UPAY Inc (UPYY) grows revenue, warns on going concern risk
Filing Impact
Filing Sentiment
Form Type
10-Q
UPAY Inc, a Nevada-based software developer serving credit providers in South Africa, reported revenue of $226,347 for the three months ended May 31, 2026, up from $170,414 a year earlier. Gross profit was $166,942, while total expenses of $269,811 led to a net loss of $115,440, compared with a $141,986 loss in the prior-year period.
As of May 31, 2026, assets totaled $224,490 against liabilities of $807,428, resulting in a stockholders’ deficit of $582,938 and negative working capital of $380,139. Cash and cash equivalents were $91,692, with $74,222 of net cash used in operating activities funded by $75,000 of new related-party debt. Management states that limited revenues and reliance on external financing raise substantial doubt about the ability to continue as a going concern.
Customer concentration remains high, with four customers providing most revenue, and the company continues to compensate directors and service providers with restricted stock. Management concludes that disclosure controls and procedures are not effective, citing a material weakness tied to an inadequate control environment, no independent directors, and no audit committee financial expert.
Positive
- Quarterly revenue increased to $226,347 from $170,414, and net cash used in operating activities improved to $74,222 from $130,676, reflecting higher sales and lower operating cash burn.
Negative
- Management discloses substantial doubt about the ability to continue as a going concern due to insufficient revenues and reliance on external financing.
- The company reports a stockholders’ deficit of $582,938, total liabilities of $807,428 versus assets of $224,490, and negative working capital of $380,139.
- Disclosure controls and procedures are deemed not effective, with a reported material weakness stemming from an inadequate control environment, no independent directors, and no audit committee financial expert.
Key Figures
Revenue: $226,347
Net Loss: $115,440
Cash and Cash Equivalents: $91,692
+5 more
8 metrics
Revenue
$226,347
Three months ended May 31, 2026
Net Loss
$115,440
Three months ended May 31, 2026
Cash and Cash Equivalents
$91,692
As of May 31, 2026
Net Cash Used in Operating Activities
$74,222
Three months ended May 31, 2026
Total Liabilities
$807,428
As of May 31, 2026
Stockholders’ Deficit
$582,938
As of May 31, 2026
Working Capital Deficit
$380,139
Negative working capital at May 31, 2026
Shares Outstanding
17,665,211 shares
Common stock outstanding as of July 14, 2026
Key Terms
going concern, material weakness, working capital, Section 4(a)(2) of the Securities Act of 1933, +2 more
6 terms
going concern financial
"raise substantial doubt about the Company’s ability to continue as a going concern"
Going concern is the accounting assumption that a company will keep operating and meeting its obligations for the foreseeable future. The phrase matters most when a company or its auditors disclose substantial doubt about it, a formal warning that the business may not have enough resources to continue without raising money, restructuring, or selling assets. That language in a filing or press release signals elevated financial risk.
material weakness financial
"management has determined that these circumstances constitute a material weakness"
A material weakness is a significant flaw in the systems and checks a company uses to ensure its financial reports are accurate, meaning errors or fraud could happen and not be caught. For investors it matters because it raises the risk that reported results are unreliable—similar to finding a hole in a ship’s hull—potentially leading to corrected financials, regulatory action, reduced trust, and negative effects on stock value and borrowing costs.
working capital financial
"We had negative working capital of $380,139 at May 31, 2026"
Working capital is the money a business has available to cover its daily expenses, like paying bills and buying supplies. It’s like the cash in your wallet that helps you handle everyday costs; having enough ensures the business can operate smoothly without running into money shortages.
Section 4(a)(2) of the Securities Act of 1933 regulatory
"were exempt from registration under Section 4(a)(2) of the Securities Act of 1933"
right-of-use building (operating lease) financial
"Right-of-use building (operating lease) cost $61,038 with net carrying value $41,626"
emerging growth company regulatory
"Smaller reporting company x Emerging growth company"
An emerging growth company is a recently public or smaller public firm that qualifies for temporary, lighter regulatory and disclosure rules to reduce the cost and effort of being public. For investors, it means the company may provide less historical financial detail and face fewer reporting requirements than larger firms, so it can grow more quickly but also carries higher uncertainty—like buying a promising early-stage product with fewer user reviews.
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FAQ
What were UPAY Inc (UPYY)'s revenue and net loss for the quarter ended May 31, 2026?
UPAY Inc reported revenue of $226,347 and a net loss of $115,440 for the three months ended May 31, 2026. This compares with revenue of $170,414 and a net loss of $141,986 in the same period of 2025.
How did UPAY Inc (UPYY)'s cash flow from operations change year over year?
Net cash used in operating activities improved to $74,222 for the three months ended May 31, 2026, from $130,676 a year earlier. The shortfall was largely funded by $75,000 of new notes payable to a related party.
What is UPAY Inc (UPYY)'s financial position and working capital as of May 31, 2026?
As of May 31, 2026, UPAY Inc had total assets of $224,490 and total liabilities of $807,428, resulting in a stockholders’ deficit of $582,938 and negative working capital of $380,139.
Does UPAY Inc (UPYY) disclose a going concern risk?
Yes. Management states that current revenues are insufficient to execute the business plan and that the company intends to seek equity financing, raising substantial doubt about its ability to continue as a going concern.
What internal control issues did UPAY Inc (UPYY) report for the quarter?
UPAY Inc concluded its disclosure controls and procedures were not effective as of May 31, 2026. A material weakness was identified, including an underdeveloped control environment, lack of independent directors, and no audit committee financial expert.
Did UPAY Inc (UPYY) issue any unregistered shares during the quarter?
During the quarter, the company issued 20,000 shares of common stock for marketing services and accrued 50,000 shares issuable under Director Agreements. These service-related issuances relied on the Section 4(a)(2) exemption from Securities Act registration.
How concentrated are UPAY Inc (UPYY)'s customers and receivables?
For the three months ended May 31, 2026, four customers accounted for significant revenues, with the largest at 20%. As of May 31, 2026, two customers represented 26% and 11% of receivables, indicating ongoing customer concentration risk.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2026
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from March 1, 2026 to May 31, 2026
Commission File Number 333-212447
(Exact name of registrant as specified in its charter)
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NEVADA |
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(972 ) 888-6052
(Registrant’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
x
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 such files). Yes
x
No
¨
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an 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 |
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¨ |
Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected no t 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 registrant had 17,665,211 shares of common stock outstanding as of July
14
, 2026.TABLE OF CONTENT
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Page |
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PART I — Financial Information
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Item 1.
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Consolidated Financial Statements (unaudited)
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F-1 |
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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3 |
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Item 3.
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Quantitative and Qualitative Disclosures about Market Risk
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5 |
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Item 4.
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Controls and Procedures
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5 |
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PART II — Other Information
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6 |
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Item 1.
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Legal Proceedings
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6 |
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Item 1A.
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Risk Factors
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6 |
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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6 |
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Item 3.
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Defaults Upon Senior Securities
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6 |
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Other Information
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Item 6.
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Exhibits
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6 |
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Signatures
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| 2 |
PART I — FINANCIAL INFORMATION
UPAY, Inc.
Consolidated Financial Statements
(unaudited)
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Index |
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Table of Contents |
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Consolidated Balance Sheets (unaudited)
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F-2
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Consolidated Statements of Operations and Comprehensive Loss (unaudited)
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F-3
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Consolidated Statements of Stockholders’ Deficit and Accumulated Other Comprehensive Loss (unaudited)
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F-4
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Consolidated Statements of Cash Flows (unaudited)
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F-5
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Notes to the Consolidated Financial Statements (unaudited)
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F-6
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| F-1 |
UPAY, INC.
Consolidated Balance Sheets
(Expressed in U.S. dollars)
May 31, 2026 | February 28, 2026 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Accounts receivable, net of allowance | ||||||||
Prepaid expenses and other current assets | ||||||||
Total Current Assets | ||||||||
Property and Equipment, Net (Note 3) | ||||||||
Right-of-use Assets, Net (Note 4) | ||||||||
Deposit (Note 11) | ||||||||
Total Assets | $ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued liabilities | $ | $ | ||||||
Due to related parties (Note 5) | ||||||||
Current portion of lease liabilities (Note 7) | ||||||||
Current portion of notes payable (Note 6) | ||||||||
Current portion of notes payable in default (Note 6) | ||||||||
Current portion of notes payable – Related parties (Note 5) | ||||||||
Current portion of notes payable – Related parties in default (Note 5) | ||||||||
Total Current Liabilities | $ | $ | ||||||
Non-Current Liabilities | ||||||||
Lease liabilities (Note 7) | ||||||||
Notes payable (Note 6) | ||||||||
Notes payable – Related parties (Note 5) | ||||||||
Total Liabilities | $ | $ | ||||||
Stockholders’ Deficit | ||||||||
Preferred Stock, $ | ||||||||
Common Stock, $ | ||||||||
Common Stock Issuable | ||||||||
Additional Paid-in Capital | ||||||||
Accumulated Deficit | ( | ) | ( | ) | ||||
Accumulated Other Comprehensive Loss | ( | ) | ( | ) | ||||
Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-2 |
UPAY, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(Expressed in U.S. dollars)
(unaudited)
Three Months | Three Months | |||||||
Ended | Ended | |||||||
May 31, | May 31, | |||||||
2026 | 2025 | |||||||
Revenue | $ | $ | ||||||
Cost of revenue | ( | ) | ( | ) | ||||
Gross Profit | ||||||||
Expenses | ||||||||
Depreciation (Note 3) | ||||||||
General and administrative | ||||||||
Total Expenses | ||||||||
Loss Before Other Income (Expenses) and Income Taxes | ( | ) | ( | ) | ||||
Other Income (Expenses) | ||||||||
Interest income | ||||||||
Interest expense | ( | ) | ( | ) | ||||
Loss Before Income Taxes | ( | ) | ( | ) | ||||
Provision for income taxes | ||||||||
Net Loss | ( | ) | ( | ) | ||||
Other Comprehensive Income | ||||||||
Foreign currency translation adjustments | ||||||||
Comprehensive Loss | $ | ( | ) | $ | ( | ) | ||
Net Loss Per Share – Basic and Diluted | $ | ( | ) | $ | ( | ) | ||
Weighted-average Common Shares Outstanding – Basic and Diluted | ||||||||
The accompanying notes are an integral part of these 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, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
Common stock issuable for services | – | – | – | – | – | |||||||||||||||||||||||
Net loss | – | – | – | – | ( | ) | – | ( | ) | |||||||||||||||||||
Foreign currency translation adjustments | – | – | – | – | – | |||||||||||||||||||||||
Balance – May 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
Balance – February 28, 2026 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
Common stock issued for services | – | – | – | |||||||||||||||||||||||||
Common stock issuable for services | – | – | – | – | – | |||||||||||||||||||||||
Net loss | – | – | – | – | ( | ) | – | ( | ) | |||||||||||||||||||
Foreign currency translation adjustments | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||
Balance – May 31, 2026 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
UPAY, Inc.
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
(unaudited)
Three Months Ended May 31, 2026 | Three Months Ended May 31, 2025 | |||||||
Cash Flows from Operating Activities | ||||||||
Net Loss | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Common stock issued or issuable for services | ||||||||
Depreciation | ||||||||
Provision for bad debt | ||||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | ( | ) | ( | ) | ||||
Prepaid expenses and other current assets | ||||||||
Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
Accounts payable – related party | ||||||||
Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
Cash Flows from Investing Activities | ||||||||
Purchase of property and equipment | ( | ) | ||||||
Net Cash Used in Investing Activities | ( | ) | ||||||
Cash Flows from Financing Activities | ||||||||
Proceeds from notes payable to related party | ||||||||
Net Cash Provided by Financing Activities | ||||||||
Effect of Exchange Rate Changes on Cash | ( | ) | ( | ) | ||||
Change in Cash and Cash Equivalents | ( | ) | ( | ) | ||||
Cash and Cash Equivalents - Beginning of Period | ||||||||
Cash and Cash Equivalents - End of Period | ||||||||
Supplemental Disclosures of Cash Flow Information: | ||||||||
Interest paid | $ | $ | ||||||
Income taxes paid | $ | $ | ||||||
Non-cash Investing and Financing Activities: | ||||||||
Common stock issued for marketing services | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
1. | Nature of Operations and Continuance of Business |
UPAY, Inc. (the “Company”) was incorporated in the State of Nevada on July 8, 2015. Pursuant to 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 51 % controlling interest in Huntpal LLC (“Huntpal”). On June 13, 2024, the Company acquired the remaining 49 % 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 consolidated 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 consolidated 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 28, 2026, 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 May 31, 2026, 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.
| F-6 |
e) | Segment Information |
In accordance with the provisions of ASC 280-10,
“Disclosures about Segments of an Enterprise and Related Information”,
the Company is required to report financial and descriptive information about its reportable operating segments. The Company has one operating segment as of May 31, 2026, and February 28, 2026. The Company manages its operations as a single operating segment for the purpose of assessing performance and making operating decisions. Accordingly, all assets are considered to relate to the single operating segment and are consistent with the total assets presented on the Company’s consolidated balance sheet. The Company’s Chief Operating Decision Maker (“CODM”) is its executive management committee. The CODM allocates resources and evaluates the performance of the Company using the information about combined net income from operations. All significant operating decisions are based upon an analysis of the Company as one operating segment, which is the same as its reporting segment. f) | 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.
3. | Property and Equipment, Net |
Property and equipment, net, consists of the following:
Cost | Accumulated Depreciation | May 31, 2026 Net Carrying Value | February 28, 2026 Net Carrying Value | |||||||||||||
Computer equipment | $ | $ | ( | ) | $ | $ | ||||||||||
Computer software | ( | ) | ||||||||||||||
Furniture and fixtures | ( | ) | ||||||||||||||
Motor vehicle | ( | ) | ||||||||||||||
Office equipment | ( | ) | ||||||||||||||
Total | $ | $ | ( | ) | $ | $ | ||||||||||
During the three months ended May 31, 2026, the Company recorded depreciation expense of $1,621 (2025 – $1,718 ).
4. | Right-Of-Use Assets, Net |
Right-of-use assets, net, consist of the following:
Cost | Accumulated Amortization | May 31, 2026 Net Carrying Value | February 28, 2026 Net Carrying Value | |||||||||||||
Right-of-use building (operating lease) | $ | $ | ( | ) | $ | $ | ||||||||||
Total | $ | $ | ( | ) | $ | $ | ||||||||||
During the three months ended May 31, 2026, the Company recorded rent expense of $6,550 (2025 - $5,676 ) related to Company’s right-of-use building.
5. | Due to Related Par ties |
a) | On March 24, 2021, the Company entered into a promissory note with the Company’s Chief Executive Officer (“CEO”) for $ September 17, 2027 . As at May 31, 2026, the outstanding principal is $ |
b) | On September 7, 2021, the Company entered into a promissory note with the Company’s CEO for $ |
c) | On February 11, 2022, the Company entered into a promissory note with the Company’s CEO for $ |
| F-7 |
d) | 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 $ |
e) | On May 2, 2022, the Company entered into a promissory note with a company controlled by a significant shareholder of the Company for $ |
f) | On September 9, 2022, the Company entered into a promissory note with a company controlled by a significant shareholder of the Company for $ |
g) | On January 31, 2025, the Company entered into a promissory note with a company controlled by a significant shareholder of the Company for $ |
h) | On March 3, 2025, the Company entered into a promissory note with a company controlled by a significant shareholder of the Company for $ |
i) | On May 9, 2025, the Company entered into a promissory note with a company controlled by a significant shareholder of the Company for $ |
j) | On May 22, 2025, the Company entered into a promissory note with a company controlled by a significant shareholder of the Company for $ |
k) | On July 23, 2025, the Company entered into a promissory note with a company controlled by a significant shareholder of the Company for $ |
l) | On September 12, 2025, the Company entered into a promissory note with a company controlled by a significant shareholder of the Company for $ |
m) | On March 17, 2026, the Company entered into a promissory note with a company controlled by a significant shareholder of the Company for $ |
n) | On May 29, 2026, the Company entered into a promissory note with a company controlled by a significant shareholder of the Company for $ |
o) | As at May 31, 2026, the Company owes a total of $ |
p) | During the three months ended May 31, 2026, the Company incurred salary expenses of $ |
| F-8 |
q) | During the three months ended May 31, 2026, the Company incurred directors’ fees of $ |
r) | During the three months ended May 31, 2026, the Company incurred directors’ fees of $ |
s) | During the three months ended May 31, 2026, the Company incurred director fees of $ |
6. | Notes Payable |
a) | On May 20, 2020, the Company entered into a promissory note with a third-party lender for $ $ |
b) | On May 27, 2020, the Company entered into a promissory note with the U.S. Small Business Administration for $ |
c) | On October 22, 2021, the Company entered into a promissory note with a third-party lender for $ ( February 28, 2026 – $ included in accounts payable and accrued liabilities. |
7. | Lease Liabilities |
On February 1, 2025, the Company entered a one-year lease with a two-year renewal option for office space in South Africa. Rental payments are due at the beginning of each month and increase at an annual escalation rate of 6 %. On January 19, 2026, the Company entered into an amendment to the original lease which amended the annual escalation rate to 4 %. The base monthly rental rate is $2,078 (R36,225 ). The interest rate underlying the obligation in the lease was 11 % per annum.
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 May 31, 2026:
Years ending February 28: | Building Lease (Operating Lease) | |||
2027 | $ | |||
2028 | ||||
Net minimum lease payments | ||||
Less: amount representing interest payments | ( | ) | ||
Present value of net minimum lease payments | ||||
Less: current portion | ( | ) | ||
Long-term portion | $ | |||
8. | Common Stock |
Share transactions for the three months ended May 31, 2026:
During the three months ended May 31, 2026, the Company accrued 50,000 shares of common stock issuable with a fair value of $34,250 pursuant to Director Agreements (Note 10(a) and Note 10(b)).
During the three months ended May 31, 2026, the Company issued 20,000 shares of common stock with a fair value of $13,400 for marketing services.
Share transactions for the three months ended May 31, 2025:
During
the three months ended May 31, 2025,
the Company accrued 50,000 shares of common stock issuable with a fair value of $34,250 pursuant to Director Agreements (Note 10(a) and Note 10(b)).
| F-9 |
9. | Concentrations |
The Company’s revenues were concentrated among four customers for the three months ended May 31, 2026 and four customers for the three months ended May 31, 2025.
Customer | Three months Ended May 31, 2026 | |||
1 | % | |||
2 | % | |||
3 | % | |||
4 | % | |||
Customer | Three months Ended May 31, 2025 | |||
1 | % | |||
2 | % | |||
3 | % | |||
4 | % | |||
The Company’s receivables were concentrated among two customers as at May 31, 2026, and two customers as at February 28, 2026:
Customer | May 31, 2026 | |||
1 | % | |||
2 | % | |||
Customer | February 28 , 2026 | |||
1 | % | |||
2 | % | |||
10. | Commitments and Contingencies |
a) | 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 February 29, 2024 , the Company recognized board member compensation of $ February 29, 2024 , another |
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. On February 26, 2025, the Company issued the 50,000 shares of common stock issuable.
On September 1, 2024, the Company extended its agreement with the Director for a new term of 24 months, effective September 1, 2024. In consideration of services to be rendered, the Company shall pay the director 200,000 restricted shares of common stock, of which 100,000 shares will vest every 12 months over the term. Pursuant to the terms of the extended agreement, the Company recognized board member compensation of $33,500 , representing a fair value of 50,000 shares of common stock issuable for services rendered for the period from September 2024 to February 2025. Pursuant to the terms of the extended agreement, the Company recognized board member compensation of $67,000 , representing a fair value of 100,000 shares of common stock issuable for services rendered for the period from March 2025 to February 2026. Pursuant to the terms of the extended agreement, the Company recognized board member compensation of $16,750 , representing a fair value of 25,000 shares of common stock issuable for services rendered for the period from March 2026 to May 2026.
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As at
May 31, 2026
, a total of 175,000 shares (February 28, 2026 – 150,000 shares) of common stock remain issuable to the director.
b) | On March 1, 2023, the Company entered into agreements with a Director and Chief Operating Officer 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 |
On March 1, 2024, the Company extended its agreement with the Director for a new term of 30 months, effective March 1, 2024. In consideration of services to be rendered, the Company shall pay the director 250,000 restricted shares of common stock, of which 100,000 shares will vest on or about September 1, 2025, with the remaining 150,000 shares vesting on or about September 1, 2026. Pursuant to the terms of the extended agreement, the Company recognized board member compensation of $70,000 representing a fair value of 100,000 shares of common stock issuable for services rendered for the period from March 2024 to February 2025. Pursuant to the terms of the extended agreement, the Company recognized board member compensation of $70,000 representing a fair value of 100,000 shares of common stock issuable for services rendered for the period from March 2025 to February 2026. Pursuant to the terms of the extended agreement, the Company recognized board member compensation of $17,500 representing a fair value of 25,000 shares of common stock issuable for services rendered for the period from March 2026 to May 2026.
As at May 31, 2026, a total of 225,000 (February 28, 2026 – 200,000 shares) shares of common stock remain issuable to the officer and director.
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 May 31, 2026, the balance of the deposit was $12,296 (R200,000 ) (February 28, 2026 – $12,584 (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
except for the following:
Subsequent to the three months ended May 31, 2026, the Company issued 50,000 shares of common stock for services pursuant to a Director Agreement.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements.” All statements other than statements of historical fact are forward-looking statements for purposes of federal and state securities laws, including any projections of earnings, revenue or other financial items; statements of the plans, strategies and objectives of management for future operations; statements concerning proposed new services or developments; statements regarding future economic conditions or performance; statements of belief; and statements of assumptions underlying any of the foregoing.
Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Except as required by applicable securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement. Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed. The factors impacting these risks and uncertainties include, but are not limited to:
· | Our results are vulnerable to economic conditions; |
· | Our ability to raise adequate working capital; |
· | Loss of customers or sales weakness; |
· | Inability to achieve sales levels or other operating results; |
· | The unavailability of funds for expansion purposes; |
· | Operational inefficiencies; and |
· | Increased competitive pressures from existing competitors and new entrants. |
Trends and Uncertainties
Our business is subject to the following trends and uncertainties:
· | Whether our system will be adaptable to countries other than South Africa; |
· | Whether we will develop interest in our software system in other countries into which we plan to expand; and |
· | The level of activity of credit facilities and their need for our software. |
Results of Operations — For the three months ended May 31, 2026 and May 31, 2025
Revenues
Our revenues for the three-month periods ended May 31, 2026 and 2025 were $226,347 and $170,414, respectively, reflecting an increase in revenues of $55,933, which increase is primarily attributable to increased revenue generated from the Company’s software development, and an increase in transactional revenue, from new and existing clients in the credit industry in South Africa.
Net Loss
We had net losses of $115,440 and $141,986 for the three months ended May 31, 2026 and 2025, respectively, reflecting a decrease net loss of $26,546, which is primarily attributable to increased revenues and gross profit during the period, partially offset by higher general and administrative expenses.
Expenses
We incurred total expenses of $269,811 and $258,432, respectively, for the three months ended May 31, 2026 and 2025, reflecting an increase in expenses of $11,379, which is primarily attributable to an increase in general and administrative expenses during the period.
Liquidity and Capital Resources
Working Capital
We had negative working capital of $380,139 at May 31, 2026 and negative working capital of $266,715 at our fiscal year end of February 28, 2026, representing a decrease in working capital of $113,424.
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Cash Flows
Our net cash used in operating activities was $74,222 and $130,676 for the three months ended May 31, 2026 and 2025, respectively.
Our net cash used in investing activities was $1,189 and $0, respectively, for the three months ended May 31, 2026 and 2025.
Our net cash provided by financing activities was $75,000 and $120,000 for the three months ended May 31, 2026 and 2025, respectively.
Off-Balance Sheet Arrangements
None.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of May 31, 2026. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of May 31, 2026, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
As of May 31, 2026, we did not maintain effective controls over our control environment. Specifically, we have not developed and effectively communicated to our employees our accounting policies and procedures, which has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity-level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.
Our management does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended May 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
We are not currently a party to any material legal proceedings, and no such proceedings are known to be contemplated
Item 1A. Risk Factors.
As a smaller reporting company, we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended May 31, 2026, the Company issued 20,000 shares of common stock for marketing services.
During the three months ended May 31, 2026, the Company also accrued 50,000 shares of common stock issuable pursuant to Director Agreements. Although the shares were issued subsequent to May 31, 2026, the shares were earned and accrued during the quarter ended May 31, 2026 pursuant to the applicable Director Agreements.
The securities described above were issued, accrued, or subsequently issued in consideration for services rendered, in transactions not involving a public offering, and were exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. No underwriters were involved in the foregoing transactions, and the Company did not receive any cash proceeds from the issuance, accrual, or subsequent issuance of such securities.
Item 3. Defaults Upon Senior Securities.
None
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Item 6. Exhibits.
Exhibit No. | Description | |
31.1 | Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) (Section 302). | |
31.2 | Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) (Section 302). | |
32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906). | |
101.INS | Inline XBRL Instance Document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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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.
UPAY, INC.
Date: July 14, 2026 | By: | /s/ Jacob Casper Folscher | |
Jacob Casper Folscher | |||
Chief Executive Officer | |||
(Principal Executive Officer) | |||
Date: July 14, 2026 | By: | /s/ Jacob Casper Folscher] | |
Chief Financial Officer | |||
(Principal Financial Officer) | |||
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