Upay Inc.

01/13/2025 | Press release | Distributed by Public on 01/13/2025 10:55

Amendment to Quarterly Report (Form 10-Q/A)

UPAY


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2024
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____to ___.
333-212447

Commission File Number
UPAY, Inc.
(Exact name of small business issuer as specified in its charter)
NEVADA
37-1793622
(State or other jurisdiction of incorporation or

organization)
(I.R.S. Employer Identification No.)
3010 LBJ Freeway, 12
th
Floor
Dallas, Texas 75234
(Address of principal executive offices)
(972) 888-6052
(Company's telephone number, including area code)
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging Growth Company

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes

No

The Company has
16,128,544
shares outstanding as of October
17
, 2024.

EXPLANATORY NOTE
The purpose of this Amendment to the Registrant's Quarterly Report on Form 10-Q/A for the quarter ended August 31, 2024 ("Form 10-Q/A") is to correct paragraph 4 of the Company's Section 302 certifications to refer to both disclosure controls procedures and internal control over financial reporting (rather than solely disclosure control procedures in the original Form 10-Q for the quarter ended August 31, 2024
)
.




UPAY, Inc.
Consolidated Financial Statements
(unaudited)

Table of Contents
Index
Consolidated Balance Sheets (unaudited)

F-2
Consolidated Statements of Operations and Comprehensive Loss (unaudited)

F-3
Consolidated Statements of Stockholders' Deficit and Accumulated Other Comprehensive Loss (unaudited)

F-4
Consolidated Statements of Cash Flows (unaudited)

F-6
Notes to the Consolidated Financial Statements (unaudited)

F-7

F-1

UPAY, INC.
Consolidated Balance Sheets
(Expressed in U.S. dollars)
August 31,
2024
February 29,
2024
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$
121,846
$
642,846
Accounts receivable, net of allowance
30,571
73,395
Prepaid expenses and other current assets
13,146
2,884
Total Current Assets
165,563
719,125
Property and Equipment, Net (Note 3)
20,596
22,638
Right-of-use Assets, Net (Note 4)
9,168
18,169
Deposit (Note 11)
11,356
10,408
Total Assets
$
206,683
$
770,340
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued liabilities
$
66,863
$
572,904
Due to related parties (Note 5)
68,016
54,774
Current portion of lease liabilities (Note 7)
9,168
18,169
Current portion of notes payable (Note 6)
52,143
52,143
Notes payable - Related parties (Note 5)
251,000
251,000
Total Current Liabilities
447,190
948,990
Non-Current Liabilities
Notes Payable (Note 6)
76,157
76,157
Total Liabilities
523,347
1,025,147
Stockholders'
Deficit
Preferred Stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding
-
-
Common Stock, $0.001 par value, 100,000,000 shares authorized; 16,128,544 and 15,708,544 shares issued and outstanding, respectively
16,128
15,708
Common Stock Issuable
479,995
313,331
Additional Paid-in Capital
1,216,170
1,116,590
Accumulated Deficit
(1,965,190
)
(1,623,189
)
Accumulated Other Comprehensive Loss
(63,767
)
(77,247
)
Total Stockholders' Deficit
(316,664
)
(254,807
)
Total Liabilities and Stockholders' Deficit
$
206,683
$
770,340
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-2
UPAY, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(Expressed in U.S. dollars)
(unaudited)
Three months
Three months
Six months
Six months
Ended
Ended
Ended
Ended
August 31,
August 31,
August 31,
August 31,
2024
2023
2024
2023
Revenue
$
168,071
$
364,042
$
425,320
$
696,618
Cost of Revenue
(49,378
)
(158,335
)
(183,711
)
(317,471
)
Gross Profit
118,693
205,707
241,609
379,147
Expenses
Amortization of right-of-use assets (Note 4)
-
-
-
888
Depreciation (Note 3)
1,951
3,471
3,855
13,190
General and administrative
300,946
370,363
565,956
559,261
Total Expenses
302,897
373,834
569,811
573,339
Loss Before Other Income (Expenses) and Income Taxes
(184,204
)
(168,127
)
(328,202
)
(194,192
)
Other Income (Expenses)
Interest income
914
1,893
2,771
3,006
Interest expense
(8,034
)
(8,384
)
(16,570
)
(16,704
)
Gain on settlement of lease (Note 7)
-
-
-
1,052
Loss Before Income Taxes
(191,324
)
(174,618
)
(342,001
)
(206,838
)
Provision for income taxes
-
-
-
-
Net Loss
(191,324
)
(174,618
)
(342,001
)
(206,838
)
Other Comprehensive Income (Loss)
Foreign currency translation adjustments
10,453
4,776
13,480
(3,776
)
Comprehensive Loss
$
(180,871
)
$
(169,842
)
$
(328,521
)
$
(210,614
)
Net Loss Per Share - Basic and Diluted
$
(0.01
)
$
(0.01
)
$
(0.02
)
$
(0.01
)
Weighted-average Common Shares Outstanding - Basic and Diluted
16,467,742
17,363,037
16,329,061
17,276,624
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-3
UPAY, Inc.
Consolidated Statement of Stockholders' Deficit and Accumulated Other Comprehensive Loss
(Expressed in U.S. dollars)
(unaudited)
Accumulated
Additional
Common
Other
Common Stock
Paid-in
Stock
Accumulated
Comprehensive
Shares
Amount
Capital
Issuable
Deficit
Loss
Total
Balance - February 28, 2023
17,190,211
$
17,190
$
535,275
$
13,334
$
(886,998
)
$
(60,828
)
$
(382,027
)
Stock subscriptions received
-
-
-
10,000
-
-
10,000
-
-
-
Common stock issuable for services
-
-
-
20,000
-
-
20,000
-
-
-
Net loss
-
-
-
-
(32,220
)
-
(32,220
)
-
-
-
Foreign currency translation adjustments
-
-
-
-
-
(8,552
)
(8,552
)
Balance - May 31, 2023
17,190,211
$
17,190
$
535,275
$
43,334
$
(919,218
)
$
(69,380
)
$
(392,799
)
Common stock issued for cash
303,333
303
109,697
(10,000
)
-
-
100,000
Common stock issued for services
50,000
50
39,950
(40,000
)
-
-
-
Common stock issuable for services
-
-
-
186,666
-
-
186,666
Net loss
-
-
-
-
(174,618
)
-
(174,618
)
Foreign currency translation adjustments
-
-
-
-
-
4,776
4,776
Balance - August 31, 2023
17,543,544
$
17,543
$
684,922
$
180,000
$
(1,093,836
)
$
(64,604
)
$
(275,975
)
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-4
UPAY, Inc.
Consolidated Statement of Stockholders' Deficit and Accumulated Other Comprehensive Loss
(Expressed in U.S. dollars)
(unaudited)
Accumulated
Additional
Common
Other
Common Stock
Paid-in
Stock
Accumulated
Comprehensive
Shares
Amount
Capital
Issuable
Deficit
Loss
Total
Balance - February 28, 2024
15,708,544
$
15,708
$
1,116,590
$
313,331
$
(1,623,189
)
$
(77,247
)
$
(254,807
)
Common stock issuable for services
-
-
-
83,332
-
-
83,332
-
-
-
Net loss
-
-
-
-
(150,677
)
-
(150,677
)
-
-
-
Foreign currency translation adjustments
-
-
-
-
-
3,027
3,027
Balance - May 31, 2024
15,708,544
$
15,708
$
1,116,590
$
396,663
$
(1,773,866
)
$
(74,220
)
$
(319,125
)
Common stock issuable for services
-
-
-
83,332
-
-
83,332
Common stock issued for cash
200,000
200
99,800
-
-
-
100,000
Common stock issued for Huntpal LLC acquisition
220,000
220
(220
)
-
-
-
-
Net loss
-
-
-
-
(191,324
)
-
(191,324
)
Foreign currency translation adjustments
-
-
-
-
-
10,453
10,453
Balance - August 31, 2024
16,128,544
$
16,128
$
1,216,170
$
479,995
$
(1,965,190
)
$
(63,767
)
$
(316,664
)
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-5
UPAY, Inc.
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
(unaudited)
Six months
Ended
August 31,
2024
Six months
Ended
August 31,
2023
Cash Flows from Operating Activities
Net Loss
$
(342,001
)
$
(206,838
)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of right-of-use assets
-
888
Common stock issued or issuable for services
166,664
206,666
Depreciation
3,855
13,190
Gain on settlement of lease
-
(1,052
)
Interest expense on lease liability
-
67
Changes in operating assets and liabilities:
Accounts receivable
47,226
594
Prepaid expenses and other current assets
(10,000
)
(3,340
)
Deposits
-
32,361
Accounts payable and accrued liabilities
(530,012
)
(135,036
)
Accounts payable - related party
13,212
12,653
Net Cash Used in Operating Activities
(651,056
)
(79,847
)
Cash Flows from Investing Activities
Purchase of property and equipment
-
(23,142
)
Net Cash Used in Investing Activities
-
(23,142
)
Cash Flows from Financing Activities
-
-
Proceeds from common stock issued for cash
100,000
110,000
Repayment of lease liabilities
-
(1,021
)
Net Cash Provided by Financing Activities
100,000
108,979
Effect of Exchange Rate Changes on Cash
30,056
(11,011
)
Change in Cash and Cash Equivalents
(521,000
)
(5,021
)
Cash and Cash Equivalents - Beginning of Period
642,846
662,991
Cash and Cash Equivalents - End of Period
$
121,846
$
657,970
Supplemental Disclosures of Cash Flow Information:
Interest paid
$
16,570
$
16,704
Income taxes paid
$
-
$
-
Non-cash Investing and Financing Activities:
Common stock issued for acquisition of Huntpal LLC
$
147,400
$
-
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-6
1.
Nature of Operations and Continuance of Business

UPAY, Inc. (the "Company") was incorporated in the State of Nevada on July 8, 2015. By a Share Exchange Agreement dated November 4, 2015, the Company agreed to acquire all of the issued and outstanding shares of Rent Pay (Pty) Ltd ("Rent Pay"), in exchange for 200,000 shares of the Company's common stock. The acquisition was a capital transaction in substance and therefore was accounted for as a recapitalization. Rent Pay was incorporated in South Africa on February 1, 2012. Because Rent Pay was deemed to be the acquirer for accounting purposes, the consolidated financial statements are presented as a continuation of Rent Pay and include the results of operations of Rent Pay since incorporation on February 1, 2012, and the results of operations of the Company since the date of acquisition on November 4, 2015. On March 2, 2022, the Company acquired a controlling interest in Miway Finance Inc. ("Miway"), which was determined to be a transaction between entities under common control. On May 30, 2023, the Company incorporated a wholly-owned subsidiary, taking a controlling interest in Huntpal LLC ("Huntpal"). On June 13, 2024, the Company acquired the remaining non-controlling interest in Huntpal, increasing its ownership to 100%. On May 28, 2024, the Company acquired a controlling interest in AML Go (Pty) Ltd ("AML") which was incorporated on July 3, 2023. AML was determined to be an entity under common control, and the transaction was considered immaterial due to the nominal assets and liabilities at the time of acquisition.
Rent Pay operates principally in South Africa and engages in software development and licensing and provides services to the credit provider industry.
2.
Summary of Significant Accounting Policies
a)
Basis of Presentation

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in U.S. dollars. The Company's fiscal year end is February 28. The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, Rent Pay and Huntpal LLC, and its controlled subsidiaries, Miway and AML. The Company owns 48% of Miway and 51% of AML. All significant intercompany transactions and accounts have been eliminated in consolidation.

b)
Interim Financial Statements

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year end February 29, 2024, have been omitted.

c)
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to useful life and recoverability of long-lived assets, and deferred income tax asset valuations. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

d)
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of August 31, 2024, the Company does not have revenues sufficient to execute its business plan. The Company intends to fund operations through equity financing arrangements. There is no assurance that this will be successful. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
e)
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its unaudited consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
F-7
3.
Property and Equipment, Net
Property and equipment, net, consists of the following:
Cost
Accumulated
Depreciation
August 31,
2024
Net Carrying Value
February 29,
2024
Net Carrying Value
Computer equipment
$
14,724
$
(11,531
)
$
3,193
$
4,186
Computer software
206,000
(205,835
)
165
325
Furniture and fixtures
10,478
(8,534
)
1,944
2,074
Motor vehicle
25,810
(11,036
)
14,774
15,414
Office equipment
4,501
(3,981
)
520
639
Total
$
261,513
$
(240,917
)
$
20,596
$
22,638
During the six months ended August 31, 2024, the Company recorded depreciation expense of $3,855 (2023
-
$13,190). During the six months ended August 31, 2024, the Company acquired $nil (2023
-
$1,180) of computer equipment and $nil (2023
-
$21,962) of motor vehicles.
4.
Right-Of-Use Assets, Net
Right-of-use assets, net, consist of the following:
Cost
Accumulated
Amortization
August 31,
2024
Net Carrying
Value
February 29,
2024
Net Carrying
Value
Right-of-use building (operating lease)
$
64,994
$
(55,826
)
$
9,168
$
18,169
Total
$
64,994
$
(55,826
)
$
9,168
$
18,169
During the six months ended August 31, 2024, the Company recorded rent expense of $10,679 (2023 - $10,032) related to Company's right-of-use building and amortization expense of $nil (2023 - $888) related to the Company's right-of-use vehicles. During the year ended February 29, 2024, the Company settled a lease obligation on a right-of-use vehicle with a carrying value of $1,894 and a remaining lease liability of $2,936, which resulted in a gain on settlement of lease of $1,042.
5.
Due to Related Parties
a)
On March 24, 2021, the Company entered into a promissory note with the Chief Executive Officer ("CEO") of the Company for $10,000, which is unsecured, bears interest of 10% per annum and matured on March 24, 2022. As at
August 31, 2024
, the outstanding principal is $10,000 (
February 29, 2024
- $10,000) and the Company has recognized accrued interest of $3,441 (
February 29, 2024
- $2,963), which is included in due to related parties.
b)
On September 7, 2021, the Company entered into a promissory note with the CEO of the Company for $10,000, which is unsecured, bears interest of 10% per annum and matured on March 7, 2022. As at
August 31, 2024
, the outstanding principal is $10,000 (
February 29, 2024
- $10,000) and the Company has recognized accrued interest of $2,984 (
February 29, 2024
- $2,479) which is included in due to related parties.
c)
On February 11, 2022, the Company entered into a promissory note with the CEO of the Company for $20,000, which is unsecured, bears interest of 10% per annum and matured on February 11, 2023. As at
August 31, 2024
, the outstanding principal is $20,000 (
February 29, 2024
- $20,000) and the Company has recognized accrued interest of $5,107 (
February 29, 2024
- $4,099), which is included in due to related parties.
d)
On April 14, 2021, the Company entered into a promissory note with a company controlled by a significant shareholder of the Company for $26,000, which is unsecured, bears interest of 10% per annum and matured on October 13, 2023. As at
August 31, 2024
, the outstanding principal is $26,000 (
February 29, 2024
- $26,000) and the Company has recognized accrued interest of $8,797 (
February 29, 2024
- $7,487), which is included in due to related parties.
e)
On February 11, 2022, the Company entered into a promissory note with a company controlled by a significant shareholder of the Company for $130,000, which is unsecured, bears interest of 10% per annum and matures on February 11, 2023. As at
August 31, 2024
, the outstanding principal is $130,000 (
February 29, 2024
- $130,000) and the Company has recognized accrued interest of $33,195 (
February 29, 2024
- $26,641), which is included in due to related parties.
F-8
f)
During the year ended February 28, 2022, a third-party lender purchased a promissory note from a company controlled by a significant shareholder of the Company in the amount of $15,000, which is unsecured, bears interest of 10% per annum and matured on October 13, 2023. As at August 31, 2024, the outstanding principal is $15,000 (February 29, 2024 - $15,000) and the Company has recognized accrued interest of $5,075 (February 29, 2024 - $4,319), which is included in due to related parties.
g)
On May 2, 2022, the Company entered into a promissory note with a company controlled by a significant shareholder of the Company for $25,000, which is unsecured, bears interest of 10% per annum and matured on March 2, 2023. As at August 31, 2024, the outstanding principal is $25,000 (February 29, 2024 - $25,000) and the Company has recognized accrued interest of $5,836 (February 29, 2024 - $4,575), which is included in due to related parties.
h)
On September 9, 2022, the Company entered into a promissory note with a company controlled by a significant shareholder of the Company for $15,000, which is unsecured, bears interest of 10% per annum and matured on September 9, 2023. As at August 31, 2024, the outstanding principal is $15,000 (February 29, 2024 - $15,000) and the Company has recognized accrued interest of $2,967 (February 29, 2024 - $2,211), which is included in due to related parties.
i)
As at August 31, 2024, the Company owes a total of $614 (February 29, 2024 - $nil) to officers of the Company for advances, which are unsecured, non-interest bearing and due on demand.
j)
During the six months ended August 31, 2024, the Company incurred salary expenses of $53,432 (R986,516) (2023 - $57,434 (R1,604,887)) to the CEO of the Company.
k)
During the six months ended August 31, 2024, the Company incurred directors' fees of 50,000 (2023 - $40,000) to a Director of the Company pursuant to a Director Agreement (Note 10(b)).
l)
During the six months ended August 31, 2024, the Company incurred directors' fees of $2,437 (R45,000) (2023 - $nil) to a Director of the Company.
m)
During the six months ended August 31, 2024, the Company incurred management fees of $116,664 (2023 - $nil) to the Chief Operating Officer ("COO") and Director of the Company pursuant to a Director and Officer Agreement (Note 10(c)).
6.
Notes Payable
a)
On May 20, 2020, the Company entered into a promissory note with a third-party lender for $25,000, which is unsecured, bears interest of 10% per annum and matured on May 20, 2023. As at
August 31, 2024
, the Company has recognized accrued interest of $10,712 (
February 29, 2024
-
$
9,452), which is included in accounts payable and accrued liabilities.
b)
On May 27, 2020, the Company entered into a promissory note with the U.S. Small Business Administration for $77,800, which is secured by the assets of the Company, bears interest of 3.75% per annum and matures on May 27, 2050. Instalment payments, including principal and interest, of $380 per month will begin 12 months from the date of the promissory note. As at August 31, 2024, the Company has recognized accrued interest of $11,665 (
February 29, 2024
- $10,195), which is included in accounts payable and accrued liabilities.
c)
On October 22, 2021, the Company entered into a promissory note with a third-party lender for $25,500, which is unsecured, bears interest of 10% per annum and matured on October 13, 2023. As at
August 31, 2024
, the Company has recognized accrued interest of $7,294
(
February 29, 2024
-
$6,008), which is
included in accounts payable and accrued liabilities.
7.
Lease Liabilities
The Company commenced the leasing of a motor vehicle on October 10, 2018, for a term of five years. The monthly minimum lease payments were $512 (R9,456). The motor vehicle lease was classified as a finance lease. The interest rate underlying the obligation in the lease was 11.25% per annum. During the six months ended August 31, 2024, the Company paid a total of $nil (2023 - $1,021) in principal and interest payments on the motor vehicle lease.
On May 10, 2023, the Company settled the motor vehicle finance leases for a settlement fee of $2,549 (R47,204) resulting in a gain on settlement of $1,052 (R19,480). Upon the payment of the settlement fee, the vehicle title was transferred immediately to the Company and has been allocated to the Company's property and equipment to be depreciated over the remainder of its useful life.
On February 1, 2021, the Company entered a two-year lease with a renewal option for office space in South Africa. The term of the renewal agreement is for an additional two years and commenced on February 1, 2023. Rental payments are due at the beginning of each month and increase at an annual rate of 7%. The base monthly rental rate is $1,192 (R22,000) for the first year, $1,275 (R23,540) in the second year, $1,364 (R25,188) in the third year, and $1,460 (R26,951) in the final year of the lease. On January 26, 2023, the Company executed the renewal option for two additional years of its lease, commencing on February 1, 2023. Rental payments are due at the beginning of each month. The base monthly rental rate is $1,679 (R31,000) for the first year and $1,780 (R32,860) in the second year. The office space lease was classified as an operating lease. The interest rate underlying the obligation in the lease was 7% per annum.
F-9
The following is a schedule by years of future minimum lease payments under the remaining finance leases together with the present value of the net minimum lease payments as of August 31, 2024:
Years ending February 28:
Building Lease
(Operating Lease)
2025
$
9,329
Net minimum lease payments
9,329
Less: amount representing interest payments
(161
)
Present value of net minimum lease payments
9,168
Less: current portion
(9,168
)
Long-term portion
$
-
8.
Common Stock
Share transactions for the six months ended August 31, 2024:
a)
On June 13, 2024, the Company issued 220,000 shares of common stock with a fair value of $147,400 to the acquire the remaining 49% non-controlling interest in Huntpal LLC
. At the date of acquisition, the carrying value of the non-controlling interest was $
nil
, resulting in a loss of $147,180 which was recognized against additional paid-in capital.
b)
On July 22, 2024, the Company issued 200,000 shares of common stock for proceeds of $100,000.
c)
The Company accrued 166,664 shares of common stock issuable with a fair value of $166,664 pursuant to a Director Agreement (Note 10(b)) and a Officer Agreement (Note 10(c)).
Share transactions for the six months August 31, 2023:
a)
On July 17, 2023, the Company issued 303,333 shares of common stock for proceeds of $110,000. The Company also issued 50,000 shares of common stock for services with a fair value of $40,000, pursuant to a Director Agreement.
b)
The Company accrued $50,000 of stock payable pursuant to a Director Agreement and $116,666 of stock payable pursuant to an Officer Agreement.
9.
Concentrations
The Company's revenues were concentrated among two customers for the six months ended August 31, 2024, and three customers for the six months ended August 31, 2023.
Customer
Six months
Ended
August 31, 2024
1
32
%
2
14
%
Customer
Six months
Ended
August 31, 2023
1
24
%
2
20
%
3
11
%
F-10
The Company's receivables were concentrated among two customers as at August 31, 2024, and one customer as at February 29, 2024:
Customer
August 31,
2024
1
32
%
2
23
%
Customer
February 29
,
2024
1
65
%
10.
Commitments and Contingencies
a)
On February 3, 2022 (the "Effective Date"), the former CEO of the Company and the Company entered into a Share Purchase and Separation Agreement (the "Agreement") with the following terms: (a) former CEO sells the Company 7,125,000 shares of common stock of the Company and 3,700,000 shares of common stock of MiWay Finance, Inc. (the "Purchased Shares"), for $240,000, payable with a $150,000 cash payment within 10 days of the Effective Date; and (b) $10,000 per month for 9 consecutive months commencing April 1, 2022; (c) the Company will pay the former CEO current salary through February 2022; (d) former CEO shall retain ownership of 2,000,000 shares of the Company's common stock subject to a lockup/leak out whereby the former CEO is prohibited from selling any of the 2,000,000 Shares for a period of 18 months and thereafter, shall be permitted to sell no more than 5,000 shares per month. In addition, the former CEO agreed to forgive the $10,000 promissory note and accrued interest entered on September 7, 2021 with the Company, as well as $1,170 in expenses incurred on behalf of the Company. As of February 28, 2022, the Company received 7,025,000 of the 7,125,000 shares of common stock of the Company. The transaction closed on March 2, 2022, and the Company received the remaining 100,000 shares of common stock of the Company and 3,700,000 shares of common stock of Miway Finance Inc.
On September 1, 2023, the Company amended the Agreement with the former CEO of the Company. The amendment stipulates a revised payment structure, with the Company agreeing to pay a total of $170,000 for the Purchased Shares, including a $150,000 cash payment post-closing and two $10,000 monthly payments from April 1, 2022, all of which have been paid at the amendment date. As a result of the amendment, a total of $70,000 was forgiven related to the revised payments for the Purchased Shares resulting in a corresponding reduction in accounts payable and accrued liabilities, and additional paid-in capital. The Company and the former CEO of the Company have mutually released each other from all claims and liabilities related to the former CEO's employment and termination, excluding those specified in the agreement. Additionally, the Company agreed to repurchase a total of
2,035,000
shares of common stock held by the former CEO of the Company in consideration for $
23,500
. All other terms of the original agreement remain in effect unless specifically modified by this addendum. On September 19, 2023, the Company repurchased and cancelled the
2,035,000
shares of common stock.
b)
On September 1, 2022, the Company entered into an agreement with a Director of the Company for a term of 12 months. In consideration for the services to be provided, the Company agreed to pay the Director 100,000 restricted shares of common stock that will vest bi-monthly over the 12 months. During the year ended February 28, 2023, the Company recognized board member compensation of $40,000, representing the fair value of 50,000 shares of common stock issuable for services rendered for the period from September 2022 to February 2023. During the year ended February 28, 2023, the Company issued 33,333 of the 50,000 shares issuable, leaving a balance of 16,667 shares still issuable at February 28, 2023. During the year ended
February 29, 2024
, the Company recognized board member compensation of $40,000, representing the fair value of 50,000 shares of common stock issuable for services rendered for the period from March 2023 to August 2023. During the year ended
February 29, 2024
, another 50,000 shares were issued.
On August 16, 2023, the Company extended its Agreement with the Director for a new term of 12 months, effective September 1, 2023. In consideration of services to be rendered, the Company shall pay the director 100,000 restricted shares of common stock, of which 50,000 shares will vest every
6
months over the term. Pursuant to the terms of the extended agreement, the Company recognized board member compensation of $50,000, representing a fair value of
50,000
shares of common stock issuable for services rendered for the period from March 2024 to August 2024. As at
August 31, 2024
, a total of 116,667 shares (February 29, 2024 - 66,667 shares) of common stock remain issuable to the director.
c)
On March 1, 2023, the Company entered into agreements with a Director and COO of the Company for director services and management services for a term of 12 months and 3 years, respectively. In consideration for the services to be provided as a director, the Company agreed to pay the Officer and Director 100,000 restricted shares of common stock that will vest bi-monthly over the 12 months. In consideration for the services to be provided as the COO, the Company also agreed to pay the Officer and Director an additional 700,000 shares of common stock that will vest quarterly with 12 equal payments of 58,333 shares. During the year ended February 29, 2024, the Company recognized management fees of $233,330 and board member compensation of $100,000, representing the fair value of 333,330 shares of common stock issuable for services rendered for the period from March 2023 to February 2024. During the six months ended August 31, 2024, the Company recognized management fees of $116,664 and board member compensation of $nil, representing the fair value of
58,332
shares of common stock issuable for services rendered for the period from March 2024 to August 2024. As at August 31, 2024, a total of 366,661 (February 29, 2024 - 249,997 shares) shares of common stock remain issuable to the officer and director.
Management has evaluated commitments and contingencies and is unaware of any legal matters or other contingencies requiring disclosure through period-end.
F-11
11.
Deposit
On October 15, 2021, the Company paid a R800,000 deposit to set up an electronic funds transfer debit facility with a vendor, which does not require a physical facility. During the year ended February 29, 2024, R600,000 of the deposit was returned to the Company. As at August 31, 2024, the balance of the deposit was $11,356 (R200,000) (February 29, 2024
-
$10,408 (R200,000). The deposit will remain for as long as the Company uses the facility.
12.
Subsequent Event
Management has evaluated subsequent events through the date that these financial statements were issued, and none were identified.
Management's Discussion and Analysis of Financial Condition and Results of Operations - 3 Month Periods Ending August 31, 2024 and August 31, 2023.
Reliance Upon One or a Few Customers
The Company's revenues were concentrated among two customers for the six months ended August 31, 2024, and three customers for the six months ended August 31, 2023.
Customer
Six months
Ended
August 31, 2024
1
32
%
2
14
%
Customer
Six months
Ended
August 31, 2023
1
24
%
2
20
%
3
11
%
F-12
The Company's receivables were concentrated among two customers as at August 31, 2024, and one customer as at February 29, 2024:
Customer
August 31,
2024
1
32
%
2
23
%
Customer
February 29,

2024
1
65
%
Trends and Uncertainties
Our business is subject to the following trends and uncertainties:
·
Whether our system will be adaptable to US needs
·
Whether we will develop interest in our software system in the US
·
The level of activity of credit facilities and their need for our software
Going Concern
Our financial statements have been prepared on a going concern basis which assumes that we will be able to realize our assets and discharge its liabilities and commitments in the normal course of business for the foreseeable future. We had an accumulated deficit of ($1,773,866) at August 31, 2024. As of August 31, 2024, we do not have revenues sufficient to execute our business plan. We intend to fund operations through equity financing arrangements; however, there is no assurance that we will be successful.
F-13
Results of Operations: For the 3 months ended August 31, 2024 and August 31, 2023
Revenues
Our revenues for the 3-month period ended August 31, 2024 and 2023 were $168,071 and $364,042 respectively, reflecting decreased revenues of $195,971. The $196,171 of decreased revenues is primarily attributable to a reduction in transactional revenue in our South African operations.
Net Loss/Profit
We had a net loss of $191,324 and a net loss of $174,618 for the 3-months ended August 31, 2024 and 2023, respectively, reflecting an increased net loss of $16,706, which increased net loss is primarily attributable to a reduction in transactional revenue in our South African operations.
Expenses
We incurred total expenses of $302,897 and $373,834, respectively, for the 3-month period ended August 31, 2024 and 2023, reflecting decreased expenses of $70,937, which is primarily attributable to a decrease in general and administrative expenses.
Results of Operations: For the 6 months ended August 31, 2024 and August 31, 2023
Revenues
Our revenues for the 6-month period ended August 31, 2024 and 2023 were $425,320 and $696,618, respectively, reflecting decreased revenues of $271,298. The decreased revenues of $271,298 is primarily attributable to a decrease in transactional revenue in our South African operations.
Net Loss/Profit
We had a net loss of $342,001 and a net loss of $206,838 for the 6-months ended August 31, 2024 and 2023 , respectively, reflecting an increased net loss of $135,163, which increased net loss is primarily attributable to a decrease in our transactional revenue in our South African operations.
Expenses
We incurred total expenses of $569,811 and $573,339, respectively, for the 6-month period ended August 31, 2024 and 2023, reflecting decreased total expenses of $3,528, which is primarily attributable to a decrease in general and administrative expenses.
Liquidity and Capital Resources
We had working capital of ($281,627) on August 31, 2024 and working capital of ($229,865) at our fiscal year end of February 28, 2024, representing decreased working capital of $51,762.
Our net cash used in operating activities was ($651,056) and ($79,847) for the 6 months ended August 31, 2024 and 2023 reflecting increased net cash used in operating activities of $571,209.
Our net cash used in investing activities were ($0) and ($23,142), respectively, for the 6 months ended August 31, 2024 and 2023, reflecting decreased net cash used in investing activities of $23,142.
Our net cash provided by financing activities was $100,000 and $108,979 for the 6-month period ended August 31, 2024 and 2023, respectively, reflecting decreased net cash provided by financing activities of $8,979.
F-14
Off-Balance sheet arrangements
None.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer/Chief Accounting Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by SEC Rule 15d-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective in providing reasonable assurance in the reliability of our report as of the end of the period covered by this report. This is because we have not sufficiently developed our segregation of duties and we do not have an audit committee.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We will continue to evaluate the effectiveness of internal controls and procedures on an on-going basis.
F-15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We know of no material pending legal proceedings to which our company or our subsidiary is a party or of which any of our properties, or the properties of our subsidiary, is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.
We know of no material proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder is a party adverse to our us or has a material interest adverse to our company or our subsidiary.
Item 1A. Risk Factors
As a smaller reporting company, we are not required to provide risk factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures.
None
Item 5. Other information
None.
Item 6. Exhibits.
EXHIBIT INDEX
Exhibit
Number
Description
31.1

Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2

Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1

Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2

Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
II-1

SIGNATURES
Pursuant to the requirements 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.
Date: January 13, 2025
UPAY, INC.
By:
/s/ Jaco C. Folscher
Jaco C. Folscher
Chief Executive Officer
(Principal Executive Officer & Chief Executive Officer)
By:
/s/ Jaco C. Folscher
Jaco C. Folscher
Chief Financial Officer
(Chief Financial Officer/Chief Accounting Officer)
II-2