10-K: PAID Inc. Reports 2025 Net Loss Amid Revenue Growth

PAID Inc. reported an 11% revenue increase in 2025, driven by shipping services, but posted a net loss due to higher operating expenses and reduced other income.

Summary

• Total revenues increased by 11% to $20,708,235 in 2025, up from $18,585,525 in 2024.
• Shipping coordination and label generation services revenue grew by 12% to $20,677,832, largely due to the Canada Post strike and increased marketing.
• Client services revenue decreased by 78% to $3,863, attributed to the retirement of the brewery management software business.
• eCommerce services revenue declined by 61% to $26,540, as the company shifts focus to a full platform of product offerings.
• Gross profit increased by 14% to $4,644,795, but gross margin slightly decreased to 22% from 23% in 2024.
• Operating expenses rose by 16% to $5,299,572, primarily due to share-based compensation and the hiring of two new executive-level employees.
• Net other income decreased by 96% to $50,520, as the company refrained from recording revenues from the Embolx note in 2025, unlike a significant gain in 2024.
• The company reported a net loss of $(368,243) in 2025, a significant shift from a net income of $763,592 in 2024.
• Basic loss per common share was $(0.04) in 2025, compared to basic income of $0.09 per common share in 2024.
• Cash and cash equivalents decreased to $1,108,059 at year-end 2025 from $1,284,965 in 2024.
• Working capital improved, reducing its deficit to ($304,212) in 2025 from ($629,467) in 2024.
• Net cash used in operating activities was $(53,171) in 2025, a decline from $447,643 provided by operations in 2024.
• The company acquired an approximate 80% shareholder interest in Warehowz, Inc. on January 30, 2026, for $177,000 plus earnouts.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing with caution. While revenue growth in the core shipping segment is positive, the shift to a net loss, negative operating cash flow, and significant internal control weaknesses indicate underlying operational and financial challenges that outweigh the growth.

Positives

• Total revenues increased by 11% in 2025, reaching $20,708,235.
• Shipping coordination and label generation services, the key revenue driver, saw a 12% increase in revenue to $20,677,832.
• Gross profit increased by 14% to $4,644,795.
• Working capital deficit improved significantly, decreasing to ($304,212) from ($629,467).
• Management believes the company has adequate cash resources to fund operations for the next 12 months.
• The company was awarded a 'Great Place to Work' certification in Canada and added six new employees with minimal turnover.
• Successful integration of Paid Inc. and ShipTime platforms continues, with a focus on expanding e-commerce offerings.
• The company acquired an approximate 80% shareholder interest in Warehowz, Inc. in January 2026, expanding its business.

Negatives

• The company reported a net loss of $(368,243) in 2025, a reversal from a net income of $763,592 in 2024.
• Basic loss per common share was $(0.04) in 2025, down from $0.09 income per share in 2024.
• Net cash used in operating activities was $(53,171) in 2025, compared to $447,643 provided by operations in 2024.
• Other income decreased by 96% due to the company refraining from recording revenues from the Embolx note in 2025.
• Client services revenue decreased by 78% due to the retirement of the brewery management software business.
• eCommerce services revenue decreased by 61% as the company shifts focus.
• Operating expenses increased by 16%, driven by share-based compensation and new executive hires.
• The CEO/CFO concluded that the company's disclosure controls and procedures were not effective as of December 31, 2025, due to material weaknesses in internal control over financial reporting.
• The company has identified four remaining material weaknesses in internal controls over financial reporting, including ineffective communication, ineffective monitoring, lack of procedures/documentation, and lack of cash reconciliation.
• The market for the company's securities is limited, with low trading volume and quotation on the OTCPINK, potentially affecting liquidity.

Risks

• Inability to anticipate and adapt to a developing market for e-commerce and logistics services.
• Challenges in marketing, licensing, and enforcing its 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.
• Inability to maintain competitive pricing with its carriers.
• Requirement for additional financing to continue operations, which could lead to shareholder dilution if equity securities are issued.
• Uncertainty regarding marketplace acceptance of its software products due to rapid technological change and evolving industry standards.
• Unpredictable operating results and growth rate due to factors like customer base increase, gross margin maintenance, consumer confidence in encrypted transactions, competitor introductions, technical difficulties, governmental regulation, and general economic conditions.
• Dependence on third-party technology elements (internet service providers, technology licensors, hardware suppliers) and potential negative impact from errors, failures, interruptions, or delays.
• Failure to manage growth effectively, placing strain on management, operational, and financial resources.
• Dependence on the continued services of key personnel, W. Austin Lewis, IV (CEO/CFO) and David Scott (COO), without key person life insurance.
• Inability to attract and retain other qualified managerial, accounting, technical consulting, marketing, and customer service personnel.
• Reliance on market awareness of its brand, requiring substantial financial and other resources for marketing and advertising.
• System failures, including internet disruptions, could result in service interruptions, harm business, and diminish reputation.
• Vulnerability of cloud-based servers to computer viruses, physical/electronic break-ins, and deliberate capacity overloads.
• Certain provisions of Delaware law and the company's Certificate of Incorporation and Bylaws could have anti-takeover effects.
• Inability to obtain and maintain proprietary protection for its technologies and processes, including software for shipping calculator, label generation, and e-commerce solutions.
• Potential intellectual property infringement claims from third parties, leading to litigation costs and diversion of resources.
• Dependence on licensed technologies from third parties, with risks of license termination or inability to obtain upgrades.
• Exposure to liability for content retrieved from its websites, including claims related to defamation, libel, negligence, personal injury, copyright, trademark, or patent infringement.
• Potential risks relating to significant deficiencies and material weaknesses in internal controls over financial reporting, which could lead to loss of investor confidence or material misstatements.
• Intense competition in the online services market with low barriers to entry, potentially leading to reduced operating margins and loss of market share.
• Adverse effects from deterioration in economic conditions, impacting consumer/corporate spending and ability to raise capital.
• Security breaches and credit card fraud could harm business, expose the company to loss or litigation, and require significant capital expenditure.
• Increased government regulation on internet services, user privacy, freedom of expression, pricing, content, taxation, advertising, intellectual property rights, and information security.
• Impact of tariffs and trade disputes, such as the 25% tariff on goods from Canada, Mexico, and China, which affected ~10% of label generation customer revenues in 2025.
• Volatility of the company's stock price, influenced by operational results, competitor announcements, short selling, regulatory changes, and general economic conditions.
• Penny stock regulations may impose restrictions on the marketability of securities.
• Limited market for the company's securities on the OTCPINK, potentially limiting liquidity for investors.

Future Outlook

Management's focus for 2026 is to continue growing the ShipTime business and building out the foundation of the Paid platform of e-commerce products. The technology roadmap extends through 2027, with scheduled enhancements for existing platforms, new websites, e-commerce shopping cart solutions, merchant payment processing, and shipping tools. The company also plans to continue adding technical and marketing personnel and exploring opportunities and partnerships to grow the Paid platform. Management believes it has adequate cash resources for the next 12 months and continues to seek alternative capital sources for future growth.

Management Comments

• "The Company's focus in 2024 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 todays on-line marketplace."
• "While the ShipTime portion of our business is our key revenue driver; our strategy in 2025 was to continue to build out the foundation of the Paid platform of e-commerce products while driving our core business forward."
• "Management feels that the assets of Embolx are sufficient to satisfy the obligation of the note receivable."
• "Management continues to evaluate the financial status of Embolx and the potential sales of their business."
• "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."
• "Management believes that the Company has adequate cash resources to fund operations during the next 12 months."
• "Management continues to explore opportunities and partnerships to grow the Paid platform of services."
• "The CEO/CFO has worked with the SVP of Finance and management to identify areas of improvement and together they continue to implement cross training and redundancies to assist with internal controls."

Industry Context

StockSavvy.ai notes that PAID Inc.'s growth in shipping coordination services, partly fueled by the Canada Post strike, highlights the resilience and critical nature of logistics platforms in the e-commerce sector. The company's strategic shift towards a comprehensive e-commerce platform aligns with broader industry trends of integrated solutions for small and medium businesses, aiming to capture more value per customer. However, the decline in client services (brewery software) and e-commerce services revenue suggests challenges in diversifying or consolidating offerings, a common hurdle for companies expanding beyond their core competencies. The impact of tariffs and their subsequent legal challenge underscore the significant external regulatory and geopolitical risks that can rapidly affect cross-border e-commerce and logistics operations, a factor that competitors with more diversified geographic revenue streams might mitigate more effectively.

Comparison to Industry Standards

• The 11% revenue growth is positive, but the shift to a net loss and negative cash flow from operations in 2025 suggests underperformance compared to industry leaders in the e-commerce and logistics SaaS space, which often demonstrate consistent profitability and strong cash generation as they scale.
• The gross margin of 22% in 2025 is lower than many established SaaS companies, which typically aim for gross margins of 70-80% or higher, indicating a significant portion of revenue is consumed by direct costs, likely carrier services in the shipping segment.
• The identified material weaknesses in internal controls over financial reporting are a significant concern, falling below the governance standards expected of publicly traded companies, especially compared to larger, more mature competitors like Shopify (for e-commerce) or FedEx/UPS (for logistics, though PAID operates as a platform).
• The high volatility of the stock price and limited liquidity on the OTCPINK market are characteristic of smaller, less mature companies, contrasting sharply with the stability and robust trading volumes of larger, well-capitalized industry players.
• The acquisition of Warehowz, Inc. indicates a strategic move to expand capabilities, a common growth strategy in the fragmented logistics tech market, but its success will depend on effective integration and realization of synergies, which can be challenging for companies with internal control deficiencies.

Management Changes

Corporate Governance

Legal Proceedings

• A dispute with former President and CEO, Mr. Allan Pratt, regarding the non-renewal of his employment agreement, severance payment, and an unpaid bonus. Mr. Pratt alleges wrongful termination and disputes the authorization of a stock bonus awarded to the current CEO in March 2021.
• A claim contesting the reduction of the board size was dismissed by the Delaware court on November 9, 2023.
• The trial on the remaining claim (severance and stock bonus) was held on December 5-6, 2024, with post-trial briefing completed on March 21, 2025, and a post-trial hearing on May 14, 2025. The outcome is not yet determined, and no reserve has been recorded.

Related Party Transactions

• The company did not engage in any related party transactions exceeding $120,000 in 2025 or 2024, and does not currently propose any such transactions.
• The company has an unwritten policy to obtain approval from the entire board of directors for any related party transaction involving more than a de minimis obligation, expense, payment, or equity grant.

Stakeholder Impact

• **Shareholders**: Experienced a net loss and negative operating cash flow in 2025, potentially impacting share value. The stock price has been highly volatile. Material weaknesses in internal controls could erode confidence. Dilution risk exists if future capital raises involve equity issuance.
• **Employees**: The company was awarded a 'Great Place to Work' certification in Canada, suggesting a positive work environment. New executive hires and share-based compensation indicate investment in talent, but dependence on key personnel (Lewis and Scott) poses a risk.
• **Customers**: Continued focus on enhancing e-commerce platforms and 'Heroic Multilingual Customer Support' aims to improve customer experience and retention. However, system interruptions and reliance on third-party technologies could negatively impact service reliability.
• **Suppliers/Carriers**: The company relies on partnerships with leading couriers and freight carriers for its shipping services. Maintaining competitive pricing and managing relationships with these third parties is crucial.
• **Creditors**: The company has outstanding notes receivable (Embolx, 5String Solutions LLC) and a working capital deficit, which could be a concern. However, management believes it has adequate cash for the next 12 months and the Embolx note is secured by assets.

Next Steps

• Continue to build out the foundation of the Paid platform of e-commerce products.
• Drive the core ShipTime business forward.
• Engage Sales and Account Management Teams with prospects and members to provide guidance and support in utilizing Paid platform tools and services.
• Provide agencies, associations, and partners with infrastructure to help small to medium businesses grow digital offerings.
• Continue to focus on clients in both the United States and Canada.
• Market PAID and ShipTime throughout 2026 and beyond, enhancing cross-selling efforts and adding new features.
• Create additional partnerships in the United States and beyond North America.
• Utilize additional resources and marketing initiatives to increase onboarding and convert members into active long-time users.
• Implement continuous user enhancements on existing platforms, new websites, updates to e-commerce shopping cart solution, enhancements to merchant payment processing platform, shipping calculator enhancements, and other online shopping and shipping tools (technology roadmap projected from 2025 through 2027).
• Continue to add technical and marketing personnel.
• Continue to review new procedures and controls in 2026 to remediate material weaknesses in internal controls.
• Improve infrastructure, personnel, and related processes to strengthen internal control over financial reporting.
• Conduct a search to fill the open Board of Directors position following David Ogden's resignation.
• Repay approximately $102,000 in indebtedness for Warehowz, Inc. acquisition on or around February 28, 2026, in shares of restricted common stock.
• Pay off an additional $75,000 convertible note for Warehowz, Inc. acquisition within 120 days of closing.
• Make earnout cash payments to Warehowz, Inc. shareholders on April 15, 2027, and April 15, 2028, based on net revenue and net income for 2026 and 2027.

Key Dates

Recommendation

The company shows promising revenue growth in its core shipping segment and strategic expansion through acquisition. However, the shift to a net loss, negative operating cash flow, and significant material weaknesses in internal controls present substantial risks. The stock's high volatility and limited liquidity on the OTCPINK further complicate investment. A 'hold' recommendation is appropriate as investors should await clear evidence of sustained profitability, positive operating cash flow, and successful remediation of internal control deficiencies before considering further investment, while acknowledging the potential for long-term growth if these issues are addressed.

Keywords

e-commerce platform, shipping logistics, SaaS, payment processing, online sales, ShipTime, PaidPayments, PaidCart, PaidWeb, SEC filing, 10-K, financial results, internal controls, tariffs, stock options, Warehowz