PAYD 10-K & 10-Q changes, risk factors and insider trading

To address these risks, we must, among other things, successfully market our e-commerce shopping cart,products, our merchant payment platform and shipping label generation services, continue to develop new relationships with carriers, e-commerce service providers, maintain our customer base, attract significant numbers of new customers, respond to competitive developments, and continue to develop and upgrade our technologies. We cannot offer any assurances that we will be successful in addressing these risks.

You should not rely on the results for any period as an indication of future performance. Our operating results and rate of growth are unpredictable and are expected to fluctuate in the future due to a number ofseveral additional factors, many of which are outside our control. These factors beyond our control include:

As a strategic response to changes in the competitive environment, we may from time to time make certain service, marketing or supply decisions or acquisitions that could have a material adverse effect on our results of operations and financial condition. In 2024,2025, our revenues were derived from our shipping coordination, shipping label generation services, shipping calculator services, and eCommerce solutions.

Growth places a significant strain on our management, operational and financial resources, and has placed significant demands on our management, which currently include two executive officers, two senior executives including a president and chief technical officer, a director of marketing, a vice president of sales and a vice president of finance. In order to manage growth, we will be required to continue to expand existing operations, particularly with respect to enhanced product offerings, customer service and development, to improve existing and implement new operational, financial systems, procedures and controls. In 2024,2025, the Company added several consultants to assist with development of the Paid platformand ShipTime platforms and operational needs and will continue to add technical and marketing personnel.

We believe that our future success will depend upon our ability to identify, attract, hire, train, motivate and retain other highly skilled managerial, accounting, technical consulting, marketing and customer service personnel. The Company has recently been awarded a “Great Place to Work” certification in Canada. We have added fivesix new employees with minimal turnover in the last year. We cannot offer assurances that we will be successful in attracting, assimilating or retaining the necessary personnel, and failure to do so could have an adverse effect on our business.

ShipTime Inc. has developed a SaaS based application, which focuses on the small to medium business segment. This offering allows members to quote, process, generate labels, insure,purchase insurance, 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 businesses and through long standing partnerships with selected associations throughout Canada. Our focus in 20242026 will be to continue to grow this portion of our business.

PAID, Inc. (the “Company”) has developed a full line of SaaS-based business services including PaidPayments, PaidCart, PaidShipping and PaidWeb. These eCommerce services provide commerce solutions to small - and medium-sized businesses by enabling them to use one platform to market their products, sell their goods and services, accept payment, and create repeat sales thoughthrough an online payment processing solution. This capability also provides cost advantages, rapid response to market needs, simplified processes for boarding business and a seamless interface for our merchant customers.

The Company has two notes receivable outstanding that accrue annual interest and penalties for non-payment. The notes are backed by the assets of the debtor and management continues to evaluate the collectability of the notes. The Company has recognized significant gains on interest and penalties, however, as of the year ended 2024, one of the notes is in default.penalties. If the Company determines this note is uncollectible, it could result in a significant loss and subsequent litigation for the Company.

Revenues increased $2,020,696$2,122,710 or 12%11% in 20242025 primarily from a result of the 32% fourth quarter increase in shipping coordination and label generation services due to the impacts of the Canada Post carrier strike. This event has had a significant impact on the entire Canadian transportation industry.

Client services revenues, which include brewery management software and shipping calculator services decreased $16,123$13,951 or 48%78% to $3,863 compared to $17,815 compared to $33,938 in 2023.2024. The decrease was attributable to the cancellationretirement of several clients using ourthe brewery management software and the limited marketing of this segment of the business.

Gross profit increased $285,768$573,378 or 8%14% to $4,644,795 in 2025 compared to $4,071,417 in 20242024. Gross margin decreased to 22% for the year ended 2025 compared to $3,785,648 in 2023. Gross margin remained at 23% for the years ended 2024 and 2023.2024. The increase in gross profit was due to growth of the shipping coordination and label generation service revenues.

Total operating expenses in 20242025 were $4,564,799$5,299,572 compared to $4,373,471$4,564,799 in 2023,2024, an increase of $191,328$734,773 or 4%.16%. The increase is mainly due to the salariesshare-based compensation for newlythe hiredrenewal of one employee contract in addition to the hiring of two new executive level employees and consultants in 2024.2025.

Net other income in 20242025 was $1,215,925$50,520 in 2025 compared to $849,258$1,215,925 in 2023,2024, ana increasedecrease of $366,6671,165,405 or 43%.96%. The 2024 amountother income is made up of a gain of $1,192,182 on the Embolx, Inc. note receivable andwhereas anthe additionalCompany gainhas elected to refrain from recording any revenues from the Embolx note until the end of $25,884 for the notecurrent receivable with 5String Solutions.agreement.

The Company reported a net incomeloss in 20242025 of $763,592$(368,243) compared to $353,214net income of $763,592 for the same period in 2023.2024. The basic income per common share in 20242025 is $0.09($0.04) compared to $0.04$0.09 per common share in 2023.2024.

The Company had cash and cash equivalents of $1,108,059 on December 31, 2025 compared to $1,284,965 on December 31, 2024 compared to $1,731,993 on December 31, 2023.2024. The Company had working capital of (629,467$304,212) on December 31, 20242025 compared to $2,592,522($629,467) on December 31, 2023,2024, aAn decreaseincrease of (3,221,989).$325,255. The decreaseincrease in working capital is primarily attributed to the reclassificationincrease ofin notes receivable and the shortdecrease termin noteaccounts receivablepayable tofor longthe term.year ended 2025.

Comparison of the three months ended MarchJune 31,30, 2026 and 2025.

The following discussion compares the Company's results of operations for the three months ended MarchJune 31,30, 2026, with those for the three months ending MarchJune 31,30, 2025. The Company's condensed consolidated financial statements and notes thereto included elsewhere in this quarterly report contain detailed information that should be referred to in conjunction with the following discussion.

Revenues increased 22%8% in the firstsecond quarter as a result of the shipping coordination and label generation segment of the business. StrategicOngoing strategic sales initiatives and pricing strategies have contributed to the shipping volume increase of 22%8% in firstsecond quarter of 20262026. inThe additionnewly toadded the addition of the new warehousingWarehowz segment whichhas contributed to the overall revenue increase for 2026.

Client services revenues, which included brewery management software and shipping calculator services decreased $2,034$1,829 or 100% to $0 in the firstsecond quarter of 2026 compared to $2,034$1,829 in 2025. The decrease in revenues is due to the retirement of the brewery management software application and the online shipping calculation services. The Company announced the closing of this BeerRun Software in June of 2025.

Shipping coordination and label generation services revenues increased $898,649$418,689 or 21%8% to $5,244,788$5,836,725 in the firstsecond quarter of 2026 compared to $4,346,139$5,418,037 in 2025. The increase is primarily due to additional pricing and sales initiatives.initiatives to attract more businesses to the shipping platform. Additional carriers and customer-focused product enhancements continue to attractstrengthen newour clientsmarket position. The Company has also added a surcharge for invoices paid via credit card in order to theoffset platform.credit card fees paid to our merchant.

Gross profit increased $40,512$22,954 in the firstsecond quarter of 2026 to $1,060,588$1,224,607 compared to $1,020,076$1,201,653 for the same period in 2025. Gross margin decreased 2%1% to 20%21% in the firstsecond quarter of 2026 compared to 22% for the same period in 2025.

Total operating expenses in the firstsecond quarter of 2026 were $1,178,309$1,247,780 compared to $1,179,205$1,608,968 in the firstsecond quarter of 2025, a decrease of $896$361,188 or less22%. thanThe 1%.decrease in operating expenses is related to the share-based compensation recognized for an employee contract renewal in 2025 in addition to fully vested stock options awarded to the Board of Directors.

Net other income in 2026 was $65,664$15,770 compared to $0$10,422 in 2025, an increase of $65,664$5,348 or 100%.51%. The other income in the firstsecond quarter of 2026 was made up of severalbank write offs of aged payablesinterest and accruedinterest expenses.on notes receivable.

The Company recorded a net loss in the firstsecond quarter of 2026 of ($41,531$7,403) compared to a net loss of ($148,773$397,349) for the same period in 2025. The net loss per share for the firstsecond quarter of 2026 was $0.00 and the net loss per share for 2025 was ($0.02$0.05).

A summarized reconciliation of the Company's net loss to cash and cash equivalents used in operating activities for the threesix months ended MarchJune 31,30, 2026 and 2025 is as follows:

The Company had cash and cash equivalents of $951,698$1,078,408 at MarchJune 31,30, 2026, compared to $1,108,059 at December 31, 2025. The Company had a net working capital deficit of $353,993$230,140 at MarchJune 31,30, 2026, an increaseimprovement of $49,781$74,072 compared to the deficit of $304,212 at December 31, 2025. The decrease in net working capital is primarily attributable to the cash on hand and the accounts receivable balance at the end of the firstsecond quarter in 2026.