Paid, Inc. Enters Note Modification and Forbearance Extension with Embolx

What Happened

• Paid, Inc. (PAYD) reported that it holds a secured convertible note originally entered under a Securities Purchase Agreement with Embolx, Inc. The original note was $1,875,000 (purchased at a 20% original issue discount, $375,000) and was secured by substantially all of Embolx’s assets and convertible into Embolx common stock. The note experienced defaults and was amended multiple times. In March 2024 Paid amended and replaced the note, adding $500,000 (with a 25% original issue discount) and related adjustments. Paid later entered a Forbearance and Loan Modification Agreement that extended the note balance of $5,967,100 with a 25% interest rate to September 30, 2025, which was subsequently amended to expire August 31, 2026 and then extended again by letter through October 31, 2026.

Key Details

• Original note: $1,875,000 principal, 20% original issue discount ($375,000), 9‑month maturity (entered Oct 13, 2022).
• Defaults and penalties: note defaulted as of July 19, 2023 (additional 20% penalty + 20% interest), recognized $578,425 of other income in Paid’s 2023 financials.
• March 12, 2024 amendment: replacement note included an additional $500,000 with a 25% original issue discount and a $50,000 increase applied to related expenses; note defaulted effective June 19, 2024.
• Forbearance/extensions: Forbearance and Loan Modification extended a $5,967,100 note at 25% interest to Sept 30, 2025; amended to Aug 31, 2026; further extended by letter through Oct 31, 2026.

Why It Matters

• Paid retains concentrated credit exposure to Embolx through a large, high‑interest secured note ($5.97M as of the forbearance) that has been in default and subject to repeated amendments and forbearance. That means recovery of principal (or conversion to equity) is uncertain and timing is extended to at least October 31, 2026 under current agreements.
• The arrangement has produced significant non‑operating income (the $578,425 recognized in 2023) from penalties/interest, but the underlying credit risk remains material to Paid’s balance sheet and future cash flows until the note is resolved. Investors should note the continued counterparty and credit risk, the high interest/penalty rates (20–25%), and the multiple extensions delaying final resolution.