# EDGAR Filing Document

**Accession Number:** 0001017655
**File Stem:** 0001437749-23-008832
**Filing Date:** 2023-3
**Character Count:** 258805
**Document Hash:** bcf84c9eafcc943a866762324cdeeec2
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-23-008832.hdr.sgml**: 20230331

**ACCESSION NUMBER**: 0001437749-23-008832

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 76

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230331

**DATE AS OF CHANGE**: 20230331

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** PAID INC
- **CENTRAL INDEX KEY:** 0001017655
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-BUSINESS SERVICES, NEC [7389]
- **IRS NUMBER:** 731479833
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-28720
- **FILM NUMBER:** 23787344

**BUSINESS ADDRESS:**
- **STREET 1:** 200 FRIBERG PARKWAY
- **STREET 2:** SUITE 4004
- **CITY:** WESTBOROUGH
- **STATE:** MA
- **ZIP:** 01581
- **BUSINESS PHONE:** 617-861-6050

**MAIL ADDRESS:**
- **STREET 1:** 200 FRIBERG PARKWAY
- **STREET 2:** SUITE 4004
- **CITY:** WESTBOROUGH
- **STATE:** MA
- **ZIP:** 01581

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SALES ONLINE DIRECT INC
- **DATE OF NAME CHANGE:** 19990525

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SECURITIES RESOLUTION ADVISORS INC
- **DATE OF NAME CHANGE:** 19980814

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** ROSE INTERNATIONAL LTD
- **DATE OF NAME CHANGE:** 19960627

payd20221231_10k.htm

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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-K**

☑ **Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

**For the fiscal year ended December 31, 2022**

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

**COMMISSION FILE NUMBER 0-28720**

![image01.jpg](image01.jpg)

**(Exact Name of Registrant as Specified in its Charter)**

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| | |
|:---|:---|
| **Delaware** | **73-1479833** |
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |

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**225 Cedar Hill Street, Marlborough, Massachusetts 01752**

(Address of Principal Executive Offices) (Zip Code)

**(617) 861-6050**

(Registrant's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Act:

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| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol | Name of each exchange on which registered |

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Securities registered under Section 12(g) of the Act:

**<u>Common Stock, $0.001 Par Value</u>**

Indicate by check mark whether the registrant has filed a report on an attestation to its management's assessment of the effectiveness of its internal control of financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☑

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated Filer | ☐ | Non-accelerated filer | ☑ | Smaller reporting company  | ☑ | Emerging Growth Company | ☐ |

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If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to tis managements' assessment of effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) foo the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The aggregate market value of the common stock held by non-affiliates of the registrant based on the last sale price of such stock as reported by the Over-the-Counter Bulletin Board on June 30, 2022 (the last business day of the Registrant's most recently completed second fiscal quarter) was approximately $5,565,883.

As of March 31, 2023, the registrant had 7,993,448 shares of Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

No documents are incorporated by reference into this Annual Report except those Exhibits so incorporated as set forth in the Exhibit Index.

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**PAID, INC.**

**FORM 10-K**

**FOR THE YEAR ENDED DECEMBER 31, 2022**

**<u>**TABLE OF CONTENTS**</u>**

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| | | |
|:---|:---|:---|
| **PART I** | **PART I** |  |
| Item 1. | Business | 1 |
| Item 1A. | Risk Factors | 4 |
| Item 1B. | Unresolved Staff Comments | 11 |
| Item 2. | Properties | 11 |
| Item 3. | Legal Proceedings | 11 |
| Item 4. | Mine Safety Disclosure | 11 |
| **PART II** | **PART II** |  |
| Item 5. | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 11 |
| Item 6. | Reserved |  |
| Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 12 |
| Item 7A. | Quantitative and Qualitative Disclosure about Market Risk | 17 |
| Item 8. | Financial Statements and Supplementary Data | 17 |
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 17 |
| Item 9A. | Controls and Procedures | 17 |
| Item 9B. | Other Information | 21 |
| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 22 |
| **PART III** | **PART III** |  |
| Item 10. | Directors, Executive Officers and Corporate Governance | 22 |
| Item 11. | Executive Compensation | 24 |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 26 |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 26 |
| Item 14. | Principal Accountant Fees and Services | 27 |
| **PART IV** | **PART IV** |  |
| Item 15. | Exhibits and Financial Statement Schedules | 27 |
| Item 16.  | Form 10-K Summary  | 28 |
| Signatures | Signatures | 29 |
| Exhibit Index | Exhibit Index |  |

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**PART I**

**Forward Looking Statements**

This Annual Report on Form 10-K contains certain forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) regarding the Company and its business, financial condition, results of operations and prospects. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates", "could", "may", "should", "will", "would", and similar expressions or variations of such words are intended to identify forward-looking statements in this report. Additionally, statements concerning future matters such as the development of new services, technology enhancements, purchases of equipment, credit arrangements, possible changes in legislation and other statements regarding matters that are not historical are forward-looking statements.

Although forward-looking statements in this Annual Report reflect the good faith judgment of the Company's management, such statements can only be based on facts and factors currently known by the Company. Consequently, forward-looking statements are inherently subject to risks, contingencies and uncertainties, and actual results and outcomes may differ materially from results and outcomes discussed in this Annual Report. Although the Company believes that its plans, intentions and expectations reflected in these forward-looking statements are reasonable, the Company can give no assurance that its plans, intentions or expectations will be achieved. For a more complete discussion of these risk factors, see Item 1A, "Risk Factors".

For example, the Company's ability to maintain a positive cash flow and to become profitable may be adversely affected as a result of a number of factors that could thwart its efforts. These factors include the Company's inability to successfully implement the Company's business and revenue model, higher costs than anticipated, the Company's inability to sell its products and services to a sufficient number of customers, the introduction of competing products by others, the Company's inability to complete development of its core products, the failure of the Company's operating systems, and the Company's inability to increase its revenues as rapidly as anticipated. If the Company is not profitable in the future, it will not be able to continue its business operations.

Except as required by applicable laws, we do not intend to publish updates or revisions of any forward-looking statements we make to reflect new information, future events or otherwise. Readers are urged to review carefully and to consider the various disclosures made by the Company in this Annual Report, which attempts to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

**Item 1. Business**

**Overview**

PAID, Inc. (the "Company" or "PAID") was incorporated in Delaware on August 9, 1995. The Company has multiple web addresses, www.paid.com, which offers updated information on various aspects of our operations and www.shiptime.com which showcases our online label generation software. Information contained in the Company's website shall not be deemed to be a part of this Annual Report. The Company's principal executive offices are located at 225 Cedar Hill Street, Marlborough, Massachusetts 01752 with offices also located at 700 Dorval Drive, Oakville, Ontario, Canada. The Company's telephone number is (617) 861-6050.

We file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K with the Securities and Exchange Commission (the "SEC"). These reports, any amendments to these reports, proxy and information statements and certain other documents we file with the SEC are available through the SEC's website at www.sec.gov or free of charge on our website as soon as reasonably practicable after we file the documents with the SEC. The public may also read and copy these reports and any other materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

**Our Business**

*ShipTime Inc.* ShipTime's platform provides its members with the ability to quote, process, track and dispatch shipments while getting preferred rates on packages and skidded less than truckload ("LTL") freight shipments throughout North America and around the world. In addition to these features, ShipTime also provides what it refers to as "Heroic Multilingual Customer Support." In this capacity, ShipTime acts as an advocate on behalf of its clients in resolving matters concerning orders and shipping. With an increasing focus and service offering for e-commerce merchants; which include online shopping carts, inventory management, payment services, client prospecting and retention software, ShipTime can help merchants worldwide grow and scale their businesses. ShipTime generates monthly revenue through transactions and "software as a service" (SAAS) offerings. It currently serves in excess of 68,000 members in North America and desires to expand its services worldwide.

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*AuctionInc Software.* AuctionInc is a suite of online shipping and tax management tools assisting businesses with e-commerce storefronts, shipping solutions, tax calculation, inventory management, and auction processing. The application was designed to focus on real-time carrier calculated shipping rates and tax calculations. The product does have tools to assist with other aspects of the fulfillment process, but the main purpose of the product is to provide accurate shipping and tax calculations and packaging algorithms that provide customers with the best possible shipping and tax solutions. This product has been retired and the Company is transitioning these clients to our PaidWeb, PaidCart and PaidShipping solutions.

*BeerRun Software.* BeerRun Software is a brewery management and Alcohol and Tobacco Tax and Trade Bureau tax reporting software. Small craft brewers can utilize the product to manage brewery schedules, inventory, packaging, sales and purchasing. Tax reporting can be processed with a single click and is fully customizable by state or province. The software is designed to integrate with QuickBooks accounting platforms by using our powerful sync engine. We currently offer two versions of the software BeerRun and BeerRun Light which excludes some of the enhanced features of BeerRun without disrupting the core functionality of the software. Additional features include Brewpad and Kegmaster and can be added on to the base product. Craft brewing continues to grow in the United States and we feel that there is potential to grow this portion of our business.

*Paid, Inc.* PaidPayments provides commerce solutions to small - and medium-sized businesses by enabling them to sell their goods and services, accept payment, and create repeat sales though an online payment processing solution. The Company has offered PaidPayments as a Payment Facilitator since 2019, which enables our merchants to get the benefit of instant boarding and discounted rates. Our platform provides all aspects required for payment processing, including merchant boarding, underwriting, fraud monitoring, settlement, funding to the sub-merchant, and monthly reporting and statements. The Company controls all of these necessary aspects in the payment process and is then able to supply a one-step boarding process for our partners and value-added resellers. This capability also provides cost advantages, rapid response to market needs, simplified processes for boarding business and a seamless interface for our merchant customers.

**Business Strategy**

The Company's focus in 2022 was to effectively execute the integration of Paid Inc. and ShipTime while ensuring that our vision ("*To provide a comprehensive e-commerce platform for small to medium enterprises*"*)* continued to move toward this goal by the adding fundamental tools for our members to compete in today's on-line marketplace.

While the ShipTime portion of our business is our key revenue driver; our strategy in 2022 was to continue to buildout the foundation of the Paid platform of e-commerce products while driving our core business forward. By continuing to offer small to medium enterprises meaningful solutions and an integrated infrastructure platform we can enhance the value proposition to both our channel partners and our growing customer base allowing us to cost effectively break into new markets.

In order to support the Company's members via our strategic build-out of e-commerce services, our Heroic Support™ team remains focused on a Support and Customer Success mindset. Our Sales and Account Management Teams will be engaging with our prospects and members to provide guidance and support in utilizing Paid platform tools and services. Paid will provide agencies, associations and partners with the infrastructure to help small to medium businesses grow and be more effective with their digital offerings. We continue to focus on clients in both the United States and Canada. Paid products will continue to grow in 2023 with the launch of our PaidShipping, PaidWeb and PaidCart platforms.

Our strategy for the legacy shipping calculator clients includes migrating the AuctionInc clients to our new Paid platform as we have several Paid options that meet the needs of this small group of clients.

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BeerRun continues to be a valuable component of the Company and remains effective for the existing clients. Our strategy for 2023 is to wind down this segment of the business as we are no longer investing in new technologies and development in the Craft Brewing industry.

As ShipTime has been cash flow positive we are able to take advantage of the excess cash with a short-term investment. During 2022, the Company entered into a Securities Purchase Agreement with respect to a secured $1.875 million convertible note made by Embolx, Inc., a California corporation. Pursuant to the Securities Purchase Agreement, the Company loaned USD $1.5 million to Embolx. The Note is purchased at a 20% ($375,000) original issue discount and is subject to a 9-month maturity, after which, if unpaid, will then carry a 20% interest rate. The Company has the option to convert the note into shares of common stock of Embolx. As additional consideration, the Company received a 5-year Warrant to purchase additional shares of common stock of Embolx. The shares are subject to certain piggyback registration rights under a Registration Rights Agreement, and the note is secured by all assets of Embolx pursuant to a Security Agreement. Under the Securities Purchase Agreement, the Company has a right to purchase additional shares on the same terms for a total potential investment amount of $2 million. Management continues to evaluate the financial status of Embolx and has considered the extension of the note as it has a favorable return on investment.

The business strategy described above is intended to expand our markets, increase revenue per member while enhancing our opportunities in the online ecommerce market. There are always a variety of factors that may impact our plans and inhibit our success. See "Risk Factors" included in Item 1A. Therefore, we have no guarantees and can provide no assurances that our plans will be successful.

**Marketing and Sales**

The Company continues to successfully nurture and grow the relationships with our channel partners and has added new relationships that are global in scope. While much of the growth and success in 2022 was the result of the cooperative efforts of ShipTime, our channel partners and our new marketing strategies. Additions to our marketing team have allowed us to continue to pursue digital marketing efforts, as well as increasing our in-house sales team to fast forward our growth.

The Company will continue to market PAID and ShipTime throughout 2023 and beyond. Cross selling efforts will be enhanced and new features are being added to our Paid platform. Based on experience and feedback with existing partnerships that promote our product lines, the Company believes that creating additional partnerships beyond North America is an effective marketing tool to promote and encourage new registrations. Additional resources and marketing initiatives will be utilized to increase onboarding and converting our members to being active long-time users of the Company's services in order to accelerate our growth.

**Revenue Sources**

In 2022, our revenues were primarily derived from our label generation services. This portion of our business has maintained consistent growth since our merger in 2016. In addition to the label generation services we continue to focus on launching our new e-commerce platforms. See "Risk Factors" included in Item 1A. We have no guarantees and can provide no assurances that our plans will be successful.

**Competition**

Technology within the logistics industry is highly competitive and we have focused a variety of differentiators including our Heroic Customer Support™ to elevate our services beyond those of our competition. Our product offerings may also be available from other companies in our industry and we continue to emphasize value and quality customer support. The ShipTime trademark has been registered in both Canada and the United States. Our line of AuctionInc shipping calculator software is proprietary. Our intellectual property rights do not guarantee any competitive advantage and may not sufficiently protect us against competitors with similar technology. We believe that our products and other proprietary rights do not infringe on the proprietary rights of third parties. However, there can be no assurance that third parties will not assert infringement claims against us in the future with respect to current or future products or other works of ours.

We also utilize free open-source technology in certain areas. Unlike proprietary software, open-source software has publicly available source code and can be copied, modified and distributed with minimal restrictions. We use open-source software and technology as well to support the growing social and viral opportunities on the internet. By using 'best-of-breed' products and tools we can maximize our clients' opportunities while minimizing our costs, which we are able to pass on to our customers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3

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As with any software product BeerRun is not excluded from the competitive market. There are a growing number of competitors in the industry all with a unique perspective. The updates to our existing offering have helped us maintain a presence in the brewery management industry. Our support team stays informed with the competition and we have the ability to modify our product as the industry changes.

**Research and Development**

Over the past years, the Company has made progress developing new integrations with e-commerce shopping cart platforms. The Company now employs several developers who are focused on the growth of the PAID brand and ShipTime products and their technologies. Our technology roadmap has been projected from 2023 through the 2024 calendar year and we have enhancements scheduled for all aspects of our businesses. Our strategy includes continuous user enhancements on our existing platforms, new websites, updates to our e-commerce shopping cart solution, enhancements to our merchant payment processing platform, shipping calculator enhancements and many additional features and upgrades to our online shopping and shipping tools.

**Employees**

As of March 31, 2023, the Company currently has twenty-two full time equivalent employees and one part-time employee. We have no collective bargaining agreements and consider the relationship with our employees to be excellent.

**Government Regulation**

We are not currently subject to direct federal, state or local regulation, and laws or regulations applicable to access or commerce on the Internet, other than regulations applicable to businesses generally. However, due to the increasing popularity and use of the Internet and other online services, it is possible that a number of laws and regulations may be adopted with respect to the Internet or other online services covering issues such as user privacy, freedom of expression, pricing, content and quality of products and services, taxation, advertising, intellectual property rights and information security.

**Item 1A. Risk Factors**

*You should carefully consider the risks and uncertainties described below before deciding to invest in shares of our common stock. If any of the following risks or uncertainties actually occurs, our business, prospects, financial condition and operating results would likely suffe r . In that event, the market price of our common stock could decline, and you could lose all or part of your investment.*

**Risks Relating to the Company**

***We have experienced operating losses.***

Our business and prospects must be considered in light of the risks, expenses and difficulties that are inherent in our business. The risks include:

● our ability to anticipate and adapt to a developing market;

● our ability to market, license and enforce our shipping calculator, payment processing platform, shopping cart and other e-commerce tools;

● development of equal or superior Internet portals, shipping calculators and related services by competitors; and

● our ability to maintain competitive pricing with our carriers

To address these risks, we must, among other things, successfully market our e-commerce shopping cart, 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.

The Company has reported substantial operating losses since 1999. There can be no assurance that we will be profitable in the future.

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***Our capital is limited, and we may need additional financing to continue operations.***

We require substantial working capital to fund our business. If we are unable to obtain additional financing in the amounts desired and on acceptable terms, or at all, or issue stock, we could be required to significantly reduce the scope of our expenditures, which impact our business potential and the market price of our common stock. By raising additional funds by issuing equity securities, our shareholders will be further diluted. Based on our cash position as of December 31, 2022, we believe we have sufficient capital to fund our anticipated operating expenses over the next 12 months.

***We are unable to guarantee that the marketplace will accept our software products.***

The software markets are characterized by rapid technological change, frequent new product enhancements, uncertain product life cycles, changes in customer demands and evolving industry standards. Our software products could be rendered obsolete if products based on new technologies are introduced or new industry standards emerge, or if we do not obtain adequate intellectual property protection. We are unable to provide any assurances that the marketplace will accept our software products and services, or that we will be able to provide these products and services at a profit.

***Our operating results are unpredictable.***

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 of additional factors, many of which are outside our control. These factors beyond our control include:

● our ability to significantly increase our customer base and traffic to our websites, maintain gross margins, and maintain customer satisfaction;

● our ability to market and sell our software products;

● consumer confidence in encrypted transactions in the internet environment;

● the announcement or introduction of new types of services or products by our competitors;

● technical difficulties with respect to customer use of our technologies;

● governmental regulation by federal or local governments; and

● general economic conditions and economic conditions specific to the internet and e-commerce.

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 2022, our revenues were derived from our shipping coordination, shipping label generation services, shipping calculator services, merchant payment processing and brewery management software solutions.

***The successful operation of our business depends upon the supply of critical technology elements from other third parties, including our internet service provider and technology licensors.***

Our operations depend on a number of third parties for internet/telecom access, delivery services, and software services. We have limited control over these third parties and no long-term relationships with many of them. We rely on an internet service provider to connect our websites to the internet. From time to time, we have experienced temporary interruptions in our website's connection and also our telecommunications access. The Company has recently secured a secondary subscription for our internet services and have migrated our hosted services to a cloud based offsite location in order to mitigate any potential outages. We license technology and related databases from third parties for certain elements of our properties. Furthermore, we are dependent on hardware suppliers for prompt delivery, installation, and service of servers and other equipment to deliver our products and services. Our internally developed software depends on operating system, database and server software that was developed and produced by and licensed from third parties. We have from time-to-time discovered errors and defects in the software from these third parties and, in part, rely on these third parties to correct these errors and defects in a timely manner. Any errors, failures, interruptions, or delays experienced in connection with these third-party technologies and information services could negatively impact our relationship with users and adversely affect our brand and our business and could expose us to liabilities to third parties.

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***Our failure to manage growth could place a significant strain on our management, operational and financial resources.***

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, a director of sales and a vice president of finance. In order to manage growth, we will be required 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 2021, the Company added a significant number of consultants to assist with development and will continue to add customer support and technical personnel.

We have experienced some strain on our resources because of:

● the need to manage relationships with various technology licensors, other websites and services, and other third parties;

● pressures for the continued development of our core of software products; and

● the need for additional development and technology personnel.

Difficulties we may encounter in dealing successfully with the above risks could seriously harm our operations. We cannot offer any assurance that our current personnel, systems, procedures and controls will be adequate to support our future operations or that management will be able to identify, hire, train, retain, motivate and manage required personnel.

***Our Company's success still depends upon the continued services of its current management and other relationships.***

We are substantially dependent on the continued services of our key personnel, W. Austin Lewis, IV and David Scott. Mr. Lewis has specialized knowledge and skills with respect to our Company and our operations and relationships with our clients. As a result, if Mr. Lewis were to leave our Company, we could face some difficulties in hiring qualified successors. Mr. Scott has unique knowledge regarding the technology of the Company and its integrations to other third-party software. If Mr. Scott were to leave the Company, we could face some setbacks in development or possible outages. We do not maintain any key person life insurance.

***Our Company's success will depend on our ability to attract and retain qualified 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 added seven new employees and has had minimal turnover in the last year. We cannot offer assurances that we will be successful in attracting, assimilating or retaining the necessary personnel, and the failure to do so could have an adverse effect on our business.

***Our success depends upon market awareness of our brand.***

Development and awareness of our Company will depend largely on our success in increasing our customer base, specifically in the United States. To attract and retain customers and to promote and maintain our Company in response to competitive pressures, we may find it necessary to increase our marketing and advertising budgets and otherwise to increase substantially our financial commitment to creating and maintaining brand loyalty among consumers. We will need to continue to devote substantial financial and other resources to increase and maintain the awareness of our online brands among website users, advertisers, affiliate relationships, and e-commerce entities that we have advertising relationships with through:

● web advertising, marketing, and social media;

● traditional media advertising campaigns; and

● Canadian seller resources.

Our results of operations could be seriously harmed if our investment of financial and other resources, in an attempt to achieve or maintain a leading position in internet commerce or to promote and maintain our brand, does not generate a corresponding increase in net revenue, or if the expense of developing and promoting our online brands becomes excessive.

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***System failures could result in interruptions in our service, which could harm our business.***

A key element of our strategy is to generate a high volume of traffic to, and use of, our products. Accordingly, the satisfactory performance, reliability and availability of the shipping calculations, transaction processing systems and network infrastructure are critical to our operating results, as well as our reputation and our ability to attract and retain customers and maintain adequate customer service levels.

We periodically have experienced minor systems interruptions, including internet disruptions. Some of the interruptions are due to upgrading our technology. During these upgrades, the outages have generally lasted less than an hour. Any systems interruptions, including internet disruptions, which result in the unavailability of our services, could harm our business. In addition to placing increased burdens on our engineering staff, these outages create a large number of user questions and complaints that need to be responded to by our personnel. We cannot offer assurances that:

● we will be able to accurately project the rate or timing of increases if any, in the use of our services; or

● we will have uninterrupted access to the internet.

Any disruption in the Internet access to our websites and services or any systems failures could significantly reduce consumer demand for our services, diminish the level of traffic to our products, impair our reputation and reduce our e-commerce and advertising revenues.

***We currently identify vulnerabilities with our communications hardware and computer hardware.***

Our main servers are cloud-based and are located within two separate third party hosting facilities. The cloud-based servers are spread across North America. ShipTime maintains several non-critical servers which are located in Canada with daily operations conducted in Oakville, Ontario. Neither our Massachusetts facilities nor our Canadian facilities are protected from flood, power loss, telecommunication failure, break-in and similar events however the equipment located at these offices is not considered critical to our service offerings.

As with all servers, our cloud-based servers are also vulnerable to computer viruses, physical or electronic break-ins, attempts by third parties to deliberately exceed the capacity of our systems and similar disruptive problems. Computer viruses, break-ins or other problems caused by third parties could lead to interruptions, delays, loss of data or cessation in service to users of our services and products and could seriously harm our business. Our implementation of redundancies minimizes the risk of loss though there are no guarantees.

***There are certain provisions of Delaware law that could have anti-takeover effects.***

Certain provisions of Delaware law and our Certificate of Incorporation, and Bylaws could make an acquisition of our Company by means of a tender offer, a proxy contest or otherwise, and the removal of our incumbent officers and directors more difficult. Our Certificate of Incorporation and Bylaws do not provide for cumulative voting in the election of directors. Our Bylaws include advance notice requirements for the submission by stockholders of nominations for election to the Board of Directors and for proposing matters that can be acted upon by stockholders at a meeting.

We are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law (the "DGCL"), which will prohibit us from engaging in a "business combination" with an "interested stockholder" for three years after the date of the transaction in which the person became an interested stockholder unless the business combination is approved in a prescribed manner. Generally, a "business combination" includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an "interested stockholder" is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested stockholder status, did own) 15% or more of a corporation's voting stock. The existence of this provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by the Board of Directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by stockholders. Section 203 could adversely affect the ability of stockholders to benefit from certain transactions, which are opposed by the Board or by stockholders owning 15% of our common stock, even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7

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***Our success is dependent in part on our ability to obtain and maintain proprietary protection for our technologies and processes.***

Our most important intellectual property relates to the software for our shipping calculator, label generation and payment processing products. We do not have any patents or patent applications for our designs or innovations, except for our patent with respect to our online auction shipping and tax calculator. We may not be able to obtain copyright, patent or other protection for our proprietary technologies or for the processes developed by our employees. Legal standards relating to intellectual property rights in computer software are still developing and this area of the law is evolving with new technologies. Our intellectual property rights do not guarantee any competitive advantage and may not sufficiently protect us against competitors with similar technology.

As part of our confidentiality procedures, we generally enter into agreements with our employees and consultants and limit access to and distribution of our software, documentation and other proprietary information. We cannot offer assurances that the steps we have taken will prevent misappropriation of our technology or that agreements entered into for that purpose will be enforceable. Notwithstanding the precautions we have taken, it might be possible for a third party to copy or otherwise obtain and use our software or other proprietary information without authorization or to develop similar software independently. Policing unauthorized use of our technology is difficult, particularly because the global nature of the internet makes it difficult to control the ultimate destination or security of software or other data transmitted. The laws of other countries may afford our Company little or no effective protection of its intellectual property. Because our success in part relies upon our technologies, if proper protection is not available or can be circumvented, our business may suffer.

***Intellectual property infringement claims would harm our business.***

We may in the future receive notices from third parties claiming infringement by our software or other aspects of our business. Any future claim, with or without merit, could result in significant litigation costs and diversion of resources, including the attention of management, and require us to enter into licensing agreements, which could have a material adverse effect on our business, results of operations and financial condition. Licensing agreements, if required, may not be available on terms acceptable to the Company or at all. In the future, we may also need to file lawsuits to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others. This litigation, whether successful or unsuccessful, could result in substantial costs and diversion of resources, which could have a material adverse effect on our business, results of operations and financial condition.

***Our success is dependent on licensed technologies.***

We rely on a variety of technologies that we license from third parties. We also rely on encryption and authentication technology licensed from a third party through an online user agreement to provide the security and authentication necessary to effect secure transmission of confidential information.

We cannot make any assurances that these third-party technology licenses will continue to be available to us on commercially reasonable terms. Although no single software vendor licensor provides us with irreplaceable software, the termination of a license and the need to obtain and install new software on our systems would interrupt our operations. Our inability to maintain or obtain upgrades to any of these technology licenses could result in delays in completing our proprietary software enhancements and new developments until equivalent technology could be identified, licensed or developed and integrated. These delays would materially and adversely affect our business, results of operations and financial condition.

***We may be exposed to liability for content retrieved from our websites.***

Our exposure to liability from providing content on the internet is currently uncertain. Due to third party use of information and content downloaded from our websites, we may be subject to claims relating to:

● the content and publication of various materials based on defamation, libel, negligence, personal injury and other legal theories;

● copyright, trademark or patent infringement and wrongful action due to the actions of third parties; and

● other theories based on the nature and content of online materials made available through our websites.

Our exposure to any related liability could result in us incurring significant costs and could drain our financial and other resources. We do not maintain insurance specifically covering these claims. Liability or alleged liability could further harm our business by diverting the attention and resources of our management and by damaging our reputation in our industry and with our customers.

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***The Company may be exposed to potential risks relating to our significant deficiencies and material weaknesses in our internal controls over financial reporting.***

As directed by Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX 404"), the Securities and Exchange Commission adopted rules requiring public companies to include a report of management on the Company's internal control over financial reporting in their annual reports, including Form 10-K. We have identified deficiencies and material weaknesses in our internal controls and have taken steps to remediate them as cost-effectively as possible. Based on these deficiencies and material weaknesses, investors and others may lose confidence in the reliability of our financial statements and our ability to obtain equity or debt financing could suffer.

**Risks Associated With Our Industry**

***The market for online services is intensely competitive with low barriers to entry.***

The market for internet products and services is very competitive. Barriers to entry are relatively low, and current and new competitors can launch new sites at relatively low costs using commercially available software. We currently or potentially compete with a variety of other companies depending on the type of services offered to customers. These competitors include a number of indirect competitors that specialize in e-commerce shipping solutions or derive a substantial portion of their revenue from e-commerce products and those that specialize in brewery management solutions.

It is possible that new competitors or alliances may emerge and rapidly acquire market share. Increased competition is likely to result in reduced operating margins, loss of market share and a diminished brand recognition, any one of which could materially adversely affect our business, results of operations and financial condition. Many of our current and potential competitors have greater financial, marketing, customer support, technical and other resources than the Company. As a result, these competitors may be able to provide services on more favorable terms than we can, and they may be able to respond more quickly to changes in customer preferences or to devote greater resources to the development of their products than the Company.

***We may be adversely affected by the deterioration in economic conditions, which could affect consumer and corporate spending and our ability to raise capital, and, therefore, significantly adversely impact our operating results.***

The impact of slowdowns on our business is difficult to predict, but they may result in reductions in new client registrations and our ability to generate revenue. The risks associated with our businesses may become more acute in periods of a slowing economy or a recession, which may be accompanied by a decrease in e-commerce business. Instability in the financial markets as a result of recession or otherwise, as well as insufficient financial sector liquidity, also could affect the cost of capital and energy suppliers and our ability to raise capital.

Our business depends on discretionary consumer and corporate spending. Many factors related to corporate spending and discretionary consumer spending, including economic conditions affecting disposable consumer income such as employment, fuel prices, interest and tax rates and inflation can significantly impact our operating results. Business conditions, as well as various industry conditions, including corporate marketing and promotional spending, can also significantly impact our operating results. Negative factors such as challenging economic conditions, public concerns over terrorism and security incidents, particularly when combined, can impact corporate and consumer spending and one negative factor can impact our results more than another. There can be no assurance that consumer and corporate spending will not be adversely impacted by economic conditions, thereby possibly impacting our operating results and growth.

The COVID-19 pandemic including the emergence of different variants could cause disruptions to global economic conditions that could adversely affect our business, financial condition, liquidity, capital, and results of operations. Even as efforts to contain the pandemic, including vaccinations, have made progress and most restrictions have relaxed, new variants of the virus may cause additional outbreaks. The impact of COVID-19 pandemic or any future pandemic, epidemic or outbreak of any other highly infectious disease, may materially adversely affect our business.

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***Security breaches and credit card fraud could harm our business.***

We rely on encryption and authentication technology licensed from a third party through an online user agreement to provide the security and authentication necessary to effect secure transmission of confidential information. We believe that a significant barrier to e-commerce and communications is the secure transmission of confidential information over public networks. We cannot give an assurance that advances in computer capabilities, new discoveries in the field of cryptography or other events or developments will not result in a compromise or breach of the algorithms we use to protect customer transaction data. If this compromise of our security were to occur, it could have a material adverse effect on our business, results of operations and financial condition. A party who is able to circumvent our security measures and those of our third-party providers could misappropriate proprietary information or cause interruptions in our operations. To the extent that activities of our Company or third-party contractors involve the storage and transmission of proprietary information. Security breaches could expose us to a risk of loss or litigation and possible liability. We may be required to expend significant capital and other resources to protect against the threat of security breaches or to alleviate problems caused by these breaches. We cannot offer assurances that our security measures will prevent security breaches or that failure to prevent these security breaches will not have a material adverse effect on our business.

***Our industry may be exposed to increased government regulation.***

Our Company is not currently subject to direct regulation by any government agency, other than regulations applicable to businesses generally, and laws or regulations directly applicable to access to, or commerce on, the internet. Today there are relatively few laws specifically directed towards online services, other than to protect user privacy or children. However, due to the increasing popularity and use of the internet, it is possible that a number of laws and regulations may be adopted with respect to the internet, covering issues such as user privacy, freedom of expression, pricing, content and quality of products and services, fraud, taxation, advertising, intellectual property rights and information security. Compliance with additional regulation could hinder our growth or prove to be prohibitively expensive.

The applicability to the internet of existing laws in various jurisdictions governing issues such as property ownership, sales tax, libel and personal privacy is uncertain and may take time to resolve. In addition, because our service is available over the internet in multiple states, and we sell to numerous consumers resident in these states, these jurisdictions may claim that we are required to qualify to do business as a foreign corporation in each state. Our failure to qualify as a foreign corporation in a jurisdiction where it is required to do so could subject our Company to taxes and penalties for the failure to qualify. Any new legislation or regulation, or the application of laws or regulations from jurisdictions whose laws do not currently apply to our business, could have a material adverse effect our business, results of operations and financial condition.

**Risks Associated with our Common Stock**

***Our stock price has been and may continue to be very volatile.***

The market price of the shares of our common stock has been, and is likely to be, highly volatile. During the year ended December 31, 2022 our stock price as quoted on the OTC Pink operated by the OTC Markets Group, Inc., on the OTCPINK has ranged from a high of $2.87 per share to a low of $1.03 per share. The variance in our share price makes it difficult to forecast with any certainty the stock price at which you may be able to buy or sell your shares of our common stock. The market price for our stock could be subject to wide fluctuations in response to factors that are out of our control such as:

● actual or anticipated variations in our results of operations;

● announcements of new products, services or technological innovations by our competitors;

● short selling our common stock and stock price manipulation;

● merger, split or issuance;

● developments in internet regulation; and

● general conditions and trends on the internet and e-commerce industries.

The trading prices of many technology companies' stock have experienced extreme price and volume fluctuations. These fluctuations often have been unrelated or disproportionate to the operating performance of these companies. These broad market factors may adversely affect the market price of our common stock. These market fluctuations, as well as general economic, political and market conditions such as recessions or interest rate fluctuations, may adversely affect the market price of our common stock. Any negative change in the public's perception of the prospects of Internet or e-commerce companies could depress our stock price regardless of our results.

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***"Penny stock***" ***regulations may impose certain restrictions on marketability of securities.***

The SEC adopted regulations which generally define "penny stock" to be an equity security that has a market price of less than $5.00 per share. Our common stock may be subject to rules that impose additional sales practice requirements on broker-dealers who sell these securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of these securities and have received the purchaser's prior written consent to the transaction.

Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the "penny stock" rules may restrict the ability of broker-dealers to sell our common stock and may affect the ability to sell our common stock in the secondary market.

***The market for our Company's securities is limited and may not provide adequate liquidity.***

Our common stock is currently quoted on the OTCPINK, a regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter equity securities. As a result, an investor may find it more difficult to dispose of, or obtain accurate quotations as to the price of, our securities than if the securities were traded on the Nasdaq Stock market, or another national exchange. There are a limited number of active market makers of our common stock. In order to trade shares of our common stock you must use one of these market makers unless you trade your shares in a private transaction. In the year ended December 31, 2022 the actual daily trading volume ranged from a low of 0 shares of common stock to a high of 115,200 shares of common stock. Selling our shares can be more difficult because smaller quantities of shares are bought and sold and news media coverage about us is limited. These factors result in a limited trading market for our common stock and therefore holders of our Company's stock may be unable to sell shares purchased should they desire to do so.

**Item 1B. Unresolved Staff Comments**

None.

**Item 2. Properties**

The Company's primary offices are located at 700 Dorval Drive, Oakville, Ontario with a principal executive office at 225 Cedar Hill Street, Marlborough, Massachusetts, pursuant to a lease agreement for the Oakville property which expires in August 2023. The agreement for the Marlborough Massachusetts office is month to month.

**Item 3. Legal Proceedings**

From time to time we may be a party to various legal proceedings arising in the ordinary course of our business. Our management is not aware of any litigation outstanding, threatened or pending as of the date hereof by or against us or our properties which we believe would be material to our financial condition or results of operations, except with respect to a dispute related to its non-renewal of the employment agreement with Mr. Allan Pratt, the Company's former President and CEO, in which Mr. Pratt appears to be treating it as a termination which would trigger a two-year severance payment. Around the same time that Mr. Pratt's employment term expired, the Company's Board of Directors voted to reduce the board from five to three, and Mr. Pratt and Mr. Austin Lewis, CFO, automatically rolled off from the Board of Directors. More than a year later, in 2021, Mr. Pratt filed a claim in Delaware courts to contest that decision.

**Item 4. Mine Safety Disclosure**

Not applicable.

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**PART II**

**Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities**

Our common stock, par value $0.001 per share, is presently quoted on the OTC Pink operated by the OTC Markets Group Inc., on the OTCPINK under the symbol "PAYD".

The following table sets forth the high and low bid information for our common stock as reported by OTCPINK for the eight quarters ended December 31, 2022. The quotations from the OTCPINK reflect inter-dealer prices without retail mark-up, mark-down, or commission and may not represent actual transactions.

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| | | |
|:---|:---|:---|
| **2021** | **High** | **Low** |
| Quarter ended March 31, 2021 | $3.27 | $1.85 |
| Quarter ended June 30, 2021 | $2.85 | $2.07 |
| Quarter ended September 30, 2021 | $2.95 | $2.26 |
| Quarter ended December 31, 2021 | $2.88 | $2.21 |

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| | | |
|:---|:---|:---|
| **2022** | **High** | **Low** |
| Quarter ended March 31, 2022 | $2.87 | $1.85 |
| Quarter ended June 30, 2022 | $2.42 | $1.53 |
| Quarter ended September 30, 2022 | $2.20 | $1.60 |
| Quarter ended December 31, 2022 | $2.24 | $1.03 |

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As of March 31, 2023, there were approximately 867 holders of record of our common stock. Because many of the shares are held by brokers and other institutions on behalf of stockholders, the Company is unable to estimate the total number of individual stockholders represented by these holders of record.

We have not previously paid cash dividends on our common stock, and intend to utilize current resources to operate the business; thus, it is not anticipated that cash dividends will be paid on our common stock in the foreseeable future.

**Exchangeable Shares**

Holders of our subsidiary's exchangeable shares have the same dividend and distribution rights as holders of Company shares, and if Company shares are subdivided or in the event of a Company stock dividend, the exchangeable shares will be equally subdivided, as exchangeable shares are intended to be economically the same as shares of common or preferred stock of the Company. The Company will have a "liquidation call right" in the event of proposed liquidation, dissolution or winding up of ShipTime Canada Inc. Absent prior events, the Company will redeem the exchangeable shares on the fifth anniversary whereby the Company will redeem the exchangeable shares for shares of the Company's preferred stock and common stock. By agreement, exchangeable shares also may be purchased by ShipTime Canada Inc. for cancellation. The Company also has a right to call the shares in the event of a change in the applicable laws.

The holders of exchangeable shares have an "automatic exchange right" in the event of any bankruptcy or insolvency or in general, related proceedings, of ShipTime Canada Inc. or the Company. The exchangeable shares would at such time be converted automatically into that number of shares of common stock and preferred stock of the Company at the agreed upon conversion ratio. Moreover, Callco will have an overriding call right to purchase some or all of the exchangeable shares. This mechanism will be triggered with the automatic exchange right and is necessary to comply with Canadian tax laws. The exercise of this call right does not alter the outcome of the exchangeable share transaction.

Under a Support Agreement, the Company is required to treat holders of Exchangeable Shares substantially similar, or economically equivalent, to holders of Company stock. As such, under the Support Agreement, the Company cannot declare or pay any dividend or other distribution on Company stock unless ShipTime Inc. simultaneously declares or pays the dividend or distribution on the Exchangeable Shares and has sufficient money or other assets to meet these requirements. In turn, ShipTime Inc. would effect a corresponding dividend or distribution of its securities related to the Exchangeable Shares. The Company also undertakes to advise ShipTime Inc. of the declaration of dividend or distribution, among other similar events, and to cooperate with it to effect the dividend or distribution as of the same record and effective date. The Company is also required in this case to segregate funds to pay for the dividend, and to reserve sufficient number of shares to permit the exchange of the Exchangeable Shares into the required number of Company shares of common stock and preferred stock. The Support Agreement is also binding on any successor to the Company and with respect to any successor transaction.

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**Equity Compensation Plan Information**

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| | | | |
|:---|:---|:---|:---|
|  | Number of<br> Securities To be<br> Issued Upon<br> Exercise of<br> Outstanding<br> Options,<br> Warrants and<br> Rights | Weighted-<br> Average<br> Exercise Price of<br> Outstanding<br> Options,<br> Warrants and<br> Rights | Number of<br> Securities<br> Remaining<br> Available For<br> Future Issuance<br> Under Equity<br> Compensation<br> Plans<br> (Excluding<br> Securities<br> Reflected<br> in Column (a) |
|  | (a) | (b) | (c) |
| Equity Compensation Plans Approved by Security Holders | 0 | $0.00 |  |
| Equity Compensation Plans Not Approved by Security Holders | 371000 | $3.07 | 586000 |
| Total | 371000 | $3.07 | 586000 |

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See Note 10, Notes to Consolidated Financial Statements for the years ended December 31, 2022 and 2021 included in Part IV, Item 15, of this Annual Report, for a discussion of the material features of the stock options, warrants and related stock plans.

**Item. 6 Reserved**

**Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations**

**Forward Looking Statements**

This Annual Report on Form 10-K contains certain forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) regarding the Company and its business, financial condition, results of operations and prospects. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates", "could", "may", "should", "will", "would", and similar expressions or variations of such words are intended to identify forward-looking statements in this report. Additionally, statements concerning future matters such as the development of new services, technology enhancements, purchase of equipment, credit arrangements, possible changes in legislation and other statements regarding matters that are not historical are forward-looking statements.

Although forward-looking statements in this Annual Report reflect the good faith judgment of the Company's management, such statements can only be based on facts and factors currently known by the Company. Consequently, forward-looking statements are inherently subject to risks, contingencies and uncertainties, and actual results and outcomes may differ materially from results and outcomes discussed in this report. Although the Company believes that its plans, intentions and expectations reflected in these forward-looking statements are reasonable, the Company can give no assurance that its plans, intentions or expectations will be achieved. For a more complete discussion of these risk factors, see Item 1A, "Risk Factors."

For example, the Company's ability to maintain a positive cash flow and to become profitable may be adversely affected as a result of a number of factors that could thwart its efforts. These factors include the Company's inability to successfully implement the Company's business and revenue model, higher costs than anticipated, the Company's inability to sell its products and services to a sufficient number of customers, the introduction of competing products or services by others, the Company's failure to attract sufficient interest in, and traffic to, its sites, the Company's inability to complete development of its products, the failure of the Company's operating systems, and the Company's inability to increase its revenues as rapidly as anticipated.

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**Overview**

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, 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 2023 will be to continue to grow this portion of our business.

PAID, Inc. (the "Company") has developed AuctionInc, which is a suite of online shipping and tax management tools assisting businesses with e-commerce storefronts, shipping solutions, tax calculation, inventory management, and auction processing. The product does have tools to assist with other aspects of the fulfillment process, but the main purpose of the product is to provide accurate shipping and tax calculations and packaging algorithms that provide customers with the best possible shipping and tax solutions.

BeerRun Software is a brewery management and Alcohol and Tobacco Tax and Trade Bureau tax reporting software. Small craft brewers can utilize the product to manage brewery schedules, inventory, packaging, sales and purchasing. Tax reporting can be processed with a single click and is fully customizable by state or providence. The software is designed to integrate with QuickBooks accounting platforms by using our powerful sync engine. We currently offer two versions of the software BeerRun and BeerRun Light which excludes some of the enhanced features of BeerRun without disrupting the core functionality of the software.

PaidPayments provides commerce solutions to small - and medium-sized businesses by enabling them to sell their goods and services, accept payment, and create repeat sales though an online payment processing solution. The Company has operated as a Payment Facilitator since 2019, which enables our merchants to get the benefit of instant boarding and discounted rates. Our platform provides all aspects required for payment processing, including merchant boarding, underwriting, fraud monitoring, settlement, funding to the sub-merchant, and monthly reporting and statements. The Company controls all of these necessary aspects in the payment process and is then able to supply a one-step boarding process for our partners and value-added resellers. This capability also provides cost advantages, rapid response to market needs, simplified processes for boarding business and a seamless interface for our merchant customers.

**Critical Accounting Policies**

Our significant accounting policies are more fully described in Note 3 to our consolidated financial statements. However, certain of our accounting policies are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management; as a result, they are subject to an inherent degree of uncertainty. In applying these policies, our management makes estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. Those estimates and judgments are based upon our historical experience, the terms of existing contracts, our observance of trends in the industry, information that we obtain from our customers and outside sources, and on various other assumptions that we believe to be reasonable and appropriate under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Our critical accounting policies include:

*Revenue Recognition*

The Company generates revenue principally from the sales related to the label generation services, shipping calculator services, brewery management software subscriptions, merchant processing services, and client services.

The Company recognizes revenues in accordance with the FASB ASC Topic 606. Accordingly, the Company recognizes revenues when the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

For label generation service revenues, the Company recognizes revenue when a customer has successfully prepared a shipping label and had a pickup. The service is offered to consumers via an online registration and allows users to create a shipping label using a credit card on their account (all customers must have a valid credit card on file to process shipments on the ShipTime platform).

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For shipping calculator revenues and brewery management software and other subscription-based revenues, the Company recognizes subscription revenue on a monthly basis. Shipping calculator customers' renewal dates are based on their date of installation and registration of the shipping calculator line of products. The timing of the revenue recognition and cash collection may vary within a given quarter and the deposits for future services are recorded as contract liabilities on the consolidated balance sheets. Brewery management software subscribers are billed monthly at the first of the month. All payments are made via credit card for the month following.

For payment processing services, the Company recognizes revenue based on daily transactions by our partners and merchants. Customers process credit card payments for sales and remit fees based on the number of transactions and percent of the processed amounts. The merchant bank deposits the funds to the customer net of fees. The remainder of the fees withheld is disbursed to the Company on a daily basis, net of interchange and other transactional charges.

*Foreign Currency*

The currencies of ShipTime, the Company's international subsidiary, are in Canadian dollars. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at December 31, 2022. 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 component of shareholders' equity in accumulated other comprehensive income.

*Long-Lived Assets*

The Company reviews the carrying values of its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the expected future cash flow 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. 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 additional impairment of long-lived assets in the future.

*Share- Based Compensation*

The Board of Directors has on occasion voted to award stock options or common shares/preferred shares to employees or directors. The price at which the option shares may be purchased is based on the fair market value of the shares on the date of the agreement. Each recipient's option agreement may differ; the vesting terms may vary from fully vested immediately 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. Historically the options granted have had a 10-year term. If the recipient's employment or relationship with the Company is terminated the options recipient may be allowed up to three months to exercise their options. Option compensation is calculated by using the Black-Scholes-Merton option pricing model to estimate the fair value of these share-based awards.

*Leases*

A right-of-use asset represents a lessee's right to use a leased asset for the term of the lease. Our right-of-use assets generally consist of an operating lease for a building. Right-of-use assets are measured initially at the present value of the lease payments, plus any lease payments made before a lease began and any initial direct costs, such as commissions paid to obtain a lease. Right-of-use assets are subsequently measured at the present value of the remaining lease payments, adjusted for incentives, prepaid or accrued rent, and any initial direct costs not yet expensed.

We have an operating lease for our corporate offices in Canada and finance leases for furniture and equipment, which expired in June 2021. Our leases have remaining lease terms of seven months to eight months, and our primary operating leases include options to extend the leases for four years. Future renewal options that are not likely to be executed as of the balance sheet date are excluded from right-of-use assets and related lease liabilities.

We report operating leased assets, as well as operating lease current and noncurrent obligations on our balance sheets for the right to use the building in our business. Our finance leases represent furniture and office equipment; we report the furniture and equipment, as well as finance lease current and noncurrent obligations on our balance sheet.

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Generally, interest rates are stated in our leases for equipment. When no interest rate is stated in a lease, however, we review the interest rates implicit in our recent finance leases to estimate our incremental borrowing rate. We determine the rate implicit in a lease by using the most recent finance lease rate, or other method we think most closely represents our incremental borrowing rate.

**Results of Operations**

***Comparison of the years ended December 31, 2022 and 2021***

The following discussion compares the Company's results of operations for the year ended December 31, 2022 with those for the year ended December 31, 2021. The Company's consolidated financial statements and notes thereto included elsewhere in this Annual Report contain detailed information that should be referred to in conjunction with the following discussion.

*Revenues*

The following table compares total revenue for the periods indicated.

---

| | | | |
|:---|:---|:---|:---|
|  | Years ended December 31, | Years ended December 31, | Years ended December 31, |
|  | 2022 | 2021 | % Change |
| Client services | $806 | $3141 | (74)% |
| Shipping calculator services | 7964 | 22872 | (65)% |
| Brewery management software | 38575 | 59075 | (35)% |
| Merchant processing services | 40153 | 54003 | (26)% |
| Shipping coordination and label generation services | 16498431 | 14750625 | 12% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenues | $16585929 | $14889716 | 11% |

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Revenues increased $1,696,213 or 11% in 2022 from the continued growth of the shipping coordination and label generation services.

Client services revenues decreased $2,335 or 74% to $806 compared to $3,141 in 2021. The decrease was attributable to depletion of our movie poster inventory available for auction.

Shipping calculator services revenues decreased $14,908 or 65% to $7,964 compared to $22,872 in 2021. The decrease was attributed to the retirement of the shipping calculator platform. The Company has launched a new platform where the new clients will be migrated to.

Brewery management software revenues decreased $20,500 or 35% to $38,575 in 2022 compared to $59,075 in 2021. The decrease is attributable to the limited marketing to new clients and churn of existing clients.

Merchant processing services had difficulties with the launch and had declined 26% from $54,003 to $40,153 in 2022. The Company has partnered with a secondary merchant processor and is relaunching the program. Merchant processing services will be offered in combination with other Paid products.

Shipping coordination and label generation services revenues increased $1,747,806 or 12% to $16,498,431 in 2022 compared to $14,750,625 in 2021. The increase is attributable to the increase in marketing efforts offset by the impact of the increase in the cost of fuel as it significantly impacts the shipping industry.

*Gross Profit*

Gross profit increased $235,500 or 7% to $3,688,981 in 2022 compared to $3,453,481 in 2021. Gross margin decreased one percentage point to 22% in 2022 from 23% in 2021. The decrease in gross margin was partially due to the decrease in pricing to remain competitive in the shipping coordination and label generation industry.

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*Operating Expenses*

Total operating expenses in 2022 were $3,629,988 compared to $3,943,984 in 2021, a decrease of $313,996 or 8%. The decrease is mainly due to the decrease in share-based compensation for 2022 compared to 2021.

*Other Income/Expense, net* 

Net other income in 2022 was $136,662 compared to $0 in 2021. The 2022 amount is made up of a gain on the rite-off of stale accounts payable in addition to the $104,167 accretion of the discount on the Embolx, Inc. note receivable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(Benefit) Provision for Income Taxes*

Total income tax (benefit) provision for 2022 was $(456,491) compared to $206,257 in 2021. The change of $662,748 is a result of the net effect of the adjustment for 2017 to 2022 transfer price adjustments and the reserve for long term tax liabilities.

*Net Income (Loss)*

The Company reported a net income in 2022 of $652,146 compared to a net loss of $(696,760) for the same period in 2021. The basic income per common share in 2022 is $0.08 while the basic net loss per common share in 2021 is $(0.09).

*Inflation*

The Company believes that inflation has not had a material effect on its results of operations.

**Cash Flows**

A summarized reconciliation of the Company's cash flows for the years ended December 31, 2022 and 2021 is as follows:

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| Net income (loss) | $652146 | $(696760) |
| Provision for bad debts | 36845 |  |
| Depreciation and amortization | 325940 | 511698 |
| Accretion of discount on note receivable | (104167) |  |
| Amortization of operating lease right-of-use assets | 35337 | 33447 |
| Deferred income taxes | (77128) | (131204) |
| Share-based compensation | 172488 | 603533 |
| Write-off of other payables | (32495) |  |
| Changes in current assets and liabilities | (207554) | 882640 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating activities | $801412 | $1203354 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | $(1500000) | $(1120) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in financing activities | $(87493) | $(2907) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effect of exchange rate on cash and cash equivalents | $(266358) | $(3850) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net change in cash and cash equivalents | $(1052439) | $1195477 |

---

**Working Capital and Liquidity**

The Company had cash and cash equivalents of $1,787,248 on December 31, 2022 compared to $2,839,687 on December 31, 2021. The Company had working capital of $1,635,370 as of December 31, 2022 compared to $495,446 as of December 31, 2021, an improvement of $1,139,924. The improvement in working capital is primarily attributed to the transfer price adjustments and the effect of the decrease in income taxes payable and the cash on hand at year end.

Management believes that the Company has adequate cash resources to fund operations during the next 12 months. In addition, management continues to explore opportunities and partnerships to grow the Paid platform of services. However, there can be no assurance that anticipated growth in new business will occur, and that the Company will be successful in launching new products and services. Management continues to seek alternative sources of capital to support the growth of future operations.

**Item 7A. Quantitative and Qualitative Disclosure about Market Risk**

As a smaller reporting company, the Company is not required to provide the information for this Item 6A.

**Item 8. Financial Statements and Supplementary Data**

The financial statements listed in Item 15(a) are incorporated herein by reference and are filed as a part of this report and follow the signature pages to this Annual Report on Form 10-K on page 34.

**Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure**

None.

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**Item 9A. Controls and Procedures**

**Evaluation of Disclosure Controls and Procedures**

The Company's management, including the Chief Executive Officer /Chief Financial Officer of the Company, as its principal financial officer has evaluated the effectiveness of the Company's "disclosure controls and procedures," as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based upon this evaluation, the Chief Executive Officer/Chief Financial Officer has concluded that, as of December 31, 2022, the Company's disclosure controls and procedures were not effective, due to material weaknesses in internal control over financial reporting, for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time period specified by the Securities and Exchange Commission's rules and forms, and is accumulated and communicated to the Company's management, including its principal executive/financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As described in our accompanying *Management's Annual Report on Internal Control over Financial Reporting*, we have identified four remaining material weaknesses in internal controls over financial reporting. Because of these remaining material weaknesses, we concluded that, as of December 31, 2021, our internal control over financial reporting was not effective based on the criteria outlined in *Internal Control-Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

We continued to review new procedures and controls in 2022 and have taken steps to remediate the material weaknesses at the entity and activity levels, and to review further our procedures and controls in 2023. In addition, we expect to continue improve our infrastructure, personnel and related processes in order to strengthen and materially affect our internal control over financial reporting.

Prior to the complete remediation of these material weaknesses, there remains risk that the processes and procedures on which we currently rely will fail to be sufficiently effective, which could result in material misstatement of our financial position or results of operations and require a restatement. Moreover, because of the inherent limitations in all control systems, no evaluation of controls even where we conclude the controls are operating effectively can provide absolute assurance that all control issues, including instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, our control systems, as we develop them, may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be immediately detected and could be material to our financial statements.

The certifications of our principal executive officer/principal financial officer required in accordance with Rule 13a-14(a) under the Exchange Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached as exhibits to this Annual Report on Form 10-K. The disclosures set forth in this Item 8A contain information concerning (i) the evaluation of our disclosure controls and procedures, and changes in internal control over financial reporting, referred to in paragraph 4 of the certifications, and (ii) material weaknesses in the design or operation of our internal control over financial reporting, referred to in paragraph 5 of the certifications. Those certifications should be read in conjunction with this Item 8A for a more complete understanding of the matters covered by the certifications.

**Management's Annual Report on Internal Control over Financial Reporting**

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 18

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Our internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Management, with the participation of our principal executive officer/principal financial officer, is required to evaluate the effectiveness of our internal controls over financial reporting as of December 31, 2022 based on criteria established under the COSO integrated framework of internal controls. The COSO framework identifies five components of internal control and provides a basis for evaluating the effectiveness of internal controls. Management has concluded that our internal controls over financial reporting were not effective as of December 31, 2022 due to the following:

1. Entity Level Controls

- Ineffective control environment, including lack of corporate governance

- Ineffective communication of information

- Ineffective monitoring of activities

2. Activity Level Controls

- Lack of procedures and control documentation

**1. Inadequate Entity Level Controls**

*Ineffective Control Environment, Including Lack of Corporate Governance*

The Control Environment is the tone of an organization and how the tone influences the control consciousness of its people. Control Environment factors include, the integrity, ethical values, and competence of the entity's people; management's philosophy and operating style; the way management assigns authority and responsibility; the way management organizes and develops its people; and the attention and direction provided by the audit committee and board of directors. The Control Environment includes the Company's Corporate Governance which is made up of a set of practices, policies, laws, and principals, designed to provide guidance and structure to directors, managers, and employees with a clear view of corporate goals and business objectives. These processes and procedures need to be clearly defined, presented and administered to each participant in the organization, and should document the distribution of rights and responsibilities among employees, management, clients and customers.

*Steps taken towards Remediation for an Ineffective Control Environment:*

● On an annual basis, the Company distributes the employee handbook which includes public company policies and practices, Corporate Disclosure and Insider Trading policies and a Communication Policy.

● The Company meets monthly in a town hall style meeting led by the CEO. This provides an ongoing opportunity to convey best practices for public companies.

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● Management and the Board formally meet to discuss our filings. During these discussions, our auditors, and legal counsel may present to the Company various information which may be of material importance to our financial reporting and internal controls.

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

*Ineffective Communication of Information*

Information and communication systems support the identification, capture, and exchange of information in a form and time frame that enable people to carry out their responsibilities. This component includes information technology controls which are specific activities performed by persons of systems designed to ensure that the business objective can be met, protect the business from fraud and collusion, and keep the corporate assets protected and safe.

*Steps taken towards Remediation of Ineffective Communication of Information:*

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

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

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

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

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

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

*Ineffective Monitoring of Activities*

Monitoring is a process that assesses the quality of internal control performance over time.

*Steps taken towards Remediation of Ineffective Monitoring of Activities:*

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

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

● Senior Management meets weekly to discuss day to day operations and team successes. Managers work with team members in one-on-one meetings to continue to monitor employee activity.

● The Company has made changes to its policies and procedures with regard to its financial reporting systems. Upgrades to software systems have been made which has resulted in the automation of accounting transactions and has enhanced our financial reporting and timeliness of operating results. Management and staff are more integrated into the review process.

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

The Company believes significant improvements have been made to remediate its material weakness in the internal controls over financial reporting at the entity level, but does not have the appropriate documentation to support its efforts. The Company also believes that further work is still required to develop appropriate controls in some aspects of entity level control to provide reasonable assurance that controls are designed in the most effective and efficient manner possible. While we believe these changes will be effective at mitigating risk of material error, there continues to be additional work required for us to conclude that all three of these control areas are operating effectively. As noted in the Management's Report on Internal Control over Financial Reporting, we consider each of these control areas within the entity level control to constitute a material weakness.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 20

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The Company has taken significant steps to reduce risks associated with information technology controls and documentation. Our information technology department has worked toward cross training and redundancies to assure that no one single person has the ability to make changes to the core operating systems of our products. Additionally, we have contacted with our third-party hosting provider to gain the ability to increase bandwidth in cases of larger than normal traffic to our websites and servers. The critical employees have continued network access with additional access to two independent internet providers.

In addition to the ongoing increase of documentation of the policies and procedures the Company has added increased internal controls with regard to the segregation of duties. As the Company grows and adds additional management level personnel it is increasingly easier to segregate duties. We have also added internal spending and approval limits to monitor activities.

**2. Inadequate Activity Level Controls**

*Lack of Procedures and Control Documentation*

The Company lacks specific documentation relating to certain accounts, and financial closing, which in effect make these internal controls ineffective. The lack of documentation in internal controls relating to these accounts may affect the financial statements and will directly affect the nature and timing of other auditing procedures for certain activities.

*Steps taken towards Remediation of Revenue Recognition:*

● The Company upgraded its transactional processing systems which resulted in the automation of several manual accounting tasks. This automation eliminated the risk of human error for these manual tasks and created a more concise audit trail in the revenue recognition process.

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

● The Company continues to document new processes and procedures to assure employees are following proper protocols with regard to activity that has an effect on the financial transactions of the Company.

*Steps taken towards Remediation of Financial Closing:*

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

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

The Company has made significant improvements to the activity level controls specifically with regard to the deficiencies with the financial close. In addition, further work is required to develop appropriate controls in the other aspects of activity level control to provide reasonable assurance that controls are designed in the most effective and efficient manner possible. Therefore, while we believe these changes are effective at mitigating risk of material error, there continues to be additional work required for us to conclude that this control area is operating effectively. Therefore, as noted in the Management's Report on Internal Control over Financial Reporting, we consider this control area within the activity level control to constitute a material weakness.

A factor for our internal control deficiencies is the small size of the Company and the lack of a financial expert on the Audit Committee of the Board of Directors and other corporate governance controls. As defined by the Public Company Accounting Oversight Board Auditing Standard No. 5, a material weakness is a significant control deficiency or a combination of significant control deficiencies that results in there being more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management continues to monitor and assess the controls to ensure compliance.

As a smaller reporting company, our independent registered public accounting firm is not required to issue a report on the Company's internal control over financial reporting as of December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21

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*Changes in Internal Control Over Financial Reporting*

As discussed in the Managements' Annual Report on Internal Control over Financial Reporting, the Company continues to make improvements to the entity and activity controls and expects to take further steps in 2023 to remediate the outlined deficiencies. The Company has implemented a substantial number of policies and procedures with regard to financial reporting, specifically in terms of segregation of duties. The CEO/CFO has worked with the SVP of Finance and management to identify areas of improvement and together they created appropriate written procedures for approvals and spending limits for individuals within the Company. Departmental budgets have been established and all transactions are reviewed monthly. The Company has also implemented dual approval and review of all cash disbursements and financial transactions. While we believe they are effective at mitigating risk of material error, we have not yet concluded that they are operating effectively. There were several areas of improvement in our segregation of duties, financial closing, and information technology controls that have positively impacted our internal control over financial reporting for the fiscal year ended 2022.

**Item 9B. Other Information**

Not applicable.

**Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections**

Not applicable.

**PART III**

**Item 10. Directors, Executive Officers and Corporate Governance**

**Directors and Executive Officers**

The following table sets forth certain information regarding the directors and executive officers of PAID:

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| | | |
|:---|:---|:---|
| Name | Age | Position |
| W. Austin Lewis, IV | 47 | CEO, CFO |
| David Scott | 28 | COO |
| Andrew Pilaro | 53 | Director |
| Laurie Bradley | 69 | Director |
| David Ogden | 60 | Director |

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Andrew Pilaro was elected as of September 19, 2000, for a term expiring at the 2001 Annual Meeting of Stockholders and until their successors are elected and qualified . On March 27, 2021, the Company amended its Bylaws to reduce the existing Board of Directors from five positions to three positions. At that time, W. Austin Lewis, IV and Allan Pratt automatically rolled off from the Board of Directors. Under Delaware law, unless otherwise provided in the certificate of incorporation or bylaws, directors are elected for one-year terms at the annual meeting of shareholders. The Amended Bylaws would provide for the Board to be divided into three classes of directors serving staggered three-year terms. As a result, approximately one-third of the Board will be elected each year. Initially, three directors will serve between one-to-three-year terms. The directors placed in a Class I position will serve for approximately one year. The directors placed in a Class II position will serve for approximately two years. The directors placed in a Class III position will serve approximately three years. After this transitional arrangement, the Directors will serve for three-year terms, with one class being elected each year.

**Andrew Pilaro** has served as a Director of PAID since September 2000. He is President of CAP Properties Limited, a family office which is an investment management company, with a primary responsibility for asset management. Mr. Pilaro was asked to serve as a director because he provides investment management skills and a general business background.

**W. Austin Lewis, IV** currently serves as CFO and CEO of PAID and previously served as the Chairman of the Audit Committee for MAM Software, Inc. (MAMS). Since 2004, Mr. Lewis has served as Chief Executive Officer of Lewis Asset Management Corporation, an investment management company he founded, where he is also the General Partner of the Lewis Opportunity Fund. Prior to founding Lewis Asset Management, Mr. Lewis held a variety of positions with investment firms, including Puglisi & Co., Thompson Davis & Co., and Branch Cabell & Company. Mr. Lewis holds a Bachelor of Science in Finance and a Bachelor of Science in Financial Economics from James Madison University. Mr. Lewis was asked to serve as the CEO because he had a thorough knowledge of the Company's strengths and weaknesses and has a strong background in being able to make companies run efficiently and successfully.

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**David Ogden** is the CEO of Soho Management Consulting, a global investment consulting firm. David held many senior positions with FedEx, including Managing Director of Sales for FedEx Middle East and Africa region based in Dubai, and instrumental in India's launch as a direct served FedEx location. He was Managing Director of FedEx Logistics in the Middle East and Africa and was responsible for the region's first FedEx Logistics subsidiary's start-up. After FedEx, he moved to Egypt, where he created a group of companies representing best-of-class business support services under a group holding company. After Egypt, he moved to Abu Dhabi to work for an alternative investment company developing warehousing and logistics parks in the United Arab Emirates. He has recently been working with ecommerce ventures from around the world.

**Laurie Bradley** is the Chief Executive Officer of Flexible Support Group providing funding, accounting, and payroll services to small and mid-size businesses across North America. Ms. Bradley also retains ownership in ASG Renaissance and serves as its President. ASG sold its staffing and contracting business in 2016 and now operates with a focus on executive search, and consulting services that delivers training to assist clients with their diversity and inclusion initiatives. The ASG consulting practice also leverages the 2007 Mosaic Advantage initiative which aggregated a network of minority, women, and veteran owned businesses providing them with access to larger business opportunities, coaching, mentoring and financial services. Ms. Bradley has worked in both the public and private sectors specializing in talent management, executive leadership, and advisory services. Ms. Bradley holds a Bachelor of Arts degree from McMaster University and a certificate in Business Strategy from Cornell University.

**David Scott** currently serves as the COO of PAID, having previously served as the Director of Technology joining the Company in 2017. With a computer science background from Mohawk College and McMaster University, Mr. Scott has played a pivotal role in driving technological advancements and operational efficiency at PAID. As COO, he continues to foster innovation, optimize processes, and nurture a collaborative work culture, solidifying Paid's position as a leading force in the industry.

The Company has not made any material changes to the procedures by which security holders may recommend nominees to the Board of Directors. The Board does not have a separate nominating committee.

**Audit Committee**

The Securities and Exchange Commission has adopted rules to implement certain requirements of the Sarbanes-Oxley Act of 2002 pertaining to public company audit committees. One of the rules requires a company to disclose whether it has an "audit committee financial expert" serving on its audit committee. Based on its review of the criteria of an audit committee financial expert under the rule adopted by the SEC, the Board of Directors does not believe that any member of the Board of Directors' Audit Committee would be described as an audit committee financial expert. At this time, the Board of Directors believes it would be desirable for the Audit Committee to have an audit committee financial expert serving on the committee. While from time-to-time informal discussions as to potential candidates have occurred, no formal search process has commenced. Andrew Pilaro, one of the Company's independent directors, is the sole member of the audit committee. The audit committee does not have a charter.

**Audit Committee Report**

The Audit Committee reviewed and discussed our audited consolidated financial statements for the year ended December 31, 2022 with our management. The Audit Committee also reviewed and discussed our audited consolidated financial statements and the matters required to be discussed, by the Public Company Accounting Oversight Board ("PCAOB"), including material weaknesses and other internal control deficiencies with KMJ Corbin & Company LLP, our independent registered public accounting firm. The Audit Committee received from KMJ Corbin & Company LLP the written disclosures and letter required by applicable requirements of the PCAOB regarding the independent accountant's communications with the audit committee concerning independence and has discussed with the independent accountant the independent accountant's independence.

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

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| |
|:---|
| <u>The Audit Committee</u> |
| Andrew Pilaro |

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**Code of Ethics**

The Company has adopted a Code of Ethics that applies to all of its directors, officers, and employees, including its principal executive officer, principal financial officer, principal accounting officer, or controller, or persons performing similar functions. A written copy of the Company's Code of Ethics will be provided to anyone, free of charge, upon request to: W. Austin Lewis, CEO and CFO, PAID, Inc., 225 Cedar Hill Street, Marlborough, Massachusetts 01752.

Any waiver of the code of business conduct and ethics for directors or executive officers, or any amendment to the code that applies to directors or executive officers, may only be made by the board of directors. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of this code of ethics by posting such information on our website, at the address and location specified above. To date, no such waivers have been requested or granted.

**Section 16(a) Beneficial Ownership Reporting Compliance**

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than 10% of the Company's outstanding Common Stock to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Common Stock. These persons are required by SEC regulation to furnish the Company with copies of all such reports they file. To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and representations that no other reports were required, all Section 16(a) filing requirements applicable to its officers and directors and beneficial owners of more than 10% of the Company's stock, have been complied with for the period which this Form 10-K relates.

**Item 11. Executive Compensation**

On May 10, 2017, the Board of Directors appointed Laurie Bradley as the Chairman of the Compensation Committee. Ms. Bradley, along with the remaining Board of Directors, will be responsible for carrying out the Board responsibilities relating to executive compensation, employment agreements, executive succession and equity-based compensation programs and practices of the Company.

On March 29, 2021, the Company entered into an Employment Agreement and an Executive Non-Competition Agreement with W. Austin Lewis, IV, as CEO of the Company, with an effective date of January 4, 2021. The Employment Agreement is for a two-year term from the effective date with automatic one-year renewals subject to 12 months' notice of termination by the Company. Mr. Lewis shall receive an annualized salary of $300,000 and may qualify for a bonus. Mr. Lewis also received 250,000 shares of Company's common stock as a signing bonus, of which 125,000 shares may be repurchased at $1.91 per share in the event that Mr. Lewis terminates his employment prior to January 1, 2022. In addition, other than termination "for cause", Mr. Lewis qualifies for a one-year severance of his then current salary. By separate agreement dated March 29, 2021, Mr. Lewis is also bound by a non-competition restriction for a period of 12 months following termination. On March 21, 2023, the Board of Directors approved a renewal of Mr. Lewis's employment agreement. The Amendment to the Employment Agreement is for a two-year term with automatic one-year renewals subject to 12 months' notice of termination by the Company. Mr. Lewis shall receive an annualized salary of $321,000 and may qualify for a bonus. Mr. Lewis also received 250,000 shares of the Company's common stock of which 125,000 shares may be repurchased at $0.01 per share in the event that Mr. Lewis terminates his employment agreement prior to January 1, 2024. On March 23, 2023, the Board of Directors approved the terms of an employment contract for David Scott, the Company's COO. The Employment Agreement as executed is for a one-year term with automatic one-year renewals subject to 6 months' notice of termination by the Company. Mr. Scott shall receive an annualized salary of $214,000 CAD and may qualify for a bonus. Mr. Scott will also receive $25,000 USD shares of the Company's common stock which may be repurchased at $0.01 per share in the event that Mr. Scott terminates his employment agreement prior to April 1, 2024.

**Compensation to the Named Executive Officers**

The following table sets forth the compensation of the Company's chief executive officer, chief financial officer and the chief operating officer, and each officer whose total cash compensation exceeded $100,000, for the last two fiscal years ended December 31, 2022 and 2021.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Summary Compensation Table**  | **Summary Compensation Table**  | **Summary Compensation Table**  | **Summary Compensation Table**  | **Summary Compensation Table**  |
| **Name and**<br> **Principal Position** | **Year** | **Salary** | **Bonus** | **Option**<br> **Awards ($)** | **Total** |
| W. Austin Lewis, IV (1)(2)(4)(7) (CFO, CEO) | 2022 | $300000 | $109574 | $- | $409574 |
|  | 2021 | $300000 | $477500 | $- | $777500 |
| David Scott (3)(5)(6)(8) (COO) | 2022 | $153787 | $79787 | $- | $233574 |
|  | 2021 | $149675 | $25000 | $- | $174675 |

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1. Mr. Lewis's start date was July 31, 2012.

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

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

4. Mr. Lewis received 250,000 shares on March 29, 2021 valued at $1.91 per share.

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

6. Mr. Scott received 13,021 shares on June 16, 2022 valued at $1.92 per share.

7. Mr. Lewis' bonus of $109,574 to be paid out in 2023 in cash and shares for 2022 was approved by the Board of Directors on March 21, 2023. 31,307 shares were valued at $1.75 per share based on the close price of the Company's common stock at March 20, 2023.

8. Mr. Scott's bonus for 2022 includes $54,787 to be paid out in 2023 in cash and shares, which was approved by the Board of Directors on March 21, 2023. 7,827 shares were valued at $1.75 per share based on the close price of the Company's common stock at March 20, 2023.

The following tables set forth certain information related to outstanding equity awards as of December 31, 2022 for our executive officers.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Option Awards** | **Option Awards** | **Option Awards** | **Option Awards** | **Option Awards** | **Option Awards** |
| **Name** | **Number of<br> Securities<br> Underlying<br> Unexercised<br> Options (#)<br> Exercisable** | **Number of<br> Securities<br> Underlying<br> Unexercised<br> Options (#)<br> Unexercisable** | **Equity Incentive<br> Plan Awards:<br> Number of<br> Securities<br> Underlying<br> Unexercised<br> Unearned<br> Options (#)** | **Option<br> Exercise<br> Price ($)** | **Option<br> Expiration<br> Date** |
| David Scott | 7000 |  |  | $4.10 | 03/23/2028 |
|  | 3000 |  |  | $3.50 | 10/01/2028 |
|  | 15000 |  |  | $2.92 | 02/13/2029 |
|  | 15000 |  |  | $3.00 | 08/13/2029 |
|  | 26667 | 13333 |  | $2.885 | 11/10/2030 |

---

In 2021, a number of non-executive employees and non-employee directors received compensation through cash and through stock option grants under the Company's 2018 Non-Qualified Stock Option Plan. The Company granted 22,300 stock options to employees and consultants during the year ended December 31, 2021. The options vest over a three-year period, they expire if not exercised within ten years from grant date, and the exercise prices ranged from $1.91 to $2.68. As a result of these issuances and the expense recorded on previously issued stock options, The Company recorded share-based compensation expense of $172,488 and $603,533 during the years ended December 31, 2022 and 2021, respectively. On August 13, 2020, the Board of Directors approved cash compensation to board members equal to $4,000, payable in equal installments quarterly, plus an additional $6,000 for each chairperson payable in equal installments quarterly. There were no options granted to executives in 2022. For 2023 the board compensation will include options to purchase shares of the Company's common stock of 5,000 shares for board members and an additional 10,000 shares for committee chairmen.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 25

------

The following table provides compensation information for the one-year period ended December 31, 2022 for the only non-employee members of our Board of Directors.

---

| | | | |
|:---|:---|:---|:---|
|  | **Director Compensation in 2022** | **Director Compensation in 2022** | **Director Compensation in 2022** |
| **Name** | **Fees earned or paid in cash** | **Option Awards ($)** | **Total** |
| Andrew Pilaro | $10000 | $- | $10000 |
| Laurie Bradley | $10000 | $- | $10000 |
| David Ogden | $4000 | $- | $4000 |

---

**Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters**

To the knowledge of the management of the Company the following table sets forth the beneficial ownership of our common stock as of March 31, 2023 of each of our directors and executive officers, and all of our directors and executive officers as a group, and other beneficial owners holding more than five percent of the Company's issued and outstanding shares.

---

| | | | |
|:---|:---|:---|:---|
|  | Amount and Nature of<br> Beneficial Ownership |  | Percent<br> of Class (2) |
| W. Austin Lewis, IV | 3277485 |  | 39% |
| Allan Pratt | 2222273 | (3) | 26% |
| David Scott | 112160 | (6) | 1% |
| John Smith | 914973 |  | 11% |
| David Ogden | 50000 | (4) | 1% |
| Laurie Bradley | 109217 | (5) | 1% |
| Andrew Pilaro | 100337 | (1) | 1% |
| All directors beneficial owners | 6786445 |  | 80% |

---

(1) Includes options to purchase 98,000 shares of the Company's common stock.

(2) Percentages are calculated on the basis of the amount of outstanding securities plus for such person or group, any securities that person or group has the right to acquire within 60 days.

(3) Included in this amount are shares authorized and reserved for future issuance from exchangeable shares.

(4) Includes options to purchase 50,000 shares of the Company's common stock.

(5) Includes options to purchase 82,500 shares of the Company's common stock.

(6) Includes options to purchase 80,000 shares of the Company's common stock

To the knowledge of the management of the Company, based solely on our review of SEC filings, three shareholders are the beneficial owner of more than five percent of the Company's common stock.

The information regarding the Company's "Equity Compensation Plan Information" is incorporated herein by reference in Part II, Item 5 of this Annual Report on Form 10-K.

**Item 13. Certain Relationships and Related Transactions, and Director Independence**

The Company did not engage in any transaction in 2022 or 2021, and does not currently propose any transaction, in which the Company was a participant whereas the amount involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest.

**Review, Approval or Ratification of Transactions with Related Parties**

It is our unwritten policy, which policy is not otherwise evidenced, for any related party transaction that involves more than a de minimis obligation, expense or payment or stock option or equity grants, to obtain approval by our entire board of directors prior to our entering into any such transaction. In conformity with our various policies on related party transactions, any transactions discussed in this Item 12 have been reviewed and approved by our board of directors.

**Director Independence**

The Company has a majority of independent directors with Laurie Bradley as the sole member of the compensation committee and Andrew Pilaro is the sole member of the audit committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 26

------

Our board of directors currently consists of three members. Our board of directors determined that the three directors, Andrew Pilaro, Laurie Bradley and David Ogden, are independent under the standards of the "Nasdaq Global Market" pursuant to Nasdaq Listing Rule 5605.

**Item 14. Principal Accountant Fees and Services**

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

The following is a summary of the fees billed to the Company by KMJ for professional services rendered for the years ended December 31, 2022 and 2021. These fees are for work performed in the years indicated and, in some instances, we have estimated the fees for services rendered but not yet billed.

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| ***Audit Fees:*** |  |  |
| Consists of fees billed for professional services rendered for the audit of the Company's annual financial statements and the review of the interim financial statements included in the Company's Quarterly Reports (together, the "***Financial Statements***") and for services normally provided in connection with statutory and regulatory filings or engagements | $61715 | $64925 |
| ***Tax Fees*** |  |  |
| Consists of fees billed for tax compliance, tax advice and tax planning | 5400 | 5000 |
| ***Total All Fees*** | $67115 | $69925 |

---

The Audit Committee approves all audit and audit-related fees. The Audit Committee is required to pre-approve all non-audit services to be performed by the auditor. The percentage of hours expended on the principal accountant's engagement to audit the Company's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was 0%.

**PART IV**

**Item 15. Exhibits and Financial Statement Schedules**

(a)(1) Financial Statements

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

(a)(2) Financial Statements Schedules

All schedules are omitted because they are not applicable, or the required information is included in the financial statements or notes thereto.

(a)(3) Exhibits

The list of exhibits filed as a part of this Annual Report on Form 10-K is set forth on the Exhibit Index immediately preceding the exhibits hereto and is incorporated herein by reference.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 27

------

**Item 16. Form 10-K Summary**

None.

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| No. | Description of Exhibits |
| [<u>3.1</u>](http://www.sec.gov/Archives/edgar/data/1017655/000116923203006845/d57599_ex3-1.txt) | Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to Form 8-K, filed on November 25, 2003) |
| [<u>3.2</u>](http://www.sec.gov/Archives/edgar/data/1017655/000116923204006014/d61546_ex3-2.htm) | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K, filed on December 8, 2004) |
| [<u>3.3</u>](http://www.sec.gov/Archives/edgar/data/1017655/000165495416005108/ex3-1.htm)  | Certificates of Amendment of Certificate of Incorporation of the Company effective December 30, 2016 (incorporated by reference to Exhibit 3.1 to Form 8-K filed on December 23, 2016) |
| [<u>3.4</u>](http://www.sec.gov/Archives/edgar/data/1017655/000165495416005108/ex3-2.htm) | Amendment No. 1 to Bylaws effective December 30, 2016 (incorporated by reference to Exhibit 3.2 to Form 8-K filed on December 23, 2016) |
| [<u>4.1</u>](http://www.sec.gov/Archives/edgar/data/1017655/000101410000000108/0001014100-00-000108-0002.txt) | Specimen of certificate for Common Stock (incorporated by reference to Exhibit 4.1 to Form SB-2/A filed on December 1, 2000) |
| [<u>10.1+</u>](http://www.sec.gov/Archives/edgar/data/1017655/000116923203002433/d54852_ex10-17.txt) | 2002 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 10.17 to Form 10-KSB filed on March 31, 2003) |
| [<u>10.2+</u>](http://www.sec.gov/Archives/edgar/data/1017655/000114036111005676/ex99_1.htm) | 2011 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 99.1 to Form S-8 filed on February 2, 2011) |
| [<u>10.3</u>](http://www.sec.gov/Archives/edgar/data/1017655/000165495419003887/ex10-35.htm) | 2018 Non-Qualified Stock Option Plan (incorporated by reference from Exhibit 10.35 to Form 10-K filed on April 1, 2019) |
| [<u>10.4+</u>](http://www.sec.gov/Archives/edgar/data/1017655/000101765512000038/exhibit101.htm) | PAID, Inc. 2012 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on October 18, 2012) |
| [<u>10.5+</u>](http://www.sec.gov/Archives/edgar/data/1017655/000101765512000038/exhibit102.htm) | Agreement for Non-Qualified Stock Option under the PAID, Inc. 2012 Non-Qualified Stock Option Plan awarded to W. Austin Lewis, IV, dated October 15, 2012 (incorporated by reference to Exhibit 10.2 to Form 10-Q filed on October 18, 2012) |
| [<u>10.6+</u>](http://www.sec.gov/Archives/edgar/data/1017655/000101765512000038/exhibit103.htm) | Agreement for Non-Qualified Stock Option under the PAID, Inc. 2011 Non-Qualified Stock Option Plan awarded to W. Austin Lewis, IV, dated August 8, 2012 (incorporated by reference to Exhibit 10.3 to Form 10-Q filed on October 18, 2012) |
| [<u>10.7</u>](http://www.sec.gov/Archives/edgar/data/1017655/000141588916007074/ex10-1.htm)  | Amalgamation Agreement dated September 1, 2016 by and among PAID, Inc., emergeIT, Inc., 2534845 Ontario Inc. and 2534841 Ontario Inc. (incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 23, 2016) |
| [<u>10.8</u>](http://www.sec.gov/Archives/edgar/data/1017655/000141588916007074/ex10-2.htm) | Exchange and Call Rights Agreement (incorporated by reference to Exhibit 10.2 to Form 8-K filed on December 23, 2016) |
| [<u>10.9</u>](http://www.sec.gov/Archives/edgar/data/1017655/000141588916007074/ex10-2.htm) | Support Agreement (incorporated by reference to Exhibit 10.4 to Form 8-K filed on December 23, 2016) |
| [<u>10.10+</u>](http://www.sec.gov/Archives/edgar/data/1017655/000141588916007074/ex10-5.htm) | Employment Agreement for Allan Pratt (incorporated by reference to Exhibit 10.6 to Form 8-K filed on December 23, 2016) |
| [<u>10.11+</u>](http://www.sec.gov/Archives/edgar/data/1017655/000165495421003649/ex10-11.htm) | Employment Agreement for W. Austin Lewis IV dated March 29, 2021 (incorporated by reference to Exhibit 10.11 to Form 10-K filed on March 31, 2021) |
| [<u>10.12+</u>](http://www.sec.gov/Archives/edgar/data/1017655/000165495421003649/ex10-12.htm) | Non-Compete Agreement for W. Austin Lewis IV dated March 29, 2021 (incorporated by reference to Exhibit 10.12 to Form 10-K filed on March 31, 2021) |
| [10.13+\*](ex_494733.htm) | Addendum to Employment Agreement for W. Austin Lewis IV dated March 21, 2023 |
| [10.14+\*](ex_494734.htm) | Employment Agreement for David Scott dated March 29, 2023 |
| [<u>31.2</u>\*](ex_492052.htm) | CFO Certification required under Section 302 of Sarbanes-Oxley Act of 2002 |
| [<u>32.0</u>\*](ex_492053.htm) | CEO and CFO Certification required under Section 906 of Sarbanes-Oxley Act of 2002 |
| EX-101.INS | Inline XBRL Instance Document |
| EX-101.SCH | Inline XBRL Taxonomy Extension Schema |
| EX-101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase |
| EX-101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase |
| EX-101.LAB | Inline XBRL Taxonomy Extension Label Linkbase |
| EX-101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) |

---

------

---

| |
|:---|
| \*filed herewith |
| +Indicates a management contract or any compensatory plan, contract or arrangement |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 28

------

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | PAID, INC. | PAID, INC. |
|  | By: | /s/ W. Austin Lewis, IV |
| Date: March 31, 2023 |  | W. Austin Lewis, IV, Chief Executive Officer, Chief Financial Officer |

---

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| Signature | Title | Date |
| /s/ Andrew Pilaro |  |  |
| Andrew Pilaro | Director | March 31, 2023 |
| /s/ Laurie Bradley |  |  |
| Laurie Bradley | Director | March 31, 2023 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 29

------

**PAID, INC. & SUBSIDIARIES**

**INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022 AND 2021**

---

| | |
|:---|:---|
| Report of Independent Registered Public Accounting Firm (PCAOB ID: 170) | F-1 |
| Consolidated Balance Sheets as of December 31, 2022 and 2021 | F-3 |
| Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years ended December 31, 2022 and 2021 | F-4 |
| Consolidated Statements of Changes in Shareholders' Equity for the Years ended December 31, 2022 and 2021 | F-5 |
| Consolidated Statements of Cash Flows for the Years ended December 31, 2022 and 2021 | F-6 |
| Notes to Consolidated Financial Statements | F-7 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 30

------

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and Shareholders of

PAID, Inc.

**Opinion on the Consolidated Financial Statements**

We have audited the accompanying consolidated balance sheets of PAID, Inc. and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income (loss), changes in shareholders' equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matter**

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-1

------

***Collectability of Note Receivable***

*Critical Audit Matter Description*

As discussed in Note 5 to the consolidated financial statements, on October 13, 2022, the Company entered in a Securities Purchase Agreement with respect to a secured $1,875,000 convertible note ("Convertible Note") made by a noteholder ("Noteholder"). The Convertible Note was purchased at a 20% ($375,000) original issue discount and is subject to a 9-month maturity, after which, if unpaid will then carry a 20% interest rate. The Company has the option to convert the Convertible Note into shares of common stock of the Noteholder. The Convertible Note is secured by essentially all assets of the Noteholder. As additional consideration, the Company received a 5-year warrant to purchase shares of common stock of the Noteholder. The shares are subject to certain piggyback registration rights under a Registration Rights Agreement. The warrant is offered at 50% of the original principal amount and will be valued at the price per share of common stock paid in the first liquidity event following October 19, 2022. The warrants expire five years from the original issue date. Management assesses whether the Convertible Note will be collectable in order to determine if there is a need for an allowance to be recognized. As the Noteholder is an early-stage entity with limited operating history and no audited financial information, management applies judgment to determine collectability based on its knowledge of the Noteholder.

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

*How the Critical Audit Matter Was Addressed in the Audit*

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

● We obtained a copy of the securities purchase agreement, security agreement, registration rights agreement, convertible note, and common stock purchase warrant agreement and examined the terms of such agreements in detail.

● We obtained and tested for reasonableness management's analysis to support the collectability of the Convertible Note balance. This testing included inquiries with management, understanding the technology of the Noteholder through reading Noteholder technical presentations and the Noteholder's website, obtaining evidence of outside interest in the Noteholder's technology, and assessing the security position of the Company.

● We obtained from management the unaudited internal 2022 financial information of the Noteholder to assess the financial viability of the Noteholder.

/s/ KMJ Corbin & Company LLP

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

Irvine, California

March 31, 2023

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-2

------

**PAID, INC. & SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

**AS OF DECEMBER 31,**

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| ASSETS |  |  |
| Current assets: |  |  |
| Cash and cash equivalents | $1787248 | $2839687 |
| Accounts receivable, net | 169074 | 215109 |
| Note receivable, net of discount | 1604167 |  |
| Prepaid expenses and other current assets | 151374 | 164823 |
| Total current assets | 3711863 | 3219619 |
| Property and equipment, net | 23487 | 40493 |
| Intangible assets, net | 2663311 | 3175198 |
| Operating lease right-of-use assets | 23063 | 61040 |
| Total assets | $6421724 | $6496350 |
| LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |
| Current liabilities: |  |  |
| Accounts payable | $1610416 | $1625588 |
| Income tax payable |  | 674921 |
| Accrued expenses | 430858 | 376387 |
| Contract liabilities | 13020 | 11154 |
| Operating lease obligations – current portion | 22199 | 36123 |
| Total current liabilities | 2076493 | 2724173 |
| Long-term liabilities: |  |  |
| Operating lease obligations – net of current portion |  | 25187 |
| Deferred tax liability, net | 707952 | 838312 |
| Uncertain tax position liability | 265167 |  |
| Total liabilities | 3049612 | 3587672 |
| Commitments and contingencies |  |  |
| Shareholders' equity: |  |  |
| Series A Preferred stock, $0.001 par value, 5,000,000 shares authorized; no shares issued and outstanding at December 31, 2022 and 2021, respectively |  |  |
| Common stock, $0.001 par value, 25,000,000 shares authorized; 7,840,124 shares issued and 7,696,487 shares outstanding at December 31, 2022, 7,807,103 shares issued and 7,773,263 shares outstanding at December 31, 2021 | 7840 | 7807 |
| Accrued common stock bonus | 82180 |  |
| Additional paid-in capital | 72800976 | 72691201 |
| Accumulated other comprehensive income | 316360 | 590067 |
| Accumulated deficit | (69670404) | (70322550) |
| Common stock in treasury, at cost, 143,637 and 33,840 shares at December 31, 2022 and 2021, respectively | (164840) | (57847) |
| Total shareholders' equity | 3372112 | 2908678 |
| Total liabilities and shareholders' equity | $6421724 | $6496350 |

---

See accompanying notes to consolidated financial statements

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-3

------

**PAID, INC. & SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)**

**FOR THE YEARS ENDED DECEMBER 31,**

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Revenues, net | $16585929 | $14889716 |
| Cost of revenues | 12896948 | 11436235 |
| Gross profit | 3688981 | 3453481 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries and related | 1912142 | 1803173 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General and administrative | 1233549 | 1046711 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of intangible assets | 311809 | 490567 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share-based compensation | 172488 | 603533 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | 3629988 | 3943984 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income (loss) from operations | 58993 | (490503) |
| Other income (expense): |  |  |
| Other income | 136662 |  |
| Income (loss) before income tax (benefit) provision | 195655 | (490503) |
| Income tax (benefit) provision | (456491) | 206257 |
| Net income (loss) | $652146 | $(696760) |
| Net income (loss) per share – basic | $0.08 | $(0.09) |
| Net income (loss) per share – diluted | $0.08 | $(0.09) |
| Weighted average number of common shares outstanding – basic | 7770298 | 7444732 |
| Weighted average number of common shares outstanding – diluted | 7781689 | 7444732 |
| Consolidated statements of comprehensive income (loss): |  |  |
| Net income (loss) | $652146 | $(696760) |
| Other comprehensive income (loss): |  |  |
| Foreign currency translation adjustments | (273707) | 19306 |
| Comprehensive income (loss) | $378439 | $(677454) |

---

See accompanying notes to consolidated financial statements

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-4

------

**PAID, INC. & SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY** 

**FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Common Stock | Common Stock |  |  |  |  | Treasury Stock | Treasury Stock |  |
|  | Shares | Amount | Accrued Common Stock Bonus | Additional Paid-in Capital | Accumulated<br> Other Comprehensive Income | Accumulated Deficit | Shares | Amount | Total |
| Balance, January 1, 2021 | 6489004 | $6489 | $2005500 | $70083486 | $570761 | $(69625790) | (33840) | $(57847) | $2982599 |
| Foreign currency translation adjustment | *-* |  |  |  | 19306 |  | *-* |  | 19306 |
| Share-based compensation expense | *-* |  |  | 324783 |  |  | *-* |  | 324783 |
| Issuance of common stock for accrued bonus and signing bonus | 1300000 | 1300 | (2005500) | 2242950 |  |  | *-* |  | 238750 |
| Issuance of common stock for compensation | 18099 | 18 |  | 39982 |  |  |  |  | 40000 |
| Net loss | *-* |  |  |  |  | (696760) | *-* |  | (696760) |
| Balance December 31, 2021 | 7807103 | 7807 |  | 72691201 | 590067 | (70322550) | (33840) | (57847) | 2908678 |
| Foreign currency translation adjustment | *-* |  |  |  | (273707) |  | *-* |  | (273707) |
| Share-based compensation expense | *-* |  | 82180 | 65308 |  |  | *-* |  | 147488 |
| Repurchase of common stock for treasury |  |  |  |  |  |  | (109797) | (106993) | (106993) |
| Option exercise | 20000 | 20 |  | 19480 |  |  |  |  | 19500 |
| Issuance of common stock for compensation | 13021 | 13 |  | 24987 |  |  |  |  | 25000 |
| Net income | *-* |  |  |  |  | 652146 | *-* |  | 652146 |
| Balance December 31, 2022 | 7840124 | $7840 | $82180 | $72800976 | $316360 | $(69670404) | (143637) | $(164840) | $3372112 |

---

See accompanying notes to consolidated financial statements

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-5

------

**PAID, INC. & SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR THE YEARS ENDED DECEMBER 31,**

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| Cash flows from operating activities: |  |  |
| Net income (loss) | $652146 | $(696760) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |  |
| Depreciation and amortization | 325940 | 511698 |
| Amortization of operating lease right-of-use assets | 35337 | 33447 |
| Provision for bad debts, net | 36845 |  |
| Accretion of discount on note receivable | (104167) |  |
| Gain on write off of other payables | (32495) |  |
| Share-based compensation | 172488 | 603533 |
| Deferred income taxes | (77128) | (131204) |
| Changes in assets and liabilities: |  |  |
| Accounts receivable | (331) | (41710) |
| Prepaid expenses and other current assets | 5916 | 20143 |
| Accounts payable | 122833 | 501145 |
| Income tax payable and uncertain tax position liability | (380719) | 336505 |
| Accrued expenses | 78517 | 99153 |
| Contract liabilities | 2731 | 2058 |
| Operating lease obligations | (36501) | (34654) |
| Net cash provided by operating activities | 801412 | 1203354 |
| Cash flows from investing activities: |  |  |
| Issuance of note receivable | (1500000) |  |
| Purchase of property and equipment |  | (1120) |
| Net cash used in investing activities | (1500000) | (1120) |
| Cash flows from financing activities: |  |  |
| Payments on finance leases |  | (2907) |
| Proceeds from option exercise | 19500 |  |
| Repurchase of common stock | (106993) |  |
| Net cash used in financing activities | (87493) | (2907) |
| Effect of exchange rate changes on cash and cash equivalents | (266358) | (3850) |
| Net change in cash and cash equivalents | (1052439) | 1195477 |
| Cash and cash equivalents, beginning of year | 2839687 | 1644210 |
| Cash and cash equivalents, end of year | $1787248 | $2839687 |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |  |  |
| Cash paid during the year for: |  |  |
| Income taxes | $1356 | $956 |
| Interest | $- | $85 |
| SUPPLEMENTAL DISCLOSURES OF NON-CASH ITEMS |  |  |
| Issuance of common shares in settlement of accrued expenses | $- | $2005500 |

---

See accompanying notes to consolidated financial statements

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-6

------

**PAID, INC. & SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2022 AND 2021**

**NOTE *1.* ORGANIZATION**

PAID, Inc. ("PAID", the "Company", "we", "us", or "our") has developed AuctionInc, which is a suite of online shipping and tax management tools assisting businesses with e-commerce storefronts, shipping solutions, tax calculation, and auction processing. The product has tools to assist with other aspects of the fulfillment process, but the main purpose of the product is to provide accurate shipping and tax calculations and packaging algorithms that provide customers with the best possible shipping and tax solutions. Paid also offers BeerRun Software which is a brewery management and Alcohol and Tobacco Tax and Trade Bureau tax reporting software. Small craft brewers can utilize the product to manage brewery schedules, inventory, packaging, sales and purchasing. Tax reporting can be processed with a single click and is fully customizable by state or province.

ShipTime Canada Inc. ("ShipTime") has developed a SaaS-based application, which focuses on the small and medium business segments. This offering allows members to quote, process, generate labels, dispatch and track courier and LTL shipments all from a single interface. The application provides customers with a choice of today's leading couriers and freight carriers all with discounted pricing allowing members to save on every shipment. ShipTime can also be integrated into on-line shopping carts to facilitate sales via e-commerce. We actively sell directly to small and medium businesses and through long standing partnerships with selected associations throughout Canada.

PaidPayments provides commerce solutions to small – and medium-sized businesses by enabling them to sell their goods and services, accept payment, and create repeat sales though an online payment processing solution. The Company has operated as a Payment Facilitator since *2019,* which enables our merchants to get the benefit of instant boarding and discounted rates. Our platform provides all aspects required for payment processing, including merchant boarding, underwriting, fraud monitoring, settlement, funding to the sub-merchant, and monthly reporting and statements. The Company controls all of these necessary aspects in the payment process and is then able to supply a *one*-step boarding process for our partners and value-added resellers. This capability also provides cost advantages, rapid response to market needs, simplified processes for boarding business and a seamless interface for our merchant customers.

**NOTE *2.* LIQUIDITY AND MANAGEMENT**'**S PLANS**

As of *December 31, 2022,* the Company reported cash and cash equivalents of $1,787,248 and had working capital of $1,635,370. The Company has reported operating income of $58,993 and cash flows from operations of $801,412 for the year ended *December 31, 2022* and has an accumulated deficit of $69,670,404 at *December 31, 2022.*

Management believes that the Company has adequate cash resources to fund operations during the next *12* months after the filing of this annual report on Form *10*-K. However, there can be *no* assurance that anticipated growth in new business will occur, and that the Company will be successful in launching new products and services. Management continues to seek alternative sources of capital to support the growth of future operations.

Although there can be *no* assurances, the Company believes that the above management plan will be sufficient to meet the Company's working capital requirements through the end of *March 2024* and will have a positive impact on the Company for the foreseeable future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *7*

------

**NOTE *3.* SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Basis of Presentation**

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

**Principles of Consolidation**

The consolidated financial statements include the accounts of PAID, Inc. and its wholly owned subsidiaries, PAID Run, LLC and ShipTime Canada. All intercompany accounts and transactions have been eliminated.

**Foreign Currency**

The currency of ShipTime, the Company's international subsidiary, is in Canadian dollars. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at each balance sheet date. Results of operations and cash flows are translated using the average exchange rates throughout the period. The effect of exchange rate fluctuations on translation of assets and liabilities is included as a separate component of shareholders' equity in accumulated other comprehensive income.

**Geographic Concentrations**

The Company conducts business in the U.S. and Canada. For customers headquartered in their respective countries, the Company derived approximately 99% of its revenues from Canada and 1% from the U.S. during the years ended *December 31, 2022* and *2021.*

At *December 31, 2022* and *2021,* the Company maintained 100% of its net property and equipment in Canada.

**Comprehensive Income (Loss)**

Comprehensive income (loss) includes all changes in equity (net assets) during a period from non-owner sources. For the years ended *December 31, 2022* and *2021,* the components of comprehensive income (loss) consist solely of foreign currency translation gains (losses).

**Use of Estimates**

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates made by the Company's management include, but are *not* limited to, the collectability of accounts and note receivable, the recoverability of long-lived assets, the valuation of deferred tax assets and liabilities, renewal periods and discount rates for leases and the valuation of share-based transactions. Actual results could materially differ from those estimates.

**Fair Value Measurements**

The Company measures the fair value of certain of its financial assets on a recurring basis. A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in *one* of the following *three* categories:

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

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

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *8*

------

At *December 31, 2022* and *2021,* the Company's financial instruments include cash and cash equivalents, accounts receivable, note receivable, accounts payable, and accrued expenses. The carrying amount of cash and cash equivalents, accounts receivable, note receivable, accounts payable, and accrued expenses approximates fair value due to the short-term maturities of these instruments.

**Cash and Cash Equivalents**

The Company considers all highly liquid temporary cash investments with initial maturities of *three* months or less to be cash equivalents.

**Concentration of Risk**

The Company maintains cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC") up to USD *$250,000* and the Canadian Depositors Insurance Corporation ("CDIC") up to CAD *$100,000.* At *December 31, 2022,* the Company had amounts that exceeded the CDIC insurance limits but *none* that were in excess of the FDIC insurance limits. The Company has *not* experienced any losses in such accounts and believes it is *not* exposed to any significant credit risk related to these deposits.

The Company extends credit based on an evaluation of the customer's financial condition, generally without requiring collateral. Exposure to losses on accounts receivable is principally dependent on each customer's financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses. Although the Company expects to collect amounts due, actual collections *may* differ from the estimated amounts. As of *December 31, 2022* and *2021,* the Company recorded an allowance for doubtful accounts of $36,845 and $0, respectively.

For the years ended *December 31, 2022* and *2021,* no revenues from any *one* individual customer accounted for more than *10%* of the total revenues. As of *December 31, 2022* and *2021,* there was no customer that accounted for more than *10%* of the accounts receivable balance.

**Property and Equipment**

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of three to eight years. Any leasehold improvements are depreciated at the lesser of the useful life of the asset or the lease term. Equipment purchased under capital leases is amortized on a straight-line basis over the estimated useful life of the asset or the term of the lease, whichever is shorter. Expenditures for repairs and maintenance are charged to expense as incurred.

**Right-of-Use Assets**

A right-of-use asset represents a lessee's right to use a leased asset for the term of the lease. Our right-of-use assets generally consist of an operating lease for a building.

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

Right-of-use assets are subsequently measured at the present value of the remaining lease payments, adjusted for incentives, prepaid or accrued rent, and any initial direct costs *not* yet expensed.

**Intangible Assets**

Intangible assets consist of patents, client lists, trade names, customer relationships, brewery and distillery management software and shipping label generation technology which are being amortized on a straight-line basis over their estimated useful lives. Currently the intangible assets are being amortized between two and 17 years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *9*

------

**Long-Lived Assets**

The Company reviews the carrying values of its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount *may not* be recoverable. If the expected future cash flows from the use of the asset and its eventual disposition is less than the carrying amount of the asset, an impairment loss is recognized and measured using the fair value of the related asset. No impairment charges were recognized during the years ended *December 31, 2022* and *2021.* There can be *no* assurance, however, that market conditions will *not* change or demand for the Company's services will continue, which could result in impairment of long-lived assets in the future.

**Revenue Recognition**

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

**Cost of Revenues**

Cost of revenues includes carrier services, web hosting, data storage, commissions, carrier insurance costs and merchant processing interchange fees.

**Operating Expenses**

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

**Advertising**

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

**Share-Based Compensation**

The Company grants options to purchase the Company's common stock to employees, directors and consultants under stock option plans. The benefits provided under these plans are share-based payments that the Company accounts for using the fair value method. In addition, in *2021* the Board of Directors approved an amendment to ShipTime's *December 30, 2016* Warrant Agreement with an entity controlled by the Company's CEO/CFO to reprice the outstanding warrants. The modification of the warrant resulted in a charge to the Company's share-based compensation expense. In addition, during *2021,* the Company's board of directors granted shares of common stock valued at the closing price on the date of the grant, for *2019* and *2020* bonuses and a *2021* signing bonus to the CEO/CFO (see Note *10*). The Company recorded $82,180 for share-based bonus payments related to *2022* which were approved by the Board of Directors on *March 21, 2023.* The shares of common stock were issued to the CEO/CFO, *one* additional officer and *one* employee.

The fair value of each option award is estimated on the date of grant using a Black-Scholes-Merton option pricing model ("Black-Scholes-Merton model") that uses assumptions regarding a number of complex and subjective variables. These variables include, but are *not* limited to, expected stock price volatility, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. Expected volatilities are based on the historical volatility of the Company's common stock. The expected terms of options granted are based on analyses of historical employee termination rates and option exercises. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant. Since the Company does *not* expect to pay dividends on common stock in the foreseeable future, it estimated the dividend yield to be 0%.

Share-based compensation expense recognized during a period is based on the value of the portion of share-based payment awards that is ultimately expected to vest and is amortized under the straight-line attribution method. As share-based compensation expense recognized in the accompanying consolidated statements of operations and comprehensive income (loss) for the years ended *December 31, 2022* and *2021* is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *10*

------

Since the Company has a net operating loss carry-forward as of *December 31, 2022* and *2021,* 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, 2022* and *2021* that would have resulted in a reclassification from cash flows from operating activities to cash flows from financing activities.

**Income Taxes**

The Company accounts for income taxes and the related accounts under the liability method. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the income tax bases of assets and liabilities. A valuation allowance is applied against any net deferred tax asset if, based on available evidence, it is more likely than *not* that some or all of the deferred tax assets will *not* be realized. Therefore, the Company has recorded a full valuation allowance against the net deferred tax assets. The Company's income tax provision includes state minimum taxes.

The Company recognizes any uncertain income tax positions on income tax returns at the largest amount that is more-likely-than-*not* to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will *not* be recognized if it has less than a *50%* likelihood of being sustained (see Note *11*).

The Company's policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

The Company is subject to taxation in the U.S., and Canada and various state jurisdictions.

**Income (Loss) Per Common Share**

Basic income (loss) per share represent 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. The potential common shares that *may* be issued by the Company relate to outstanding stock options and have been excluded from the computation of diluted income (loss) per share in *2021* because they would reduce the reported loss per share and therefore have an anti-dilutive effect. For the year ended *December 31, 2022* there were approximately *11,400* dilutive shares that were included in the diluted income (loss) per share.

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

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| Numerator: |  |  |
| Net income (loss) | $652146 | $(696760) |
| Denominator: |  |  |
| Basic weighted-average shares outstanding | 7770298 | 7444732 |
| Effect of dilutive securities | 11391 |  |
| Diluted weighted-average shares outstanding | 7781689 | 7444732 |
| Net income (loss) per share – basic | $0.08 | $(0.09) |
| Net income (loss) per share – diluted | $0.08 | $(0.09) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *11*

------

**Segment Reporting**

The Company reports information about segments of its business in its annual consolidated financial statements and reports selected segment information in its quarterly reports issued to shareholders. The Company also reports on its entity-wide disclosures about the products and services it provides and reports revenues and its major customers. The Company's six reportable segments are managed separately based on fundamental differences in their operations. At *December 31, 2022,* the Company operated in the following *six* reportable segments:

a) Client services;

b) Shipping calculator services;

c) Brewery management software;

d) Merchant processing services;

e) Shipping coordination and label generation services; and

f) Corporate operations.

The Company evaluates performance and allocates resources based on operating income. The accounting policies of the reportable segments are the same as those described in this summary of significant accounting policies. The Company's chief operating decision maker is the Chief Executive Officer/Chief Financial Officer.

The following table compares total revenues for the years indicated.

---

| | | |
|:---|:---|:---|
|  | Years Ended | Years Ended |
|  | December 31, 2022 | December 31, 2021 |
| Client services | $806 | $3141 |
| Brewery management software | 38575 | 59075 |
| Shipping calculator services | 7964 | 22872 |
| Merchant processing services | 40153 | 54003 |
| Shipping coordination and label generation services | 16498431 | 14750625 |
| Total revenues, net | $16585929 | $14889716 |

---

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

---

| | | |
|:---|:---|:---|
|  | Years Ended | Years Ended |
|  | December 31, 2022 | December 31, 2021 |
| Client services | $689 | $2529 |
| Brewery management software | (38933) | 20747 |
| Shipping calculator services | 251 | 12383 |
| Merchant processing services | (4434) | 20417 |
| Shipping coordination and label generation services | 273363 | 115473 |
| Corporate operations | (171943) | (662052) |
| Total income (loss) from operations | $58993 | $(490503) |

---

During *2022* and *2021,* the Company recorded depreciation and amortization expense of $325,940 and $511,698, respectively, which was solely related to the shipping coordination and label generations service segment of the Company. During *2022,* the Company reclassified expenses of $537,602 related to transfer price adjustments from corporate operations segment to shipping coordination and label generations services segment for the year ended *2021* to conform to the *2022* presentation.

**Reclassifications**

Certain amounts were reclassified in the accompanying consolidated balance sheet as of *December 31, 2021* in order to conform to the current period presentation.

**Recent Accounting Pronouncements**

There were *no* new accounting pronouncements issued by the FASB during the year that would apply to the Company and would have a material impact on its consolidated financial position or results of operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *12*

------

**NOTE *4.* REVENUE FROM CONTRACTS WITH CUSTOMERS** 

In accordance with current accounting guidance, the Company recognizes revenue by taking into consideration the following *five* steps: (*1*) identify the contract(s) with a customer; (*2*) identify the performance obligations in the contract; (*3*) determine the transaction price; (*4*) allocate the transaction price to the performance obligations in the contract; and (*5*) recognize revenue when (or as) the entity satisfies a performance obligation. Due to the nature of the Company's product offerings and contracts associated with those products, the Company's deliverables do *not* fluctuate and its revenue recognition is consistent.

*Nature of Goods and Services*

For label generation service revenues, the Company recognizes revenue when a customer has successfully prepared a shipping label and had a pickup. The service is offered to consumers via an online registration and allows users to create a shipping label using a credit card on their account.

Beginning in *2018,* customers were offered airline miles as a reward for using the shipping coordination and label generation services. Our affiliated partner, Canadian Federation of Independent Businesses ("CFIB") has allowed us to provide this benefit to their members. Miles are purchased from Air Canada and distributed to the members once monthly based on a calculation of *one* mile for each base and fuel dollar of their spend with the Company. Unused airline miles are recorded in prepaid expenses and other current assets in the accompanying consolidated balance sheets.

For shipping calculator revenues and brewery management software revenues, the Company recognizes subscription revenue on a monthly basis. Shipping calculator customers' renewal dates are based on their date of installation and registration of the shipping calculator line of products. The timing of the revenue recognition and cash collection *may* vary within a given quarter and the deposits for future services are recorded as contract liabilities on the consolidated balance sheets. Brewery management software subscribers are billed monthly at the *first* of the month. All payments are made via credit card for the month following.

Merchant processing revenue consists of fees a seller pays us to process their payment transactions and is recognized upon authorization of a transaction. Revenue is recognized net of estimated refunds, which are reversals of transactions initiated by sellers. We act as the merchant of record for our sellers, which puts us in their shoes with respect to card networks and puts the risk for refunds and chargebacks on us. The gross transaction fees collected from sellers is recognized as revenue as we are the primary obligor to the seller and are responsible for processing the payment, have latitude in establishing pricing with respect to the sellers and other terms of service, have sole discretion in selecting the *third* party to perform the settlement, and assume the credit risk for the transaction processed.

*Revenue Disaggregation*

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

*Performance Obligations*

At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services). To identify the performance obligations, the Company considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Revenue is recognized when the performance obligation has been met, which is when the customer has successfully prepared a shipping label and had a pickup for shipping coordination and label generation services. The Company considers control to have transferred at that time because the Company has a present right to payment at that time, the Company has provided the shipping label, and the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the shipping label.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *13*

------

Merchant processing customers receive a merchant identification number which allows them to process credit card transactions. Once the transaction is approved, the funds are distributed in an overnight feed and the Company has met its performance obligation.

The Company has *no* shipping and handling activities related to contracts with customers.

Revenues are recognized net of any taxes collected from customers, which are subsequently remitted to government authorities.

*Significant Payment Terms*

Pursuant to the Company's contracts with its customers, amounts are collected up front primarily through credit/debit card transactions. Accordingly, the Company determined that its contracts with customers do *not* include extended payment terms or a significant financing component.

*Variable Consideration*

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

Variable consideration is estimated at the most likely amount that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will *not* occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the anticipated performance and all information (historical, current and forecasted) that is reasonably available.

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

*Warranties*

The Company's products and services are provided on an "as is" basis and *no* warranties are included in the contracts with customers. Also, the Company does *not* offer separately priced extended warranty or product maintenance contracts.

*Contract Assets*

Typically, the Company has already collected revenue from the customer at the time it has satisfied its performance obligation. Accordingly, the Company has only a small balance of accounts receivable, totaling $169,074 and $215,109 at *December 31, 2022* and *2021,* respectively. Generally, the Company does *not* have material amounts of contract assets since revenue is recognized as control of goods is transferred or as services are performed.

*Contract Liabilities (Deferred Revenue)*

Contract liabilities are recorded when cash payments are received in advance of the Company's performance (including rebates). Contract liabilities were $13,020 and $11,154 at *December 31, 2022* and *2021,* respectively. During the years ended *December 31, 2022* and *2021,* the Company recognized revenues of $11,154 and $9,046, respectively, related to contract liabilities outstanding at the beginning of each year.

**NOTE *5.* NOTE RECEIVABLE**

On *October 13, 2022,* the Company entered in a Securities Purchase Agreement ("SPA") with respect to a secured $1,875,000 convertible note ("Convertible Note") made by Embolx, Inc. ("Noteholder"), a California corporation. The Convertible Note was purchased at a 20% ($375,000) original issue discount and is subject to a 9-month maturity, after which, if unpaid will then carry a 20% interest rate. The Company has recognized $104,167 in other income related to accretion of the discount on the Convertible Note for the year ended *December 31, 2022.* The Company has the option to convert the Convertible Note into shares of common stock of the Noteholder. The Convertible Note is secured by essentially all assets of the Noteholder. Under the SPA, the Company has a right to purchase additional notes and receive warrants on the same terms for a total potential investment amount of $2,000,000 with an additional over-allotment option of $500,000 as defined in the SPA. As additional consideration, the Company received a 5-year warrant to purchase shares of common stock of the Noteholder. The shares are subject to certain piggyback registration rights under a Registration Rights Agreement. The warrant is offered at 50% of the original principal amount and will be valued at the price per share of common stock paid in the *first* liquidity event following *October 19, 2022.* The warrants expire five years from the original issue date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *14*

------

**NOTE *6.* PROPERTY AND EQUIPMENT**

At *December 31,* property and equipment consisted of the following:

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| Computer equipment and software | $139769 | $140775 |
| Office furniture and equipment | 66644 | 70814 |
| Website development costs | 396997 | 402975 |
|  | 603410 | 614564 |
| Accumulated depreciation | (579923) | (574071) |
|  | $23487 | $40493 |

---

Depreciation expense of property and equipment for the years ended *December 31, 2022* and *2021* amounted to $14,900 and $21,131, respectively.

**NOTE *7.* INTANGIBLE ASSETS**

The Company holds several patents for the real-time calculation of shipping costs for items purchased through online auctions using a zip code as a destination location indicator. It includes shipping charge calculations across multiple carriers and accounts for additional characteristics of the item being shipped, such as weight, special packaging or handling, and insurance costs. These patents help facilitate rapid and accurate estimation of shipping costs across multiple shipping carriers and also include real-time calculation of shipping.

In addition, the Company has various intangible assets from past business combinations.

At *December 31, 2022,* intangible assets consisted of the following:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Patents | Trade Name | Technology & Software | Customer Relationships | Total |
| Gross carrying amount | $16000 | $789212 | $587776 | $4644033 | $6037021 |
| Accumulated amortization | (16000) | (789212) | (587776) | (1980722) | (3373710) |
|  | $- | $- | $- | $2663311 | $2663311 |

---

At *December 31, 2021,* intangible assets consisted of the following:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Patents | Trade Name | Technology & Software | Customer Relationships | Total |
| Gross carrying amount | $16000 | $846186 | $624162 | $4963860 | $6450208 |
| Accumulated amortization | (16000) | (843240) | (624162) | (1791608) | (3275010) |
|  | $- | $2946 | $- | $3172252 | $3175198 |

---

Amortization expense of intangible assets for the years ended *December 31, 2022* and *2021* was $311,809 and $490,567, respectively.

Amortization of intangible assets for the next *five* years ending *December 31* are as follows:

---

| | |
|:---|:---|
| Year Ended December 31, |  |
| 2023 | $295352.0 |
| 2024 | 295352.0 |
| 2025 | 295352.0 |
| 2026 | 295352.0 |
| 2027 | 295352.0 |
| Total 5-year amortization | $1476760.0 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *15*

------

**NOTE *8.* ACCRUED EXPENSES**

At *December 31,* accrued expenses consist of the following:

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| Payroll and related costs | $195803 | $58182 |
| Professional and consulting fees | 3685 | 26070 |
| Royalties | 40075 | 47803 |
| Accrued cost of revenues | 168657 | 212020 |
| Sales tax | 22228 | 31902 |
| Other | 410 | 410 |
| Total | $430858 | $376387 |

---

**NOTE *9.* COMMITMENTS AND CONTINGENCIES**

**Legal Matters**

In the normal course of business, the Company periodically becomes involved in litigation and disputes. During *2021,* the Company was notified of a dispute related to its non-renewal of the employment agreement with Mr. Allan Pratt, the Company's former President, CEO and Chairman. On or around *January 2020,* the Company had allowed Mr. Pratt's employment agreement to *not* renew, but Mr. Pratt alleges in a court in Canada that the Company terminated him and that the Company owes him a severance 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 courts to contest that decision. In *July 2022,* Mr. Pratt amended the complaint to dispute the proper authorization of a stock bonus that was awarded to the Company's CEO in *March 2021 (*see Note *10*). The Company has *not* recorded a reserve as the outcome of these matters cannot be determined.

**Indemnities and Guarantees**

The Company has made certain indemnities and guarantees, under which it *may* be required to make payments to a guaranteed or indemnified party, in relation to certain actions or transactions. The Company indemnifies its directors, officers, employees and agents, as permitted under the laws of the State of Delaware. In connection with its facility lease, the Company has agreed to indemnify its lessor for certain claims arising from the use of the facilities. The duration of the guarantees and indemnities varies, and is generally tied to the life of the agreement. These guarantees and indemnities do *not* provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has *not* been obligated nor incurred any payments for these obligations and, therefore, *no* liabilities have been recorded for these indemnities and guarantees in the accompanying consolidated balance sheets.

**NOTE *10.* SHAREHOLDERS**' **EQUITY**

**Preferred Stock**

The Company's amended Certificate of Incorporation authorizes the issuance of 20,000,000 shares of blank-check preferred stock at $0.001 par value. The Board of Directors will be authorized to fix the designations, rights, preferences, powers and limitations of each series of the preferred stock.

The Company filed a Certificate of Designations effective on *December 30, 2016* which sets aside 5,000,000 shares of Preferred Stock as Series A Preferred Stock. The Series A Preferred Stock carries a coupon payment obligation of 1.5% of the liquidation value per share ($3.03) per year in cash or additional Series A Preferred Stock, calculated by taking the *30*-day average closing price for a share of common stock for the month immediately preceding the coupon payment date which is made annually. 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, 2022* and *2021,* there are no outstanding shares of Series A Preferred Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *16*

------

**Common Stock**

In *February 2020,* ShipTime Canada amended its rights to exchange one share of ShipTime Canada stock from 45 PAID common shares and 311 PAID preferred shares to 356 PAID common shares. The Company made available to its ShipTime Canada exchangeable preferred shareholders the *one*-time option to convert existing book entry preferred shares and exchangeable rights to preferred shares into PAID common shares. As a result, certain ShipTime exchangeable shareholders exercised their rights to receive 1,461,078 shares of PAID Series A Preferred Stock for 1,461,078 shares of PAID common stock. At the same time, the Company made available to its Series A Preferred Stock shareholder the option to exchange existing Series A preferred shares for PAID common shares. The exchange was offered on a *one*-to-*one* basis. Shareholders holding 1,015,851 shares of Series A Preferred Stock exchanged such shares for 1,015,851 shares of PAID common stock. Furthermore, because of the amended exchange rights, the Company reflected an additional exchange of PAID Series A Preferred Stock shares totaling 2,089,298 to PAID common shares, representing the additional amount of PAID common shares that will be issued to the ShipTime shareholders upon the exchange. In total, the Company has reserved for future issuance of 2,106,808 shares of PAID common stock with respect to the remaining 5,918 exchangeable shares to be issued as a result of the ShipTime acquisition which are considered issued and outstanding as of *December 31, 2022* for financial reporting purposes.

On *March 29, 2021,* the Company's Board of Directors authorized the issuance of 1,050,000 bonus shares of PAID common stock to the CEO/CFO for services rendered during *2019* and *2020.* This bonus was valued at $2,005,500 based on the closing price of the Company's common stock at *March 29, 2021* and was recorded in accrued common stock bonus in shareholders' equity at *December 31, 2020.* Also, at *March 29, 2021,* the Company's Board of Directors authorized the issuance of an additional 250,000 shares to the CEO/CFO as a *one*-time sign-on bonus resulting in a share-based compensation expense of $477,500, which was recognized ratably during *2021* as the bonus shares were subject to repurchase if the CEO/CFO terminated employment through *January 1, 2022.* All of these shares were issued on *March 31, 2021.* During the *second* quarter of *2021,* the Company issued 18,099 shares valued at $2.21 per share for a total of $40,000 to *two* employees as bonus compensation which is included in share-based compensation in the condensed statements of operations and comprehensive income (loss) for the year ended *December 31, 2021.* During the *second* quarter of *2022,* the Company issued 13,021 shares valued at $1.92 per share for a total share-based compensation expense of $25,000 to *one* employee as bonus compensation which is included in share-based compensation in the consolidated statements of operations and comprehensive income (loss) for the year ended *December 31, 2022.* The shares were issued pursuant to the exemption for registration provided by Section *4*(a)(*2*) of the Securities Act and Rule *506* of the SEC's Regulation D thereunder. On *March 21, 2023,* the Company's Board of Directors authorized the issuance of 46,961 bonus shares of PAID common stock to the CEO/CFO, *one* additional officer and *one* employee for services rendered during *2022.* This bonus was valued at $82,180 based on the closing price of the Company's common stock at *March 20, 2023* and is recorded in accrued common stock bonus in shareholders' equity at *December 31, 2022.* These shares were issued in *March 2023.*

**Share-Based Incentive Plans**

During the years ended *December 31, 2022* and *2021,* the Company had *four* stock option plans that include both incentive and non-qualified options to be granted to certain eligible employees, non-employee directors, or consultants of the Company.

On *March 23, 2018,* the Board of Directors voted to approve the *2018* Stock Option Plan which reserves 450,000 non-qualified stock options to be granted to employees. The Company has *three* additional stock option plans that include both incentive and non-qualified stock options to be granted to certain eligible employees, non-employee directors, or consultants of the Company. On *November 10, 2020,* the board voted to increase the *2018* Stock Option Plan from 450,000 options to 900,000 options.

During *2021,* the Company granted 10,000 stock options to *one* employee. These options have a three-year vesting schedule with *one*-third vesting immediately, *one*-*third* vesting in *18* months and the final *one*-*third* vesting in *36* months. The options expire if *not* exercised in ten years from the grant date, and their exercise price is $1.91 per share.

On *October 14, 2022,* the Company received a notice of exercise of options to purchase 20,000 common shares of the Company's stock. The options were exercised at $0.975 per share and the Company received proceeds of $19,500.

During *2022,* options granted to purchase 12,000 shares of the Company's common stock were cancelled due to the expiration of the *ten*-year term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *17*

------

**Active Plans:**

***2018* Plan***

On *March 23, 2018,* the Company adopted the *2018* Non-Qualified Stock Option Plan (the *"2018* Plan"). The purpose of the *2018* Plan is to provide long-term incentives and rewards to those employees of the Company, and any other individuals, whether directors, consultants or advisors who are in a position to contribute to the long-term success and growth of the Company. The options granted have a 10-year contractual term and have a vesting period that ranges from one hundred percent on the date of grant to fully vest over a two-year period. There are currently 586,000 shares reserved for future issuance under this plan. Information with respect to stock options granted under this plan during the year ended *December 31, 2022* is as follows:

---

| | | |
|:---|:---|:---|
|  | Number of<br> shares | Weighted<br> average<br> exercise<br> price per<br> share |
| Options outstanding at January 1, 2022 | 314000 | $3.17 |
| Granted |  |  |
| Cancelled/Expired |  |  |
| Exercised |  |  |
| Options outstanding at December 31, 2022 | 314000 | $3.17 |

---

***2012* Plan***

On *October 15, 2012,* the Company adopted the *2012* Non-Qualified Stock Option Plan (the *"2012* Plan"). The purpose of the *2012* Plan is to provide long-term incentives and rewards to those employees of the Company, and any other individuals, whether directors, consultants or advisors who are in a position to contribute to the long-term success and growth of the Company. The options granted have a 10-year contractual term and vest one hundred percent on the date of grant. There are no shares reserved for future issuance under this plan. Information with respect to stock options granted under this plan during the year ended *December 31, 2022* is as follows:

---

| | | |
|:---|:---|:---|
|  | Number of<br> shares | Weighted<br> average<br> exercise<br> price per<br> share |
| Options outstanding at January 1, 2022 | 36000 | $0.98 |
| Granted |  |  |
| Cancelled | (2000) | 0.98 |
| Exercised | (20000) | 0.98 |
| Options outstanding at December 31, 2022 | 14000 | $0.98 |

---

***2011* Plan***

On *February 1, 2011,* the Company adopted the *2011* Non-Qualified Stock Option Plan (the *"2011* Plan"). Under the *2011* Plan, employees and consultants *may* elect to receive their gross compensation in the form of options, exercisable at $0.98 to $3.30 per share, to acquire the number of shares of the Company's common stock equal to their gross compensation divided by the fair value of the stock on the date of grant. The options granted have a 10-year contractual term and have vesting periods that range from *one hundred* percent on the date of grant to *one*-third immediately, *one*-third vesting in *18* months and the final *one*-third vesting in *36* months from the date of the grant. There are *no* shares reserved for issuance under this plan. Information with respect to stock options granted under this plan during the year ended *December 31, 2022* is as follows:

---

| | | |
|:---|:---|:---|
|  | Number of<br> shares | Weighted<br> average<br> exercise<br> price per<br> share |
| Options outstanding at January 1, 2022 | 43000 | $3.00 |
| Granted |  |  |
| Cancelled |  |  |
| Exercised |  |  |
| Options outstanding at December 31, 2022 | 43000 | $3.00 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *18*

------

***2002* Plan***

The *2002* Stock Option Plan (*"2002* Plan") provides for the award of qualified and non-qualified options for up to 60,000 shares. The options granted have a ten-year contractual term and have a vesting schedule of either immediately, two years, or four years from the date of grant. There are no shares reserved for issuance under this plan. Information with respect to stock options granted under this plan during the year ended *December 31, 2022* is as follows:

---

| | | |
|:---|:---|:---|
|  | Number of<br> shares | Weighted<br> average<br> exercise<br> price per<br> share |
| Options outstanding at January 1, 2022 | 10000 | $0.98 |
| Granted |  |  |
| Cancelled/Expired | (10000) | 0.98 |
| Exercised |  |  |
| Options outstanding at December 31, 2022 |  | $- |

---

***Fair value of issuances***

The Company did *not* grant any options to purchase Company stock during the year ended *December 31, 2022.* The fair value of the Company's *2021* option grants under the *2018, 2012, 2011,* and *2002* Plans was estimated at the date of grant using the Black-Scholes-Merton model with the following weighted average assumptions (see below).

---

| | | |
|:---|:---|:---|
|  | 2021 | 2021 |
| Expected term (based upon historical experience) (in years) | 5.5 | 5.8 |
| Expected volatility | 117 | 159% |
| Expected dividends |  |  |
| Risk free interest rate | 0.73 | 1.24% |

---

For the years ended *December 31, 2022* and *2021,* the Company recorded total share-based compensation expense related to the common stock bonuses, other stock issuances, and stock options of $172,488 and $603,533, respectively, which is recorded in share-based compensation expense in the accompanying consolidated statements of operations and comprehensive income (loss).

The Company has unrecognized share-based compensation expense of $57,958 for options outstanding as of *December 31, 2022* which will be recognized over the weighted average period of approximately one year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *19*

------

Information pertaining to options outstanding and exercisable at *December 31, 2022* is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| Options Outstanding | Options Outstanding | Options Outstanding | Options Exercisable | Options Exercisable |
| Exercise Prices | Number of<br> shares | Weighted<br> Average<br> Remaining<br> contractual<br> Life (In Years) | Number of<br> shares | Weighted<br> Average<br> Remaining<br> contractual<br> Life (In Years) |
| $0.98 | 19500 | 2.11 | 19500 | 2.11 |
| $1.91 | 10000 | 8.25 | 6667 | 8.25 |
| $2.21 | 7000 | 8.45 | 4666 | 8.45 |
| $2.68 | 5300 | 8.87 | 1767 | 8.87 |
| $2.89 | 105000 | 7.87 | 78333 | 7.87 |
| $2.92 | 52500 | 6.13 | 52500 | 6.13 |
| $3.00 | 52500 | 6.62 | 52500 | 6.62 |
| $3.30 | 37500 | 4.75 | 37500 | 4.75 |
| $3.50 | 3000 | 5.76 | 3000 | 5.76 |
| $4.10 | 78700 | 5.23 | 78700 | 5.23 |
|  | 371000 | 6.28 | 335133 | 6.10 |

---

Summary of all stock option plans activity during the year ended *December 31, 2022* is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Number of<br> Shares | Weighted<br> Average<br> Price | Weighted<br> Average<br> Remaining<br> Contractual<br> Life (In Years) | Aggregate<br> Intrinsic<br> Value |
| Options outstanding at January 1, 2022 | 403000 | $2.90 |  |  |
| Granted |  |  |  |  |
| Cancelled/Expired | (12000) | 0.98 |  |  |
| Exercised | (20000) | 0.98 |  |  |
| Options outstanding and expected to vest at December 31, 2022 | 371000 | $3.07 | 6.28 | $6838 |
| Options exercisable at December 31, 2022 | 335133 | $3.10 | 6.10 | $6338 |

---

The aggregate intrinsic value of options is calculated as the difference between the exercise price of options and the fair value of the Company's common stock at *December 31, 2022.* 

**NOTE *11.* INCOME TAXES**

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

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| U.S. | $(77704) | $(1143578) |
| Foreign | 273359 | 653075 |
|  | $195655 | $(490503) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *20*

------

The Company is subject to taxation in the U.S., Canada, and Massachusetts. The (benefit) provision for income taxes for the years ended *December 31* are summarized below:

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| Current: |  |  |
| Federal | $- | $- |
| State | 1356 | 456 |
| Foreign | (364879) | 336568 |
| Total current | (363523) | 337024 |
| Deferred: |  |  |
| Federal |  |  |
| State |  |  |
| Foreign | (92968) | (130767) |
| Total deferred | (92968) | (130767) |
| Income tax (benefit) provision | $(456491) | $206257 |

---

A reconciliation of income taxes computed by applying the statutory U.S. income tax rate to the Company's income (loss) before income tax (benefit) provision to the income tax (benefit) provision is as follows for the years ended *December 31:*

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| U.S. federal statutory tax rate | 21.00% | 21.00% |
| State tax benefit, net | 5.62% | (7.61)% |
| Stock compensation | 18.56% | (4.15)% |
| Officers compensation | -% | (69.84)% |
| Attributes expiration | 17.06% | (148.01)% |
| &nbsp;&nbsp;&nbsp; Return to Provision | (257.75)% | 8.73% |
| Other | 30.65% | (7.86)% |
| NOL Adjustment | 295.28% | -% |
| Unrecognized tax benefit | 361.72% | -% |
| GILTI | 156.50% | -% |
| Interest and penalties | -% | (14.27)% |
| Valuation allowance | (882.41)% | 180.11% |
| Effective income tax rate | (233.77)% | (41.90)% |

---

Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's net deferred tax liabilities are as follows as of *December 31:*

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| Deferred taxes: |  |  |
| NOLs | $7495858 | $9122325 |
| Inventory and other reserves | 31340 | 24128 |
| Stock based compensation expense | 196700 | 296657 |
| Lease liability | 5883 | 16125 |
| Accruals | 14695 | 7597 |
| Other | 96 | 96 |
| Total deferred tax assets | 7744572 | 9466928 |
| Depreciation and amortization | (668359) | (784611) |
| Right-of-use assets | (6112) | (16054) |
| Valuation allowance | (7778053) | (9504575) |
| Net deferred tax liabilities | $(707952) | $(838312) |

---

Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The reduction in the valuation allowance is approximately $1,727,000 and $884,000 in *2022* and *2021,* respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *21*

------

As of *December 31, 2022,* the Company had net operating loss carryforwards for federal income tax purposes of approximately $32,917,000. Of the total amount approximately $902,000 were generated after *January 1, 2018,* and therefore will *not* expire but can only be used to offset *80* percent of future taxable income. The remaining amount of approximately $32,015,000 expires beginning in the year *2023.* As of *December 31, 2022,* the Company had net operating loss carryforwards for state income tax purposes of approximately $9,229,000 which expire beginning in the year *2031.* As of *December 31, 2022,* the Company also had Canada net operating loss carryforwards of $1,670,000 which expire beginning in the year *2039.*

Utilization of the net operating losses *may* be subject to substantial annual limitation due to federal and state ownership change limitation provided by the Internal Revenue Code and similar state provisions. Such annual limitations could result in the expiration of the net operating losses and credits before their utilization. The Company has *not* performed an analysis to determine the limitation of the net operating loss carryforwards.

A valuation allowance of 100% has been established in respect of the deferred income tax assets due to the uncertainty of the Company's utilization of such deferred tax assets for the U.S. federal and state on each of the Company's consolidated balance sheets at *December 31, 2022* and *2021.*

The income tax provision at *December 31, 2022* reflects a full accounting of tax filings under ASC Subtopic *740*-*10.* Paid, Inc. is subject to U.S. federal and Massachusetts state tax. With limited exceptions, the Company is *no* longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2019. Generally, the tax years remain open for examination by the federal and Massachusetts authorities under *three*-year statute of limitation. In addition, the Company's tax years starting *2003* and *2011* are subject to limited examination by the United States and Massachusetts authorities, respectively, due to the carry forward of unutilized net operating losses. ShipTime is subject to taxation in Canada and Ontario. The foreign subsidiary is generally subject to examination for *four* years following the later of: (*1*) the year in which the tax obligation originated or (*2*) the year the tax return is filed. ShipTime is *not* currently under examination by the local tax authority. The Company recognizes interest and penalties related with income taxes, as estimated or incurred, as a part of the income tax provision. As of *December 31, 2022,* and *2021* the Company accrued $16,064 and $70,060 of interest and penalties related to foreign income taxes.

The Tax Cuts and Jobs Act requires taxpayers to capitalize and amortize research and development ("R&D") expenditures under Section *174* for tax years beginning after *December 31, 2021.* This rule became effective for the Company during the year but did *not* result in the capitalization of R&D costs. This rule is also in effect for its foreign subsidiary and the calculation of global intangible low-tax income ("GILTI"), of which approximately $900,000 of R&D costs related with internally developed software have been capitalized. The Company will amortize these costs for tax purposes over *five* years if the R&D was performed in the U.S. and over *15* years if the R&D was performed outside the U.S.

The evaluation of uncertainty in a tax position is a *two*-step process. The *first* step involves recognition. The Company determines whether it's more likely than *not* that a tax position will be sustained upon tax examination including any resolution of any related appeals or litigation, based on only the technical merits of the position. The technical merits of a tax position are derived from both statutory and judicial authority (legislation and statutes, legislative intent, regulations, rulings, and case law) and their applicability to the facts and circumstances of the tax position. If a tax position does *not* meet the more-likely-than-*not* recognition threshold, the benefit of that position is *not* recognized in the consolidated financial statements. The *second* step is measurement. A tax position that meets the more-likely-than-*not* recognition threshold is measured to determine the amount of benefit to recognize in the consolidated financial statements. The tax position is measured as the largest amount of benefit that is greater than *50%* likely of being realized upon ultimate resolution with a taxing authority. Uncertain tax positions are reviewed on an ongoing basis and are adjusted after considering facts and circumstances, including progress of tax audits, developments in case law and closing of statutes of limitation.

The following table summarizes the activity related to the Company's gross unrecognized tax benefits at the beginning and end of the years ended *December 31, 2022* and *2021:*

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| Gross unrecognized tax benefits at the beginning of the year | $- | $- |
| Increases related to current year positions |  |  |
| Increases (decreases) related to prior year positions | 691675 |  |
| Expiration of unrecognized tax benefits |  |  |
| Gross unrecognized tax benefits at the end of the year | $691675 | $- |

---

The amount of unrecognized tax benefits that would impact the Company's effective tax rate, if recognized, is $707,738 (including estimated penalties and interest). The amount of the increase during *2022* is primarily related to transfer pricing policy changes applicable to prior years that were implemented during *2022.* The Company does *not* believe its unrecognized tax benefits will change during the next *twelve* months.

**NOTE *12.* Leases**

We have an operating lease for our corporate offices in Canada and finance leases for furniture and equipment, which expired in *June 2021.* Our leases have remaining lease terms of seven months to eight months, and our primary operating leases include options to extend the leases for four years. Future renewal options that are *not* likely to be executed as of the balance sheet date are excluded from right-of-use assets and related lease liabilities.

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

Generally, interest rates are stated in our leases for equipment. When *no* interest rate is stated in a lease, however, we review the interest rates implicit in our recent finance leases to estimate our incremental borrowing rate. We determine the rate implicit in a lease by using the most recent finance lease rate, or other method we think most closely represents our incremental borrowing rate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *22*

------

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

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| Operating lease cost | $39324 | $40796 |
| Finance lease cost: |  |  |
| Amortization of leased assets | $- | $5557 |
| Interest on lease liabilities |  | 86 |
| Total finance lease cost | $- | $5643 |

---

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

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| Cash paid for amounts included in leases: |  |  |
| Operating cash flows from operating leases | $38355 | $42006 |
| Operating cash flows from finance leases | $- | $86 |
| Financing cash flows from finance leases | $- | $2907 |
| Right-of-use assets obtained in exchange for lease obligations: |  |  |
| Operating leases | $- | $- |
| Finance leases | $- | $- |

---

Supplemental balance sheet information related to leases was as follows:

---

| | | |
|:---|:---|:---|
|  | December 31, 2022 | December 31, 2021 |
| Operating leases: |  |  |
| Operating lease right-of-use assets | $23063 | $61040 |
| Current portion of operating lease obligations | $22199 | $36123 |
| Operating lease obligations, net of current portion |  | 25187 |
| Total operating lease liabilities | $22199 | $61310 |

---

---

| | |
|:---|:---|
|  | Year Ended<br> December 31, 2022 |
| Weighted Average Remaining Lease Term |  |
| Operating lease (in years) | 0.6 |
| Weighted Average Discount Rate |  |
| Operating lease | 9.0% |

---

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

A summary of future minimum payments under non-cancellable operating lease commitment as of *December 31, 2022* is as follows:

---

| | |
|:---|:---|
| Years ending December 31, | Total |
| 2023 | $23751 |
| Total lease liabilities | 23751 |
| Less amount representing interest | (1552) |
| Total | 22199 |
| Less current portion | (22199) |
|  | $- |

---

**NOTE *13.* SUBSEQUENT EVENTS**

On *March 21, 2023,* the Board of Directors approved the issuance of 250,000 shares of PAID common stock valued at $437,500 and is to be recorded as share-based compensation in *2023* as it relates to the renewal of the employment agreement of W. Austin Lewis IV, of which 125,000 of the shares are subject to repurchase at $0.01 per share if Mr. Lewis terminates employment prior to *January 1, 2024,* as defined in the employment agreement. The Board of Directors also approved the allocation of the *2022* bonus accrual to be paid out in cash and shares of which $82,180 has been recorded as share-based compensation expense for the year ended *December 31, 2022.* Option compensation for the board positions was increased to 10,000 common stock options per committee head from 5,000 common stock options per committee head and was approved by the Board of Directors. A total of 46,961 shares of common stock were issued to officers and *one* employee in *March 2023.* The Board of Directors has approved the terms of an employment agreement of the Company's COO, David Scott. The employment agreement for $214,000 CAD annually includes the issuance of common stock valued at $25,000 USD which are subject to repurchase at *$0.01* in the event that Mr. Scott terminates his employment agreement prior to *April 1, 2024.*

The Company has evaluated subsequent events through the filing of this Annual Report on Form *10*-K, and determined that there have been *no* events that have occurred that would require adjustment to or additional disclosure in the consolidated financial statements, except as disclosed herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-23

## Exhibit 10.13

**Exhibit 10.13**

**ADDENDUM**

This Addendum to Employment Agreement ("Addendum") is entered into as of March 21, 2023, by and between Paid, Inc., a Delaware corporation ("Paid" or "the Company"), and W. Austin Lewis, IV ("Employee").

WHEREAS, the Company and Employee entered into a two-year Employment Agreement on March 29, 2021 subject to one year renewals ("Employment Agreement");

WHEREAS, the parties desire to renew the Employment Agreement for a two year period;

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Company and Employee hereby agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Renewal.</u> The Employment Agreement is hereby renewed for an additional *two* year term, with the following changes in compensation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. <u>Base Salary</u>. Base Salary is increased to $321,000, retroactive to January 1, 2023;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. <u>Bonus</u>. Employee shall receive, no later than March 22, 2023, 250,000 shares of common stock, provided that fifty percent (50%) of such shares may be repurchased by the Company at Company's sole election at $0.01 per share (adjusted for any stock split, stock dividend, or other recapitalization or reorganization) in the event that Employee terminates his employment voluntarily prior to January 1, 2024. Employee may be awarded such other bonuses by the Board of Directors in the Board's sole discretion from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Governing Laws and Forum</u>. This Addendum shall be governed by, construed, and enforced in accordance with the laws of the Commonwealth of Massachusetts. The parties hereto further agree that any disagreement, claim or controversy may arise between Employee and the Company with respect to a termination (including but not limited to, any claim of employment discrimination), the same shall be settled by arbitration in Massachusetts before a single arbitrator in accordance with the then current national rules for resolution of employment disputes of the American Arbitration Association, enforceable in any court of competent jurisdiction and shall be binding upon the parties hereto except that the Company may seek equitable relief with respect to any breaches of clause 6 of the Employment Agreement (confidentiality) or the Non-competition Agreement attached to the Employment Agreement that is referenced in clause 7 of the Employment Agreement.

------

IN WITNESS WHEREOF, the Company and Employee have executed and delivered this Addendum as of the date written above.

---

| | | |
|:---|:---|:---|
|  | Paid, Inc. | Paid, Inc. |
| &nbsp;&nbsp;&nbsp;&nbsp;/s/ W. Austin Lewis | By: | &nbsp;&nbsp;&nbsp;&nbsp;/s/ Laurie Bradley |
| W. Austin Lewis, IV | Name: | Laurie Bradley, Director |

---

## Exhibit 10.14

**Exhibit 10.14**

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| | |
|:---|:---|
| ![p03.jpg](p03.jpg) | ![p04.jpg](p04.jpg) |

---

March 23, 2023

David Scott<br> 1549 Upper Wellington Street<br> Hamilton, ON L9B 2H4

Dear David:

**<u>RE:</u>**<u> </u>**<u>Employment Agreement with ShipTime Canada Inc. and PAID, Inc.</u>**

We are pleased to offer you continuing employment with ShipTime Canada Inc. and its parent company PAID, Inc., (collectively, the "**Employer**") in the position of Chief Operating Officer (the "**Position**"), subject to the terms and conditions set out in this letter agreement (the "**Agreement**"). We shall refer to you throughout this Agreement as either "**you**" or "**your**" or the "**Employee**".

Please note that this Agreement is conditional upon: (a) you accepting all of the terms and conditions set out herein; and (b) you returning a signed copy of this Agreement **<u>prior to</u>** 5PM on **March 28, 2023** (the "**Deadline**"). If any of these conditions are not fulfilled, then this Agreement shall be deemed to have been withdrawn and shall be null and void.

Finally, we note that in exchange for your execution of this Agreement, you are being provided with a raise of 7% to your Base Salary (from $200,000/year to $214,000/year), which will be retroactive to January 1, 2023. By entering into this Agreement, you are acknowledging that this is valid and sufficient consideration for your execution of this Agreement.

**<u>1.</u>**<u> </u>**<u>Employment and Hours</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 Your employment pursuant to this Agreement will commence on April 1, 2023. You will be responsible to and take direction from Austin Lewis, or such other person as the Employer may advise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 The Employer will recognize your original start date with ShipTime Canada Inc. for the purposes of your entitlements under this contract and pursuant to the  ***Employment Standards Act, 2000,* S.O. 2000, c. 41**, as amended ()"**ESA** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 You will be employed for an indefinite term, subject to termination in accordance with the termination provisions set out in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4 Your employment is full-time but will involve hours of work that may vary from time to time. You are expected to work at least 44 hours per week, but given the nature of your Position you are required to attend to the needs of the Employer as necessary to fulfill the duties of your Position. The Employer shall have the right to determine your schedule and shall assign such schedule upon reasonable notice to you, including any changes that may be made from time to time.

ShipTime Canada Inc. 700 Dorval Drive, Oakville, ON L6K3V3 Paid Inc. 225 Cedar Hill Street, Marlborough, MA 01752

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| ![p03.jpg](p03.jpg) | ![p04.jpg](p04.jpg) |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.5 The Employer shall have the right to temporarily lay you off in accordance with the ESA.

**<u>2.</u>**<u> </u>**<u>Duties and Exclusivity</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 You shall be required to perform the duties and responsibilities of your position as well as all other duties assigned to you by the Employer from time to time, as more particularly set out in **Schedule** "**A**" attached hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 In conducting your duties, you agree to fully, faithfully and to the best of your talents, experience, and abilities: (a) perform any and all lawful legal duties, responsibilities and other services necessary or appropriate to perform the functions of the Position, (b) perform all duties and responsibilities assigned by the Employer, at the sole discretion and direction of the Employer, and (c) act in a manner that is consistent with the industry standard of someone in your Position.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 Throughout your employment, you shall not be employed or engaged in any capacity in any other business that may conflict with the performance of your duties and responsibilities for the Employer, unless expressly authorized by the Employer in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 From time to time, your duties and responsibilities may change, and the Employer reserves the right to make changes to your duties and responsibilities as and when necessary to meet the needs of the business. Where a fundamental change in your duties or responsibilities is to be made, the Employer will provide you with notice in accordance with the ESA of such change, which you hereby agree and accept is sufficient notice of any such changes.

**<u>3.</u>**<u> </u>**<u>Remuneration and Benefits</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 As payment for and in connection with the performance of your duties under this Agreement for the Employer, the Employer shall provide you with the following aggregate compensation and benefits, less applicable statutory deductions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) **Base Salary**. A gross base salary of **$214,000.00 (CDN)** per year (the "**Base Salary** "), payable in bi-weekly instalments and in accordance with the Employer's payroll practices. Please note that, unless otherwise specified herein, your base salary is inclusive of all monetary entitlements including but not limited to vacation pay, public holiday pay, and overtime pay.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. **Retroactive Payment**. The Employer will make you a one-time retroactive payment for the difference between your previous base salary of $200,000/year and your new Base Salary of $214,000.00/year, pro-rated back to January 1, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) **Benefits**. You shall be entitled to participate in the Employer's health care benefit programs that are made generally available by the Employer from time to time pursuant to its policies. The Employer's sole obligation in this regard will be to pay its share of the premiums for such benefits. Your participation in any such health care benefit programs will at all times be subject to the terms and conditions of the applicable benefit plans. The Employer reserves the right to modify or eliminate benefit plans in its sole and absolute discretion.

ShipTime Canada Inc. 700 Dorval Drive, Oakville, ON L6K3V3 Paid Inc. 225 Cedar Hill Street, Marlborough, MA 01752

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| ![p03.jpg](p03.jpg) | ![p04.jpg](p04.jpg) |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) **Vacation**. You shall be entitled to four (4) weeks of vacation per year or the minimum entitlements set out in the ESA, whichever is greater. The Employer will make its best efforts to schedule your vacation at mutually agreeable times and in consultation with you, but the Employer reserves the right to schedule your vacation unilaterally. Please note that as a salaried employee your vacation pay and public holiday pay is included in your salary. Therefore, it is expected that when you take a vacation or a public holiday, your salary will simply continue without interruption. If you have any additional wages over and above your salary (i.e. bonus), then you hereby agree that such additional wages are inclusive of any vacation pay.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) **Discretionary Bonuses**. You will be eligible to receive a discretionary bonus, in accordance with the achievement of objectives, both corporate and personal, which will be established by the Board of Directors of the Employer from time to time ()"**Bonus** "). You acknowledge that (i) the terms of the Bonus may change each at the discretion of the Employer including, without limitation, the Employer implementing a Bonus Plan; (ii) you have no expectation that in any fiscal year there will be a guaranteed level of Bonus; (iii) the amount of the Bonus, if any, that you may be awarded may change from year to year; and (iv) all bonuses are subject to applicable deductions and withholdings. Your eligibility for any Bonus is conditional upon (a) your performance, (b) the performance of the Employer, and (c) approval by the Employer's Board of Directors. Your entitlement to any Bonus in the event of the termination of your employment will be determined in accordance with the "**Termination of Agreement**" provisions provided herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e) **Stock**. By no later than April 3, 2023, the Employer, shall, on a one-time basis, provide you with an aggregate of $25,000.00 (USD) in restricted shares of PAID, provided that such shares may be repurchased by the Employer, at the Employer's sole and absolute discretion, at a $0.01 per share (adjusted for any stock split, stock dividend or other recapitalization or reorganization) in the event that your employment with the Employer is terminated for any reason prior to April 1, 2024. Please note that your entitlement to and participation in any grant of stock from the Employer is also subject to PAID's Share Plan (the "**Plan** "), which may be amended or replaced from time to time in the sole and absolute discretion of the Employer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f) **Expenses**. You shall be reimbursed for pre-approved expenses authorized and properly incurred in the direct performance of your duties and responsibilities in accordance with the Employer's applicable expense policies. Any expenses which you incur that are contrary to the Employer's policies regarding expenses will be denied reimbursement.

ShipTime Canada Inc. 700 Dorval Drive, Oakville, ON L6K3V3 Paid Inc. 225 Cedar Hill Street, Marlborough, MA 01752

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| ![p03.jpg](p03.jpg) | ![p04.jpg](p04.jpg) |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g) **Company Equipment**. You shall be entitled to the use of company equipment including a company owned cell phone, company owned laptop, and company credit card, to assist you in the performance of your duties and responsibilities assigned to you by the Employer from time to time. During the course of your employment and following thereafter, the Employer retains the right to all company equipment. The Employer reserves the right to modify or eliminate your use of company equipment in its sole discretion.

**<u>4.</u>**<u> </u>**<u>Employer Policies</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 During the course of your employment, you shall abide by all Employer policies in effect which may be amended from time to time by the Employer in its sole and absolute discretion. You hereby undertake to become informed of all such company policies which shall be made available to you upon request, and to remain informed of any changes to such policies as and when communicated to you by the Employer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 Given the unique nature of your Position, you are expected to not only follow the Employer's rules, policies, and procedures but to be a role model for other employees in the organization. Accordingly, you recognize that you are held to a higher standard with respect to your conduct.

**<u>5.</u>**<u> </u>**<u>Conflicts of Interest</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 During the course of your employment, you shall not, directly or indirectly, acquire any financial interest in, accept gifts or favours from, or establish any business relationship with any customer, supplier, distributor or any other person or firm who does, or seeks to do business with the Employer, other than as permitted by the Employer's policies and business practices as determined by the Employer.

**<u>6.</u>**<u> </u>**<u>Confidential Information</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1. The Employee acknowledges and agrees that he has an ongoing obligation to maintain and protect indefinitely the confidentiality of all Confidential Information (as defined in Section 6.3 below) to which he may have access. The Employee covenants that he shall not use any Confidential Information for any purpose other than the purposes of the Employer and its affiliates and shall not, directly or indirectly, publish, disseminate, disclose or otherwise make available any Confidential Information to any third party without the Employer's prior written consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 The Employee acknowledges and agrees that the Confidential Information is valuable and unique and that a breach of his representations, warranties and covenants under Section 6.1 would result in immediate and irreparable injury to the Employer. The Employee agrees that in the event of a breach or threatened breach of his representations, warranties and covenants under Section 6.1, the Employer shall be entitled to seek from any court of competent jurisdiction preliminary and permanent injunctive relief, which remedy shall be cumulative and in addition to any other rights and remedies to which the Employer may be entitled.

ShipTime Canada Inc. 700 Dorval Drive, Oakville, ON L6K3V3 Paid Inc. 225 Cedar Hill Street, Marlborough, MA 01752

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| ![p03.jpg](p03.jpg) | ![p04.jpg](p04.jpg) |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 As used herein, the term " <u>Confidential Information</u> " means all information, data, know-how, trade secrets, processes, research, systems and procedures of a technical or commercial nature in any form relating to the Employer or any of its affiliates, or any of their predecessors, or customers or prospective customers, and their respective business operations, whether contained in hard copy, electronic format or in some other form, including without limitation all business and marketing plans, marketing and financial information, pricing, cost and sales information, contractual arrangements, market research data, lists of customers and prospective customers, information about employees, contractors, customers and suppliers, know-how, product designs, trade secrets, manufacturing techniques, processes, discoveries, ideas, concepts, passwords, and computer programs or software in all stages of development (including source code listings and object code). Confidential Information does not include any information, data or other material that is or becomes part of the public domain other than directly or indirectly by the acts or omissions of the Employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4 Notwithstanding anything contained in this Agreement to the contrary, the Employee may disclose Confidential Information (a) as such disclosure or use may be required or appropriate in connection with his work as an employee of the Employer or its affiliates or (b) when required to do so by a court of law, by any governmental agency having supervisory authority over the business of the Employer or its affiliates or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order him to divulge, disclose or make accessible such information.

**<u>7.</u>**<u> </u>**<u>Non-Solicitation and Non-Competition</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 **Non-Solicitation**. You agree that for as long as this Agreement remains in effect and for a period of twenty four (24) months following the termination of this Agreement for any reason, you will not, either individually or in partnership or jointly or in conjunction with any other person, entity or organization, as principal, agent, consultant, contractor, employer, employee, or in any other manner, directly or indirectly, solicit, entice away, or in any other manner persuade or attempt to persuade any client, customer, officer, employee, or agent of the Employer or its related or affiliated entities, to discontinue or alter any one of their relationships with the Employer or its related or affiliated entities, as the case may be.

ShipTime Canada Inc. 700 Dorval Drive, Oakville, ON L6K3V3 Paid Inc. 225 Cedar Hill Street, Marlborough, MA 01752

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| ![p03.jpg](p03.jpg) | ![p04.jpg](p04.jpg) |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 **Non-Competition**. You agree that for as long as this Agreement remains in effect and for a period of twelve (12) months following the termination of this Agreement for any reason, you will not directly or indirectly own, manage, operate, control or participate in the ownership, management, operation or control of, a Restricted Business in the Territory (each as defined below). Notwithstanding the foregoing, you may own, directly or indirectly, solely as an investment, securities of any company traded on any national securities exchange if you are not a controlling person of, or a member of a group which controls such Person, and do not, directly or indirectly, own 3% or more of any class of securities of such Person. For purposes of this Agreement, the following terms shall have the following meaning:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) **"Restricted Business**" shall mean (a) the business of providing on-line package shipping services as conducted by the Company, including payment processing services in the twelve (12) month period immediately preceding the date of employment termination to customers based within the Territory.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) **"Territory**" shall mean the United States and Canada.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) **"Person**" means any natural person or any business entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3 **Enforcement**. You hereby acknowledge and agree that the non-solicitation and non-competition restrictions set out in Sections 7.1 and 7.2 hereof are reasonable and necessary for the successful operation of the Employer's business. You further acknowledge that if you breach any provision of Sections 7.1 or 7.2 hereof, the Employer will suffer irreparable injury. It is therefore agreed that the Employer shall have the right to enjoin any such breach or threatened breach, without posting any bond, if ordered by a court of competent jurisdiction. The existence of this right to injunctive and other equitable relief shall not limit any other rights or remedies that the Employer may have at law or in equity including, without limitation, the right to monetary and compensatory damages. If any provision of Section 7.1 or 7.2 hereof is determined by a court of competent jurisdiction to be unenforceable in the manner set forth herein, the Employee and the Employer agree that it is the intention of the parties that such provision should be enforceable to the maximum extent possible under applicable law. If any provision of this Agreement is held to be invalid or unenforceable, such invalidation or unenforceability shall not affect the validity or enforceability of any other provision of this Agreement (or any portion thereof). For purposes of the restrictions of this Agreement, references to the "Employer" include reference to its subsidiaries and affiliates.

**<u>8.</u>**<u> </u>**<u>Termination of Agreement</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 **Resignation**. You may terminate this Agreement upon providing six (6) months of advance notice in writing to the Employer. The Employer may waive such notice period in whole, or in part, in its sole discretion. In the event the Employer elects to waive such notice period, you shall be paid eight (8) weeks' pay in lieu of notice (or the minimum required by the ESA), and shall receive any accrued, but unused vacation pay on your last pay following after your last day of work.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 **Death, Frustration, or Wilful Misconduct**. This Agreement and the Employee's employment will cease in the event of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. the death of the Employee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. the Employee engaging in wilful misconduct; or

ShipTime Canada Inc. 700 Dorval Drive, Oakville, ON L6K3V3 Paid Inc. 225 Cedar Hill Street, Marlborough, MA 01752

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. the Agreement being frustrated due to the Employee being unable to perform the essential duties of the Position as a result of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. the Employee suffering a permanent disability (meaning an injury or illness that renders the Employee unable to work for at least six (6) consecutive months even with accommodations to the point of undue hardship. and such that it is unlikely that the Employee will be able to return to work within the foreseeable future, as determined by a medical professional);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. the Employee being unable to travel internationally (i.e. between Canada and the U.S.A.) due to the Employee losing their ability to travel (i.e. loss of driver's license) or the Employee being deemed inadmissible for entry into the U.S.A. due to a criminal conviction or similar offence; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. any other situation where it would be impossible for the Employee to fulfill their duties under this Agreement and there is no reasonable likelihood that the Employee will be able to return to work within a reasonable time.

If this Agreement ends as a result of any of the circumstances outlined in Section 8.2 hereof, then the Employer shall pay to the Employee or to the Employee's estate, as applicable: (i) Base Salary up to the date of termination; (ii) accrued and outstanding vacation pay to the date of termination; (iii) payment of any pro-rated Bonus for the year prior to the year of termination that was earned but not yet paid; and (iv) reimbursement for business expenses properly incurred to the date of termination (the "**Basic Entitlements**"). In addition, the Employee or the Employee's estate, as applicable, shall receive any other entitlements expressly required by the ESA as applicable in the circumstances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 **Termination Without Cause**. The Employer may terminate your employment in its sole discretion at any time, without cause, upon providing you <u>solely</u> with the following entitlements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. the Employer shall pay to the Employee the Basic Entitlements (with vacation pay calculated to the end of the statutory notice period);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. the Employer shall pay to the Employee the Bonus payable with respect to the year in which termination occurs calculated *pro rata* through the date of termination based on the average of the Bonus awarded for the two calendar years prior to the year in which the Employee's employment terminates or, if the Employee has not completed two years of service following the Commencement Date, the Employee's target bonus for the year in which the Employee's employment terminates (the "**Bonus Calculation** ");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. the Employer shall provide the Employee with the <u>greater of</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. three (3) weeks of notice and benefits, or pay in lieu thereof, or a combination of the two, for every year of completed service, as calculated from the Employee's original hire date with the Employer, up to a maximum of twenty six (26) weeks, plus any severance pay that is required by the ESA; <u>or</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. all of the minimum entitlements required by the ESA as calculated with reference to the Employee's original hire date with the Employer;

ShipTime Canada Inc. 700 Dorval Drive, Oakville, ON L6K3V3 Paid Inc. 225 Cedar Hill Street, Marlborough, MA 01752

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| ![p03.jpg](p03.jpg) | ![p04.jpg](p04.jpg) |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. the Employer shall continue to pay its premiums to provide all benefits to the Employee (as existed on the date notice of termination is provided) until the end of the applicable period determined by paragraph 8.3(c) hereof; provided that, if the Employer cannot continue any particular benefit pursuant to the terms of the relevant plan or policy, then the Employer shall instead make alternate arrangements to provide the Employee with comparable benefits during the applicable period determined by paragraph 8.3(c) hereof or, at the Employer's discretion, provide the Employee with a payment equal to the premium costs for the benefits as they existed at the date notice of termination is provided;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. the Employee's entitlement, if any, to awards under the Plan will be determined in accordance with the terms of the Plan; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. the Employee's entitlement, if any, with respect to equity will be determined in accordance with the terms of the Plan and the Shareholders' Agreement.

You agree that the entitlements provided pursuant to Section 8.3 constitute full and final satisfaction of any and all obligations which the Employer may have arising from the termination of your employment and you hereby expressly waive any claims including pursuant to the common law and the ESA, and agree to accept such entitlements in full and final satisfaction of any and all such claims. For clarity, under no circumstances will you be provided with less than your minimum entitlements under the ESA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4 **Equity on Termination**. Your direct or indirect equity in the Employer shall at all times be subject to the terms of the Shareholders Agreement and/or the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5 **Return of Property**. Upon termination of this Agreement for any reason, you shall return to the Employer all company property, including but not limited to: all Confidential Information, company credit cards, computers, cell phones, computer equipment and company files, disks, USBs or CDs that are in your possession.

**<u>9.</u>**<u> </u>**<u>General</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1  ***Severability*** *.* In the event that any provision herein, or part thereof, shall be deemed void or invalid by a court of competent jurisdiction, the remaining provisions, or parts thereof, shall be and remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2  ***Survival of Covenants.*** All restrictive covenants herein shall survive termination of this Agreement and continue in full force and effect notwithstanding the termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3  ***Schedules.*** The Schedules appended to this Agreement, if any, are expressly incorporated into, and form part of this Agreement. In the event of any inconsistency or conflict between the terms and conditions in this Agreement and any Schedule, the terms and conditions of this Agreement shall prevail.

ShipTime Canada Inc. 700 Dorval Drive, Oakville, ON L6K3V3 Paid Inc. 225 Cedar Hill Street, Marlborough, MA 01752

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4  ***Governing Law.*** **  This Agreement shall be governed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein and the parties agree that they shall attorn to the jurisdiction of the courts of the Province of Ontario.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5  ***Assignment.*** The Employer may assign this Agreement to its parent, or subsidiary, or affiliate provided that in all events it shall be bound by any applicable provisions of the ESA in respect of successor employers. You may not assign this Agreement and obligations hereunder that survive the termination of this Agreement shall be binding upon your successors, executors, heirs and/or estate trustee as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.6  ***Amendment.*** Any modification to the terms of this Agreement must be in writing and signed by the parties, or it shall have no force or effect and shall be void.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.7  ***Entire Agreement*** *.* This Agreement contains the entire agreement between you and the Employer and supersedes all other provisions, negotiations, discussions, commitments, or agreements insofar as it relates to your employment. There are no representations or warranties related to this Agreement except as set out herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.8  ***Successor Legislation*** . Any statute referred to herein shall be deemed to include that statute and its regulations as amended, restated and/or replaced from time to time, and any successor legislation to the same general intent and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.9  ***Independent Legal Advice*** *.* By signing this Agreement, you acknowledge that you have read and understood the Agreement and acknowledge that you have had the opportunity to obtain legal advice about it and have either obtained independent legal advice, or waived that right.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.10  ***Employer*** '  ***s Property.*** The Employee acknowledges that all items of any and every nature or kind created or used by the Employee pursuant to the Employee's employment under this Agreement, or furnished by the Employer to the Employee, and all equipment, credit cards, books, records, reports, files, manuals, literature, confidential information or other materials shall remain and be considered the exclusive property of the Employer at all times and shall be surrendered to the Employer, in good condition, promptly on the termination of the Employee's employment irrespective of the time, manner of cause of the termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.11  ***Ministry of Labour Poster*** . By signing this Agreement, you acknowledge receiving a copy of the most recent version of the Employment Standards Poster prepared and published by the Minister of Labour entitled "Employment Standards in Ontario" and which can be accessed at: <u>https://files.ontario.ca/mltsd-employment-standards-poster-en-2020-09-08.pdf</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.12  ***Anti-Obsolescence*** . Except for expressly agreed upon changes to this Agreement which are made in accordance with paragraph 9.6 hereof, the terms and conditions of this Agreement shall govern the parties regardless of the length of employment or any changes to your position, compensation, title and regardless of whether such change is material or otherwise.

ShipTime Canada Inc. 700 Dorval Drive, Oakville, ON L6K3V3 Paid Inc. 225 Cedar Hill Street, Marlborough, MA 01752

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Please note that this Agreement shall remain open for acceptance until the Deadline. If the offer is not accepted by that date it shall be deemed to be withdrawn.

If you agree with all of the terms and conditions set out in this Agreement, please sign the "Acceptance and Acknowledgment" page that is attached hereto, and return a copy to me at your earliest convenience.

Yours very truly,

**ShipTime Canada Inc. and PAID, Inc.**

Per:<u> </u><u>/s/ W. Austin Lewis IV</u><u> </u><u> </u>

Austin Lewis<br> I have authority to bind the Companies.

ShipTime Canada Inc. 700 Dorval Drive, Oakville, ON L6K3V3 Paid Inc. 225 Cedar Hill Street, Marlborough, MA 01752

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**<u>ACCEPTANCE AND ACKNOWLEDGEMENT</u>**

I, the undersigned, hereby warrant and confirm that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) I have had sufficient time to review and consider this Agreement thoroughly;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) I have read and understand the terms of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) I am not bound by any restrictive covenants which would limit me, or prohibit me, from being employed with the Employer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) I have received legal advice with respect to this Agreement, or have waived my right to do so;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e) I am receiving sufficient and valid consideration for entering into this Agreement, including but not limited to an increase in my Base Salary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f) I enter into this Agreement voluntarily; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g) I hereby accept this Agreement and all of the terms and conditions set out in this Agreement.

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| _____03/24/2023___________________<br> Date  | __/s/ David Scott_____________________<br> **David Scott** |

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ShipTime Canada Inc. 700 Dorval Drive, Oakville, ON L6K3V3 Paid Inc. 225 Cedar Hill Street, Marlborough, MA 01752

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**SCHEDULE** "**A**"

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**DUTIES AND RESPONSIBILITIES**

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The Employee shall be required to perform the following duties and responsibilities as part of essential functions of the Position:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Lead the technology teams of ShipTime and Paid. Meet with technology and integration partners, vet & build projects including wireframing designs, build roadmaps based on cost/benefit analysis, assign development resources to match their skills with the tasks, execute & launch successful products & features while training internal teams, and communicating changes to members. Assure tools and resources are provided to maintain stability and scalability of applications as well as meet project deliverable dates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Lead marketing efforts of ShipTime and Paid while working with the marketing manager. Provide wireframe of ideas and campaigns to execute against across all channels – website (new pages, blogs), in-app, social, email, YouTube, affiliate marketing, paid ads (google, fb, LinkedIn). Final proofing changes on all graphical and written content. Assure tools and resources are provided to hit marketing/lead gen KPIs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Lead sales efforts of ShipTime and Paid while working with the VP sales. Set up and maintain all software associated with managing leads including the sync of data, building automated workflows (welcome series, sales automation, follow-up funnels, rep alerts, account-based triggers to increase conversion), building sales emails for automation as well as smart email for reps to use in canned responses. Implement higher converting funnels from signup, to quote, to ship, to being a repeat shipper. Hit sales KPI's;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Assure smooth operations both within individual departments and from a high level across departments. Have a highway of interdepartmental information flowing to all teams that allow us to move faster and respond to issues while cutting costs and time and delivering a better experience to our members; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. Such other duties and responsibilities as may be assigned to the Employee from time to time by the Employer.

ShipTime Canada Inc. 700 Dorval Drive, Oakville, ON L6K3V3 Paid Inc. 225 Cedar Hill Street, Marlborough, MA 01752

## Exhibit 31.2

**EXHIBIT 31.2**

CERTIFICATION

I, W. Austin Lewis, IV, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 10-K of PAID, INC. (the "Company");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

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| /s/ W. Austin Lewis, IV |
| W. Austin Lewis, IV, Chief Executive Officer, Chief Financial Officer |
| (Principal Financial and Accounting Officer) |

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Date: March 31, 2023

## Exhibit 32.0

**EXHIBIT 32.0**

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES OXLEY

ACT OF 2002

In connection with the Annual Report of PAID, INC. (the "Company") on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, in his capacity as CEO and CFO of the Company, certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ W. Austin Lewis

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

(Principal Financial and Accounting Officer)

March 31, 2023

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