{"url_path":"/sec/payd/10-k/2026/item-16","section_key":"item-16","section_title":"Item 16 Form 10-K Summary**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-03-31","source_url":"https://www.sec.gov/Archives/edgar/data/1017655/0001437749-26-010730-index.html","accession_number":"0001437749-26-010730","cik":"0001017655","ticker":"PAYD","issuer_name":"PAID INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1017655/0001437749-26-010730-index.html","primary_entity_key":"0001017655","primary_entity_name":"PAID INC"},"word_count":12205,"has_tables":true,"body_markdown":"**Item 16. Form 10-K Summary**\n\n \n\nNone. \n\n \n\n**EXHIBIT INDEX**\n\n \n\nNo.\n\n \n\nDescription of Exhibits\n\n[3.1](http://www.sec.gov/Archives/edgar/data/1017655/000116923203006845/d57599_ex3-1.txt)\n\n \n\nCertificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to Form 8-K, filed on November 25, 2003)\n\n[3.2](http://www.sec.gov/Archives/edgar/data/1017655/000116923204006014/d61546_ex3-2.htm)\n\n \n\nAmended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K, filed on December 8, 2004)\n\n[3.3](http://www.sec.gov/Archives/edgar/data/1017655/000165495416005108/ex3-1.htm)\n\n \n\nCertificates 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)\n\n[3.4](http://www.sec.gov/Archives/edgar/data/1017655/000165495416005108/ex3-2.htm)\n\n \n\nAmendment No. 1 to Bylaws effective December 30, 2016 (incorporated by reference to Exhibit 3.2 to Form 8-K filed on December 23, 2016)\n\n[4.1](http://www.sec.gov/Archives/edgar/data/1017655/000101410000000108/0001014100-00-000108-0002.txt)\n\n \n\nSpecimen of certificate for Common Stock (incorporated by reference to Exhibit 4.1 to Form SB-2/A filed on December 1, 2000)\n\n \n\n24\n\n \n\n \n\n[10.1+](http://www.sec.gov/Archives/edgar/data/1017655/000116923203002433/d54852_ex10-17.txt)\n\n \n\n2002 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 10.17 to Form 10-KSB filed on March 31, 2003)\n\n[10.2+](http://www.sec.gov/Archives/edgar/data/1017655/000114036111005676/ex99_1.htm)\n\n \n\n2011 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 99.1 to Form S-8 filed on February 2, 2011)\n\n[10.3](http://www.sec.gov/Archives/edgar/data/1017655/000165495419003887/ex10-35.htm)\n\n \n\n2018 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 10.35 to Form 10-K filed on April 1, 2019 )\n\n[10.4+](http://www.sec.gov/Archives/edgar/data/1017655/000101765512000038/exhibit101.htm)\n\n \n\nPAID, Inc. 2012 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on October 18, 2012)\n\n[10.5+](http://www.sec.gov/Archives/edgar/data/1017655/000101765512000038/exhibit102.htm)\n\n \n\nAgreement 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)\n\n[10.6+](http://www.sec.gov/Archives/edgar/data/1017655/000101765512000038/exhibit103.htm)\n\n \n\nAgreement 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)\n\n[10.7](http://www.sec.gov/Archives/edgar/data/1017655/000141588916007074/ex10-1.htm)\n\n \n\nAmalgamation 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)\n\n[10.8](http://www.sec.gov/Archives/edgar/data/1017655/000141588916007074/ex10-2.htm)\n\n \n\nExchange and Call Rights Agreement (incorporated by reference to Exhibit 10.2 to Form 8-K filed on December 23, 2016)\n\n[10.9](http://www.sec.gov/Archives/edgar/data/1017655/000141588916007074/ex10-4.htm)\n\n \n\nSupport Agreement (incorporated by reference to Exhibit 10.4 to Form 8-K filed on December 23, 2016)\n\n[10.10+](http://www.sec.gov/Archives/edgar/data/1017655/000141588916007074/ex10-5.htm)\n\n \n\nEmployment Agreement for Allan Pratt (incorporated by reference to Exhibit 10.5 to Form 8-K filed on December 23, 2016)\n\n[10.11+](http://www.sec.gov/Archives/edgar/data/1017655/000165495421003649/ex10-11.htm)\n\n \n\nEmployment 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)\n\n[10.12+](http://www.sec.gov/Archives/edgar/data/1017655/000165495421003649/ex10-12.htm)\n\n \n\nNon-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)\n\n[10.13+](http://www.sec.gov/Archives/edgar/data/1017655/000143774923008832/ex_494733.htm)\n\n \n\nAddendum 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)\n\n[10.14+](http://www.sec.gov/Archives/edgar/data/1017655/000143774923008832/ex_494734.htm)\n\n \n\nEmployment Agreement for David Scott dated March 29, 2023 (incorporated by reference to Exhibit 10.14 to Form 10-K filed on March 31, 2023)\n\n[10.15](http://www.sec.gov/Archives/edgar/data/1017655/000143774924010365/ex_648130.htm)\n\n \n\nSecurities 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)\n\n[10.16](http://www.sec.gov/Archives/edgar/data/1017655/000143774924010365/ex_648131.htm)\n\n \n\nConvertible 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)\n\n[10.17](http://www.sec.gov/Archives/edgar/data/1017655/000143774924010365/ex_648132.htm)\n\n \n\nSecurity 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)\n\n[19.0](ex_938596.htm)\n \nPaid, Inc. Insider Trading Policy\n\n \n \n \n\n[31.2*](ex_937020.htm)\n\n \n\nCFO Certification required under Section 302 of Sarbanes-Oxley Act of 2002\n\n[32.0*](ex_937019.htm)\n\n \n\nCEO and CFO Certification required under Section 906 of Sarbanes-Oxley Act of 2002\n\nEX-101.INS\n\n \n\nInline XBRL Instance Document\n\nEX-101.SCH\n\n \n\nInline XBRL Taxonomy Extension Schema\n\nEX-101.CAL\n\n \n\nInline XBRL Taxonomy Extension Calculation Linkbase\n\nEX-101.DEF\n\n \n\nInline XBRL Taxonomy Extension Definition Linkbase\n\nEX-101.LAB\n\n \n\nInline XBRL Taxonomy Extension Label Linkbase\n\nEX-101.PRE\n\n \n\nInline XBRL Taxonomy Extension Presentation Linkbase\n\n104\n \nCover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)\n\n \n\n \n\n*filed herewith\n\n \n\n+Indicates a management contract or any compensatory plan, contract or arrangement\n\n \n\n25\n\n \n\n \n\n**SIGNATURES**\n\n \n\nPursuant 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.\n\n \n\n \n \n\nPAID, INC.\n\n \n \n \n\n \n \n\nBy:\n\n/s/ W. Austin Lewis, IV \n\n \n\nDate: March 31, 2026\n\n \n\nW. Austin Lewis, IV, Chief Executive Officer, Chief\n\nFinancial Officer\n\n \n\nPursuant 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.\n\n \n\n \n\nSignature\n\n \n\nTitle\n\n \n\nDate\n\n \n \n \n \n \n \n\n \n\n/s/Andrew Pilaro\n\n \n \n \n \n\n \n\nAndrew Pilaro\n\n \n\nDirector\n\n \n\nMarch 31, 2026\n\n \n \n \n \n \n \n\n \n\n/s/ Laurie Bradley\n\n \n \n \n \n\n \n\nLaurie Bradley\n\n \n\nDirector\n\n \n\nMarch 31, 2026\n\n \n\n26\n\n \n\n \n\n \n\n**PAID, INC. & SUBSIDIARIES**\n\n**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n**DECEMBER 31, 2025 AND 2024**\n\n \n\n \n\nReport of Independent Registered Public Accounting Firm (PCAOB ID: 3501)\n\nF-1\n\nConsolidated Balance Sheets as of December 31, 2025 and 2024\n\nF-2\n\nConsolidated Statements of Income and Comprehensive Income for the Years ended December 31, 2025 and 2024\n\nF-3\n\nConsolidated Statements of Changes in Shareholders’ Equity for the Years ended December 31, 2025 and 2024\n\nF-4\n\nConsolidated Statements of Cash Flows for the Years ended December 31, 2025 and 2024\n\nF-5\n\nNotes to Consolidated Financial Statements\n\nF-6\n\n \n\n \n\n \n\n \n\n**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**\n\n \n\n \n\nTo the Board of Directors and Stockholders of Paid, Inc.\n\n \n\n**Opinion on the Financial Statements**\n\nWe 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.\n\n \n\n**Basis for Opinion**\n\nThese 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.\n\n \n\nWe 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.\n\n \n\nOur 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.\n\n \n\n**Critical Audit Matter**\n\nThe 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.\n\n \n\n**Recoverability of Note Receivable**\n\nDescription of the Matter:\n\nAs 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.\n\nHow We Addressed the Matter in our Audit:\n\nWe 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.\n\n \n\n \n\n \n\n/s/ dbbmckennon\n\nWe have served as the Company's auditor since 2024.\n\nSan Diego, California\n\nMarch 31, 2026\n\n \n\nF-1\n\n \n\n \n\n \n\n**PAID, INC. & SUBSIDIARIES**\n\n**CONSOLIDATED BALANCE SHEETS**\n\n**AS OF DECEMBER 31,**\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\nASSETS\n\n \n \n \n \n \n \n \n \n\nCurrent assets:\n\n \n \n \n \n \n \n \n \n\nCash and cash equivalents\n\n \n$\n1,108,059\n \n \n$\n1,284,965\n \n\nAccounts receivable, net\n\n \n \n302,894\n \n \n \n193,852\n \n\nNote receivable, net of discount\n\n \n \n-\n \n \n \n-\n \n\nPrepaid expenses and other current assets\n\n \n \n370,064\n \n \n \n430,588\n \n\nTotal current assets\n\n \n \n1,781,017\n \n \n \n1,909,405\n \n\n \n \n \n \n \n \n \n \n \n\nProperty and equipment, net\n\n \n \n4,096\n \n \n \n4,370\n \n\nIntangible assets, net\n\n \n \n1,758,606\n \n \n \n1,952,896\n \n\nOperating lease right-of-use assets\n\n \n \n89,685\n \n \n \n115,150\n \n\nNote receivable, long term\n\n \n \n4,644,360\n \n \n \n4,458,237\n \n\nTotal assets\n\n \n$\n8,277,764\n \n \n$\n8,440,058\n \n\n \n \n \n \n \n \n \n \n \n\nLIABILITIES AND SHAREHOLDERS’ EQUITY\n\n \n \n \n \n \n \n \n \n\nCurrent liabilities:\n\n \n \n \n \n \n \n \n \n\nAccounts payable\n\n \n$\n1,390,109\n \n \n$\n1,694,599\n \n\nAccrued expenses\n\n \n \n332,973\n \n \n \n438,912\n \n\nContract liabilities\n\n \n \n329,725\n \n \n \n372,795\n \n\nOperating lease obligations\n\n \n \n32,422\n \n \n \n32,566\n \n\nTotal current liabilities\n\n \n \n2,085,229\n \n \n \n2,538,872\n \n\nLong-term liabilities:\n\n \n \n \n \n \n \n \n \n\nDeferred tax liability, net\n\n \n \n407,901\n \n \n \n420,128\n \n\nUncertain tax position liability\n\n \n \n181,824\n \n \n \n370,454\n \n\nOperating lease obligation – net of current position\n\n \n \n60,550\n \n \n \n85,437\n \n\nTotal liabilities\n\n \n \n2,735,504\n \n \n \n3,414,891\n \n\nCommitments and contingencies (Note 9.)\n\n \n \n\n \n \n \n\n \n\nShareholders’ equity:\n\n \n \n \n \n \n \n \n \n\nSeries A Preferred stock, $0.001 par value, 5,000,000 shares authorized; no shares issued and outstanding at December 31, 2025 and 2024\n\n \n \n-\n \n \n \n-\n \n\nCommon stock, $0.001 par value, 25,000,000 shares authorized; 8,527,467shares issued and 8,379,834 shares outstanding December 31, 2025 and 8,213,533 shares issued and 8,067,333 shares outstanding and December 31, 2024\n\n \n \n8,528\n \n \n \n8,214\n \n\nAccrued common stock bonus\n\n \n \n124,709\n \n \n \n193,246\n \n\nAdditional paid-in capital\n\n \n \n74,579,428\n \n \n \n73,640,538\n \n\nAccumulated other comprehensive income\n\n \n \n240,700\n \n \n \n226,031\n \n\nAccumulated deficit\n\n \n \n(69,242,269\n)\n \n \n(68,874,026\n)\n\nCommon stock in treasury, at cost, 147,633 shares at December 31, 2025 and 143,637 shares at December 31, 2024\n\n \n \n(168,836\n)\n \n \n(168,836\n)\n\nTotal shareholders’ equity\n\n \n \n5,542,260\n \n \n \n5,025,167\n \n\n \n \n \n \n \n \n \n \n \n\nTotal liabilities and shareholders’ equity\n\n \n$\n8,277,764\n \n \n$\n8,440,058\n \n\n \n\nSee accompanying notes to consolidated financial statements\n\n \n\nF-2\n\n \n\n \n\n \n\n**PAID, INC. & SUBSIDIARIES**\n\n**CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME**\n\n**FOR THE YEARS ENDED DECEMBER 31,**\n\n \n\n \n \n\n**2025**\n\n \n \n\n**2024**\n\n \n\n \n \n \n \n \n \n \n \n \n\nRevenues, net\n\n \n$\n20,708,235\n \n \n$\n18,585,525\n \n\nCost of revenues\n\n \n \n16,063,440\n \n \n \n14,514,108\n \n\nGross profit\n\n \n \n4,644,795\n \n \n \n4,071,417\n \n\nOperating expenses:\n \n \n \n \n \n \n \n \n\nSalaries and related\n\n \n \n2,395,910\n \n \n \n2,060,956\n \n\nGeneral and administrative\n\n \n \n1,748,422\n \n \n \n1,975,740\n \n\nAmortization of intangible assets\n\n \n \n286,785\n \n \n \n292,528\n \n\nShare-based compensation\n\n \n \n868,455\n \n \n \n235,575\n \n\nTotal operating expenses\n\n \n \n5,299,572\n \n \n \n4,564,799\n \n\nLoss from operations\n\n \n \n(654,777\n)\n \n \n(493,382\n)\n\n \n \n \n \n \n \n \n \n \n\nOther income (expense):\n\n \n \n \n \n \n \n \n \n\nInterest income\n\n \n \n36,123\n \n \n \n175,133\n \n\nOther income\n\n \n \n14,397\n \n \n \n1,040,792\n \n\nTotal other income\n\n \n \n50,520\n \n \n \n1,215,925\n \n\nIncome before income (loss) tax (benefit) provision\n\n \n \n(604,257\n)\n \n \n722,543\n \n\nIncome tax (benefit) provision\n\n \n \n(236,014\n)\n \n \n(41,049\n)\n\nNet income (loss)\n\n \n$\n(368,243\n)\n \n$\n763,592\n \n\n \n \n \n \n \n \n \n \n \n\nNet income (loss) per share – basic\n\n \n$\n(0.04\n)\n \n$\n0.09\n \n\nNet income (loss) per share – diluted\n\n \n$\n(0.04\n)\n \n$\n0.09\n \n\n \n \n \n \n \n \n \n \n \n\nWeighted average number of common shares outstanding – basic\n\n \n \n8,421,254\n \n \n \n8,054,400\n \n\nWeighted average number of common shares outstanding – diluted\n\n \n \n8,421,254\n \n \n \n8,074,685\n \n\n \n \n \n \n \n \n \n \n \n\nConsolidated statements of comprehensive income:\n\n \n \n \n \n \n \n \n \n\nNet income (loss)\n\n \n$\n(368,243\n)\n \n$\n763,592\n \n\nOther comprehensive income (loss):\n\n \n \n \n \n \n \n \n \n\nForeign currency translation adjustments\n\n \n \n14,669\n \n \n \n(116,937\n)\n\nComprehensive income (loss)\n\n \n$\n(353,574\n)\n \n$\n646,655\n \n\n \n\nSee accompanying notes to consolidated financial statements\n\n \n\nF-3\n\n \n\n \n\n**PAID, INC. & SUBSIDIARIES**\n\n**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS**’** EQUITY**\n\n**FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024**\n\n \n\n \n \n\nCommon Stock\n\n \n \n\nAccrued\n\nCommon\n\n \n \n\nAdditional\n\nPaid-in\n\n \n \n\nAccumulated\n\nOther\n\nComprehensive\n\n \n \n\nAccumulated\n\n \n \n\nTreasury Stock\n\n \n \n\n \n\n \n\n \n \n\nShares\n\n \n \n\nAmount\n\n \n \nStock Bonus\n \n \nCapital\n \n \nIncome\n \n \nDeficit\n \n \n\nShares\n\n \n \n\nAmount\n\n \n \nTotal\n \n\nBalance, January 1, 2024, as corrected\n\n \n \n8,154,474\n \n \n$\n8,154\n \n \n$\n84,576\n \n \n$\n73,505,439\n \n \n$\n342,968\n \n \n$\n(69,637,618\n)\n \n \n(143,637\n)\n \n$\n(164,840\n)\n \n$\n4,138,679\n \n\nForeign currency translation adjustment\n\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n(116,937\n)\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n(116,937\n)\n\nIssuance of common stock for accrued bonus\n\n \n \n54,559\n \n \n \n55\n \n \n \n(84,576\n)\n \n \n84,521\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n\nShare-based compensation expense\n\n \n \n-\n \n \n \n-\n \n \n \n193,246\n \n \n \n46,195\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n239,441\n \n\nIssuance of common stock for bonus\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n\nOption exercise\n\n \n \n4,500\n \n \n \n5\n \n \n \n-\n \n \n \n4,383\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n4,388\n \n\nPurchase of treasury stock\n\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n(3,996\n)\n \n \n(3,996\n)\n \n \n(3,996\n)\n\nNet income\n\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n763,592\n \n \n \n-\n \n \n \n-\n \n \n \n763,592\n \n\nBalance December 31, 2024\n\n \n \n8,213,533\n \n \n \n8,214\n \n \n \n193,246\n \n \n \n73,640,538\n \n \n \n226,031\n \n \n \n(68,874,026\n)\n \n \n(147,633\n)\n \n \n(168,836\n)\n \n \n5,025,167\n \n\nForeign currency translation adjustment\n\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n14,669\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n14,669\n \n\nIssuance of common stock for accrued bonus\n\n \n \n62,501\n \n \n \n62\n \n \n \n(193,246\n)\n \n \n193,184\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n\nIssuance of common stock for signing bonus\n\n \n \n250,000\n \n \n \n250\n \n \n \n-\n \n \n \n373,500\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n373,750\n \n\nShare-based compensation expense\n\n \n \n-\n \n \n \n-\n \n \n \n124,709\n \n \n \n369,996\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n494,705\n \n\nOption exercise\n\n \n \n1,433\n \n \n \n2\n \n \n \n-\n \n \n \n2,210\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n2,212\n \n\nNet loss\n\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n(368,243\n)\n \n \n-\n \n \n \n-\n \n \n \n(368,243\n)\n\nBalance December 31, 2025\n\n \n \n8,527,467\n \n \n$\n8,528\n \n \n$\n124,709\n \n \n$\n74,579,428\n \n \n$\n240,700\n \n \n$\n(69,242,269\n)\n \n \n(147,633\n)\n \n$\n(168,836\n)\n \n$\n5,542,260\n \n\n \n\nSee accompanying notes to consolidated financial statements\n\n \n\nF-4\n\n \n\n \n\n \n\n**PAID, INC. & SUBSIDIARIES**\n\n**CONSOLIDATED STATEMENTS OF CASH FLOWS**\n\n**FOR THE YEARS ENDED DECEMBER 31,**\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\nCash flows from operating activities:\n\n \n \n \n \n \n \n \n \n\nNet income (loss)\n\n \n$\n(368,243\n)\n \n$\n763,592\n \n\nAdjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:\n\n \n \n \n \n \n \n \n \n\nDepreciation and amortization\n\n \n \n289,737\n \n \n \n304,797\n \n\nAmortization of operating lease right-of-use assets\n\n \n \n30,656\n \n \n \n13,710\n \n\nAccretion of discount on note receivable\n\n \n \n-\n \n \n \n(1,048,402\n)\n\nShare-based compensation\n\n \n \n868,455\n \n \n \n235,575\n \n\nDeferred income taxes\n\n \n \n(236,014\n)\n \n \n(41,504\n)\n\nInterest and default income accrued on note receivable\n\n \n \n(36,123\n)\n \n \n(156,410\n)\n\nProvision for bad debts\n\n \n \n40,072\n \n \n \n-\n \n\nChanges in assets and liabilities:\n\n \n \n \n \n \n \n \n \n\nAccounts receivable\n\n \n \n(137,724\n)\n \n \n(4,109\n)\n\nPrepaid expenses and other current assets\n\n \n \n78,226\n \n \n \n(318,872\n)\n\nAccounts payable\n\n \n \n(375,800\n)\n \n \n286,052\n \n\nAccrued expenses\n\n \n \n(115,426\n)\n \n \n46,953\n \n\nContract liabilities\n\n \n \n(60,615\n)\n \n \n376,972\n \n\nOperating lease obligations\n\n \n \n(30,372\n)\n \n \n(10,711\n)\n\nNet cash provided by (used in) operating activities\n\n \n \n(53,171\n)\n \n \n447,643\n \n\nCash flows from investing activities:\n\n \n \n \n \n \n \n \n \n\nIssuance of notes receivable\n\n \n \n(150,000\n)\n \n \n(750,000\n)\n\nPurchase of property and equipment\n\n \n \n(2,469\n)\n \n \n(6,526\n)\n\nNet cash used in investing activities\n\n \n \n(152,469\n)\n \n \n(756,526\n)\n\nCash flows from financing activities:\n\n \n \n \n \n \n \n \n \n\nProceeds from option exercise\n\n \n \n2,212\n \n \n \n4,388\n \n\nRepurchase of common stock\n\n \n \n-\n \n \n \n(3,996\n)\n\nNet cash provided by financing activities\n\n \n \n2,212\n \n \n \n392\n \n\nEffect of exchange rate changes on cash and cash equivalents\n\n \n \n26,522\n \n \n \n(138,537\n)\n\n \n \n \n \n \n \n \n \n \n\nNet change in cash and cash equivalents\n\n \n \n(176,906\n)\n \n \n(447,028\n)\n\n \n \n \n \n \n \n \n \n \n\nCash and cash equivalents, beginning of year\n\n \n \n1,284,965\n \n \n \n1,731,993\n \n\n \n \n \n \n \n \n \n \n \n\nCash and cash equivalents, end of year\n\n \n$\n1,108,059\n \n \n$\n1,284,965\n \n\n \n \n \n \n \n \n \n \n \n\nSUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION\n\n \n \n \n \n \n \n \n \n\nCash paid during the year for:\n\n \n \n \n \n \n \n \n \n\nIncome taxes\n\n \n$\n685\n \n \n$\n456\n \n\nInterest\n\n \n$\n-\n \n \n$\n-\n \n\nSUPPLEMENTAL DISCLOSURES OF NON-CASH ITEMS\n\n \n \n \n \n \n \n \n \n\nIncrease in note receivable for reimbursable expenses\n\n \n$\n-\n \n \n$\n50,000\n \n\nIncrease in note receivable for discount\n\n \n$\n-\n \n \n$\n847,193\n \n\nIssuance of common shares in settlement of accrued common stock bonus\n\n \n$\n193,246\n \n \n$\n84,576\n \n\nOperating lease liabilities from obtaining lease right-of-use assets\n\n \n$\n-\n \n \n$\n130,506\n \n\n \n\nSee accompanying notes to consolidated financial statements\n\n \n\nF-5\n\n \n\n \n\n**PAID, INC. & SUBSIDIARIES**\n\n**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n**DECEMBER 31, 2025 AND 2024**\n\n \n\n**NOTE 1. ORGANIZATION**\n\n \n\nPAID, 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.\n\n \n\nShipTime 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.\n\n \n\nPaid 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.\n\n \n\n \n\n**NOTE 2. LIQUIDITY AND MANAGEMENT**’**S PLANS**\n\n \n\nAs 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.\n\n \n\nManagement 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.\n\n \n\nAlthough 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.\n\n \n\n \n\n**NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**\n\n \n\n**Basis of Presentation**\n\n \n\nThe accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).\n\n \n\nF-6\n\n \n\n \n\n**Principles of Consolidation**\n\n \n\nThe 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.\n\n \n\n**Foreign Currency**\n\n \n\nThe 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.\n\n \n\n**Geographic Concentrations**\n\n \n\nThe 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.\n\n \n\nAt December 31, 2025 and 2024, the Company maintained 100% of its net property and equipment in Canada.\n\n \n\n**Comprehensive Income (Loss)**\n\n \n\nComprehensive 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).\n\n \n\n**Use of Estimates**\n\n \n\nThe 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.\n\n \n\n**Fair Value Measurements**\n\n \n\nThe 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:\n\n \n\nLevel 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;\n\n \n\nLevel 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\n\n \n\nLevel 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.\n\n \n\nAt 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.\n\n \n\n**Cash and Cash Equivalents**\n\n \n\nThe Company considers all highly liquid temporary cash investments with initial maturities of three months or less to be cash equivalents.\n\n \n\nF-7\n\n \n\n \n\n**Concentration of Risk**\n\n \n\nThe 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.\n\n \n\nThe 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.\n\n \n\nAs 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.\n\n \n\n**Property and Equipment**\n\n \n\nProperty 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.\n\n \n\n**Right-of-Use Assets**\n\n \n\nA 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.\n\n \n\nRight-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.\n\n \n\nRight-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.\n\n \n\n**Intangible Assets**\n\n \n\nIntangible 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.\n\n \n\n**Long-Lived Assets**\n\n \n\nThe 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.\n\n \n\nF-8\n\n \n\n \n\n**Revenue Recognition**\n\n \n\nThe Company generates revenues principally from fees for coordinating shipping services, brewery management software subscriptions, eCommerce services and client services (see Note 4).\n\n \n\n**Cost of Revenues**\n\n \n\nCost of revenues includes carrier services, web hosting, data storage, commissions, carrier insurance costs and merchant processing interchange fees.\n\n \n\n**Operating Expenses**\n\n \n\nOperating expenses include indirect expenses, including credit card processing fees, marketing, payroll, travel, facility costs, amortization of intangible assets and other general and administrative expenses.\n\n \n\n**Advertising**\n\n \n\nAdvertising 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.\n\n \n\n**Share-Based Compensation**\n\n \n\nThe 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.\n\n \n\nThe 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%.\n\n \n\nShare-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.\n\n \n\nSince 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.\n\n \n\n**Income Taxes**\n\n \n\nThe 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.\n\n \n\nF-9\n\n \n\n \n\nThe 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).\n\n \n\nThe Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.\n\n \n\nThe Company is subject to taxation in the U.S., and Canada and various state jurisdictions.\n\n \n\n**Income (Loss) Per Common Share**\n\n \n\nBasic 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.\n\n \n\nThe following is a reconciliation of the numerators and denominators of the basic and diluted income per share computations for the years ended December 31:\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\nNumerator:\n \n \n \n \n \n \n \n \n\nNet income (loss)\n\n \n$\n(368,243\n)\n \n$\n763,592\n \n\nDenominator:\n \n \n \n \n \n \n \n \n\nBasic weighted-average shares outstanding\n\n \n \n8,421,254\n \n \n \n8,054,400\n \n\nEffect of dilutive securities\n\n \n \n-\n \n \n \n20,285\n \n\nDiluted weighted-average shares outstanding\n\n \n \n8,421,254\n \n \n \n8,074,685\n \n\nNet income (loss) per share – basic\n\n \n$\n(0.04\n)\n \n$\n0.09\n \n\nNet income (loss) per share – diluted\n\n \n$\n(0.04\n)\n \n$\n0.09\n \n\n \n\n**Segment Reporting**\n\n \n\nThe Company reports information about segments of its business in its annual consolidated financial statements and reports selected segment information in its quarterly reports issued to shareholders. The Company also reports on its entity-wide disclosures about the products and services it provides and reports revenues and its major customers. The Company’s four reportable segments are managed separately based on fundamental differences in their operations. At December 31, 2025, the Company operated in the following four reportable segments:\n\n \n\n \n\na)\n\nClient services;\n\n \n\nb)\n\neCommerce services;\n\n \n\nc)\n\nShipping coordination and label generation services; and\n\n \n\nd)\n\nCorporate operations.\n\n \n\nThe Company evaluates performance and allocates resources based on operating income. The accounting policies of the reportable segments are the same as those described in this summary of significant accounting policies. The Company’s chief operating decision maker is the Chief Executive Officer/Chief Financial Officer.\n\n \n\nF-10\n\n \n\n \n\nThe following table compares total revenues for the years indicated.\n\n \n\n \n \n\nYears Ended\n\n \n\n \n \n\nDecember 31, 2025\n\n \n \n\nDecember 31, 2024\n\n \n\nClient services\n\n \n$\n3,863\n \n \n$\n17,815\n \n\neCommerce services\n\n \n \n26,540\n \n \n \n68,097\n \n\nShipping coordination and label generation services\n\n \n \n20,677,832\n \n \n \n18,499,613\n \n\nTotal revenues, net\n\n \n$\n20,708,235\n \n \n$\n18,585,525\n \n\n \n\nThe following table compares total income (loss) from operations for the years indicated.\n\n \n\n \n \n\nYears Ended\n\n \n\n \n \n\nDecember 31, 2025\n\n \n \n\nDecember 31, 2024\n\n \n\nClient services\n\n \n$\n(4,426\n)\n \n$\n4,658\n \n\neCommerce services\n\n \n \n(136,256\n)\n \n \n(298,020\n)\n\nShipping coordination and label generation services\n\n \n \n(254,177\n)\n \n \n(66,664\n)\n\nCorporate operations\n\n \n \n(259,918\n)\n \n \n(133,356\n)\n\nTotal income (loss) from operations\n\n \n$\n(654,777\n)\n \n$\n(493,382\n)\n\n \n\nDuring 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.\n\n \n\n**Recent Accounting Pronouncements**\n\n \n\nAccounting 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.\n\n \n\nIn 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.\n\n \n\n \n\n**NOTE 4. REVENUE FROM CONTRACTS WITH CUSTOMERS**\n\n \n\nThe 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.\n\n \n\n*Nature of Goods and Services*\n\n \n\nFor 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).\n\n \n\nF-11\n\n \n\n \n\nFor 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.\n\n \n\neCommerce 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.\n\n \n\n*Revenue Disaggregation*\n\n \n\nThe Company operates in four reportable segments (see Note 3).\n\n \n\n*Performance Obligations*\n\n \n\nAt 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.\n\n \n\nFor 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.\n\n \n\nMerchant 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.\n\n \n\nThe Company has no shipping and handling activities related to contracts with customers.\n\n \n\nRevenues are recognized net of any taxes collected from customers, which are subsequently remitted to government authorities.\n\n \n\n*Significant Payment Terms*\n\n \n\nPursuant 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.\n\n \n\n*Measurement of Credit Losses*\n\n \n\nThe 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.\n\n \n\nF-12\n\n \n\n \n\n*Variable Consideration*\n\n \n\nIn 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.\n\n \n\nVariable 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.\n\n \n\nRevenues are recorded net of variable considerations, such as rebates, refunds and cancellations.\n\n \n\n*Warranties*\n\n \n\nThe 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.\n\n \n\n*Contract Assets*\n\n \n\nTypically, 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.\n\n \n\n*Contract Liabilities (Deferred Revenue)*\n\n \n\nContract 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.\n\n \n\n \n\n**NOTE 5. NOTE RECEIVABLE**\n\n \n\nOn 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.\n\n \n\nF-13\n\n \n\n \n\nThe 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.\n\n \n\nThe 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.\n\n \n\nThe 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.\n\n \n\nInterest of $36,123 has been recorded based on the outstanding balance of the $400,000 note for the year ending December 31, 2025.\n\n \n\n \n\n**NOTE 6. PROPERTY AND EQUIPMENT**\n\n \n\nAt December 31, property and equipment consisted of the following:\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\nComputer equipment and software\n\n \n$\n139,623\n \n \n$\n138,964\n \n\nOffice furniture and equipment\n\n \n \n66,037\n \n \n \n63,307\n \n\nWebsite development costs\n\n \n \n396,128\n \n \n \n391,358\n \n\n \n \n \n601,788\n \n \n \n593,629\n \n\nAccumulated depreciation\n\n \n \n(597,692\n)\n \n \n(589,259\n)\n\n \n \n$\n4,096\n \n \n$\n4,370\n \n\n \n\nDepreciation expense of property and equipment for the years ended December 31, 2025 and 2024 amounted to $2,953 and $12,270, respectively.\n\n \n\n \n\n**NOTE 7. INTANGIBLE ASSETS**\n\n \n\nThe Company holds several patents for the real-time calculation of shipping costs for items purchased through online auctions using a zip code as a destination location indicator. It includes shipping charge calculations across multiple carriers and accounts for additional characteristics of the item being shipped, such as weight, special packaging or handling, and insurance costs. These patents help facilitate rapid and accurate estimation of shipping costs across multiple shipping carriers and also include real-time calculation of shipping.\n\n \n\nIn addition, the Company has various intangible assets from past business combinations.\n\n \n\nF-14\n\n \n\n \n\nAt December 31, 2025, intangible assets consisted of the following:\n\n \n\n \n \n\nPatents\n\n \n \n\nTrade Name\n\n \n \n\nTechnology &\n\nSoftware\n\n \n \n\nCustomer\n\nRelationships\n\n \n \n\nTotal\n\n \n\nGross carrying amount\n\n \n$\n16,000\n \n \n$\n780,931\n \n \n$\n582,487\n \n \n$\n4,597,547\n \n \n$\n5,976,965\n \n\nAccumulated amortization\n\n \n \n(16,000\n)\n \n \n(780,931\n)\n \n \n(582,487\n)\n \n \n(2,838,941\n)\n \n \n(4,218,359\n)\n\n \n \n$\n-\n \n \n$\n-\n \n \n$\n-\n \n \n$\n1,758,606\n \n \n$\n1,758,606\n \n\n \n\nAt December 31, 2024, intangible assets consisted of the following:\n\n \n\n \n \n\nPatents\n\n \n \n\nTrade Name\n\n \n \n\nTechnology &\n\nSoftware\n\n \n \n\nCustomer\n\nRelationships\n\n \n \n\nTotal\n\n \n\nGross carrying amount\n\n \n$\n16,000\n \n \n$\n743,628\n \n \n$\n558,664\n \n \n$\n4,388,146\n \n \n$\n5,706,438\n \n\nAccumulated amortization\n\n \n \n(16,000\n)\n \n \n(743,628\n)\n \n \n(558,664\n)\n \n \n(2,435,250\n)\n \n \n(3,753,542\n)\n\n \n \n$\n-\n \n \n$\n-\n \n \n$\n-\n \n \n$\n1,952,896\n \n \n$\n1,952,896\n \n\n \n\nAmortization expense of intangible assets for the years ended December 31, 2025 and 2024 was $286,785 and $292,528, respectively.\n\n \n\nAmortization of intangible assets for the next five years ending December 31 are as follows:\n\n \n\nYear Ended December 31,\n\n \n \n \n \n\n2026\n\n \n$\n278,881\n \n\n2027\n\n \n \n278,881\n \n\n2028\n\n \n \n278,881\n \n\n2029\n\n \n \n278,881\n \n\n2030\n\n \n \n278,881\n \n\nThereafter\n\n \n \n364,201\n \n\nTotal amortization\n\n \n$\n1,758,606\n \n\n \n\n \n\n**NOTE 8. ACCRUED EXPENSES**\n\n \n\nAt December 31, accrued expenses consist of the following:\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\nPayroll and related costs\n\n \n$\n208,087\n \n \n$\n209,434\n \n\nProfessional and consulting fees\n \n \n22,646\n \n \n \n-\n \n\nRoyalties\n\n \n \n40,075\n \n \n \n40,075\n \n\nAccrued cost of revenues\n\n \n \n39,527\n \n \n \n166,765\n \n\nSales tax\n\n \n \n22,228\n \n \n \n22,228\n \n\nOther\n\n \n \n410\n \n \n \n410\n \n\nTotal\n\n \n$\n332,973\n \n \n$\n438,912\n \n\n \n\n \n\n**NOTE 9. COMMITMENTS AND CONTINGENCIES**\n\n \n\n**Legal Matters**\n\n \n\nIn 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.\n\n \n\nF-15\n\n \n\n \n\n**Indemnities and Guarantees**\n\n \n\nThe 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.\n\n \n\n \n\n**NOTE 10. SHAREHOLDERS**’**EQUITY**\n\n \n\n**Preferred Stock**\n\n \n\nThe 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.\n\n \n\nThe 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.\n\n \n\n**Common Stock**\n\n \n\nIn 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.\n\n \n\nOn 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.\n\n \n\nOn 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.\n\n \n\nF-16\n\n \n\n \n\n**Share-Based Incentive Plans**\n\n \n\nDuring 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.\n\n \n\nOn 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.\n\n \n\nOn 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 $2,212.\n\n \n\n**Active Plans:**\n\n \n\n***2018 Plan***\n\n \n\nOn March 23, 2018, the Company adopted the 2018 Non-Qualified Stock Option Plan (the “2018 Plan”). The purpose of the 2018 Plan is to provide long-term incentives and rewards to those employees of the Company, and any other individuals, whether directors, consultants or advisors who are in a position to contribute to the long-term success and growth of the Company. The options granted have a 10-year contractual term and have a vesting period that ranges from one hundred percent on the date of the grant to fully vest over a two-year period. There are currently 317,025 shares reserved for future issuance under this plan. Information with respect to stock options granted under this plan during the year ended December 31, 2025 is as follows:\n\n \n\n \n \n\nNumber of\n\nshares\n\n \n \n\nWeighted\n\naverage\n\nexercise\n\nprice per\n\nshare\n\n \n\nOptions outstanding at January 1, 2025\n\n \n \n444,360\n \n \n$\n2.73\n \n\nGranted\n\n \n \n95,548\n \n \n \n3.02\n \n\nCancelled/Expired\n\n \n \n-\n \n \n \n-\n \n\nExercised\n\n \n \n(1,433\n)\n \n \n1.55\n \n\nOptions outstanding at December 31, 2025\n\n \n \n538,475\n \n \n$\n2.79\n \n\n \n\nF-17\n\n \n\n \n\n**2012 Plan**\n\n \n\nOn October 15, 2012, the Company adopted the 2012 Non-Qualified Stock Option Plan (the “2012 Plan”). The purpose of the 2012 Plan is to provide long-term incentives and rewards to those employees of the Company, and any other individuals, whether directors, consultants or advisors who are in a position to contribute to the long-term success and growth of the Company. The options granted have a 10-year contractual term and vest one hundred percent on the date of grant. There are no shares reserved for future issuance under this plan. Information with respect to stock options granted under this plan during the year ended December 31, 2025 is as follows:\n\n \n\n \n \n\nNumber of\n\nshares\n\n \n \n\nWeighted\n\naverage\n\nexercise\n\nprice per\n\nshare\n\n \n\nOptions outstanding at January 1, 2025\n\n \n \n4,000\n \n \n$\n0.98\n \n\nGranted\n\n \n \n-\n \n \n \n-\n \n\nCancelled\n\n \n \n-\n \n \n \n-\n \n\nExercised\n\n \n \n-\n \n \n \n-\n \n\nOptions outstanding at December 31, 2025\n\n \n \n4,000\n \n \n$\n0.98\n \n\n \n\n**2011 Plan**\n\n \n\nOn 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 $3.30 per share, to acquire the number of shares of the Company’s common stock equal to their gross compensation divided by the fair value of the stock on the date of grant. The options granted have a 10-year contractual term and have vesting periods that range from one hundred percent on the date of grant to one-third immediately, one-third vesting in 18 months and the final one-third vesting in 36 months from the date of the grant. There are no shares reserved for issuance under this plan. Information with respect to stock options granted under this plan during the year ended December 31, 2025 is as follows:\n\n \n\n \n \n\nNumber of\n\nshares\n\n \n \n\nWeighted\n\naverage\n\nexercise\n\nprice per\n\nshare\n\n \n\nOptions outstanding at January 1, 2025\n\n \n \n40,500\n \n \n$\n3.13\n \n\nGranted\n\n \n \n-\n \n \n \n-\n \n\nCancelled\n\n \n \n-\n \n \n \n-\n \n\nExercised\n\n \n \n-\n \n \n \n-\n \n\nOptions outstanding at December 31, 2025\n\n \n \n40,500\n \n \n$\n3.13\n \n\n \n\n**Fair value of issuances**\n\n \n\nThe 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).\n\n \n\n \n \n2025\n \n\nExpected term (based upon historical experience) (in years)\n\n \n \n5.84\n \n\nExpected volatility\n\n \n \n92\n%\n\nExpected dividends\n\n \n\nNone\n\n \n\nRisk free interest rate\n\n \n \n3.95\n%\n\n \n\nFor 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.\n\n \n\nThe Company has an unrecognized share-based compensation expense of $8,946 for options outstanding as of December 31, 2025 which will be recognized over the weighted average period of approximately 1.16 years.\n\n \n\nF-18\n\n \n\n \n\nSummary of all stock option plans activity during the year ended December 31, 2025 is as follows:\n\n \n\n \n \n\nNumber of\n\nShares\n\n \n \n\nWeighted\n\nAverage\n\nPrice\n\n \n \n\nWeighted\n\nAverage\n\nRemaining\n\nContractual\n\nLife (In\n\nYears)\n\n \n \n\nAggregate\n\nIntrinsic\n\nValue\n\n \n\nOptions outstanding at January 1, 2025\n\n \n \n488,860\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nGranted\n\n \n \n95,548\n \n \n \n3.02\n \n \n \n \n \n \n \n \n \n\nCancelled/Expired\n\n \n \n-\n \n \n \n-\n \n \n \n \n \n \n \n \n \n\nExercised\n\n \n \n(1,433\n)\n \n \n1.55\n \n \n \n \n \n \n \n \n \n\nOptions outstanding and expected to vest at December 31, 2025\n\n \n \n582,975\n \n \n$\n2.80\n \n \n \n5.35\n \n \n$\n222,005\n \n\nOptions exercisable at December 31, 2025\n\n \n \n549,634\n \n \n$\n2.71\n \n \n \n5.10\n \n \n$\n209,696\n \n\n \n\nThe 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 $8,708, respectively.\n\n \n\n \n\n**NOTE 11. INCOME TAXES**\n\n \n\nThe Company’s income (loss) before income tax (benefit) provision includes the following components for the years ended December 31:\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\nU.S.\n\n \n$\n(363,791\n)\n \n$\n779,605\n \n\nForeign\n\n \n \n(240,466\n)\n \n \n(57,062\n)\n\n \n \n$\n(604,257\n)\n \n$\n722,543\n \n\n \n\nThe Company is subject to taxation in the U.S., Canada, and Massachusetts. The (benefit) provision for income taxes for the years ended December 31 are summarized below:\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\nCurrent:\n\n \n \n \n \n \n \n \n \n\nFederal\n\n \n$\n-\n \n \n$\n-\n \n\nState\n\n \n \n-\n \n \n \n456\n \n\nForeign\n\n \n \n(201,735\n)\n \n \n115,599\n \n\nTotal current\n\n \n \n(201,735\n)\n \n \n116,055\n \n\n \n \n \n \n \n \n \n \n \n\nDeferred:\n\n \n \n \n \n \n \n \n \n\nFederal\n\n \n \n-\n \n \n \n-\n \n\nState\n\n \n \n-\n \n \n \n-\n \n\nForeign\n\n \n \n(34,279\n)\n \n \n(157,104\n)\n\nTotal deferred\n\n \n \n(34,279\n)\n \n \n(157,104\n)\n\nIncome tax (benefit) provision\n\n \n$\n(236,014\n)\n \n$\n(41,049\n)\n\n \n\nF-19\n\n \n\n \n\nA reconciliation of the expected income tax (benefit) provision at the federal statutory rate of 21% for the years ended December 31, 2025, and the income tax (benefit) provision reported in the financial statements is as follows:\n\n \n\n \n \n\nDecember 31, 2025\n\nAmount\n\n \n \n\nAs a % of net income before taxes\n\n \n\n \n \n \n \n \n \n \n \n \n\nNet income (loss) before taxes\n\n \n$\n(604,257\n)\n \n \n \n \n\nU.S. federal statutory tax rate\n\n \n \n(126,894\n)\n \n \n21.00\n%\n\nState and local income taxes, net of federal income tax effect*\n\n \n \n484\n \n \n \n(0.08\n)%\n\nForeign tax effects\n\n \n \n \n \n \n \n \n \n\nCanada\n\n \n \n \n \n \n \n \n \n\nForeign rate differential\n\n \n \n(7,907\n)\n \n \n1.31\n%\n\nPrior period adjustments\n\n \n \n52,445\n \n \n \n(8.68\n)%\n\nOther\n\n \n \n6,070\n \n \n \n(1.00\n)%\n\nEffect of cross-border tax laws\n\n \n \n \n \n \n \n \n \n\nGlobal intangible low-taxed income\n\n \n \n319,475\n \n \n \n(52.87\n)%\n\nChanges in valuation allowances\n\n \n \n(566,589\n)\n \n \n93.77\n%\n\nNon-taxable or non-deductible items\n\n \n \n \n \n \n \n \n \n\nSection 162(m) disallowance\n\n \n \n43,302\n \n \n \n(7.17\n)%\n\nStock compensation\n\n \n \n(49,400\n)\n \n \n8.18\n%\n\nChanges in unrecognized tax benefits\n\n \n \n(255,839\n)\n \n \n42.34\n%\n\nOther\n\n \n \n \n \n \n \n \n \n\nAttributes expirations\n\n \n \n304,229\n \n \n \n(50.35\n)%\n\nPrior period adjustments\n\n \n \n26,726\n \n \n \n(4.42\n)%\n\nOther\n\n \n \n17,886\n \n \n \n(2.96\n)%\n\nEffective income tax rate\n\n \n$\n(236,014\n)\n \n \n39.06\n%\n\n \n\n*State taxes in Massachusetts made up the majority (greater than 50 percent) of the tax effect in this category.\n\n \n\nAs previously disclosed for the periods ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows: \n\n \n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\nU.S. federal statutory tax rate\n\n \n \n21.00\n\n%\n\n \n \n21.00\n\n%\n\nState tax benefit, net\n\n \n \n(0.09\n\n)%\n\n \n \n7.73\n\n%\n\nStock compensation\n\n \n \n9.68\n\n%\n\n \n \n1.00\n\n%\n\nForeign rate differential\n\n \n \n1.55\n%\n \n \n(0.42\n)%\n\nAttributes expiration\n\n \n \n(59.61\n\n)%\n\n \n \n36.01\n\n%\n\nReturns to Provision\n\n \n \n(15.51\n\n)%\n\n \n \n0.07\n\n%\n\nOther\n\n \n \n(0.96\n\n)%\n\n \n \n2.97\n\n%\n\nNOL Adjustment\n\n \n \n-\n\n%\n\n \n \n(10.90\n\n)%\n\nUnrecognized tax benefit\n\n \n \n50.13\n\n%\n\n \n \n3.82\n\n%\n\nGILTI\n\n \n \n(62.60\n\n)%\n\n \n \n44.93\n\n%\n\nSection 162(m) disallowance\n\n \n \n(8.48\n)%\n \n \n-\n\n%\n\nValuation allowance\n\n \n \n111.01\n\n%\n\n \n \n(111.90\n\n)%\n\nEffective income tax rate\n\n \n \n46.12\n\n%\n\n \n \n(5.69\n\n)%\n\n \n\nF-20\n\n \n\n \n\nDeferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred tax liabilities are as follows as of December 31:\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\nDeferred taxes:\n\n \n \n \n \n \n \n \n \n\nNOLs\n\n \n$\n5,979,666\n \n \n$\n6,487,219\n \n\nInventory and other reserves\n\n \n \n7,844\n \n \n \n31,340\n \n\nStock based compensation expense\n\n \n \n200,264\n \n \n \n272,285\n \n\nAccruals\n\n \n \n24,239\n \n \n \n18,207\n \n\nOther\n\n \n \n96\n \n \n \n96\n \n\nTotal deferred tax assets\n\n \n \n6,212,109\n \n \n \n6,809,147\n \n\nDepreciation and amortization\n\n \n \n(442,263\n)\n \n \n(484,941\n)\n\nRight-of-use assets\n\n \n \n-\n \n \n \n-\n \n\nValuation allowance\n\n \n \n(6,177,747\n)\n \n \n(6,744,334\n)\n\nNet deferred tax liabilities\n\n \n$\n(407,901\n)\n \n$\n(420,128\n)\n\n \n\nRealization 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.\n\n \n\nAs 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.\n\n \n\nUtilization 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.\n\n \n\nA 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.\n\n \n\nThe 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.\n\n \n\nF-21\n\n \n\n \n\nThe 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.\n\n \n\nThe 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:\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\nGross unrecognized tax benefits at the beginning of the year\n\n \n$\n691,481\n \n \n$\n707,632\n \n\nIncreases related to current year positions\n\n \n \n-\n \n \n \n-\n \n\nIncreases (decreases) related to prior year positions\n\n \n \n34,720\n \n \n \n(2,116\n)\n\nExpiration of unrecognized tax benefits\n\n \n \n(176,578\n)\n \n \n(14,035\n)\n\nGross unrecognized tax benefits at the end of the year\n\n \n$\n549,623\n \n \n$\n691,481\n \n\n \n\nThe amount of unrecognized tax benefits that would impact the Company’s effective tax rate, if recognized, is $563,440 (including estimated penalties and interest).\n\n \n\nThe 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.\n\n \n\nAs of December 31, 2025 and 2024 the Company accrued $13,818 and $37,102 of interest and penalties related to foreign income taxes. The Company does not believe its unrecognized tax benefits will change significantly during the next twelve months.\n\n \n\n \n\n \n\n**NOTE 12. LEASES**\n\n \n\nWe have an operating lease for our corporate office in Canada located at 700 Dorval Drive in Oakville Ontario. Our lease has a remaining lease term of forty-four months. Future renewal options are not likely to be executed as of the balance sheet date and are excluded from right-of-use assets and related lease liabilities.\n\n \n\nWe report operating lease assets, as well as operating lease current and noncurrent obligations on our consolidated balance sheets for the right to use the office space in our business.\n\n \n\nThe components of lease expense for the years ended December 31, were as follows:\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\nOperating lease cost\n\n \n$\n34,148\n \n \n$\n17,079\n \n\n \n\nF-22\n\n \n\n \n\nSupplemental balance sheet information related to leases was as follows:\n\n \n\n \n \n\nDecember 31, 2025\n\n \n \n\nDecember 31, 2024\n\n \n\nOperating leases:\n\n \n \n \n \n \n \n \n \n\nOperating lease right-of-use assets\n\n \n$\n89,685\n \n \n$\n115,150\n \n\nCurrent portion of operating lease obligations\n\n \n$\n32,422\n \n \n$\n32,566\n \n\nOperating lease obligations, net of current portion\n\n \n \n60,550\n \n \n \n85,437\n \n\nTotal operating lease liabilities\n\n \n$\n92,972\n \n \n$\n118,003\n \n\n \n\n \n \n\nYear Ended\n\nDecember 31, 2025\n\n \n\nWeighted Average Remaining Lease Term\n\n \n \n \n \n\nOperating lease (in years)\n\n \n \n2.6\n \n\n \n \n \n \n \n\nWeighted Average Discount Rate\n\n \n \n \n \n\nOperating lease\n\n \n \n6.37\n%\n\n \n\nA summary of future minimum payments under non-cancellable operating lease commitment as of December 31, 2025 is as follows:\n\n \n\nYears ending December 31,\n\n \n\nTotal\n\n \n\n2026\n\n \n \n34,952\n \n\n2027\n\n \n \n35,405\n \n\n2028\n\n \n \n23,603\n \n\nTotal lease liabilities\n\n \n$\n93,960\n \n\nLess amount representing interest\n\n \n \n(988\n)\n\nTotal\n\n \n \n92,972\n \n\nLess current portion\n\n \n \n(32,422\n)\n\nLong term portion\n\n \n$\n60,550\n \n\n \n\n \n\n**NOTE 13. RISKS AND UNCERTAINTIES**\n\n \n\nTrade 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.\n\n \n\n \n\n**NOTE 14. SUBSEQUENT EVENTS**\n\n \n\nOn 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.\n\n \n\nOn 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.\n\n \n\nIn 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.\n\n \n\nThe 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.\n\n \n\nF-23"}