which has increased the level of awareness and accountability.

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

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.

Upgrades to software systems have been made which has resulted in the automation of accounting transactions and has enhanced our financial reporting and timeliness of operating results.

Management and staff are more integrated into the review process.

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

Management monitors all revenue, gross margin and top customers via automated distribution daily from our platform, which allows better monitoring of the Company performance.

The CFO and VP of Finance Company meet frequently to discuss and evaluate operations, sales activity, technology enhancements and their impact on the financial strength of the Company.

They also review all cash activity on a daily basis.

Automation has been updated to include a risk assessment and notification of potential fraudulent or unusual activity.

The Company believes significant improvements have been made to remediate its material weakness in the internal controls over financial reporting at the entity level, but does not have the appropriate documentation to support its efforts.

4 unchanged sentences

Our information technology department has worked toward cross training and redundancies to assure that no one single person has the ability to make changes to the core operating systems of our products.

Additionally, we have contacted with our third-party hosting provider to gain the ability to increase bandwidth in cases of larger than normal traffic to our websites and servers.

We used cloud-based solutions, tokenization to remove the need to capture and site confidential financial data in addition to encryption to protect personal data.

The critical employees have continued network access with additional access to two independent internet providers.

2 unchanged sentences

We have also added internal spending and approval limits to monitor activities.

Inadequate Activity Level Controls

3 unchanged sentences

Steps taken towards Remediation of Revenue Recognition:

The Company upgraded its transactional processing systems which resulted in the automation of several manual accounting tasks.

This automation eliminated the risk of human error for these manual tasks and created a more concise audit trail in the revenue recognition process.

The Company continues to use automation to support its revenue recognition.

Our internal software produces real-time transactional based reporting that is tied to our cash transactions.

This automation eliminated the risk of human error for these tasks and created a more concise audit trail in the revenue recognition process.

All sales are reconciled across the Company's multiple revenue and accounting systems comparing for any discrepancies.

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 Financial Closing:

The Company closes its books and reconciles all accounts monthly and provides management with a comprehensive set of financial and operating reports and analysis of results.

All transactions are audited on a quarterly basis.

The CEO/CFO receives monthly financial updates on each segment of the Company.

3 unchanged sentences

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. 

As defined by the Public Company Accounting Oversight Board Auditing Standard No.

5, a material weakness is a significant control deficiency or a combination of significant control deficiencies that results in there being more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. 

Management continues to monitor and assess the controls to ensure compliance. 

As a smaller reporting company, our independent registered public accounting firm is not required to issue a report on the Company's internal control over financial reporting as of December 31, 2023.

1 unchanged sentence

As discussed in the Managements' Annual Report on Internal Control over Financial Reporting, the Company continues to make improvements to the entity and activity controls and expects to take further steps in 2024 to remediate the outlined deficiencies.

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 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.

The Company monitors all financial activity and has implemented automated tools to support the reconciliation process specific to financial reporting.

The CEO/CFO has worked with the SVP of Finance and management to identify areas of improvement and together they continue to implement cross training and redundancies to assist with internal controls.

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

The Company has also implemented dual approval and review of all cash disbursements and financial transactions.

While we believe they are effective at mitigating risk of material error, we have not yet concluded that they are operating effectively.

The forecast is reviewed by the CFO on a regular basis and all members of Management contribute to the review.

While we believe these improvements are effective at mitigating the risk of a material error, we have not yet concluded that they are operating effectively.

There were several areas of improvement in our segregation of duties, financial closing, and information technology controls that have positively impacted our internal control over financial reporting for the fiscal year ended 2023.

15 unchanged sentences

The Amended Bylaws would provide for the Board to be divided into three classes of directors serving staggered three-year terms.

 As a result, approximately one-third of the Board will be elected each year.

 Initially, three directors will serve between one-to-three-year terms.

 The directors placed in a Class I position will serve for approximately one year.

 The directors placed in a Class II position will serve for approximately two years.

As a result, approximately one-third of the Board will be elected each year.

Initially, three directors will serve between one-to-three-year terms.

The directors placed in a Class I position will serve for approximately one year.

The directors placed in a Class II position will serve for approximately two years.

The directors placed in a Class III position will serve approximately three years.

After this transitional arrangement, the Directors will serve for three-year terms, with one class being elected each year.

Andrew Pilaro  has served as a Director of PAID since September 2000.

Andrew Pilaro has served as a Director of PAID since September 2000.

He is President of CAP Properties Limited, a family office which is an investment management company, with a primary responsibility for asset management.

Pilaro was asked to serve as a director because he provides investment management skills and a general business background.

Austin Lewis, IV  currently serves as CFO and CEO of PAID and previously served as the Chairman of the Audit Committee for MAM Software, Inc.

(MAMS). 

Austin Lewis, IV currently serves as CFO and CEO of PAID and previously served as the Chairman of the Audit Committee for MAM Software, Inc.

Since 2004, Mr.

2 unchanged sentences

Lewis held a variety of positions with investment firms, including Puglisi & Co., Thompson Davis & Co., and Branch Cabell & Company.

Lewis holds a Bachelor of Science in Finance and a Bachelor of Science in Financial Economics from James Madison University. 

Lewis was asked to serve as the CEO because he had a thorough knowledge of the Company’s strengths and weaknesses and has a strong background in being able to make companies run efficiently and successfully.

David Ogden  is the CEO of Soho Management Consulting, a global investment consulting firm.

David held many senior positions with FedEx, including Managing Director of Sales for FedEx Middle East and Africa region based in Dubai, and instrumental in India's launch as a direct served FedEx location.

He was Managing Director of FedEx Logistics in the Middle East and Africa and was responsible for the region's first FedEx Logistics subsidiary's start-up.

After FedEx, he moved to Egypt, where he created a group of companies representing best-of-class business support services under a group holding company.

After Egypt, he moved to Abu Dhabi to work for an alternative investment company developing warehousing and logistics parks in the United Arab Emirates.

He has recently been working with ecommerce ventures from around the world.

Laurie Bradley is the Chief Executive Officer of Flexible Support Group providing funding, accounting, and payroll services to small and mid-size businesses across North America.

Bradley also retains ownership in ASG Renaissance and serves as its President.

Lewis holds a Bachelor of Science in Finance and a Bachelor of Science in Financial Economics from James Madison University.

David Ogden is the CEO of Soho Management Consulting, and President of Soho Printing LLC a global investment consulting firm.

David held many senior positions with FedEx, including Managing Director of Sales for FedEx Middle East and Africa region based in Dubai, and instrumental in India's launch as a direct served FedEx location.

He was Managing Director of FedEx Logistics in the Middle East and Africa and was responsible for the region's first FedEx Logistics subsidiary's start-up.

After FedEx, he moved to Egypt, where he created a group of companies representing best-of-class business support services under a group holding company.

After Egypt, he moved to Abu Dhabi to work for an alternative investment company developing warehousing and logistics parks in the United Arab Emirates.

He has recently been working with ecommerce ventures from around the world.

Laurie Bradley is the Chief Executive Officer of Flexible Support Group providing funding, accounting, and payroll services to small and mid-size businesses across North America.

Bradley also retains ownership in ASG Renaissance and serves as its President.

ASG sold its staffing and contracting business in 2016 and now operates with a focus on executive search, and consulting services that delivers training to assist clients with their diversity and inclusion initiatives.

The ASG consulting practice also leverages the 2007 Mosaic Advantage initiative which aggregated a network of minority, women, and veteran owned businesses providing them with access to larger business opportunities, coaching, mentoring and financial services. 

The ASG consulting practice also leverages the 2007 Mosaic Advantage initiative which aggregated a network of minority, women, and veteran owned businesses providing them with access to larger business opportunities, coaching, mentoring and financial services.

Bradley has worked in both the public and private sectors specializing in talent management, executive leadership, and advisory services.

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

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

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.

5 unchanged sentences

The Securities and Exchange Commission has adopted rules to implement certain requirements of the Sarbanes-Oxley Act of 2002 pertaining to public company audit committees.

One of the rules requires a company to disclose whether it has an “audit committee financial expert”

serving on its audit committee.

One of the rules requires a company to disclose whether it has an “audit committee financial expert” serving on its audit committee.

Based on its review of the criteria of an audit committee financial expert under the rule adopted by the SEC, the Board of Directors does not believe that any member of the Board of Directors' Audit Committee would be described as an audit committee financial expert.

1 unchanged sentence

While from time-to-time informal discussions as to potential candidates have occurred, no formal search process has commenced.

Andrew Pilaro, one of the Company’s independent directors, is the sole member of the audit committee.

The audit committee does not have a charter.

Audit Committee Report

The Audit Committee reviewed and discussed our audited consolidated financial statements for the year ended December 31, 2022 with our management.  The Audit Committee also reviewed and discussed our audited consolidated financial statements and the matters required to be discussed, by the Public Company Accounting Oversight Board (“PCAOB”), including material weaknesses and other internal control deficiencies with KMJ Corbin & Company LLP, our independent registered public accounting firm.

The Audit Committee reviewed and discussed our audited consolidated financial statements for the year ended December 31, 2023 with our management.

The Audit Committee also reviewed and discussed our audited consolidated financial statements and the matters required to be discussed, by the Public Company Accounting Oversight Board (“PCAOB”), including material weaknesses and other internal control deficiencies with KMJ Corbin & Company LLP, our independent registered public accounting firm.

The Audit Committee received from KMJ Corbin & Company LLP the written disclosures and letter required by applicable requirements of the PCAOB regarding the independent accountant's communications with the audit committee concerning independence and has discussed with the independent accountant the independent accountant's independence.

Based on the reviews and discussions referred to above, the Audit Committee recommended to our Board of Directors that our audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2022.

The Audit Committee

16 unchanged sentences

Austin Lewis, IV, as CEO of the Company, with an effective date of January 4, 2021.

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

notice of termination by the Company.

The Employment Agreement is for a two-year term from the effective date with automatic one-year renewals subject to 12 months’ notice of termination by the Company.

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

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. 

In addition, other than termination “for cause”, 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.

In addition, other than termination “for cause”, Mr.

Lewis qualifies for a one-year severance of his then current salary.

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. 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. 

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

4 unchanged sentences

David Scott (3)(5)(6)(9)(10) (COO)

Lewis’s start date was July 31, 2012.

Lewis’s salary was approved by the Board of Directors at $300,000.

Lewis’s start date was July 31, 2012.

Lewis’s salary was approved by the Board of Directors at $321,000.

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

Lewis received 250,000 shares on March 29, 2023 valued at $1.75 per share.

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

Scott received 13,889 shares on April 10, 2023 valued at $1.80 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.

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.

Lewis’ bonus of $112,756 to be paid out in 2024 in cash and shares for 2023 was approved by the Board of Directors on February 22, 2024.

36,373 shares were valued at $1.55 per share based on the close price of the Company’s common stock at February 21, 2024.

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.

Scott’s bonus for 2023 includes $56,378 to be paid out in 2024 in cash and shares, which was approved by the Board of Directors on February 22, 2024.

9,093 shares were valued at $1.55 per share based on the close price of the Company’s common stock at February 21, 2024.

The following tables set forth certain information related to outstanding equity awards as of December 31, 2023 for our executive officers.

Option Awards

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 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 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.

Number of Securities Underlying Unexercised

Options (#) Exercisable

Number of Securities Underlying Unexercised

Options (#) Unexercisable

Equity Incentive Plan Awards:

Number of Securities Underlying Unexercised Unearned

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. 

On March 23, 2023 the Board of Directors approved stock option awards of 15,000 shares for board members and an additional 20,000 shares for committee chairmen.

These awards take into consideration the absence of option issuance in 2021 and 2022.

Options were granted at an exercise price of $1.75 per share, and vested immediately.

The Company recorded $104,550 of share-based compensation with relation to the options granted to the Board.

The following table provides compensation information for the one-year period ended December 31, 2023 for the only non-employee members of our Board of Directors.

Director Compensation in 2023

Fees earned or paid in cash

Option Awards ($)

Andrew Pilaro

1 unchanged sentence

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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

To the knowledge of the management of the Company the following table sets forth the beneficial ownership of our common stock as of April 1, 2024 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 (2)

Austin Lewis, IV

2 unchanged sentences

All directors beneficial owners

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

Includes options to purchase 106,000 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 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”

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

Includes options to purchase 55,000 shares of the Company’s common stock.

Includes options to purchase 92,500 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” is incorporated herein by reference in Part II, Item 5 of this Annual Report on Form 10-K.

Certain Relationships and Related Transactions, and Director Independence

6 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

KMJ Corbin & Company LLP (“KMJ”) is our independent registered public accounting firm for the years ended December 31, 2022 and 2021.

KMJ Corbin & Company LLP (“KMJ”) is our independent registered public accounting firm for the years ended December 31, 2023 and 2022.

The following is a summary of the fees billed to the Company by KMJ for professional services rendered for the years ended December 31, 2023 and 2022.

These fees are for work performed in the years indicated and, in some instances, we have estimated the fees for services rendered but not yet billed.

Financial Statements ”

) and for services normally provided in connection with statutory and regulatory filings or engagements

Consists of fees billed for professional services rendered for the audit of the Company’s annual financial statements and the review of the interim financial statements included in the Company’s Quarterly Reports (together, the “ Financial Statements ” ) and for services normally provided in connection with statutory and regulatory filings or engagements

Consists of fees billed for tax compliance, tax advice and tax planning

2 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%.

Exhibits and Financial Statement Schedules

(a)(1) Financial Statements

For a list of the financial information included herein, see “Index to Audited Consolidated Financial Statements”

on page 35 of this Annual Report on Form 10-K.

For a list of the financial information included herein, see “Index to Audited Consolidated Financial Statements” on page 35 of this Annual Report on Form 10-K.

(a)(2) Financial Statements Schedules

5 unchanged sentences

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)

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)

1 unchanged sentence

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)

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)

21 unchanged sentences

Employment Agreement for David Scott dated March 29, 2023

Securities Purchase Agreement dated March 26, 2024, by and between Paid, Inc.

and Embolx, Inc.

Convertible Note dated March 26, 2024 by Embolx, Inc for the benefit of Paid, Inc.

Security Agreement dated March 26, 2024 by and between Embolx, Inc.

and Paid, Inc.

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

11 unchanged sentences

Austin Lewis, IV,

March 31, 2023

April 1, 2024

Austin Lewis, IV, Chief Executive Officer, Chief Financial Officer

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

April 1, 2024

Andrew Pilaro

March 31, 2023

/s/ Laurie Bradley

/s/ Laurie Bradley

April 1, 2024

Laurie Bradley

March 31, 2023

& SUBSIDIARIES

2 unchanged sentences

Report of Independent Registered Public Accounting Firm (PCAOB ID:

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

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Income and Comprehensive Income for the Years ended December 31, 2023 and 2022

Consolidated Statements of Changes in Shareholders’ Equity for the Years ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the Years ended December 31, 2023 and 2022

Notes to Consolidated Financial Statements

3 unchanged sentences

We have audited the accompanying consolidated balance sheets of PAID, Inc.

and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income (loss), changes in shareholders’

equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the "consolidated financial statements").

and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of income and comprehensive income, changes in shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

2 unchanged sentences

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

2 unchanged sentences

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

9 unchanged sentences

Critical Audit Matter Description

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

The 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 Note into shares of common stock of the Noteholder.

The 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.

As of July 19, 2023, the Note was in default and carried an additional 20% penalty and 20% interest resulting in $578,425 of other income which has been recognized in the Company’s consolidated financial statements.

The Company entered into an amendment of the Note on March 26, 2024.

Management assesses whether the 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. 

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

How the Critical Audit Matter Was Addressed in the Audit

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.

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

We obtained a copy of the SPA, security agreement, Registration Rights Agreement, 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 Note balance.

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

We obtained confirmation directly from the Noteholder of the outstanding balance as of December 31, 2023.

We obtained from management the unaudited internal 2023 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.

Irvine, California

March 31, 2023

April 1, 2024

& SUBSIDIARIES

3 unchanged sentences

Cash and cash equivalents

$ 1,787,248  

$ 2,839,687  

Accounts receivable, net

169,074  

215,109  

Note receivable, net of discount  

1,604,167  

Note receivable, net of discount

Prepaid expenses and other current assets

151,374  

164,823  

Total current assets

3,711,863  

3,219,619  

Property and equipment, net

23,487  

40,493  

Intangible assets, net

2,663,311  

3,175,198  

Operating lease right-of-use assets

23,063  

61,040  

$ 6,421,724  

$ 6,496,350  

LIABILITIES AND SHAREHOLDERS’

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$ 1,610,416  

$ 1,625,588  

Income tax payable

674,921  

Accrued expenses

430,858  

376,387  

Contract liabilities

13,020  

11,154  

Operating lease obligations –

current portion

22,199  

36,123  

Operating lease obligations

Total current liabilities

2,076,493  

2,724,173  

Long-term liabilities:

Operating lease obligations –

net of current portion

25,187  

Deferred tax liability, net

707,952  

838,312  

Uncertain tax position liability  

265,167  

Uncertain tax position liability

Total liabilities

3,049,612  

3,587,672  

Commitments and contingencies

Shareholders’

Shareholders’ equity:

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

no shares issued and outstanding at December 31, 2022 and 2021, respectively

no shares issued and outstanding at December 31, 2023 and 2022

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

1 unchanged sentence

Accrued common stock bonus

82,180  

Additional paid-in capital

72,800,976  

72,691,201  

Accumulated other comprehensive income

316,360  

590,067  

Accumulated deficit

( 69,670,404 )  

( 70,322,550 )

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

( 164,840 )  

Total shareholders’

3,372,112  

2,908,678  

Total liabilities and shareholders’

$ 6,421,724  

$ 6,496,350  

Common stock in treasury, at cost, 143,637 shares at December 31, 2023 and 2022, respectively

Total shareholders’ equity

Total liabilities and shareholders’ equity

See accompanying notes to consolidated financial statements

& SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31,

9 unchanged sentences

Other income (expense):

Income (loss) before income tax (benefit) provision

Interest income

Total other income

Income before income tax (benefit) provision

Income tax (benefit) provision

Net income (loss)

Net income (loss) per share –

Weighted average number of common shares outstanding –

Consolidated statements of comprehensive income (loss):

Net income (loss)

Net income per share – basic

Net income per share – diluted

Weighted average number of common shares outstanding – basic

Weighted average number of common shares outstanding – diluted

Consolidated statements of comprehensive income:

Other comprehensive income (loss):

Foreign currency translation adjustments

Comprehensive income (loss)

Comprehensive income

See accompanying notes to consolidated financial statements

& SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS ’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

Comprehensive

Treasury Stock

Accrued Common Stock Bonus

Additional Paid-in Capital

Other Comprehensive Income

Accumulated Deficit

Paid-in Capital

Balance, January 1, 2022

1 unchanged sentence

Share-based compensation expense

Issuance of common stock for accrued bonus and signing bonus

Repurchase of common stock for treasury

Option exercise

Issuance of common stock for compensation

1 unchanged sentence

Foreign currency translation adjustment

Issuance of common stock for accrued bonus

Issuance of common stock for signing bonus

Issuance of common stock for bonus

Share-based compensation expense

Repurchase of common stock for treasury

Option exercise

Issuance of common stock for compensation

Balance December 31, 2023

4 unchanged sentences

Cash flows from operating activities:

Net income (loss)

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

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

Depreciation and amortization

5 unchanged sentences

Deferred income taxes

Interest and default income accrued on note receivable

Changes in assets and liabilities:

2 unchanged sentences

Accounts payable

Income tax payable and uncertain tax position liability

Uncertain tax position liability

Accrued expenses

4 unchanged sentences

Issuance of note receivable

Purchase of property and equipment

Net cash used in investing activities

Cash flows from financing activities:

Payments on finance leases

Proceeds from option exercise

Repurchase of common stock

Net cash used in financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

5 unchanged sentences

SUPPLEMENTAL DISCLOSURES OF NON-CASH ITEMS

Issuance of common shares in settlement of accrued expenses

Issuance of common shares in settlement of accrued common stock bonus

Adjustment to operating lease right-of-use assets and operating lease obligations due to lease amendment

See accompanying notes to consolidated financial statements

2 unchanged sentences

DECEMBER 31, 2023 AND 2022

(“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, 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. 

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.

(“PAID”, the “Company”, “we”, “us”, or “our”) has developed a full line of SaaS-based business services including PaidPayments, PaidCart, PaidShipping and PaidWeb.

These solutions are developed to provide businesses with a streamlined experience for website creation, online sales, payment collection and shipping all in one platform.

ShipTime Canada Inc.

(“ShipTime”) has developed a SaaS-based application, which focuses on the small and medium business segments.

This offering allows members to quote, process, generate labels, dispatch and track courier and LTL shipments all from a single interface.

The application provides customers with a choice of today’s leading couriers and freight carriers all with discounted pricing allowing members to save on every shipment.

ShipTime can also be integrated into on-line shopping carts to facilitate sales via e-commerce.

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.

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.

This capability also provides cost advantages, rapid response to market needs, simplified processes for boarding business and a seamless interface for our merchant customers.

LIQUIDITY AND MANAGEMENT ’

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.

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

Paid offers a robust platform enabling small and medium businesses to launch websites via our catalog of templates.

Our platform includes a wide array of features such as mobile editing, search engine optimization, collaboration tools, pre-designed templates, and can be integrated with multiple platforms.

PaidCart serves as a comprehensive solution for small and medium businesses looking to expand their online sales through multiple channels.

It provides a centralized system to manage sales across various platforms, with additional functionalities for currency and language management, promotional sales, and abandoned cart recovery.

PaidPayments and PaidShipping seamlessly interface with PaidCart to facilitate the checkout and shipping processes.

Operating as a Payment Facilitator since 2019, PaidPayments provides businesses with a secure and efficient way to conduct online transactions including a virtual terminal, invoicing capability, subscriptions processing, checkout pages, and a point-of-sale system with support for USD, CAD, and EUR currencies.

PaidShipping delivers a solution to quote, process, generate labels, dispatch and track courier and LTL shipments all from a single interface.

We offer savings through partnerships with leading carriers.

It includes a multi-courier comparison tool, integrations with eCommerce platforms and branded tracking.

LIQUIDITY AND MANAGEMENT ’ S PLANS

As of December 31, 2023, the Company reported cash and cash equivalents of $ 2,052,421 and had working capital of $ 2,912,950 .

The Company has reported operating loss of ($ 587,823 ) and generated cash flows from operations of $ 235,516 for the year ended December 31, 2023 and has an accumulated deficit of $ 69,317,190 at December 31, 2023.

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.

1 unchanged sentence

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.

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 2025 and will have a positive impact on the Company for the foreseeable future.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Principles of Consolidation

The consolidated financial statements include the accounts of PAID, Inc.

and its wholly owned subsidiaries, PAID Run, LLC and ShipTime Canada.

and its wholly owned subsidiaries, PAID Run, LLC and ShipTime.

All intercompany accounts and transactions have been eliminated.

Foreign Currency

The currency of ShipTime, the Company’s international subsidiary, is in Canadian dollars.

Foreign currency denominated assets and liabilities are translated into U.S.

1 unchanged sentence

Results of operations and cash flows are translated using the average exchange rates throughout the period.

The effect of exchange rate fluctuations on translation of assets and liabilities is included as a separate component of shareholders’

equity in accumulated other comprehensive income.

The effect of exchange rate fluctuations on translation of assets and liabilities is included as a separate component of shareholders’ equity in accumulated other comprehensive income.

Geographic Concentrations

8 unchanged sentences

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 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.

3 unchanged sentences

Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1 –

Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 –

Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities;

Level 3 –

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities;

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

At December 31, 2023 and 2022, 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.

2 unchanged sentences

Concentration of Risk

The Company maintains cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to USD $250,000 and the Canadian Depositors Insurance Corporation (“CDIC”) up to CAD $100,000.

At December 31, 2023, the Company had amounts that exceeded the CDIC insurance limits but none that were in excess of the FDIC insurance limits.

1 unchanged sentence

The Company extends credit based on an evaluation of the customer's financial condition, generally without requiring collateral.

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

During the years ended December 31, 2023 and 2022, the Company recorded a bad debt expense of $ 0 and $ 36,845 , respectively.

For the years ended December 31, 2023 and 2022, no revenues from any one individual customer accounted for more than 10% of the total revenues.

As of December 31, 2022 and 2021, there was no customer that accounted for more than 10% of the accounts receivable balance.

As of December 31, 2023, there was one customer that accounted for more than 10% of the accounts receivable balance and for the year ended December 31, 2022 there were no customers that accounted for more than 10% of the accounts receivable balance.

Property and Equipment

2 unchanged sentences

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

Equipment purchased under capital leases is amortized on a straight-line basis over the estimated useful life of the asset or the term of the lease, whichever is shorter.

Equipment purchased under finance leases is amortized on a straight-line basis over the estimated useful life of the asset or the term of the lease, whichever is shorter.

Expenditures for repairs and maintenance are charged to expense as incurred.

Right-of-Use Assets

A right-of-use asset represents a lessee’s right to use a leased asset for the term of the lease.

Our right-of-use assets generally consist of an operating lease for a building.

A right-of-use asset represents a lessee’s right to use a leased asset for the term of the lease.

Our right-of-use assets consist of an operating lease for office space.

Right-of-use assets are measured initially at the present value of the lease payments, plus any lease payments made before a lease began and any initial direct costs, such as commissions paid to obtain a lease.

2 unchanged sentences

Intangible assets consist of patents, client lists, trade names, customer relationships, brewery and distillery management software and shipping label generation technology which are being amortized on a straight-line basis over their estimated useful lives.

Currently the intangible assets are being amortized between two and 17 years.

Currently the intangible assets are being amortized over 15 years.

Long-Lived Assets

2 unchanged sentences

No impairment charges were recognized during the years ended December 31, 2023 and 2022.

There can be no assurance, however, that market conditions will not change or demand for the Company’s services will continue, which could result in impairment of long-lived assets in the future.

Revenue Recognition

5 unchanged sentences

Advertising costs are charged to expense as incurred.

For the years ended December 31, 2022 and 2021, advertising expense totaled $ 247,549 and $ 184,075 , respectively, and are included in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income (loss).

For the years ended December 31, 2023 and 2022, advertising expenses totaled $ 263,565 and $ 247,549 , respectively, and are included in general and administrative expenses in the accompanying consolidated statements of income and comprehensive income.

Share-Based Compensation

The Company grants options to purchase the Company’s common stock to employees, directors and consultants under stock option plans.

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

In addition, 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 Company recorded $ 84,576 for share-based bonus payments related to 2023 which were approved by the Board of Directors on February 22, 2024 during the year ended December 31, 2023.

The Company recorded $ 82,180 for share-based bonus payments accrued in 2022 during the year ended December 31, 2022.

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.

These variables include, but are not limited to, expected stock price volatility, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends.

Expected volatilities are based on the historical volatility of the Company’s common stock.

The expected terms of options granted are based on analyses of historical employee termination rates and option exercises.

3 unchanged sentences

Share-based compensation expense recognized during a period is based on the value of the portion of share-based payment awards that is ultimately expected to vest and is amortized under the straight-line attribution method.

As share-based compensation expense recognized in the accompanying consolidated statements of operations and comprehensive income (loss) for the years ended December 31, 2022 and 2021 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.

As share-based compensation expense recognized in the accompanying consolidated statements of income and comprehensive income for the years ended December 31, 2023 and 2022 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.

The fair value method requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

6 unchanged sentences

Therefore, the Company has recorded a full valuation allowance against the net deferred tax assets.

The Company’s income tax provision includes state minimum taxes.

The Company recognizes any uncertain income tax positions on income tax returns at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority.

An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained (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 is subject to taxation in the U.S., and Canada and various state jurisdictions.

2 unchanged sentences

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.

For the year ended December 31, 2023 and 2022, there were approximately 6,100 and 11,400, respectively, dilutive shares that were included in the diluted income 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  

$ ( 696,760 )

Basic weighted-average shares outstanding

7,770,298  

7,444,732  

Effect of dilutive securities

11,391  

Diluted weighted-average shares outstanding

7,781,689  

7,444,732  

Net income (loss) per share –

$ 0.08  

Net income (loss) per share –

$ 0.08  

Net income per share – basic

Net income per share – diluted

Segment Reporting

1 unchanged sentence

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 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:

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

At December 31, 2023, the Company operated in the following four reportable segments:

Client services;

Shipping calculator services;

Brewery management software;

Merchant processing services;

3 unchanged sentences

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 maker is the Chief Executive Officer/Chief Financial Officer.

The following table compares total revenues for the years indicated.

2 unchanged sentences

Client services

$ 3,141  

Brewery management software

38,575  

59,075  

Shipping calculator services

22,872  

Merchant processing services

40,153  

54,003  

Shipping coordination and label generation services

16,498,431  

14,750,625  

Total revenues, net

$ 16,585,929  

$ 14,889,716  

The following table compares total income (loss) from operations for the years indicated.

2 unchanged sentences

Client services

$ 2,529  

Brewery management software

( 38,933 )  

20,747  

Shipping calculator services

12,383  

Merchant processing services

( 4,434 )  

20,417  

Shipping coordination and label generation services

273,363  

115,473  

Corporate operations

( 171,943 )  

Total income (loss) from operations

$ 58,993  

$ ( 490,503 )

During 2023 and 2022, the Company recorded depreciation and amortization expense of $ 309,972 and $ 325,940 , 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.

Certain prior year amounts have been reclassified for consistency with the current year presentation.

These reclassifications had no effect on the reported results of operations.

An adjustment has been made to the segment reporting for the years ended 2023 and 2022, to consolidate revenue reporting for smaller segments of the Company.

Recent Accounting Pronouncements

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.

In September 2016, the FASB issued ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326)-Measurement of Credit Losses on Financial Instruments, (“ASU 2016-13”), supplemented by subsequent accounting standards updates.

The new standard requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts.

ASU 2016-13, as amended, is effective for fiscal years beginning after December 15, 2022.

We adopted ASU 2016-13 on January 1, 2023.

As of December 31, 2023, the Company has $205,647 of accounts receivable and notes receivable of $2,453,425.

Based on the nature of our accounts receivable and the process of granting credit and collecting debt, we have determined that there are no expected credit losses for our accounts receivable.

The Company has one note receivable and is a senior secure lender with an absolute obligation.

Consideration has been taken into the contractual obligation, the valuation of the assets and the senior position of the repayment.

We have determined that there are no expected credit losses for our note receivable.

The adoption of this standard did not have a material impact on our consolidated financial statements or disclosures.

Specifically, our estimate of expected credit losses as of December 31, 2023, using our expected credit loss evaluation process described above, resulted in no adjustments to the provision for credit losses and no cumulative-effect adjustment to accumulated deficit on the adoption date of the standard.

Accounting Standard Update 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”).

In December 2023, the FASB issued ASU 2023-09, which requires more detailed income tax disclosures.

The guidance requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction.

The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively.

The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the disclosure requirements related to the new standard .

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures which provides guidance to improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about reportable segment’s expenses.

The new guidance must be adopted for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted, and retrospective application is required for all periods presented.

We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

REVENUE FROM CONTRACTS WITH CUSTOMERS

In accordance with current accounting guidance, the Company recognizes revenue by taking into consideration the following five steps:

The Company recognizes revenue by taking into consideration the following five steps:

(1) identify the contract(s) with a customer;

2 unchanged sentences

(4) allocate the transaction price to the performance obligations in the contract;

and ( 5 ) recognize revenue when (or as) the entity satisfies a performance obligation. 

Due to the nature of the Company’s product offerings and contracts associated with those products, the Company’s deliverables do not fluctuate and its revenue recognition is consistent.

and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

Due to the nature of the Company’s product offerings and contracts associated with those products, the Company’s deliverables do not fluctuate and its revenue recognition is consistent.

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.

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

Miles are purchased from Air Canada and distributed to the members once monthly based on a calculation of one mile for each base and fuel dollar of their spend with the Company.

Unused airline miles are recorded in prepaid expenses and other current assets in the accompanying consolidated balance sheets.

For shipping calculator revenues and brewery management software revenues, the Company recognizes subscription revenue on a monthly basis. Shipping calculator customers’

renewal dates are based on their date of installation and registration of the shipping calculator line of products.

The timing of the revenue recognition and cash collection may vary within a given quarter and the deposits for future services are recorded as contract liabilities on the consolidated balance sheets.

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

Customers with pickups after the end of the reporting period are recorded as contract liabilities on the condensed consolidated balance sheets.

The service is offered to consumers via an online registration and allows users to create a shipping label using a credit card on their account (all customers must have a valid credit card on file to process shipments on the ShipTime platform).

For shipping calculator revenues and brewery management software revenues, the Company recognizes subscription revenue on a monthly basis.

Shipping calculator customers’ renewal dates are based on their date of installation and registration of the shipping calculator line of products.

The timing of the revenue recognition and cash collection may vary within a given quarter and the deposits for future services are recorded as contract liabilities on the condensed consolidated balance sheets.

Brewery management software subscribers are billed monthly at the first of the month.

All payments are made via credit card for the month following.

All payments are made via credit card for the following month.

Merchant processing revenue consists of fees a seller pays us to process their payment transactions and is recognized upon authorization of a transaction.

3 unchanged sentences

Revenue Disaggregation

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

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

Performance Obligations

3 unchanged sentences

The Company considers control to have transferred at that time because the Company has a present right to payment at that time, the Company has provided the shipping label, and the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the shipping label.

For arrangements under which the Company provides a subscription for shipping calculator services and brewery management software, the Company satisfies its performance obligations over the life of the subscription, typically twelve months or less.

For arrangements under which the Company provides a subscription for brewery management software, the Company satisfies its performance obligations over the life of the subscription, typically twelve months or less.

Merchant processing customers receive a merchant identification number which allows them to process credit card transactions.

3 unchanged sentences

Significant Payment Terms

Pursuant to the Company’s contracts with its customers, amounts are collected up front primarily through credit/debit card transactions.

Accordingly, the Company determined that its contracts with customers do not include extended payment terms or a significant financing component.

Variable Consideration

In some cases, the nature of the Company’s contracts may give rise to variable consideration, including rebates and cancellations or other similar items that generally decrease the transaction price.

Variable consideration is estimated at the most likely amount that is expected to be earned.

2 unchanged sentences

Revenues are recorded net of variable consideration, such as rebates, refunds and cancellations.

The Company’s products and services are provided on an “as is”

basis and no warranties are included in the contracts with customers.

The Company’s products and services are provided on an “as is” basis and no warranties are included in the contracts with customers.

Also, the Company does not offer separately priced extended warranty or product maintenance contracts.

4 unchanged sentences

Contract Liabilities (Deferred Revenue)

Contract liabilities are recorded when cash payments are received in advance of the Company’s performance (including rebates).

Contract liabilities were $ 13,020 and $ 11,154 at 

December 31, 2022 and 2021, respectively.

Contract liabilities are recorded when cash payments are received in advance of the Company’s performance (including rebates).

Contract liabilities were $ 15,382 and $ 13,020 at December 31, 2023 and 2022, respectively.

During the years ended December 31, 2023 and 2022, the Company recognized revenues of $ 13,020 and $ 11,154 , 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. 

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 Company has recognized $ 270,833 in other income related to accretion of the discount on the Convertible Note for the year ended December 31, 2023 in addition to a $ 375,000 , 20 % non-payment penalty and interest due on the note of $ 203,425 .

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

The Convertible Note is secured by substantially 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.

As of July 19, 2023 the note was in default and carried an additional 20 % penalty and 20 % interest resulting in $ 578,425 of other income which has been recognized in the Company’s consolidated financial statements.

The Company amended and replaced the note and terminated the warrants as of March 26, 2024.

The terms on the amended note receivable include a 25 % original issue discount and is subject to a 9 month maturity with a new 60 day extension option.

The Company does not believe there is any impairment to the note receivable due to its secured position on the assets of Embolx and its expectation that the amounts will be recoverable if and when Embolx consummates a financial or merger transaction which is expected to happen in 2024.

PROPERTY AND EQUIPMENT

1 unchanged sentence

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, 2023 and 2022 amounted to $ 13,116 and $ 14,900 , respectively.

5 unchanged sentences

At December 31, 2023, intangible assets consisted of the following:

Patents  

Trade Name  

Technology & Software  

Customer Relationships  

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, 2022, intangible assets consisted of the following:

Patents  

Trade Name  

Technology & Software  

Customer Relationships  

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, 2023 and 2022 was $ 296,856 and $ 311,809 , respectively.

1 unchanged sentence

Year Ended December 31,

$ 295,352  

295,352  

Total 5-year amortization

$ 1,476,760  

ACCRUED EXPENSES

1 unchanged sentence

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

2 unchanged sentences

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 Mr.

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

Pratt alleges in a court in Canada that the Company terminated him and that the Company owes him a severance payment.

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 members, and Mr.

Pratt and Mr.

1 unchanged sentence

More than a year later, in 2021, Mr.

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 ). 

Pratt filed a claim in Delaware courts to contest that decision and this claim was dismissed on November 9, 2023.

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.

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

6 unchanged sentences

Historically, the Company has not been obligated nor incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities and guarantees in the accompanying consolidated balance sheets.

SHAREHOLDERS ’

SHAREHOLDERS ’ EQUITY

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.

The Board of Directors will be authorized to fix the designations, rights, preferences, powers and limitations of each series of the preferred stock.

4 unchanged sentences

As of December 31, 2023 and 2022, 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.

5 unchanged sentences

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, 2023 for financial reporting purposes.

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.

Also, at March 29, 2021, the Company’s Board of Directors authorized the issuance of an additional 250,000 shares to the CEO/CFO as a one -time sign-on bonus resulting in a share-based compensation expense of $ 477,500 , which was recognized ratably during 2021 as the bonus shares were subject to repurchase if the CEO/CFO terminated employment through January 1, 2022.

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

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.

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 income and comprehensive income 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.

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

This bonus was recorded in accrued common stock bonus in shareholders’ equity as of December 31, 2022.

The Board of Directors also authorized the issuance of an additional 250,000 shares to the CEO/CFO as a renewal bonus valued at $ 437,500 .

$ 218,750 of share-based compensation expense was recognized immediately as 125,000 of the bonus shares are immediately vested.

The remaining $ 218,750 of share-based compensation expense was recognized ratably during 2023 as 125,000 of the bonus shares are subject to repurchase if the CEO/CFO were to terminate employment during the period ended January 1, 2024.

The Company recorded $ 437,500 of share-based compensation expense for the year ended December 31, 2023 in connection with these additional shares.

On February 22, 2024 the Board authorized the issuance of 54,559 bonus shares of PAID common stock to the CEO/CFO, one additional officer and one employee for services rendered during 2023.

This bonus was valued at $ 84,576 based on the closing price of the Company’s common stock at February 21, 2024 and was issued in February 2024.

This bonus was recorded in accrued common stock bonus in shareholders’ equity as of December 31, 2023.

On March 21, 2023, the Company’s Board of Directors approved the terms of the employment agreement for David Scott, the Company’s COO.

Per the terms of the agreement, the Company issued 13,889 shares of PAID common stock to the COO.

This compensation was valued at $ 25,000 based on the closing price of the Company’s common stock at March 31, 2023 and the shares were issued on April 10, 2023.

The Company recorded $ 25,000 of share-based compensation expense in connection with the additional compensation.

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.

During the years ended December 31, 2023 and 2022, the Company had three stock option plans that include both incentive and non-qualified options to be granted to certain eligible employees, non-employee directors, or consultants of the Company.

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.

1 unchanged sentence

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.

On May 12, 2023, the Company received a notice of exercise of options to purchase 3,500 common shares of the Company’s stock from one board member and one employee.

The options were exercised at $ 0.975 per share and the Company received proceeds of $ 3,412 .

Active Plans:

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.

3 unchanged sentences

Options outstanding at January 1, 2023

314,000  

$ 3.17  

Cancelled/Expired

Options outstanding at December 31, 2023

314,000  

$ 3.17  

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.

3 unchanged sentences

Options outstanding at January 1, 2023

36,000  

$ 0.98  

( 2,000 )  

( 20,000 )  

Options outstanding at December 31, 2023

14,000  

$ 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 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.

On February 1, 2011, the Company adopted the 2011 Non-Qualified Stock Option Plan (the “2011 Plan”).

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.

2 unchanged sentences

Options outstanding at January 1, 2023

43,000  

$ 3.00  

Options outstanding at December 31, 2023

43,000  

$ 3.00  

The 2002 Stock Option Plan ( “2002 Plan”) provides for the award of qualified and non-qualified options for up to 60,000 shares.

The options granted have a ten -year contractual term and have a vesting schedule of either immediately, two years, or four years from the date of grant.

There are no shares reserved for issuance under this plan.

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

Options outstanding at January 1, 2022

10,000  

$ 0.98  

Cancelled/Expired

( 10,000 )  

Options outstanding at December 31, 2022

Fair value of issuances

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). 

The Company granted 85,000 options to purchase Company stock during the year ended December 31, 2023.

The fair value of the Company’s 2023 option grants under the 2018, 2012, and 2011 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)

5.5 - 5.8  

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 $ 57,958 for options outstanding as of December 31, 2022 which will be recognized over the weighted average period of approximately one year.

For the years ended December 31, 2023 and 2022, the Company recorded total share-based compensation expense related to the common stock bonuses, other stock issuances, and stock options of $ 703,761 and $ 172,488 , respectively, which is recorded in share-based compensation expense in the accompanying consolidated statements of income and comprehensive income.

The Company has unrecognized share-based compensation expense of $ 5,826 for options outstanding as of December 31, 2023 which will be recognized over the weighted average period of approximately 0.6 years.

Information pertaining to options outstanding and exercisable at December 31, 2023 is as follows:

4 unchanged sentences

Life (In Years)

$ 0.98  

19,500  

$ 1.91  

10,000  

$ 2.21  

$ 2.68  

$ 2.89  

105,000  

78,333  

$ 2.92  

52,500  

$ 3.00  

52,500  

$ 3.30  

37,500  

$ 3.50  

$ 4.10  

78,700  

371,000  

335,133  

Summary of all stock option plans activity during the year ended December 31, 2023 is as follows:

1 unchanged sentence

Options outstanding at January 1, 2023

403,000  

$ 2.90  

Cancelled/Expired

( 12,000 )  

( 20,000 )  

Options outstanding and expected to vest at December 31, 2023

371,000  

$ 3.07  

$ 6,838  

Options exercisable at December 31, 2023

335,133  

$ 3.10  

$ 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 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 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, 2023.

The aggregate intrinsic value of the options exercised during the years ended December 31, 2023 and 2022 was $ 2,228 and $ 25,300 , respectively.

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

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

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

( 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 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

1 unchanged sentence

Stock compensation

Officers compensation

Foreign rate differential

Attributes expiration

Return to Provision

Returns to Provision

NOL Adjustment

4 unchanged sentences

Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s net deferred tax liabilities are as follows as of December 31:

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 $ 225,000 and $ 1,727,000 in 2023 and 2022, respectively.

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. 

As of December 31, 2022, the Company had net operating loss carryforwards for federal income tax purposes of approximately $ 31,990,000 .

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 $ 31,088,000 expires beginning in the year 2024.

4 unchanged sentences

The Company has not performed an analysis to determine the limitation of the net operating loss carryforwards.

A valuation allowance of 100 % has been established in respect of the deferred income tax assets due to the uncertainty of the Company’s utilization of such deferred tax assets for the U.S.

federal and state on each of the Company’s consolidated balance sheets at December 31, 2022 and 2021.

The income tax provision at December 31, 2022 reflects a full accounting of tax filings under ASC Subtopic 740 - 10.

is subject to U.S.

federal and Massachusetts state tax.

With limited exceptions, the Company is no longer subject to U.S.

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 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. 

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.

A valuation allowance of 100 % has been established in respect of the deferred income tax assets due to the uncertainty of the Company’s utilization of such deferred tax assets for the U.S.

federal and state on each of the Company’s consolidated balance sheets at December 31, 2023 and 2022.

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

7 unchanged sentences

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:

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, 2023 and 2022:

Gross unrecognized tax benefits at the beginning of the year

1 unchanged sentence

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 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.

We report operating lease assets, as well as operating lease current and noncurrent obligations on our consolidated balance sheets for the right to use the building in our business.

Generally, interest rates are stated in our leases for equipment.

When no interest rate is stated in a lease, however, we review the interest rates implicit in our recent finance leases to estimate our incremental borrowing rate.

We determine the rate implicit in a lease by using the most recent finance lease rate, or other method we think most closely represents our incremental borrowing rate.

The amount of unrecognized tax benefits that would impact the Company’s effective tax rate, if recognized, is $ 733,798 (including estimated penalties and interest).

The income tax provision at December 31, 2023 reflects a full accounting of tax filings under ASC subtopic 740-10.

The Company is subject to U.S.

federal and Massachusetts state tax.

With limited exceptions, the Company is no longer subject to U.S.

federal, state and local income tax examinations by the tax authorities for years before 2020.

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

In addition, the Company's tax years starting 2004 and 2011 are subject to limited examination by the United States and Massachusetts authorities, respectively, due to the carryforward of unutilized net operating losses.

ShipTime is subject to taxation in Canada and Ontario.

The foreign subsidy is generally subject to examination for 4 years following the year in which the tax obligation originated.

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 part of the income tax provision.

As of December 31, 2023 and 2022 the Company accrued $ 26,165 and $ 16,064 of interest and penalties related to foreign income taxes.

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

We have an operating lease for our corporate office in Canada.

Our lease has a remaining lease term of eight months.

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

We report operating lease assets, as well as operating lease current and noncurrent obligations on our consolidated balance sheets for the right to use the office space in our business.

The components of lease expense for the years ended December 31, were as follows:

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:

Operating leases

Finance leases

Supplemental balance sheet information related to leases was as follows:

3 unchanged sentences

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

$ 22,199  

$ 61,310  

December 31, 2023

3 unchanged sentences

Operating lease

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

A summary of future minimum payments under non-cancellable operating lease commitment as of December 31, 2023 is as follows:

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.

On February 22, 2024, the Board of Directors approved the allocation of the 2023 bonus accrual to be paid out in cash and shares of which $ 84,567 has been recorded as share-based compensation expense for the year ended December 31, 2023.

Option compensation for the board was also approved by the Board in the amounts of 10,000 common stock options per committee head from 5,000 common stock options per committee head.

A total of 54,559 shares of common stock were issued to officers and one employee in February 2024.

The Board of Directors has approved the granting of common stock options to five employees totaling 20,360 valued at $ 31,558 with a three -year vesting period.

On March 26, 2024 the Company amended its Note with Embolx to include an additional $ 500,000 investment and a 25 % Original Issue Discount on the note balance which includes accrued interest and penalties through March 25, 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.

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