PAID INC 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures 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, 2025, 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, 2025 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”). 15 We continued to review new procedures and controls in 2026 and have taken steps to remediate the material weaknesses at the entity and activity levels, and to review further our procedures and controls in 2025. In addition, we expect to continue improve our infrastructure, personnel and related processes in order to strengthen and materially affect our internal control over financial reporting. Prior to the complete remediation of these material weaknesses, there remains risk that the processes and procedures on which we currently rely will fail to be sufficiently effective, which could result in material misstatement of our financial position or results of operations and require a restatement. 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 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. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, our control systems, as we develop them, may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be immediately detected and could be material to our financial statements. The certifications of our principal executive officer/principal financial officer required in accordance with Rule 13a-14(a) under the Exchange Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached as exhibits to this Annual Report on Form 10-K. The disclosures set forth in this Item 9A contain information concerning (i) the evaluation of our disclosure controls and procedures, and changes in internal control over financial reporting, referred to in paragraph 4 of the certifications, and (ii) material weaknesses in the design or operation of our internal control over financial reporting, referred to in paragraph 5 of the certifications. Those certifications should be read in conjunction with this Item 9A for a more complete understanding of the matters covered by the certifications. Management's Annual Report on Internal Control over Financial Reporting 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 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: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Management, with the participation of our principal executive officer/principal financial officer, is required to evaluate the effectiveness of our internal controls over financial reporting as of December 31, 2024 based on criteria established under the COSO integrated framework of internal controls. The COSO framework identifies five components of internal control and provides a basis for evaluating the effectiveness of internal controls. Management has concluded that our internal controls over financial reporting were not effective as of December 31, 2024 due to the following: 1. Entity Level Controls - Ineffective communication of information - Ineffective monitoring of activities 2. Activity Level Controls - Lack of procedures and control documentation 16 - Lack of documentation for cost of goods sold - Lack of reconciliation of cash held in reserve - Ineffective review of concessions provided to customers 1. Inadequate Entity Level Controls Ineffective Communication of Information Information and communication systems support the identification, capture, and exchange of information in a form and time frame that enable people to carry out their responsibilities. This component includes information technology controls which are specific activities performed by persons of systems designed to ensure that the business objective can be met, protect the business from fraud and collusion, and keep the corporate assets protected and safe. Steps taken towards Remediation of Ineffective Communication of Information: ● The Company has hired a CTO to oversee the IT environment and controls. Steps have been taken to implement backup and redundancies to reduce risk. Additional testing environments have been created along with adding new hires to create a stronger IT environment. ● Business objectives are communicated throughout the company with the addition of a new President who will be in the Canadian office on a regular basis. Company town hall meetings and weekly senior management meeting have shown significant improvement in aligning the business objectives. Ineffective Monitoring of Activities Monitoring is a process that assesses the quality of internal control performance over time. Steps taken towards Remediation of Ineffective Monitoring of Activities: ● Additional internal controls regarding fraud and risk have been implemented using our merchant processing software. The Company continuously monitors these areas to mitigate any impacts of fraudulent behavior. ● The Company has automated reporting to monitor activity, members of senior management receive daily reporting on the revenue, margins and new customers visiting our site and using our services. 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 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. 17 The Company has taken significant steps to reduce risks associated with information technology controls and documentation. Our information technology department has implemented multi-factor authentication, segregated the duties between developers and performs periodic information technology risk assessments to strengthen our IT environment. 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. 2. Inadequate Activity Level Controls Lack of Procedures and Control Documentation The Company lacks specific documentation relating to certain accounts, and financial closing, which in effect make these internal controls ineffective. The lack of documentation in internal controls relating to these accounts may affect the financial statements and will directly affect the nature and timing of other auditing procedures for certain activities. Steps taken towards Remediation of Revenue Recognition: ● The Company continues to evaluate the use of technology to automate reports that are used for financial reporting. Monthly reconciliations are performed to analyze the contract liabilities and technology has been improved to assist in reducing the risks associate with human errors. ● Steps taken towards Remediation of Financial Closing: ● The Company has migrated the accounting software to cloud based technology. This will assist the finance team with additional segregation of duties and will allow the SVP of Finance more time to produce financial statements. Improvements in this area will continue through 2026. ● Steps taken towards Remediation of Cash held in Reserve: ● Improvements to the reconciliations for the cash held in reserve have been effective in reducing variances. Regular monthly reconciliations have been implemented to monitor for any significant changes. 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. Therefore, while we believe these changes are effective at mitigating risk of material error, there continues to be additional work required for us to conclude that this control area is operating effectively. Therefore, as noted in the Management's Report on Internal Control over Financial Reporting, we consider this control area within the activity level control to constitute a material weakness. 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, 2025. 18 Changes in Internal Control Over Financial Reporting 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 2026 to remediate the outlined deficiencies. 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. Departmental budgets have been established, and all transactions are reviewed monthly. 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 2025. Item 9B. Other Information Not applicable. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. PART III Item 10. Directors, Executive Officers and Corporate Governance Directors and Executive Officers The following table sets forth certain information regarding the directors and executive officers of PAID: Name Age Position W. Austin Lewis, IV 50 CEO, CFO David Scott 31 COO Andrew Pilaro 56 Director Laurie Bradley 72 Director David Ogden (resigned October 2025) 63 Director Andrew Pilaro was elected as of September 19, 2000, for a term expiring at the 2001 Annual Meeting of Stockholders and until their successors are elected and qualified . On March 27, 2021, the Company amended its Bylaws to reduce the existing Board of Directors from five positions to three positions. At that time, W. Austin Lewis, IV and Allan Pratt automatically rolled off from the Board of Directors. Under Delaware law, unless otherwise provided in the certificate of incorporation or bylaws, directors are elected for one-year terms at the annual meeting of shareholders. 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. 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. On October 15, 2025 David Ogden submitted a resignation from the Board of Directors, the Company is currently conducting a search to fill the open position. 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. Mr. Pilaro was asked to serve as a director because he provides investment management skills and has a general business background. W. 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). Since 2004, Mr. Lewis has served as Chief Executive Officer of Lewis Asset Management Corporation, an investment management company he founded, where he is also the General Partner of the Lewis Opportunity Fund. Prior to founding Lewis Asset Management, Mr. Lewis held a variety of positions with investment firms, including Puglisi & Co., Thompson Davis & Co., and Branch Cabell & Company. Mr. Lewis holds a Bachelor of Science in Finance and a Bachelor of Science in Financial Economics from James Madison University. Mr. 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, 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. As of October 15, 2025 Mr. Ogden has resigned from the Board of Directors. 19 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. Ms. 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. Ms. Bradley has worked in both the public and private sectors specializing in talent management, executive leadership, and advisory services. Ms. 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 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. The Board does not have a separate nominating committee. Audit Committee 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. 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. At this time, the Board of Directors believes it would be desirable for the Audit Committee to have an audit committee financial expert serving on the committee. 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, 2025, 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 dbbmckennon, our independent registered public accounting firm. The Audit Committee received from 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, 2025. The Audit Committee /s/ Andrew Pilaro Code of Ethics The Company has adopted a Code of Ethics that applies to all of its directors, officers, and employees, including its principal executive officer, principal financial officer, principal accounting officer, or controller, or persons performing similar functions. A written copy of the Company's Code of Ethics will be provided to anyone, free of charge, upon request to: W. Austin Lewis, CEO and CFO, PAID, Inc., P.O. Box 17, Southborough, MA 01772. Any waiver of the code of business conduct and ethics for directors or executive officers, or any amendment to the code that applies to directors or executive officers, may only be made by the board of directors. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of this code of ethics by posting such information on our website, at the address and location specified above. To date, no such waivers have been requested or granted. 20 Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than 10% of the Company's outstanding Common Stock to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Common Stock. These persons are required by SEC regulation to furnish the Company with copies of all such reports they file. To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and representations that no other reports were required, all Section 16(a) filing requirements applicable to its officers and directors and beneficial owners of more than 10% of the Company's stock, have been complied with for the period which this Form 10-K relates. Corporate Disclosure and Insider Trading Policy The Company’s Corporate Disclosure and Insider Trading Policy ensures that communications to the investing public are timely, factual and accurate, and consistently and broadly disseminated in accordance with law. The insider trading policy extends to directors, executive officers, certain designated employees, and their applicable family members. The policy restricts disclosure of Material Information (as defined in the policy) until the same information is generally disseminated to the public. The policy states that it is illegal for anyone to purchase or sell securities with knowledge of Material Information that has not been publicly disclosed, and describes the penalties associated with the violation. The policy provides for pre-clearance of trades, trading blackout periods, and suspension of trading, as applicable. A copy of the policy is attached as Exhibit 19. Item 11. Executive Compensation On May 10, 2017, the Board of Directors appointed Laurie Bradley as the Chairman of the Compensation Committee. Ms. Bradley, along with the remaining Board of Directors, will be responsible for carrying out the Board responsibilities relating to executive compensation, employment agreements, executive succession and equity-based compensation programs and practices of the Company. On March 29, 2021, the Company entered into an Employment Agreement and an Executive Non-Competition Agreement with W. 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. Mr. Lewis shall receive an annualized salary of $300,000 and may qualify for a bonus. 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. Mr. Lewis shall receive an annualized salary of $321,000 and may qualify for a bonus. Mr. 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 if Mr. 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. 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. Mr. Scott shall receive an annualized salary of $214,000 CAD and may qualify for a bonus. Mr. Scott also received $25,000 USD shares of the Company’s common stock which may be repurchased at $0.01 per share if Mr. Scott terminated his employment agreement prior to April 1, 2024. Mr. Scott has received merit increases for the years ending 2024 and 2025. On May 15, 2025, the Company’s Board of Directors authorized the issuance of 250,000 bonus shares of PAID common stock to the CEO/CFO as a renewal bonus valued at $747,500. The issuance was based upon the $2.99 closing price of the Company’s stock on May 15, 2025. Compensation to the Named Executive Officers The following table sets forth the compensation of the Company's chief executive officer, chief financial officer and the chief operating officer, and each officer whose total cash compensation exceeded $100,000, for the last two fiscal years ended December 31, 2025 and 2024. Summary Compensation Table Name and Principal Position Year Salary Bonus Option Awards ($) Total W. Austin Lewis, IV (1)(2)(4)(6)(8)(10)(11) (CFO, CEO) 2025 $ 339,190 $ 836,473 $ - $ 1,175,663 2024 $ 321,000 $ 131,407 $ - $ 452,407 David Scott (3)(5)(6)(7)(9)(12) (COO) 2025 $ 167,443 $ 51,160 $ - $ 218,603 2024 $ 163,558 $ 77,298 $ - $ 240,856 1. Mr. Lewis’s start date was July 31, 2012. 21 2. Mr. Lewis’s salary was approved by the Board of Directors at $346,680. 3. Mr. Scott was promoted to Chief Operating Officer on May 1, 2020. 4. Mr. Lewis received 250,000 shares on March 29, 2023 valued at $1.75 per share. 5. Mr. Scott received 13,889 shares on April 10, 2023 valued at $1.80 per share. 6. Mr. 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. 7. Mr. 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. 8. Mr. 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, 2025. 9. Mr. 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, 2025. 10. Mr. Lewis received 250,000 shares on May 15, 2025 valued at $2.99 per share. 11. Mr. Lewis’s bonus for 2025 includes $88,973 to be paid out in 2026 in shares, which was approved by the Board of Directors on February 27, 2026. 37,072 shares were valued at $2.40 per share based on the close price of the Company’s common stock at February 26, 2026. 12. Mr. Scott’s bonus for 2025 includes $51,160 to be paid out in 2026 in cash and shares, which was approved by the Board of Directors on February 27, 2026. 5,329 shares were valued at $2.40 per share based on the close price of the Company’s common stock at February 26, 2026. The following tables set forth certain information related to outstanding equity awards as of December 31, 2025 for our executive officers. Option Awards Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date David Scott 7,000 - - $ 4.10 03/23/2028 3,000 - - $ 3.50 10/01/2028 15,000 - - $ 2.92 02/13/2029 15,000 - - $ 3.00 08/13/2029 40,000 - - $ 2.89 11/10/2030 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. 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. 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. On May 15, 2025 the Board of Directors approved stock option awards of 5,000 for board members and an additional 10,000 shares for committee chairmen. The Company recorded $126,500 of share-based compensation with relation to the options granted to the Board. 22 The following table provides compensation information for the one-year period ended December 31, 2025 for the non-employee members of our Board of Directors. Director Compensation in 2025 Name Fees earned or paid in cash Option Awards ($) Total Andrew Pilaro $ 10,000 $ 74,750 $ 84,750 Laurie Bradley $ 10,000 $ 74,750 $ 84,750 David Ogden $ 4,000 $ 14,950 $ 18,950 Item 12. 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, 2026 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) W. Austin Lewis, IV 3,634,094 40 % Allan Pratt 2,222,273 (3) 25 % David Scott 139,337 (5) 2 % John Smith 805,100 9 % Laurie Bradley 144,217 (4) 2 % Andrew Pilaro 135,000 (1) 1 % All directors beneficial owners 7,080,021 78 % (1) Includes options to purchase 127,000 shares of the Company’s common stock. (2) 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. (3) Included in this amount are shares authorized and reserved for future issuance from exchangeable shares. (4) Includes options to purchase 117,500 shares of the Company’s common stock. (5) 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. Item 13. Certain Relationships and Related Transactions, and Director Independence The Company did not engage in any transaction in 2025 or 2024, and does not currently propose any transaction, in which the Company was a participant whereas the amount involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest. Review, Approval or Ratification of Transactions with Related Parties It is our unwritten policy, which policy is not otherwise evidenced, for any related party transaction that involves more than a de minimis obligation, expense or payment or stock option or equity grants, to obtain approval by our entire board of directors prior to our entering into any such transaction. In conformity with our various policies on related party transactions, any transactions discussed in this Item 12 have been reviewed and approved by our board of directors. Director Independence The Company has a majority of independent directors with Laurie Bradley as the sole member of the compensation committee and Andrew Pilaro is the sole member of the audit committee. Our board of directors currently consists of two members. Our board of directors determined that the directors, Andrew Pilaro and Laurie Bradley, are independent under the standards of the “Nasdaq Global Market” pursuant to Nasdaq Listing Rule 5605. 23 Item 14. Principal Accountant Fees and Services 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. 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, 2025 and 2024. 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. 2025 2024 Audit Fees: 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 $ 93,500 $ 67,500 Tax Fees Consists of fees billed for tax compliance, tax advice and tax planning 5,500 6,900 Total All Fees $ 99,000 $ 74,400 The Audit Committee approves all audit and audit-related fees. 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%. PART IV Item 15. 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. (a)(2) Financial Statements Schedules All schedules are omitted because they are not applicable, or the required information is included in the financial statements or notes thereto. (a)(3) Exhibits The list of exhibits filed as a part of this Annual Report on Form 10-K is set forth on the Exhibit Index immediately preceding the exhibits hereto and is incorporated herein by reference. Item 16. Form 10-K Summary None. EXHIBIT INDEX No. Description of Exhibits 3.1 Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to Form 8-K, filed on November 25, 2003) 3.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K, filed on December 8, 2004) 3.3 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) 3.4 Amendment No. 1 to Bylaws effective December 30, 2016 (incorporated by reference to Exhibit 3.2 to Form 8-K filed on December 23, 2016) 4.1 Specimen of certificate for Common Stock (incorporated by reference to Exhibit 4.1 to Form SB-2/A filed on December 1, 2000) 24 10.1+ 2002 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 10.17 to Form 10-KSB filed on March 31, 2003) 10.2+ 2011 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 99.1 to Form S-8 filed on February 2, 2011) 10.3 2018 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 10.35 to Form 10-K filed on April 1, 2019 ) 10.4+ PAID, Inc. 2012 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on October 18, 2012) 10.5+ Agreement for Non-Qualified Stock Option under the PAID, Inc. 2012 Non-Qualified Stock Option Plan awarded to W. Austin Lewis, IV, dated October 15, 2012 (incorporated by reference to Exhibit 10.2 to Form 10-Q filed on October 18, 2012) 10.6+ Agreement for Non-Qualified Stock Option under the PAID, Inc. 2011 Non-Qualified Stock Option Plan awarded to W. Austin Lewis, IV, dated August 8, 2012 (incorporated by reference to Exhibit 10.3 to Form 10-Q filed on October 18, 2012) 10.7 Amalgamation Agreement dated September 1, 2016 by and among PAID, Inc., emergeIT, Inc., 2534845 Ontario Inc. and 2534841 Ontario Inc. (incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 23, 2016) 10.8 Exchange and Call Rights Agreement (incorporated by reference to Exhibit 10.2 to Form 8-K filed on December 23, 2016) 10.9 Support Agreement (incorporated by reference to Exhibit 10.4 to Form 8-K filed on December 23, 2016) 10.10+ Employment Agreement for Allan Pratt (incorporated by reference to Exhibit 10.5 to Form 8-K filed on December 23, 2016) 10.11+ Employment Agreement for W. Austin Lewis IV dated March 29, 2021 (incorporated by reference to Exhibit 10.11 to Form 10-K filed on March 31, 2021) 10.12+ Non-Compete Agreement for W. Austin Lewis IV dated March 29, 2021 (incorporated by reference to Exhibit 10.12 to Form 10-K filed on March 31, 2021) 10.13+ Addendum to Employment Agreement for W. Austin Lewis IV dated March 21, 2023 (incorporated by reference to Exhibit 10.13 to Form 10-K filed on March 31, 2023) 10.14+ 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) 10.15 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) 10.16 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) 10.17 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) 19.0 Paid, Inc. Insider Trading Policy 31.2* CFO Certification required under Section 302 of Sarbanes-Oxley Act of 2002 32.0* CEO and CFO Certification required under Section 906 of Sarbanes-Oxley Act of 2002 EX-101.INS Inline XBRL Instance Document EX-101.SCH Inline XBRL Taxonomy Extension Schema EX-101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase EX-101.DEF Inline XBRL Taxonomy Extension Definition Linkbase EX-101.LAB Inline XBRL Taxonomy Extension Label Linkbase EX-101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase 104 Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) *filed herewith +Indicates a management contract or any compensatory plan, contract or arrangement 25 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PAID, INC. By: /s/ W. Austin Lewis, IV Date: March 31, 2026 W. 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. Signature Title Date /s/Andrew Pilaro Andrew Pilaro Director March 31, 2026 /s/ Laurie Bradley Laurie Bradley Director March 31, 2026 26 PAID, INC. & SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2025 AND 2024 Report of Independent Registered Public Accounting Firm (PCAOB ID: 3501 ) F-1 Consolidated Balance Sheets as of December 31, 2025 and 2024 F-2 Consolidated Statements of Income and Comprehensive Income for the Years ended December 31, 2025 and 2024 F-3 Consolidated Statements of Changes in Shareholders’ Equity for the Years ended December 31, 2025 and 2024 F-4 Consolidated Statements of Cash Flows for the Years ended December 31, 2025 and 2024 F-5 Notes to Consolidated Financial Statements F-6 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 sheets of Paid, Inc. and subsidiaries (collectively the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of income and comprehensive income, changes in shareholders’ equity, and cash flows for the years 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, 2025 and 2024, and the results of its operations and its cash flows for the years 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 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. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits 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 audits 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 audits 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 audits provide 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) relate 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 Note 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 March 31, 2026 F-1 PAID, INC. & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 1,108,059 $ 1,284,965 Accounts receivable, net 302,894 193,852 Note receivable, net of discount - - Prepaid expenses and other current assets 370,064 430,588 Total current assets 1,781,017 1,909,405 Property and equipment, net 4,096 4,370 Intangible assets, net 1,758,606 1,952,896 Operating lease right-of-use assets 89,685 115,150 Note receivable, long term 4,644,360 4,458,237 Total assets $ 8,277,764 $ 8,440,058 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 1,390,109 $ 1,694,599 Accrued expenses 332,973 438,912 Contract liabilities 329,725 372,795 Operating lease obligations 32,422 32,566 Total current liabilities 2,085,229 2,538,872 Long-term liabilities: Deferred tax liability, net 407,901 420,128 Uncertain tax position liability 181,824 370,454 Operating lease obligation – net of current position 60,550 85,437 Total liabilities 2,735,504 3,414,891 Commitments and contingencies (Note 9.) Shareholders’ equity: Series A Preferred stock, $ 0.001 par value, 5,000,000 shares authorized; no shares issued and outstanding at December 31, 2025 and 2024 - - Common stock, $ 0.001 par value, 25,000,000 shares authorized; 8,527,467 shares issued and 8,379,834 shares outstanding December 31, 2025 and 8,213,533 shares issued and 8,067,333 shares outstanding and December 31, 2024 8,528 8,214 Accrued common stock bonus 124,709 193,246 Additional paid-in capital 74,579,428 73,640,538 Accumulated other comprehensive income 240,700 226,031 Accumulated deficit ( 69,242,269 ) ( 68,874,026 ) Common stock in treasury, at cost, 147,633 shares at December 31, 2025 and 143,637 shares at December 31, 2024 ( 168,836 ) ( 168,836 ) Total shareholders’ equity 5,542,260 5,025,167 Total liabilities and shareholders’ equity $ 8,277,764 $ 8,440,058 See accompanying notes to consolidated financial statements F-2 PAID, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2025 2024 Revenues, net $ 20,708,235 $ 18,585,525 Cost of revenues 16,063,440 14,514,108 Gross profit 4,644,795 4,071,417 Operating expenses: Salaries and related 2,395,910 2,060,956 General and administrative 1,748,422 1,975,740 Amortization of intangible assets 286,785 292,528 Share-based compensation 868,455 235,575 Total operating expenses 5,299,572 4,564,799 Loss from operations ( 654,777 ) ( 493,382 ) Other income (expense): Interest income 36,123 175,133 Other income 14,397 1,040,792 Total other income 50,520 1,215,925 Income before income (loss) tax (benefit) provision ( 604,257 ) 722,543 Income tax (benefit) provision ( 236,014 ) ( 41,049 ) Net income (loss) $ ( 368,243 ) $ 763,592 Net income (loss) per share – basic $ ( 0.04 ) $ 0.09 Net income (loss) per share – diluted $ ( 0.04 ) $ 0.09 Weighted average number of common shares outstanding – basic 8,421,254 8,054,400 Weighted average number of common shares outstanding – diluted 8,421,254 8,074,685 Consolidated statements of comprehensive income: Net income (loss) $ ( 368,243 ) $ 763,592 Other comprehensive income (loss): Foreign currency translation adjustments 14,669 ( 116,937 ) Comprehensive income (loss) $ ( 353,574 ) $ 646,655 See accompanying notes to consolidated financial statements F-3 PAID, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS ’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Common Stock Accrued Common Additional Paid-in Accumulated Other Comprehensive Accumulated Treasury Stock Shares Amount Stock Bonus Capital Income Deficit Shares Amount Total Balance, January 1, 2024, as corrected 8,154,474 $ 8,154 $ 84,576 $ 73,505,439 $ 342,968 $ ( 69,637,618 ) ( 143,637 ) $ ( 164,840 ) $ 4,138,679 Foreign currency translation adjustment - - - - ( 116,937 ) - - - ( 116,937 ) Issuance of common stock for accrued bonus 54,559 55 ( 84,576 ) 84,521 - - - - - Share-based compensation expense - - 193,246 46,195 - - - - 239,441 Issuance of common stock for bonus - - - - Option exercise 4,500 5 - 4,383 - - - - 4,388 Purchase of treasury stock - - - - - - ( 3,996 ) ( 3,996 ) ( 3,996 ) Net income - - - - - 763,592 - - 763,592 Balance December 31, 2024 8,213,533 8,214 193,246 73,640,538 226,031 ( 68,874,026 ) ( 147,633 ) ( 168,836 ) 5,025,167 Foreign currency translation adjustment - - - - 14,669 - - - 14,669 Issuance of common stock for accrued bonus 62,501 62 ( 193,246 ) 193,184 - - - - - Issuance of common stock for signing bonus 250,000 250 - 373,500 - - - - 373,750 Share-based compensation expense - - 124,709 369,996 - - - - 494,705 Option exercise 1,433 2 - 2,210 - - - - 2,212 Net loss - - - - - ( 368,243 ) - - ( 368,243 ) Balance December 31, 2025 8,527,467 $ 8,528 $ 124,709 $ 74,579,428 $ 240,700 $ ( 69,242,269 ) ( 147,633 ) $ ( 168,836 ) $ 5,542,260 See accompanying notes to consolidated financial statements F-4 PAID, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2025 2024 Cash flows from operating activities: Net income (loss) $ ( 368,243 ) $ 763,592 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 289,737 304,797 Amortization of operating lease right-of-use assets 30,656 13,710 Accretion of discount on note receivable - ( 1,048,402 ) Share-based compensation 868,455 235,575 Deferred income taxes ( 236,014 ) ( 41,504 ) Interest and default income accrued on note receivable ( 36,123 ) ( 156,410 ) Provision for bad debts 40,072 - Changes in assets and liabilities: Accounts receivable ( 137,724 ) ( 4,109 ) Prepaid expenses and other current assets 78,226 ( 318,872 ) Accounts payable ( 375,800 ) 286,052 Accrued expenses ( 115,426 ) 46,953 Contract liabilities ( 60,615 ) 376,972 Operating lease obligations ( 30,372 ) ( 10,711 ) Net cash provided by (used in) operating activities ( 53,171 ) 447,643 Cash flows from investing activities: Issuance of notes receivable ( 150,000 ) ( 750,000 ) Purchase of property and equipment ( 2,469 ) ( 6,526 ) Net cash used in investing activities ( 152,469 ) ( 756,526 ) Cash flows from financing activities: Proceeds from option exercise 2,212 4,388 Repurchase of common stock - ( 3,996 ) Net cash provided by financing activities 2,212 392 Effect of exchange rate changes on cash and cash equivalents 26,522 ( 138,537 ) Net change in cash and cash equivalents ( 176,906 ) ( 447,028 ) Cash and cash equivalents, beginning of year 1,284,965 1,731,993 Cash and cash equivalents, end of year $ 1,108,059 $ 1,284,965 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the year for: Income taxes $ 685 $ 456 Interest $ - $ - SUPPLEMENTAL DISCLOSURES OF NON-CASH ITEMS Increase in note receivable for reimbursable expenses $ - $ 50,000 Increase in note receivable for discount $ - $ 847,193 Issuance of common shares in settlement of accrued common stock bonus $ 193,246 $ 84,576 Operating lease liabilities from obtaining lease right-of-use assets $ - $ 130,506 See accompanying notes to consolidated financial statements F-5 PAID, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2025 AND 2024 NOTE 1. ORGANIZATION PAID, Inc. (“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. 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. 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. NOTE 2. LIQUIDITY AND MANAGEMENT ’ S PLANS As of December 31, 2025, the Company reported cash and cash equivalents of $ 1,108,059 and had working deficit of ($ 304,212 ). The Company has reported a net operating loss of ($ 368,243 ), and used cash from operations of ($ 53,171 ) for the year ended December 31, 2025. 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 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 March 31, 2027 and will have a positive impact on the Company for the foreseeable future. NOTE 3. 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”). F-6 Principles of Consolidation The consolidated financial statements include the accounts of PAID, Inc. and its wholly owned subsidiaries, ShipTime Canada Inc. 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. dollars using the exchange rates in effect at each balance sheet date. 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. Geographic Concentrations The Company conducts business in the U.S. and Canada. For customers headquartered in their respective countries, the Company derived approximately 99 % of its revenues from Canada and 1 % from the U.S. during the years ended December 31, 2025 and 2024. At December 31, 2025 and 2024, the Company maintained 100 % of its net property and equipment in Canada. Comprehensive Income (Loss) Comprehensive income (loss) includes all changes in equity (net assets) during a period from non-owner sources. For the years ended December 31, 2025 and 2024, the components of comprehensive income (loss) consist solely of foreign currency translation gains (losses). Use of Estimates 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. Fair Value Measurements The Company measures the fair value of certain of its financial assets on a recurring basis. A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. 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; and 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, 2025 and 2024, 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 The Company considers all highly liquid temporary cash investments with initial maturities of three months or less to be cash equivalents. F-7 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, 2024, the Company had amounts that exceeded the CDIC insurance limits but none that were in excess of the FDIC insurance limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk related to these deposits. 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, 2025 and 2024, the Company recorded an allowance for credit losses of $ 50,742 and $ 11,134 , respectively. The Company evaluates the reserve for additional credit losses on a quarterly basis. As of December 31, 2025 there were no customers that accounted for more than 10% and as of December 31, 2024 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 Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of three to eight years. Any leasehold improvements are depreciated at the lesser of the useful life of the asset or the lease term. 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 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. Right-of-use assets are subsequently measured at the present value of the remaining lease payments, adjusted for incentives, prepaid or accrued rent, and any initial direct costs not yet expensed. Intangible Assets 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 which are being amortized over 15 years. Long-Lived Assets The Company reviews the carrying values of its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the expected future cash flows from the use of the asset and its eventual disposition is less than the carrying amount of the asset, an impairment loss is recognized and measured using the fair value of the related asset. No impairment charges were recognized during the years ended December 31, 2025 and 2024. 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. F-8 Revenue Recognition 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 Cost of revenues includes carrier services, web hosting, data storage, commissions, carrier insurance costs and merchant processing interchange fees. Operating Expenses 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 Advertising costs are charged to expenses as incurred. For the years ended December 31, 2025 and 2024, advertising expenses totaled $ 384,040 and $ 347,258 , 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. During the year ended December 31, 2025 the Company recorded $ 124,709 for share-based bonus payments related to 2025 which were approved by the Board of Directors on February 27, 2026. 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 during the year ended December 31, 2024. The shares of common stock were issued to the CEO/CFO, one additional officer and three 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 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. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant. Since the Company does not expect to pay dividends on common stock in the foreseeable future, it estimated the dividend yield to be 0 %. 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 income and comprehensive income for the years ended December 31, 2025 and 2024 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. The Company estimates forfeitures based on historical experience. Changes to the estimated forfeiture rate are accounted for as a cumulative effect of change in the period the change occurred. Since the Company has a net operating loss carry-forward as of December 31, 2025 and 2024, no excess tax benefits for tax deductions related to share-based awards were recognized from any stock options exercised in the years ended December 31, 2025 and 2024 that would have resulted in a reclassification from cash flows from operating activities to cash flows from financing activities. Income Taxes The Company accounts for income taxes and the related accounts under the liability method. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the income tax bases of assets and liabilities. A valuation allowance is applied against any net deferred tax asset if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. 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. F-9 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. Income (Loss) Per Common Share 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, 2025 and 2024, 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: 2025 2024 Numerator: Net income (loss) $ ( 368,243 ) $ 763,592 Denominator: Basic weighted-average shares outstanding 8,421,254 8,054,400 Effect of dilutive securities - 20,285 Diluted weighted-average shares outstanding 8,421,254 8,074,685 Net income (loss) per share – basic $ ( 0.04 ) $ 0.09 Net income (loss) per share – diluted $ ( 0.04 ) $ 0.09 Segment Reporting The Company reports information about segments of its business in its annual consolidated financial statements and reports selected segment information in its quarterly reports issued to shareholders. 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 four reportable segments are managed separately based on fundamental differences in their operations. At December 31, 2025, the Company operated in the following four reportable segments: a) Client services; b) eCommerce services; c) Shipping coordination and label generation services; and d) Corporate operations. The Company evaluates performance and allocates resources based on operating income. 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. F-10 The following table compares total revenues for the years indicated. Years Ended December 31, 2025 December 31, 2024 Client services $ 3,863 $ 17,815 eCommerce services 26,540 68,097 Shipping coordination and label generation services 20,677,832 18,499,613 Total revenues, net $ 20,708,235 $ 18,585,525 The following table compares total income (loss) from operations for the years indicated. Years Ended December 31, 2025 December 31, 2024 Client services $ ( 4,426 ) $ 4,658 eCommerce services ( 136,256 ) ( 298,020 ) Shipping coordination and label generation services ( 254,177 ) ( 66,664 ) Corporate operations ( 259,918 ) ( 133,356 ) Total income (loss) from operations $ ( 654,777 ) $ ( 493,382 ) During 2025 and 2024, the Company recorded depreciation and amortization expense of $ 286,785 and $ 304,797 , respectively, which was solely related to the shipping coordination and label generations service segment of the Company. Recent Accounting Pronouncements 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 was effective for fiscal years beginning after December 15, 2024. We adopted this guidance for the annual period ending December 31, 2025. 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 was adopted for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of this guidance did not have an impact on our consolidated financial statements. NOTE 4. REVENUE FROM CONTRACTS WITH CUSTOMERS 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 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 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). F-11 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. 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. We act as the merchant of record for our sellers, which puts us in their shoes with respect to card networks and puts the risk for refunds and chargebacks on us. The gross transaction fees collected from sellers is recognized as revenue as we are the primary obligor to the seller and are responsible for processing the payment, have latitude in establishing pricing with respect to the sellers and other terms of service, have sole discretion in selecting the third party to perform the settlement, and assume the credit risk for the transaction processed. Revenue Disaggregation The Company operates in four reportable segments (see Note 3). Performance Obligations 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. 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. Once the transaction is approved, the funds are distributed in an overnight feed and the Company has met its performance obligation. The Company has no shipping and handling activities related to contracts with customers. Revenues are recognized net of any taxes collected from customers, which are subsequently remitted to government authorities. 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. 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, 2025 by considering the contractual obligation, the valuation of the assets and the senior position of the repayment. F-12 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. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the anticipated performance and all information (historical, current and forecasted) that is reasonably available. Revenues are recorded net of variable considerations, such as rebates, refunds and cancellations. Warranties 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. Contract Assets Typically, the Company has already collected revenue from the customer at the time it has satisfied its performance obligation. Accordingly, the Company has a balance of accounts receivable, totaling $ 302,894 , $ 193,852 , and $ 205,647 at December 31, 2025 and 2024 and 2023, respectively. The Company has recorded a balance of $ 234,972 in contract assets as of December 31, 2025. 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 $ 329,725 and $ 372,795 at December 31, 2025 and 2024, respectively. During the years ended December 31, 2025 and 2024, the Company recognized revenues of $ 372,792 and $ 15,832 , respectively, related to contract liabilities outstanding at the beginning of each year. The Company expects to recognize $ 329,725 in revenue related to contract liabilities in the first quarter of 2026. NOTE 5. 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”). 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 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 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. F-13 The note receivable was in default effective June 19, 2024, in the amount of $ 4,193,607 and the Company ceased recording of interest and penalties of $ 2,299,849 and default penalties of $ 838,721 . The total due on the note as of December 31, 2025 was $ 7,332,177 . On July 29, 2024, the Board of Directors approved an extension with Embolx which was effective as of January 31, 2025. The Company entered into a Forbearance and Loan Modification Agreement with Embolx which extended the note receivable of $ 5,967,100 until September 30, 2025 and carried a 25% interest rate. On September 30, 2025 the Company amended the Forbearance Agreement to expire on August 31, 2026. 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, 2026, and thus has been reclassed as long-term. 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 2025 or 2026. 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 the $ 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. On July 1, 2025 and October 10, 2025, the Company made an additional investment of $ 75,000 per occurrence and in accordance with the original terms of the July 3, 2024 amendment. Interest of $ 36,123 has been recorded based on the outstanding balance of the $ 400,000 note for the year ending December 31, 2025. NOTE 6. PROPERTY AND EQUIPMENT At December 31, property and equipment consisted of the following: 2025 2024 Computer equipment and software $ 139,623 $ 138,964 Office furniture and equipment 66,037 63,307 Website development costs 396,128 391,358 601,788 593,629 Accumulated depreciation ( 597,692 ) ( 589,259 ) $ 4,096 $ 4,370 Depreciation expense of property and equipment for the years ended December 31, 2025 and 2024 amounted to $ 2,953 and $ 12,270 , respectively. NOTE 7. INTANGIBLE ASSETS The Company holds several patents for the real-time calculation of shipping costs for items purchased through online auctions using a zip code as a destination location indicator. It includes shipping charge calculations across multiple carriers and accounts for additional characteristics of the item being shipped, such as weight, special packaging or handling, and insurance costs. These patents help facilitate rapid and accurate estimation of shipping costs across multiple shipping carriers and also include real-time calculation of shipping. In addition, the Company has various intangible assets from past business combinations. F-14 At December 31, 2025, intangible assets consisted of the following: Patents Trade Name Technology & Software Customer Relationships Total Gross carrying amount $ 16,000 $ 780,931 $ 582,487 $ 4,597,547 $ 5,976,965 Accumulated amortization ( 16,000 ) ( 780,931 ) ( 582,487 ) ( 2,838,941 ) ( 4,218,359 ) $ - $ - $ - $ 1,758,606 $ 1,758,606 At December 31, 2024, intangible assets consisted of the following: Patents Trade Name Technology & Software Customer Relationships Total Gross carrying amount $ 16,000 $ 743,628 $ 558,664 $ 4,388,146 $ 5,706,438 Accumulated amortization ( 16,000 ) ( 743,628 ) ( 558,664 ) ( 2,435,250 ) ( 3,753,542 ) $ - $ - $ - $ 1,952,896 $ 1,952,896 Amortization expense of intangible assets for the years ended December 31, 2025 and 2024 was $ 286,785 and $ 292,528 , respectively. Amortization of intangible assets for the next five years ending December 31 are as follows: Year Ended December 31, 2026 $ 278,881 2027 278,881 2028 278,881 2029 278,881 2030 278,881 Thereafter 364,201 Total amortization $ 1,758,606 NOTE 8. ACCRUED EXPENSES At December 31, accrued expenses consist of the following: 2025 2024 Payroll and related costs $ 208,087 $ 209,434 Professional and consulting fees 22,646 - Royalties 40,075 40,075 Accrued cost of revenues 39,527 166,765 Sales tax 22,228 22,228 Other 410 410 Total $ 332,973 $ 438,912 NOTE 9. COMMITMENTS AND CONTINGENCIES Legal Matters In the normal course of business, the Company periodically becomes involved in litigation and disputes. 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 and bonus 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. Austin Lewis, then CFO, automatically rolled off from the Board of Directors. More than a year later, in 2021, Mr. Pratt filed a claim in Delaware court to contest that decision. In July 2022, Mr. 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, followed by a post-trial hearing on May 14, 2025. The Company has not recorded a reserve as the outcome of these matters has not and cannot be determined. F-15 Indemnities and Guarantees The Company has made certain indemnities and guarantees, under which it may be required to make payments to a guaranteed or indemnified party, in relation to certain actions or transactions. The Company indemnifies its directors, officers, employees and agents, as permitted under the laws of the State of Delaware. In connection with its facility lease, the Company has agreed to indemnify its lessor for certain claims arising from the use of the facilities. The duration of the guarantees and indemnities varies and is generally tied to the life of the agreement. These guarantees and indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. 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. NOTE 10. 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. 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. 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. If purchased, redeemed, or otherwise acquired (other than conversion), the preferred stock may be reissued. As of December 31, 2025 and 2024, there are no outstanding shares of Series A Preferred Stock. Common 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 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 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, 2025 for financial reporting purposes. 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 was issued in March 2023 and 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 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. See Note 14 for discussion of 2026 issuances. F-16 Share-Based Incentive Plans During the years ended December 31, 2025 and 2024, 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. The Company has three additional stock option plans that include both incentive and non-qualified stock options to be granted to certain eligible employees, non-employee directors, or consultants of the Company. On November 10, 2020, the board voted to increase the 2018 Stock Option Plan from 450,000 options to 900,000 options. 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 . On February 24,2025, the Company received a notice of exercise of options to purchase 1,433 common shares of the Company’s stock from one employee. The options were exercised at $ 2.90 per share and the Company received proceeds of $ 2,212 . Active Plans: 2018 Plan On March 23, 2018, the Company adopted the 2018 Non-Qualified Stock Option Plan (the “2018 Plan”). The purpose of the 2018 Plan is to provide long-term incentives and rewards to those employees of the Company, and any other individuals, whether directors, consultants or advisors who are in a position to contribute to the long-term success and growth of the Company. 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 317,025 shares reserved for future issuance under this plan. Information with respect to stock options granted under this plan during the year ended December 31, 2025 is as follows: Number of shares Weighted average exercise price per share Options outstanding at January 1, 2025 444,360 $ 2.73 Granted 95,548 3.02 Cancelled/Expired - - Exercised ( 1,433 ) 1.55 Options outstanding at December 31, 2025 538,475 $ 2.79 F-17 2012 Plan On October 15, 2012, the Company adopted the 2012 Non-Qualified Stock Option Plan (the “2012 Plan”). The purpose of the 2012 Plan is to provide long-term incentives and rewards to those employees of the Company, and any other individuals, whether directors, consultants or advisors who are in a position to contribute to the long-term success and growth of the Company. The options granted have a 10 -year contractual term and vest one hundred percent on the date of grant. There are no shares reserved for future issuance under this plan. Information with respect to stock options granted under this plan during the year ended December 31, 2025 is as follows: Number of shares Weighted average exercise price per share Options outstanding at January 1, 2025 4,000 $ 0.98 Granted - - Cancelled - - Exercised - - Options outstanding at December 31, 2025 4,000 $ 0.98 2011 Plan On February 1, 2011, the Company adopted the 2011 Non-Qualified Stock Option Plan (the “2011 Plan”). Under the 2011 Plan, employees and consultants may elect to receive their gross compensation in the form of options, exercisable at $ 0.98 to $ 3.30 per share, to acquire the number of shares of the Company’s common stock equal to their gross compensation divided by the fair value of the stock on the date of grant. The options granted have a 10 -year contractual term and have vesting periods that range from one hundred percent on the date of grant to one-third immediately, one-third vesting in 18 months and the final one-third vesting in 36 months from the date of the grant. 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, 2025 is as follows: Number of shares Weighted average exercise price per share Options outstanding at January 1, 2025 40,500 $ 3.13 Granted - - Cancelled - - Exercised - - Options outstanding at December 31, 2025 40,500 $ 3.13 Fair value of issuances The Company granted 95,548 options to purchase Company stock during the year ended December 31, 2025. The fair value of the Company’s 2025 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). 2025 Expected term (based upon historical experience) (in years) 5.84 Expected volatility 92 % Expected dividends None Risk free interest rate 3.95 % For the years ended December 31, 2025 and 2024, the Company recorded total share-based compensation expense related to the common stock bonuses, other stock issuances, and stock options of $ 743,746 and $ 235,575 , respectively, which is recorded in share-based compensation expense in the accompanying consolidated statements of income and comprehensive income. The Company has an unrecognized share-based compensation expense of $ 8,946 for options outstanding as of December 31, 2025 which will be recognized over the weighted average period of approximately 1.16 years. F-18 Summary of all stock option plans activity during the year ended December 31, 2025 is as follows: Number of Shares Weighted Average Price Weighted Average Remaining Contractual Life (In Years) Aggregate Intrinsic Value Options outstanding at January 1, 2025 488,860 Granted 95,548 3.02 Cancelled/Expired - - Exercised ( 1,433 ) 1.55 Options outstanding and expected to vest at December 31, 2025 582,975 $ 2.80 5.35 $ 222,005 Options exercisable at December 31, 2025 549,634 $ 2.71 5.10 $ 209,696 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, 2025. The aggregate intrinsic value of the options exercised during the years ended December 31, 2025 and 2024 was $ 12,309 and $ 8,708 , respectively. NOTE 11. INCOME TAXES The Company’s income (loss) before income tax (benefit) provision includes the following components for the years ended December 31: 2025 2024 U.S. $ ( 363,791 ) $ 779,605 Foreign ( 240,466 ) ( 57,062 ) $ ( 604,257 ) $ 722,543 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: 2025 2024 Current: Federal $ - $ - State - 456 Foreign ( 201,735 ) 115,599 Total current ( 201,735 ) 116,055 Deferred: Federal - - State - - Foreign ( 34,279 ) ( 157,104 ) Total deferred ( 34,279 ) ( 157,104 ) Income tax (benefit) provision $ ( 236,014 ) $ ( 41,049 ) F-19 A reconciliation of the expected income tax (benefit) provision at the federal statutory rate of 21% for the years ended December 31, 2025, and the income tax (benefit) provision reported in the financial statements is as follows: December 31, 2025 Amount As a % of net income before taxes Net income (loss) before taxes $ ( 604,257 ) U.S. federal statutory tax rate ( 126,894 ) 21.00 % State and local income taxes, net of federal income tax effect* 484 ( 0.08 )% Foreign tax effects Canada Foreign rate differential ( 7,907 ) 1.31 % Prior period adjustments 52,445 ( 8.68 )% Other 6,070 ( 1.00 )% Effect of cross-border tax laws Global intangible low-taxed income 319,475 ( 52.87 )% Changes in valuation allowances ( 566,589 ) 93.77 % Non-taxable or non-deductible items Section 162(m) disallowance 43,302 ( 7.17 )% Stock compensation ( 49,400 ) 8.18 % Changes in unrecognized tax benefits ( 255,839 ) 42.34 % Other Attributes expirations 304,229 ( 50.35 )% Prior period adjustments 26,726 ( 4.42 )% Other 17,886 ( 2.96 )% Effective income tax rate $ ( 236,014 ) 39.06 % * State taxes in Massachusetts made up the majority (greater than 50 percent) of the tax effect in this category. As previously disclosed for the periods ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows: 2024 2023 U.S. federal statutory tax rate 21.00 % 21.00 % State tax benefit, net ( 0.09 )% 7.73 % Stock compensation 9.68 % 1.00 % Foreign rate differential 1.55 % ( 0.42 )% Attributes expiration ( 59.61 )% 36.01 % Returns to Provision ( 15.51 )% 0.07 % Other ( 0.96 )% 2.97 % NOL Adjustment - % ( 10.90 )% Unrecognized tax benefit 50.13 % 3.82 % GILTI ( 62.60 )% 44.93 % Section 162(m) disallowance ( 8.48 )% - % Valuation allowance 111.01 % ( 111.90 )% Effective income tax rate 46.12 % ( 5.69 )% F-20 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: 2025 2024 Deferred taxes: NOLs $ 5,979,666 $ 6,487,219 Inventory and other reserves 7,844 31,340 Stock based compensation expense 200,264 272,285 Accruals 24,239 18,207 Other 96 96 Total deferred tax assets 6,212,109 6,809,147 Depreciation and amortization ( 442,263 ) ( 484,941 ) Right-of-use assets - - Valuation allowance ( 6,177,747 ) ( 6,744,334 ) Net deferred tax liabilities $ ( 407,901 ) $ ( 420,128 ) Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The reduction in the valuation allowance is approximately $ 567,000 and $ 809,000 in 2025 and 2024, respectively. As of December 31, 2025, the Company had net operating loss carryforwards for federal income tax purposes of approximately $ 25,820,000 . 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 $ 24,918,000 expires beginning in the year 2026. As of December 31, 2025, the Company had net operating loss carryforwards for state income tax purposes of approximately $ 8,098,000 which expire beginning in the year 2031. As of December 31, 2025, the Company also had Canada net operating loss carryforwards of $ 1,613,000 which expire beginning in the year 2040. Utilization of the net operating losses may be subject to substantial annual limitation due to federal and state ownership change limitation provided by the Internal Revenue Code and similar state provisions. Such annual limitations could result in the expiration of the net operating losses and credits before their utilization. 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, 2025 and 2024. The One Big Beautiful Bill Act of 2025 (the “2025 Tax Act”) was signed into law on July 4, 2025. The 2025 Tax Act, among other things, extends certain provisions of 2017 U.S. federal tax legislation relating to federal bonus depreciation and immediate expensing for domestic research and development expenditures. These provisions did not have a material effect on the Company's consolidated financial statements for the year ended December 31, 2025. F-21 The evaluation of uncertainty in a tax position is a two-step process. The first step involves recognition. The Company determines whether it's more likely than not that a tax position will be sustained upon tax examination including any resolution of any related appeals or litigation, based on only the technical merits of the position. The technical merits of a tax position are derived from both statutory and judicial authority (legislation and statutes, legislative intent, regulations, rulings, and case law) and their applicability to the facts and circumstances of the tax position. If a tax position does not meet the more-likely-than-not recognition threshold, the benefit of that position is not recognized in the consolidated financial statements. The second step is measurement. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the consolidated financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate resolution with a taxing authority. Uncertain tax positions are reviewed on an ongoing basis and are adjusted after considering facts and circumstances, including progress of tax audits, developments in case law and closing of statutes of limitation. The following table summarizes the activity related to the Company’s gross unrecognized tax benefits at the beginning and end of the years ended December 31, 2025 and 2024: 2025 2024 Gross unrecognized tax benefits at the beginning of the year $ 691,481 $ 707,632 Increases related to current year positions - - Increases (decreases) related to prior year positions 34,720 ( 2,116 ) Expiration of unrecognized tax benefits ( 176,578 ) ( 14,035 ) Gross unrecognized tax benefits at the end of the year $ 549,623 $ 691,481 The amount of unrecognized tax benefits that would impact the Company’s effective tax rate, if recognized, is $ 563,440 (including estimated penalties and interest). The income tax provision at December 31, 2025 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 2022. 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 2006 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, 2025 and 2024 the Company accrued $ 13,818 and $ 37,102 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. NOTE 12. LEASES 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. 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: 2025 2024 Operating lease cost $ 34,148 $ 17,079 F-22 Supplemental balance sheet information related to leases was as follows: December 31, 2025 December 31, 2024 Operating leases: Operating lease right-of-use assets $ 89,685 $ 115,150 Current portion of operating lease obligations $ 32,422 $ 32,566 Operating lease obligations, net of current portion 60,550 85,437 Total operating lease liabilities $ 92,972 $ 118,003 Year Ended December 31, 2025 Weighted Average Remaining Lease Term Operating lease (in years) 2.6 Weighted Average Discount Rate Operating lease 6.37 % A summary of future minimum payments under non-cancellable operating lease commitment as of December 31, 2025 is as follows: Years ending December 31, Total 2026 34,952 2027 35,405 2028 23,603 Total lease liabilities $ 93,960 Less amount representing interest ( 988 ) Total 92,972 Less current portion ( 32,422 ) Long term portion $ 60,550 NOTE 13. RISKS AND UNCERTAINTIES Trade discussions and arrangements between the U.S. and various of its trading partners are unpredictable, and existing and future trade agreements are, and are expected to continue to be, subject to several uncertainties, including the imposition of new tariffs or adjustments and changes to existing tariff policies. The impact of new laws, regulations and policies or decisions or interpretations by authorities applying those laws and regulations, cannot be predicted. The Company is currently evaluating the accounts receivable for reserves for unpaid tariffs, however the amounts cannot be calculated as the trade agreements have yet to be settled by the U.S. NOTE 14. SUBSEQUENT EVENTS On February 27, 2026, the Board of Directors approved the allocation of the 2025 bonus accrual to be paid out in cash and shares of which $ 124,709 have been recorded as share-based compensation expense for the year ended December 31, 2025. A total of 50,974 shares of common stock were issued to two officers and three employees in March 2026. On January 30, 2026 the Company acquired an approximate 80 % shareholder interest in Warehowz, Inc., a Virgina corporation. As part of the acquisition, the Company will repay approximately $ 102,000 in indebtedness on or around February 28, 2026 in shares of restricted common stock of the Company, based on the 30-day prior average, and will pay off an additional $ 75,000 convertible note within 120 days of closing. The total consideration for the acquisition is $ 177,000 plus any earnouts described below, which are based on a percentage of net revenue and net income contributed by Warehowz, Inc. In addition, after subtracting certain costs and debts from the payment requirement, the Company will pay those shareholders who transferred shares to the Company two payments based on each shareholder’s percentage ownership of Warehowz, Inc., which payment shall equal 8.5% of net revenue plus 40% of the net income, for each of the 12 months ended December 31, 2026 and 2027. The earnout cash payments will be due on April 15, 2027 and April 15, 2028 respectively. Payments are subject to offset against any indemnity claims and any liabilities related to Warehowz, Inc. that were not expressly assumed. 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. F-23