What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-04-15 compared with 2024-04-01 · 248 added, 215 removed, 820 unchanged (36% of the section changed)

9 unchanged sentences

Moreover, because of the inherent limitations in all control systems, no evaluation of controls even where we conclude the controls are operating effectively can provide absolute assurance that all control issues, including instances of fraud, if any have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty, and breakdowns can occur because of simple error or mistake.

These inherent limitations include the fact that judgments in decision-making can be faulty, and breakdowns can occur because of simple errors or mistakes.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.

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Management is responsible for establishing and maintaining effective internal control over financial reporting of the Company.

Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer/Chief Financial Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer/Chief Financial Officer and affected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Our internal control over financial reporting includes those policies and procedures that:

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Lack of procedures and control documentation

Lack of procedures for contract asset and contract liability reporting

Lack of reconciliation of cash held in reserve

Ineffective review of concessions provided to customers

Inadequate Entity Level Controls

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Steps taken towards Remediation for an Ineffective Control Environment:

Management and the Board formally meet to discuss our filings.

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

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

Management continues to focus on the Company culture with engagement between the employees and senior management.

Culture and values have been added to the company handbook which is reviewed annually.

and the communication of goals for the products and services that the company offers.

The CEO/CFO communicates to the Board of Directors all new products and goals that on the technology roadmap.

These items are reviewed by senior management and the COO on a weekly basis to ensure that all members of the Company are aligned on the Company’s vision.

Ineffective Communication of Information

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Steps taken towards Remediation of Ineffective Communication of Information:

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.

The IT department has created new positions in order to implement technology controls and oversee work development activity that could have a direct impact on the Company.

Human Resources has implemented an annual review process for all employees which assures that goals are set to assist the Company in communicating the business objectives.

Ineffective Monitoring of Activities

1 unchanged sentence

Steps taken towards Remediation of Ineffective Monitoring of Activities:

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.

The COO and VP of Finance meet weekly to review risk, discuss strategy and create policies and procedures to monitor the day-to-day operations.

Third party services have been engaged with to monitor fraud, reduce risk and prevent malicious behavior to our website and on our platform.

The Company believes 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.

The Company also believes that further work is still required to develop appropriate controls in some aspects of entity level control to provide reasonable assurance that controls are designed in the most effective and efficient manner possible.

While we believe these changes will be effective at mitigating risk of material error, there continues to be additional work required for us to conclude that all three of these control areas are operating effectively.

While we believe these changes will be effective at mitigating the risk of material a error, there continues to be additional work required for us to conclude that all three of these control areas are operating effectively.

As noted in the Management's Report on Internal Control over Financial Reporting, we consider each of these control areas within the entity level control to constitute a material weakness.

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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.

In addition to the ongoing increase of documentation of the policies and procedures the Company has added increased internal controls with regard to the segregation of duties.

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Steps taken towards Remediation of Revenue Recognition:

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

The Company continues to use automation to support its financial reporting.

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.

Reconciliations to contract assets and contracts liabilities have been created to establish cutoff periods for system generated reports.

Steps taken towards Remediation of Financial Closing:

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All transactions are audited on a quarterly basis.

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

The Company has made significant improvements to the activity level controls specifically with regard to the deficiencies with the financial close.

The CEO/CFO receives daily cash balances and monthly financial updates on each segment of the Company.

Steps taken towards Remediation of Cash held in Reserve:

The Company will implement a reconciliation process to review and record cash held in reserve at month end.

The Company has made improvements to the activity level controls specifically with regard to the deficiencies with the financial close.

In addition, further work is required to develop appropriate controls in the other aspects of activity level control to provide reasonable assurance that controls are designed in the most effective and efficient manner possible.

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

The Company has added many new reconciliations to assist with the 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.

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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.

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

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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, 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.

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

He has held many senior positions with FedEx, including Managing Director of Sales for the FedEx Middle East and Africa region based in Dubai, where he played a key role in India's launch as a directly served FedEx location.

Additionally, he served as Managing Director of FedEx Logistics in the Middle East and Africa, where he was responsible for establishing the region's first FedEx Logistics subsidiary.

After his tenure with FedEx, he relocated to Egypt, where he established a group of companies offering best-in-class business support services under a holding company.

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

Recently, he has been involved with e-commerce 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.

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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.

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

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

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

David Scott currently serves as the Chief Operating Officer of Paid, having previously held the role of Director of Technology, joining the company in 2017.

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

Scott has been instrumental in driving Paid's technological innovation, operational scalability, and market expansion.

As COO, he oversees technology, marketing, support, and business analytics, ensuring Paid and its flagship shipping platform, ShipTime, remain industry leaders.

His leadership continues to drive efficiency, innovation, and strategic growth, reinforcing Paid’s position as a trusted solution for businesses across North America.

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

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The Audit Committee reviewed and discussed our audited consolidated financial statements for the year ended December 31, 2024 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.

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 and dbbmckennon, our independent registered public accounting firm.

The Audit Committee received from KMJ Corbin & Company LLP and dbbmckennon 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, 2024.

The Audit Committee

Andrew Pilaro

/s/ Andrew Pilaro

Code of Ethics

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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.

Lewis terminated 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.

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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.

Scott also received $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 terminated his employment agreement prior to April 1, 2024.

Compensation to the Named Executive Officers

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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.

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.

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.

Lewis’ bonus for 2023 includes $112,756 to be paid out in 2024 in cash and shares 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.

Lewis’s bonus for 2024 includes $139,136 to be paid out in 2025 in cash and shares, which was approved by the Board of Directors on March 07, 2024.

34,440 shares were valued at $3.03 per share based on the close price of the Company’s common stock at March 06, 2024.

Scott’s bonus for 2024 includes $77,298 to be paid out in 2025 in cash and shares, which was approved by the Board of Directors on March 07, 2024.

12,755 shares were valued at $3.03 per share based on the close price of the Company’s common stock at March 06, 2024.

The following tables set forth certain information related to outstanding equity awards as of December 31, 2024 for our executive officers.

Option Awards

Number of Securities Underlying Unexercised

Options (#) Exercisable

Number of Securities Underlying Unexercised

Underlying Unexercised

Options (#) Unexercisable

Equity Incentive Plan Awards:

Number of Securities Underlying Unexercised Unearned

Equity Incentive

Underlying Unexercised

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.

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

On February 22, 2024 the Board of Directors approved stock option awards of 5,000 shares for board members and an additional 5,000 shares for committee chairmen.

Options were granted at an exercise price of $1.55 per share and vested immediately.

The Company recorded $31,500 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, 2024 for the only non-employee members of our Board of Directors.

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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 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)

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, 2025 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

Austin Lewis, IV

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Principal Accountant Fees and Services

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.

dbbmckennon is our independent registered public accounting firm for the period of May 29, 2024 through current, KMJ Corbin & Company LLP (“KMJ”) was our independent registered public accounting firm through May 29, 2024 and for year ended December 31, 2023.

The following is a summary of the fees billed to the Company by KMJ and dbbmckennon for professional services rendered for the years ended December 31, 2024 and 2023.

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.

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Addendum to Employment Agreement for W.

Austin Lewis IV dated March 21, 2023

Employment Agreement for David Scott dated March 29, 2023

Austin Lewis IV dated March 21, 2023 (incorporated by reference to Exhibit 10.13 to Form 10-K filed on March 31, 2023)

Employment Agreement for David Scott dated March 29, 2023 (incorporated by reference to Exhibit 10.14 to Form 10-K filed on March 31, 2023)

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

and Embolx, Inc.

(incorporated by reference to Exhibit 10.15 to Form 10-K filed April 1, 2024)

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

(incorporated by reference to Exhibit 10.16 to Form 10-K filed April 1, 2024)

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

and Paid, Inc.

(incorporated by reference to Exhibit 10.17 to Form 10-K filed April 1, 2024)

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

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/s/ Andrew Pilaro

April 1, 2024

Andrew Pilaro

/s/ Laurie Bradley

April 15, 2025

/s/ Laurie Bradley

Laurie Bradley

April 15, 2025

& SUBSIDIARIES

INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 AND 2023

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of December 31, 2024 and 2023

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Paid, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Paid, Inc.

and subsidiaries (collectively the “Company”) as of December 31, 2024, the related consolidated statements of operations, shareholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

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.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

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 audit 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.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

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

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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

Recoverability of Note Receivable

Description of the Matter:

As discussed in Notes 4 and 5 to the financial statements, the Company has a note receivable from a third party.

Management’s assessment of the recoverability of the note receivable involves significant judgment and estimates related to the borrowers’ financial condition and future sources of cash flows.

These were the principal considerations that led us to determine this as a critical audit matter.

How We Addressed the Matter in our Audit:

We obtained an understanding of the controls over the Company’s identification of the allowance estimation process.

To evaluate the third party’s ability to repay the note, our audit procedures included, among others, obtaining and reviewing the note receivable agreements, reviewing the third party’s financial statements and cash flow projections, confirming with the third party as to the balance and terms of the note receivable, and evaluating subsequent events.

/s/ dbbmckennon

We have served as the Company's auditor since 2024.

San Diego, California

April 15, 2025

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Opinion on the Consolidated Financial Statements

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

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.

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

and subsidiaries (the “Company”) as of December 31, 2023, the related consolidated statements of income and comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, 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 the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

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

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

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

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

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.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

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

Critical Audit Matter

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

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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

Collectability of Note Receivable

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 (“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 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 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.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ KMJ Corbin & Company LLP

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

Irvine, California

April 1, 2024

We served as the Company’s auditor from 2013 to 2024.

Glendora, California

April 1, 2024 (except for the “Prior Period Corrections” section of Note 3, as to which the date is April 15, 2025)

& SUBSIDIARIES

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Operating lease right-of-use assets

Notes receivable, long term

LIABILITIES AND SHAREHOLDERS’ EQUITY

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Uncertain tax position liability

Operating lease obligation – net of current position

Total liabilities

Commitments and contingencies

Commitments and contingencies (Note 9.)

Shareholders’ equity:

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

8,154,474 shares issued and 8,010,837 shares outstanding at December 31, 2023, 7,840,124 shares issued and 7,696,487 shares outstanding at December 31, 2022

8,213,533 shares issued and 8,067,333 shares outstanding and December 31, 2024, 8,154,474 shares issued and 8,010,837 shares outstanding at December 31, 2023

Accrued common stock bonus

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Accumulated deficit

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

Common stock in treasury, at cost, 147,633 shares at December 31, 2024 and 143,637 shares at December 31, 2023

Total shareholders’ equity

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FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

Comprehensive

Other Comprehensive

Treasury Stock

Paid-in Capital

Balance, January 1, 2022

Balance, January 1, 2023, as corrected

Foreign currency translation adjustment

Issuance of common stock for accrued bonus

Issuance of common stock for signing bonus

Share-based compensation expense

Repurchase of common stock for treasury

Issuance of common stock for bonus

Option exercise

Issuance of common stock for compensation

Balance December 31, 2023

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Issuance of common stock for accrued bonus

Issuance of common stock for signing bonus

Issuance of common stock for bonus

Share-based compensation expense

Option exercise

Purchase of treasury stock

Balance December 31, 2024

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Amortization of operating lease right-of-use assets

Provision for bad debts, net

Accretion of discount on note receivable

Gain on write off of other payables

Share-based compensation

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Operating lease obligations

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Issuance of note receivable

Issuance of notes receivable

Purchase of property and equipment

Net cash used in investing activities

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Repurchase of common stock

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

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SUPPLEMENTAL DISCLOSURES OF NON-CASH ITEMS

Issuance of common shares in settlement of accrued common stock bonus

Increase in note receivable for reimbursable expenses

Increase in note receivable for discount

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

Issuance of common shares in settlement of accrued common stock bonus

Operating lease liabilities from obtaining lease right-of-use assets

See accompanying notes to consolidated financial statements

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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.

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.

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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.

As of December 31, 2024, the Company reported cash and cash equivalents of $ 1,284,965 and had working deficit of ($ 629,467 ).

The Company has reported a net operating loss of ($ 493,382 ), but generated cash flows from operations of $ 447,643 for the year ended December 31, 2024.

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

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

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

Although there can be no assurances, the Company believes that the above management plan will be sufficient to meet the Company’s working capital requirements through the end of March 2025 and will have a positive impact on the Company for the foreseeable future.

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

To address the cash requirements, Management has considered a reduction in expenses and the issuance of stock for select payroll and consulting expenses.

They may also 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 April 15, 2026 and will have a positive impact on the Company for the foreseeable future.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

and its wholly owned subsidiaries, ShipTime Canada Inc.

All intercompany accounts and transactions have been eliminated.

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The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods.

Significant estimates made by the Company’s management include, but are not limited to, the collectability of accounts 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.

Significant estimates made by the Company’s management include, but are not limited to, the collectability of notes receivable.

Actual results could materially differ from those estimates.

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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.

At December 31, 2024 and 2023, the Company’s financial instruments include cash and cash equivalents, accounts receivable, notes receivable, accounts payable, and accrued expenses.

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

Cash and Cash Equivalents

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Although the Company expects to collect amounts due, actual collections may differ from the estimated amounts.

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, 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.

As of the years ended December 31, 2024 and 2023, the Company recorded an allowance for credit losses of $ 11,134 and $ 0 , respectively however the Company has not reserved for any additional credit losses.

As of December 31, 2024 and 2023, there was one customer that accounted for more than 10% of the accounts receivable balance for the year.

The loss of this customer would not have a significant impact on our operations.

Property and Equipment

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Intangible Assets

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 over 15 years.

Intangible assets consist of patents, client lists, trade names and customer relationships, which are being amortized on a straight-line basis over their estimated useful lives.

Currently the only intangible assets remaining is customer relationships with an estimated life of seven years.

Long-Lived Assets

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Revenue Recognition

The Company generates revenues principally from fees for coordinating shipping services, sales of shipping calculator subscriptions, brewery management software subscriptions, merchant processing services and client services (see Note 4).

The Company generates revenues principally from fees for coordinating shipping services, brewery management software subscriptions, eCommerce services and client services (see Note 4).

Cost of Revenues

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Operating expenses include indirect expenses, including credit card processing fees, marketing, payroll, travel, facility costs, amortization of intangible assets and other general and administrative expenses.

Advertising costs are charged to expense as incurred.

Advertising costs are charged to expenses as incurred.

For the years ended December 31, 2024 and 2023, advertising expenses totaled $ 347,258 and $ 263,565 , respectively, and are included in general and administrative expenses in the accompanying consolidated statements of income and comprehensive income.

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

During the year ended December 31, 2024 the Company recorded $ 193,246 for share-based bonus payments related to 2024 which were approved by the Board of Directors on March 07, 2025.

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

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.

Expected volatility is 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.

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Income (Loss) Per Common Share

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

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

Diluted income (loss) per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income (loss) that would result from the assumed issuance.

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:

For the year ended December 31, 2024 and 2023, there were approximately 341,500 and 6,100 , respectively, dilutive shares that were excluded in the diluted income per share.

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

Basic weighted-average shares outstanding

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Client services;

Merchant processing services;

eCommerce services;

Shipping coordination and label generation services;

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Client services

Merchant processing services

eCommerce services

Shipping coordination and label generation services

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Client services

Merchant processing services

eCommerce services

Shipping coordination and label generation services

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During 2024 and 2023, the Company recorded depreciation and amortization expense of $ 304,797 and $ 309,972 , respectively, which was solely related to the shipping coordination and label generations service segment of the Company.

Reclassifications

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.

Prior Period Corrections

Following an analysis of quantitative and qualitative factors in accordance with SEC Staff Accounting Bulletin 99, Materiality , the Company concluded that the errors below were immaterial to the previously issued consolidated financial statements, and thus, no restatement of any of the Company’s previously issued financial statements is necessary.

The Company revised the reported balances to correct for the immaterial errors accordingly.

During the fourth quarter of 2024, the Company identified and corrected immaterial errors impacting the December 31, 2023 balances previously reported related to cash and cash equivalents.

These revisions resulted in an adjustment to the opening accumulated deficit balance as of January 1, 2023 of $ 320,428 , and a decrease in cash and cash equivalents of $ 320,428 .

Recent Accounting Pronouncements

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”).

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

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

(2) identify the performance obligations in the contract;

(3) determine the transaction price;

(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.

(1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (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 service and product offerings and contracts associated with these, the Company’s deliverables do not fluctuate, and its revenue recognition is consistent.

The Company evaluates whether amounts billed to customers should be reported as revenues on a gross or net basis.

Generally, revenue is recorded on a gross basis when the Company is primarily responsible for fulfilling the promise to provide the services, when it assumes the risk of loss, when it has discretion in setting the prices for the services to the customers, and when the Company has the ability to direct the use of the services provided by the third party.

We generally are responsible for the fulfilment of a customer order despite the fact we do not directly provide the delivery services; we can redirect delivery to other shipping companies in our network.

We control the price for which the customer pays and generally collect the gross shipping fees and remit the contractual rate to this shipping company.

Our risk of loss relates to credit card chargebacks, certain self-insured shipping losses and other miscellaneous charges that we cannot pass through to the shipping company.

Nature of Goods and Services

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.

For label generation service revenues, the Company recognizes revenue when a customer has successfully prepared a shipping label, and their shipment is delivered.

Customers with pickups and shipments in transit 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.

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

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

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.

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

Revenue is recognized net of estimated refunds, which are reversals of transactions initiated by sellers.

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Performance Obligations

At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services).

To identify the performance obligations, the Company considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

Revenue is recognized when the performance obligation has been met, which is when the customer has successfully prepared a shipping label and had a pickup for shipping coordination and label generation services.

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.

At contract inception, an assessment of the goods and services promised in the contracts with customers is carried out and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services).

The Company fulfills nearly all of its performance obligations within a one-to-two-week period and contracts with customers have an original expected duration of less than one month.

The Company generally has an unconditional right to consideration when the services are initiated or soon thereafter.

The amount due from the customer is either collected up front or recorded as accounts receivable.

The amounts related to services that are not yet completed at the reporting date are presented as contract liabilities.

The Company measures the performance of its obligations as services are completed over the life of a shipment, including services at origin, freight and destination.

This method of measurement of progress depicts the pattern of the Company's actual performance under the contracts with the customer.

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.

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

Measurement of Credit Losses

The Company has accounts receivable and note receivable and monitors the granting of credit and collecting debt on an ongoing basis.

The Company maintains an allowance for doubtful accounts based on historical loss patterns, the number of days that billings are past due, and an evaluation of potential risk of loss associated with delinquent accounts.

The Company has two notes receivable and is a senior secure lender with an absolute obligation for one of the notes.

The primary note was evaluated for credit losses as of December 31, 2024 by considering the contractual obligation, the valuation of the assets and the senior position of the repayment.

Variable Consideration

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Typically, the Company has already collected revenue from the customer at the time it has satisfied its performance obligation.

Accordingly, the Company has only a small balance of accounts receivable, totaling $ 205,647 and $ 169,074 at December 31, 2023 and 2022, respectively.

Generally, the Company does not have material amounts of contract assets since revenue is recognized as control of goods is transferred or as services are performed.

Accordingly, the Company has only a small balance of accounts receivable, totaling $ 193,852 , and $ 205,647 and $ 169,074 at December 31, 2024 and 2023 and 2022, respectively.

The Company has recorded a balance of $ 268,469 in contract assets as of December 31, 2024.

Contract Liabilities (Deferred Revenue)

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During the years ended December 31, 2024 and 2023, the Company recognized revenues of $ 15,382 and $ 13,020 , respectively, related to contract liabilities outstanding at the beginning of each year.

The Company expects to recognize $ 372,795 in revenue related to contract liabilities in the first quarter of 2025.

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.

(“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 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 Company 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 Embolx.

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

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

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

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

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

The warrants expire five years from the original issue date.

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.

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

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

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

The warrants were to 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 was recognized in the Company’s consolidated financial statements for the year ended December 31, 2023.

In March 2024, the Company amended and replaced the note and terminated the warrants.

The terms on the amended note receivable include an additional investment of $ 500,000 with 25 % original issue discount and was due on June 19, 2024.

The Company was granted a $ 50,000 increase to the debt owed by Embolx which was applied toward legal expenses incurred during the first quarter relating to the preparation of the note documentation.

For the year ended December 31, 2024 the Company has recognized $ 141,782 in other income related to the interest earned and $ 1,048,402 in other income related to the accretion of the discount on the Convertible Note compared to $ 203,425 in interest and $ 645,833 for the discount and penalty for the year ended December 31, 2023.

The note receivable was in default effective June 19, 2024 in the amount of $ 4,193,607 and the Company has elected to defer the recording of interest of $ 806,551 and default penalties of $ 838,721 .

The total due on the note as of December 31, 2024 was $ 5,838,879 .

On July 29, 2024, the Board of Directors approved an extension with Embolx which was effective as of January 31, 2025.

The Forbearance and Loan Modification Agreement with Embolx extends the note receivable of $ 5,967,100 until September 30, 2025.

Options to extend the note receivable may be considered as return on the note payable is favorable and Embolx may seek additional time to consummate a financial transaction.

The Loan Modification carries the same terms as the original note with a 25% OID and 20% interest and penalties.

Although the note is considered a short term note, the full amount of the note receivable is not expected to be collected by December 31, 2025 and thus should be reflected as long-term.

It is possible a payment will be received when the note comes due for the first time in September 2025, however, determining the approximate amount would be very difficult.

The Company entered into a $ 50,000 short term note with 5String Solutions LLC on April 4, 2024.

The terms on the note include a 12 % annual interest rate from the inception of the note which was due on May 15, 2024.

The note has been amended as of July 3, 2024 and the initial investment shall be deducted from the future advance and the note shall be deemed paid in full.

The new note includes an additional $ 198,500 investment carrying a 12 % interest rate.

The short term note of $ 50,000 plus $ 1,500 interest calculated from April 4, 2024 to July 3, 2024, along with a $ 198,500 additional investment results in a $ 250,000 long term note due on or before April 30, 2027.

On April 30, 2027 the Company has the option to convert the balance of the $ 400,000 note receivable into 55 % ownership of 5String Solutions.

In the event that the Company elects to convert the noted they subsequently have the option to purchase the remaining 45 % ownership of 5String Solutions at a rate of 5-times EBITDA reported on December 31, 2026.

Interest of $ 16,130 has been recorded based on the outstanding balance of the $ 250,000 note for the period of July 3, 2024 to December 31, 2025.

PROPERTY AND EQUIPMENT

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Year Ended December 31,

Total 5-year amortization

Total amortization

ACCRUED EXPENSES

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Payroll and related costs

Professional and consulting fees

Accrued cost of revenues

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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.

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

Around the same time that Mr.

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More than a year later, in 2021, Mr.

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

Pratt filed a claim in Delaware court 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.

Pratt amended the Delaware complaint to dispute the proper authorization of a stock bonus that was awarded to the Company’s CEO in March 2021.

On November 9, 2023, the Delaware court dismissed the claim contesting the reduction of the board size.

The trial on the remaining claim was held before the Delaware court on December 5-6, 2024.

Post-trial briefing in the Delaware action was completed on March 21, 2025, and the Delaware court is scheduled to hear post-trial arguments at a hearing on May 14, 2025.

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

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The Company filed a Certificate of Designations effective on December 30, 2016 which sets aside 5,000,000 shares of Preferred Stock as Series A Preferred Stock.

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

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

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

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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.

As a result, certain ShipTime exchangeable shareholders exercised their rights to receive 1,461,078 shares of PAID Series A Preferred Stock for 1,461,078 shares of PAID common stock.

At the same time, the Company made available to its Series A Preferred Stock shareholder the option to exchange existing Series A preferred shares for PAID common shares.

The exchange was offered on a one-to-one basis.

Shareholders holding 1,015,851 shares of Series A Preferred Stock exchanged such shares for 1,015,851 shares of PAID common stock.

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

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

The Company has had the option to force an exchange since December 2021.

In total, the Company has reserved for future issuance of 2,106,880 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, 2024 for financial reporting purposes.

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.

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.

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

On March 7, 2025 the Board authorized the issuance of 62,502 bonus shares of PAID common stock to the CEO/CFO, one additional officer and two employees for services rendered during 2024.

This bonus was valued at $ 189,380 based on the closing price of the Company’s common stock at March 6, 2025 and was issued in March 2025.

This bonus was recorded in accrued common stock bonus in shareholders’ equity as of December 31, 2024.

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

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

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 .

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 .

On November 15, 2024, the Company received a notice of exercise of options to purchase 4,500 common shares of the Company’s stock.

The options were exercised at $ 0.975 per share and the Company received proceeds of $ 4,387.50 .

Active Plans:

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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.

The options granted have a 10 -year contractual term and have a vesting period that ranges from one hundred percent on the date of grant to fully vest over a two -year period.

The options granted have a 10 -year contractual term and have a vesting period that ranges from one hundred percent on the date of the grant to fully vest over a two -year period.

There are currently 455,640 shares reserved for future issuance under this plan.

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For the years ended December 31, 2024 and 2023, the Company recorded total share-based compensation expense related to the common stock bonuses, other stock issuances, and stock options of $ 235,575 and $ 703,761 , 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:

Options Outstanding

Options Exercisable

Exercise Prices

Life (In Years)

The Company has an unrecognized share-based compensation expense of $ 13,935 for options outstanding as of December 31, 2024 which will be recognized over the weighted average period of approximately 2.16 years.

Summary of all stock option plans activity during the year ended December 31, 2024 is as follows:

Life (In Years)

Options outstanding at January 1, 2024

76 unchanged sentences

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.

We have an operating lease for our corporate office in Canada located at 700 Dorval Drive in Oakville Ontario.

Our lease has a remaining lease term of forty four 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.

2 unchanged sentences

Operating lease cost

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

Cash paid for amounts included in leases:

Operating cash flows from operating leases

Supplemental balance sheet information related to leases was as follows:

16 unchanged sentences

Less current portion

Long term portion

SUBSEQUENT EVENTS

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.

On March 07, 2025, the Board of Directors approved the allocation of the 2024 bonus accrual to be paid out in cash and shares of which $ 189,380 have been recorded as share-based compensation expense for the year ended December 31, 2024.

A total of 62,502 shares of common stock were issued to officers and two employees in March 2025.

The Board approved an extension of the 2023 Agreement for W.

Austin Lewis, IV, for an additional 2 years on the same terms and conditions, other than Mr.

Lewis’s salary will increase to $ 346,680 effective January 1, 2025.

On January 31, 2025 the Company amended its Note with Embolx to a forbearance agreement which is in effect until September 2025.

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