Paid Inc. extends $5.97M Embolx note forbearance
PAID INC extends a high-interest, $5.97 million secured note to Embolx under a forbearance agreement now running through October 31, 2026.
Rhea-AI Filing Summary
PAID INC (PAYD) reports a series of modifications and extensions to its secured convertible note investment in Embolx, Inc. The Company initially purchased a secured $1,875,000 convertible note at a 20% original issue discount with a 9‑month maturity and a potential total investment of up to $2,000,000 plus a $500,000 over‑allotment option.
After the note went into default, default penalties and interest generated $578,425 of other income for the year ended December 31, 2023. In March 2024, the note was amended and increased by $500,000 with a 25% original issue discount, and later placed under a Forbearance and Loan Modification Agreement. That agreement now covers a note of $5,967,100 at a 25% interest rate, with the forbearance period most recently extended by letter agreement on August 31, 2026 through October 31, 2026.
Positive
- None.
Negative
- Embolx note repeatedly in default and under forbearance, now a $5,967,100 obligation at 25% interest extended through October 31, 2026, signaling elevated credit and collection risk on a concentrated loan asset.
8-K Event Classification
2 items: 1.01, 9.01
2 items
Item 1.01
Entry into a Material Definitive Agreement
Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
Key Figures
Initial convertible note principal: $1,875,000
Original issue discount on initial note: $375,000 (20%)
Other income from default penalties and interest: $578,425
+5 more
8 metrics
Initial convertible note principal
$1,875,000
Secured convertible note made by Embolx, Inc. under the October 13, 2022 Securities Purchase Agreement
Original issue discount on initial note
$375,000 (20%)
Discount on the $1,875,000 Embolx secured convertible note
Other income from default penalties and interest
$578,425
Recognized for the year ended December 31, 2023 when the Embolx note was in default
Additional investment in March 2024 amendment
$500,000
Added to the Embolx note with a 25% original issue discount, due June 19, 2024
Current Embolx note balance under forbearance
$5,967,100
Note amount covered by the Forbearance and Loan Modification Agreement
Interest rate on forbearance note
25%
Interest rate on the $5,967,100 note under the forbearance agreement
Current forbearance end date
October 31, 2026
Expiration of the extended Forbearance Agreement per August 31, 2026 letter
Potential total investment under SPA
$2,000,000 plus $500,000 over‑allotment
Total potential investment and over‑allotment option defined in the Securities Purchase Agreement
Key Terms
convertible note, original issue discount, Forbearance and Loan Modification Agreement, Senior Secured “A” Note, +1 more
5 terms
convertible note financial
"a secured $1,875,000 convertible note made by Embolx, Inc."
A convertible note is a type of loan that a company gets from investors, which can later be turned into company shares instead of being paid back in cash. It matters because it helps startups raise money quickly without setting a fixed value for the company right away, making it easier to grow and attract investors.
original issue discount financial
"purchased at a 20% ($375,000) original issue discount"
Original issue discount (OID) is the difference between a debt security’s face value and the lower price at which it is first sold, treated as additional interest that accrues over the life of the instrument. For investors it matters because OID raises the effective yield and changes taxable income and the holding’s cost basis over time — think of buying a $100 voucher for $90 and recognizing the $10 gain as earned interest as the voucher approaches maturity.
Forbearance and Loan Modification Agreement financial
"entered into a Forbearance and Loan Modification Agreement with Embolx"
Senior Secured “A” Note financial
"25% Original Issue Discount Senior Secured “A” Note dated March 12, 2024"
other income financial
"resulting in $578,425 of other income which was recognized"
Other income is money a company earns outside its core business—examples include interest from investments, gains from selling assets, rental receipts, or foreign exchange gains. For investors it signals whether profits come from the company’s main operations or from occasional side sources; likened to a restaurant earning extra cash by renting out space, it helps assess whether earnings are sustainable or one-off boosts.
FAQ
What did PAID INC (PAYD) originally invest in the Embolx note?
PAID INC acquired a secured $1,875,000 convertible note from Embolx, Inc. at a 20% original issue discount ($375,000) with a 9‑month maturity and the option to purchase additional notes and warrants up to a $2,000,000 total investment plus a $500,000 over‑allotment.
How did the Embolx default affect PAID INC (PAYD) financially?
When the Embolx note was in default as of July 19, 2023, penalties and 20% interest resulted in $578,425 of other income, which PAID INC recognized in its consolidated financial statements for the year ended December 31, 2023.
What are the key terms of the March 2024 amended Embolx note with PAID INC (PAYD)?
In March 2024, PAID INC amended and replaced the Embolx note, adding a $500,000 investment with a 25% original issue discount, due on June 19, 2024. The Company also received a $50,000 increase to Embolx’s debt balance applied toward related expenses.
What is the current size and interest rate of PAID INC’s (PAYD) Embolx note?
Under the Forbearance and Loan Modification Agreement, PAID INC’s note with Embolx is $5,967,100 and carries a 25% interest rate, reflecting the restructured and increased obligation after prior defaults and amendments.
Until when has PAID INC (PAYD) extended the Embolx forbearance agreement?
By a letter agreement dated August 31, 2026, PAID INC further extended the Forbearance Agreement with Embolx so that the forbearance period now runs through October 31, 2026.
What additional rights does PAID INC (PAYD) have under the Embolx Securities Purchase Agreement?
Under the Securities Purchase Agreement, PAID INC has the right to purchase additional notes and receive warrants on the same terms for a total potential investment of $2,000,000, plus an additional $500,000 over‑allotment option.
AI-generated analysis. How Rhea-AI works. Not financial advice.
