UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the annual period ended
or
For the transition period from __ to __.
Commission File Number
(Exact name of small business issuer as specified in its charter)
(State
or other jurisdiction of incorporation or organization) |
(I.R.S.
Employer Identification No.) |
(Address of principal executive offices)
(Companys telephone number, including area code)
Indicate by check mark if the Registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes o
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o
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.
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).
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 the 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 o | Accelerated Filer o | 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 o
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which
the common equity was last sold as of August 31, 2021 ($0.35) per share), the last business day of the registrant’s most recently
completed second fiscal quarter, was $
As of June 16, 2022, there were shares outstanding.
F-1
TABLE OF CONTENTS
F-2
UPAY, Inc.
Form 10-K
In this report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to common shares refer to the common shares in our capital stock.
As used in this report and unless otherwise indicated, the terms we, us, UPAY, “Company”, and us refer to UPAY, Inc.
PART 1
ITEM 1. BUSINESS
Organization
We were incorporated in the state of Nevada on July 8, 2015. On November 4, 2015, we conducted the Share Exchange with Rent Pay, which became our wholly owned subsidiary
Industry Background
United States
Americans borrowed nearly $29 billion from payday lenders in 2017, paying $5 billion in fees, according to estimates by John Hecht, an analyst at the financial services firm Jefferies - www.jefferies.com
South Africa
As of December 31, 2020, the industry data for the year, ending December 31, 2019 estimates the unsecured credit and short-term credit market in South Africa, to be around US$ 5.35billion (conversion rate as of December 31, 2020) (78.6-billion-rands in South Africa) for that year https://www.ncr.org.za/documents/CCMR/CCMR%202020Q4.pdf
Our Mission
Our mission is to provide loan administration software to credit providers, retail stores, provisional service industry (doctors, lawyers, accountants) with a high-quality credit management software systems and customer support that will enable such industries to effectively operate and manage their business and credit risk in compliance with applicable US federal and state laws and the National Credit Act in South Africa.
Recent Developments
(a) | We have previously Embarked on a Proof of Concept, web development project with LEWFIN AMERICA for their operations in Texas. We have a December 12, 2018, titled Proof of Concept (POC) to Supply and Develop Software Systems Agreement with LEWFIN AMERICA LLC to develop an online lending website for them and to further customize and develop our loan management system to the industry needs and the needs of LEWFIN in Texas. The POC would run for a period of 12 months and expire on January 7, 2020, however, we decided to continue with the agreement on a month-to-month basis because the input and feedback received from the LEWFIN group has been valuable. LEWFIN has since gone live with some of their branches on our software system. In exchange for the industry knowledge and input supplied by LEWFIN during this POC, UPAY will continue to make the website and loan management system available to LEWFIN free of charge on a month-to-month basis, following the expiration of the POC period. All new development and customization will remain our sole property. We plan to renegotiate with LEWFIN the terms of our arrangement with them, including LEWFINS paying for services rendered, including software rental, transaction fees and software development. |
(b) | Completed software integrations with two US payment systems, namely Loan Payment Pro and Repay. We also integrated with a US credit bureau, Factor Trust, Clarity, and a Global document verifying company, Decision Logic. We completed integrations with Payliance, a payment system, Dot818 and Lead Envy who are lead providers in the US. We have also signed a Master Services Agreement with Yodlee, a Global bank account and transaction verification company in order to integrate their services to access consumer bank account information for customers and to make better credit decisions. |
F-3
(c) | Due to the cumbersome process and the difficulties and delays experienced by some new UPAY clients, during the course of their company registrations, including regulator registrations, opening of bank accounts and opening accounts with various third-party vendors, UPAY explored the opportunity to look at easier ways to assist new clients with these registrations and to help facilitate the process on behalf of potential new clients. We believe that a group model would address the cumbersome and lengthy application processes of new clients to assist smaller lenders in accessing the credit market and to minimize the risk and compliance issues. |
With such a model, investors or businesses looking to enter the credit industry could theoretically easily join an existing group that already complies with the regulators and has other registrations in place, in its own capacity and in this way allow investors to access the existing infrastructure of the group to gain access to the consumer lending market much faster and with the guidance and know-how of the group, with the existing registrations and relationships of the group already in place.
Our Board of Directors approved the adoption of such a group business as a separate structure and independent business to our existing business.
MiWay Finance, Inc. (“MiWay”) was incorporated in Texas on May 26, 2020. On June 10, 2020, UPAY entered into a Stock Purchase agreement with MiWay Finance, Inc whereby UPAY acquired 20,000,000 shares in MiWay in exchange for an investment of $20,000. This investment represents 48.66% of the shareholding held in MiWay. MiWay will run separate and independent from us but use our software, services and integrations exclusively for all its clients. MiWay will sign a Service Level Agreement with UPAY for services to be rendered, with agreed level of service and fees.
Products and Services
South African Business Operation:
Our South African subsidiary, Rent Pay (Pty) Ltd, currently provides a web-based client and loan administration software platform, the Automated Credit Provider Administration System, to registered lenders in South Africa, which we market under the name ACPAS.
Our customer base consists of customers with physical branch outlets as well as online customers with lending websites. ACPAS was designed to bridge the gap between traditional standalone administration platforms, payment gateways, credit bureaus and other third-party service providers through this fully automated software platform.
We provide a cloud-based loan origination software system that is compliant with all applicable legislation and enables our customers to grant loans, sell products, pay bills or pay monthly subscriptions on terms, all within our software system. Our software platform features integrated third-party service providers are, for example, registered payment gateways, credit bureaus, two-way texting, credit protection insurance and decision-making platforms. We also develop tailor-made web sites for our customers that is fully integrated with our ACPAS system. Our system also includes basic accounting and bookkeeping functionality.
In an effort to reduce the cost of our US operations, in November 2021, we decided to close the sales office in Grapevine Texas and to only keep the registered Dallas office at this point in time. As of February 2022, we no longer pursue US sales and operations because of: (a) the resignation of our previous Chief Executive Officer, Wouter Fouche, in February 2022 who was to direct our planned US operations and the need to appoint new staff; (b) need to raise adequate funding to pursue and complete a successful US rollout; and (c) our current staff resources are restrained and the time difference between the US and South Africa and the location of all our staff resources in South Africa and the lingering effects of Covid presents difficulties. We will focus our entire sales effort in Southern Africa, first to expand in South Africa and then into Namibia and Botswana.
Products in South Africa
1. | Loan Origination System |
ACPAS – Automated Credit Provider Administration System. This is our management software system that we lease on a monthly basis to our customers that they use to manage their businesses, clients and processes.
F-4
2. | Theme Studio - Business Online |
Customized websites that we develop for our customers that are fully integrated with our ACPAS system to provide our customers with a public platform to interact and transact with their clients daily.
3. | Credit Inquiries |
We are a reseller of credit bureau products. We provide our customers with a base within the ACPAS software system to conduct consumer credit inquiries to make informed credit decisions about whether or not to grant credit to an applicant. We buy these credit inquiries in bulk from the credit bureau and resell the transactions to our customers at a markup price.
4. | Credit Protection and Life Insurance |
We act as an agent for a registered insurance company and provide our customers with functionality within the ACPAS software system that enables our customers to sell credit protection insurance or life insurance products to consumers when securing credit. We receive monthly commission on all insurance sales generated through our system on a referral basis.
5. | Debit order transaction fees |
In South Africa, we are a registered Third-Party Payment Provider (TPPP) and charge a fee for debit order transactions that we facilitate between parties. This is a percentage-based fee that we charge for every installment due for repayment, that we successfully collect by debit order from the bank account of consumers for their benefit.
6. | Development Service Fee & Staff Services |
We offer custom software development and general administration staff services to customers for development or administration services to be offered on a monthly basis.
US Operational Cost/Restructuring:
In order to reduce the cost of our US operations, we decided to close the sales office in Grapevine Texas and to only keep the registered Dallas office at this point in time. As of February 2022, we will no longer pursue US sales and operations, apart from our one US client, that we will keep in Texas, as we will focus on our African expansion in the near future. The US client that we have, is currently supported from our South African support centre.
Planned Business Operations in Africa
Revenue
Description | South
Africa Revenue Segment |
|||
ACPAS - Monthly License Fee | $ | 43.23 | ||
ACPAS Installation and Setup fee (One-time charge) | $ | 79.80 | ||
Transaction Fee (Ave CTC /CTM per successful transaction) | 2.8 | % | ||
Ave volume of transactions/per month/per branch | 500 | |||
Commission on insurance | Variable |
(A transaction is defined as: a successful debit order collection through our debit order platform)
We will also provide custom website development services on a per quote basis.
Sales and Marketing Strategy South Africa
We provide a cloud-based loan origination software platform that enables businesses to grant loans, sell products, pay bills and monthly subscription on terms. Our marketing activities to date in South Africa have primarily consisted of contacting potential sales leads and making presentations and attending a yearly conference that we do with Micro Finance South Africa. We also run monthly Google adds and Facebook marketing campaigns, through external marketing companies.
F-5
Since August 2017, we have regularly posted videos and digital media files each month to continuously attract viewers and continue to do so.
We plan to also become members of OLA (Online lenders Alliance) and the CFSA (Community Financial Services Association of America) once adequate funding is available to establish contact with lenders within our target market and enable us to market our products and services through their network as well.
Social Media & Applications
We will use social media and apps to connect with leads and our customers on a more personal level. We currently make use of two marketing companies to promote our brand on social media platforms in South Africa and plan to do the same in the US.
Blog Posts
Create and maintain interesting blog posts to attract leads.
Webinars
We will attract potential customers by hosting webinars on interesting industry topics and by engaging with customers and potential customers face to face, by sharing quality information and having discussions on relevant industry matters. We purchased GoToMeeting and use this tool to interact with potential clients doing webinars.
Email Campaigns & Newsletters
We will signup customers and leads interested in our product through value added newsletters and email campaigns.
Events
We will arrange in-person marketing events together with industry leaders and opinion makers that will ensure personal interaction opportunities with potential clients that could result in a high conversion rate and quality leads on. During 2017, 2018, and 2019, 2020, 2021 and 2022 we attended conferences and engaged with industry leaders.
Seasonality
We do not have a seasonal business cycle in South Africa.
Raw Materials
We do not use raw materials in our business.
Target Market
Our target market consists of:
○ | Online lenders; |
○ | Storefronts lenders; |
○ | Retail establishments |
○ | Lawyers, doctors, accountants; and |
○ | Athletic or other clubs that charge monthly fees |
F-6
Reliance Upon One or a Few Customers
During our Fiscal Year 2022, 5 customers accounted for 76% of our revenues business in South Africa, as follows:
Customer % Mar 2021 – Feb 2022
Customer 1 | 31.55% |
Customer 2 | 14.55% |
Customer 3 | 10.80% |
Customer 4 | 9.72% |
Customer 5 | 9.66% |
Customer 6 | 6.68% |
Employees
We have 11 full-time employees: (a) our CEO/CFO, Jacob C Fölscher; (b) 1 operational director; (c) 1 financial director; (d) 1 scientific programmer; (e) 2 systems engineers; and (f) 1 accounting/bookkeeping person, 2 assistants, 2 Software developers. Our scientific programmer and system engineers and 2 Software developers will continue to provide support and technical assistance and modifications to our current ACPAS system and support development of future products and our current software. Most of our employees are located at our South African office working directly for the South Africa office.
To be Hired Employees
Contingent upon our revenues and adequate financing, we plan to hire 3 additional developers 2 sales representatives, 4 technical support staff members, 2 training consultants and 1 national sales manager.
Geographic Territory
Our products and services have been offered since June 2008 in all South Africa provinces and will continue to be so offered.
Competition
Our primary competitors in South Africa are
● | Compuscan |
● | Delter |
● | Mycomax |
Each of the above competitors sell credit related software that is sold to lenders.
Competitive Advantages
○ | We are a Cloud based system and there is no need for physical installation; |
○ | For the past 10 years we have designed a software system that incorporates regulatory guidelines, affordability guidelines on an ongoing basis in South Africa, which we can adapt to a US software credit system; |
○ | South Africa has a non-paying culture as evidenced by market data. |
Competitive Disadvantages
○ | Our competitors in South Africa, including those mentioned above, have greater operational, financial and personnel resources than we do; |
○ | Apart from the POC, we dont have any operations in the US; |
○ | We will have substantial development of our business and software program to adopt to the various states; and |
○ | We have not tested our marketing or our product in the US. |
F-7
Government Regulation
Our customers products and services are subject to extensive US local, state and federal regulation and South African regulations. The regulation of the loan products and services industry is intended primarily for the protection of consumers and is constantly in flux as new regulations are introduced and existing regulations are repealed, amended, and modified.
South Africa Credit Regulations (The National Credit Act)
The National Credit Act (NCA) regulates the South Africa credit industry and was designed to protect consumer in the credit market and make credit and banking services more accessible. The Purpose of the NCA Act is to: promote a fair and non-discriminatory marketplace for access to consumer credit; regulate consumer credit and improve standards of Consumer information; prohibit certain unfair credit and credit marketing practices; promote responsible credit granting and use; prohibit reckless credit granting; provide for debt re-organization in case of over-indebtedness; to regulate credit information; and establish recourse for unfair credit practices. The NCA does this by simplifying and standardizing credit agreements and information disclosure; providing for the use of simple language that is easy to understand for comparing credit agreements from different credit providers; ensures all credit products are handled in the same way by credit providers; assisting over-indebted Consumers to restructure their debt with the help of a Debt Counselor (DC) and encourage responsible lending; regulates credit bureaus in terms of their Consumer information and records; establishing the National Credit Regulator (NCR) to regulate the entire credit market; and establishing the National Consumer Tribunal (CT) to adjudicate on Consumer complaints and disputes with credit providers, contraventions of The Act and decisions of the Regulator.
The NCA affects anyone dealing with the credit industry such as credit grantors, credit grantees and intermediaries. The NCA defines a credit agreement broadly as any installment purchase agreement of goods or services, as well as the extension of credit in the form of money i.e. home loans, personal loans, credit cards, store cards and short-term loans. Therefore, a credit agreement applies to any party involved in the credit agreement which is classified into three categories namely incidental credit agreements; intermediate agreements; and large credit agreements.
Credit Providers include banks, micro lenders, retailers such as furniture and clothing stores, all businesses, companies, close corporations, partnerships and individuals who do business on credit, provide loans or charge interest on overdue accounts. Consumers Include natural person, companies, close corporations, trusts (with more than three individual trustees), partnerships and an association of persons whose asset value or annual turnover, together with the combined asset value or annual turnover of all related juristic persons, at the time the agreement is made, equals or exceeds the threshold value of 1 million rands.
The NCA lists a number of consumer rights, which are protected by the Act. A party who breaches Consumer rights protected by the NCA commits an offence in terms of credit law, which enables Consumer recourse through the established dispute channels. The following are Consumer rights protected in the NCA:
○ | To apply for credit |
○ | To be protected against discrimination in the granting of credit |
○ | To be informed why credit has not been granted, should you ask |
○ | To receive a free copy of your credit agreement |
○ | To receive a credit agreement in plain and simple language |
○ | To have your personal and financial information treated confidential |
○ | To understand all fees, costs, interest rates, the total installment and any other details |
○ | To say no to increases on your credit limit |
○ | To decide whether or not you want to be informed about products or services via telephone, SMS, mail or e-mail campaigns |
○ | To apply for debt counseling should you be overwhelmed by debt |
The key points of the NCA are:
1. Marketing
The NCA restricts and prohibits certain practices of loan canvassing such as door to door selling, uninvited canvassing at workplaces or homes. The NCA also increased control over marketing practices and advertisements such as automatic credit limit increases and negative option marketing i.e. if you do not decline, we will assume you agree. In addition, the National Credit Act provides for clear and understandable marketing communication. Consumers must receive a detailed written quote, which is valid for 5 business days, to enable quote comparisons from different credit providers.
F-8
2. Capped Interest Rates and Other Fees and Charges
The NCA effectively caps the interest rates, fees and other charges, which credit providers, can charge, depending on the type of credit and when the credit was granted. The maximum interest rate, in most cases, is based on a formula, which is dependent on the SA Reserve Bank Repurchase (Repo) rate at the time that the credit was granted. Essentially, there are seven rate categories namely mortgage agreements; credit cards/facilities; unsecured credit transactions; short-term credit transactions; developmental credit agreements; other credit agreements and incidental credit agreements. The NCA places a cap on the maximum amount that a credit provider can charge for other fees such as initiation fees, monthly service, and default and collection costs. While a loan protection policy is permitted, the charges must be reasonable and the Consumer may use/cede an existing insurance cover.
3. Loan Application
The NCA requires credit providers to supply simple contracts that are easy to understand, in official languages and the Consumer must receive a free copy. Consumers are also entitled to a reason, on request, when the credit provider denies credit. The NCA requires credit providers to do due diligence to ensure the Consumer can afford the loan and all loans must be recorded on a register to prevent Consumers becoming over-indebted.
4. Reckless Lending
Credit providers are in contravention of the NCA and may be judged guilty of reckless lending if the Consumers ability to afford loan repayments is not assessed before granting credit. Credit providers may be subject to severe penalties and may even forfeit their right to recover the debt if they are judged guilty of reckless lending. However, Consumers who failed to fill in the loan application fully and honestly are not protected by the NCA.
5. Debt Counselor & Counseling
The NCA gives Consumers the right to apply for financial management and debt counseling assistance if he or she is unable to pay their debts. The Debt Counselor (DC) is registered by the NCR after successful course and exam completion. Debt counselors will help over-indebted Consumers restructure/rearrange their debt repayments, this process can be voluntary or made an order of the court.
All DCs must be registered with the National Credit Regulator and fees are prescribed in terms of the NCA. Consumers must understand and accept the process, charges and payments before undergoing debt counseling. Once the Consumer has signed for debt counseling, the credit bureau is notified, and the Consumer will be unable to obtain further credit for the duration of debt counseling until the process is finalized/withdrawn.
6. Credit Bureau
The NCA requires all credit bureau to be registered with and submit reports to the National Credit Regulator. Credit bureau are required to ensure data is accurate at all times and that inaccurate information is immediately removed without cost to the Consumer after the Consumer has lodged a complaint. The NCA regulations stipulate how Credit bureau information is obtained, used, and for how long it should remain on a Consumers profile.
In addition, Consumers are eligible for one free credit report from each credit bureau each year to effectively manage their credit profiles.
7. The National Credit Regulator and the Consumer Tribunal
The NCA established the NCR to regulate the credit industry and ensure that credit providers comply with the NCA. In addition, the NCR is responsible for investigating and evaluating Consumer complaints about alleged contraventions of the NCA by credit providers. All credit providers, credit bureau and debt counselors must register and report to the NCR.
In addition to the NCR, the NCA established the Consumer Tribunal with equal status to a court of law to hear and adjudicate on: applications made in terms of the NCA by consumers; credit providers and credit bureau; debt counselors and the NCR including applications for interim relief and a review of the NCRs decisions; matters referred to by the NCR or complaints related to allegations of prohibited
F-9
Research and Development
Since our inception, we have had no research and development expenses.
Patents and Intellectual Property/Trademarks/Licenses/Franchises
We do not currently own any patents and have no intention of applying for patents. We rely upon our trade secrets for our technology. We currently have no trademarks. We are not a party to any license, royalty or franchise agreements.
Material Agreements
Verbal Agreement with Wouter Fouche
We had a verbal agreement with our previous Chief Executive Officer, Wouter Fouche, to pay him a monthly salary of $9,500 for our fiscal year 2022 based upon available funds.
However, Wouter Fouche resigned from all positions on February 3, 2022, including from all positions at any subsidiaries or affiliates, pursuant to a February 3, 2022, Share Purchase and Separation Agreement (the Agreement). In the Agreement, Wouter Fouche sold 7,125,000 of his 9,125,000 shares and three million seven hundred thousand (3,700,000) of MiWay Finance shares to us that were owned by Wouter Fouche for $240,000, which we have agreed to pay with a $150,000 cash payment within 10 days of the Effective Date and $10,000 per month for 9 consecutive months commencing April 1, 2022; Wouter Fouche retained an amount of 2,00,000 UPAY, Inc. shares pursuant to the Agreement. The 2,00,0000 of our shares are locked up for a period of eighteen (18) months from the closing date of the agreement and thereafter no more than five thousand (5,000) of the Retained Shares may be sold per month. The Agreement also provides for non-circumvention, non-derogation, non-solicitation provisions and Mr. Fouche will never solicit any of our employees, customers or vendors for any other business, work or project of any kind and shall take no action to interfere with, disrupt or harm our business in any manner. Further, Wouter Fouche will keep confidential, any and all information in his knowledge or possession about us or our business, finances or operations, our employees, officers, directors or agents. Wouter Fouches resignation was not in connection with any disagreement with our management regarding us, our operations, policies or practices.
Verbal Agreement with Jacob C Fölscher
We had verbal agreement with our Chief Financial Officer, Jacob C. Fölscher, to pay him a monthly salary of $9,500 for our fiscal year 2021 based upon available funds. There will also be a 13th check as an annual bonus of $9,500 per year. Additionally, we verbally agreed to pay Jacob C. Fölscher a $10,000 relocation expense for relocating to the US, if applicable. The monthly salary and $10,000 relocation expense are the sole terms of this verbal agreement. In addition, following the resignation of our former CEO, Mr Fölscher has also taken up the role of CEO.
We plan to draw up formal written agreements with our officers soon in order to protect both the company and the officers in line with the companys Bylaws and Code of Ethics.
Share Exchange Agreement with Rent Pay (Pty) Ltd
On November 4, 2015, we completed a Share Exchange Agreement with Rent Pay (Pty), Ltd (Rent Pay), a South African company, and Rent Pays shareholders, which are South Africa Trusts controlled by our officers. In the Share Exchange, we exchanged 200,000 shares of our common stock for all of Rent Pays outstanding shares (1,000 shares), 500 of which were in the name of the Loantech Trust, a trust controlled by our officer, Wouter Fouche, and 500 shares in the name of Fölscher Family Trust, a trust controlled by our other officer, Jacob Fölscher. As a result of the share exchange, Rent Pay become our wholly owned subsidiary of UPAY
Consulting Agreement with Ferdinand Labuschagne
We have a June 3, 2016 consulting agreement with Ferdinand Labuschagne to perform business advisory services in return for 300,000 restricted common stock shares that were issued and two million cashless warrants exercisable at $3.50 with an exercise period of 2 years following the effectiveness notice from the SEC, at which time the warrants will be issued. The exercise period has since expired on December 6, 2020. The 300,000 shares are subject to a Dribble Out Agreement providing that Ferdinand Labuschagne agrees not to sell during each quarter after the lock up period more than 10% of its shares then held and not more than 1,500 shares per day. The shares and the warrants are locked up for a period of 2 years following the date when the companys shares are publicly traded. As disclosed, Ferdinand Labuschagne is Wouter A. Fouches brother-in-law and the consulting agreement is a related party transaction.
F-10
Software Services Agreement with Fourier Systems (Pty) Ltd
We have a January 18, 2016 Software Services Agreement with Fourier Systems (Pty) Ltd (Fourier), a software services company located and registered in South Africa. In the agreement, Fourier agreed to provide services to develop the software for a US Loan Administration System and a Payment Gateway System in return for 1,800,000 restricted common stock shares, 1,000,000 shares of which will be recorded in book entry at our transfer agent within 10 days of the development completion of all functionality of the Loan Administration System and 800,000 shares of which will be recorded in book entry at our transfer agent within 10 days of the development completion of the our Payment Gateway. The relationship between us the company and Fourier has since come to an end and no development on the project was performed by Fourier, rendering the agreement cancelled.
Website/Software Services Agreement with Twin Harbor Web Solutions, Inc.
We have a January 1, 2016 Website/Software Services Agreement with Twin Harbor Web Solutions, Inc. (Twin Harbor) providing that Twin Harbor will provide software and website development services involving website design and basic website setup for our ACPAS system. The agreement provides that we will pay Twin Harbor: (a) $35 per month to be billed annually for website hosting; (b) $750 for website setup; (c) an initial $2,000 payment to build the master website and the plug in with all of our web services; and (d) upon completion of the master website with all plugins, we will issue 30,000 restricted common stock shares.
Asset Purchase Agreement with Twin Harbor Web Solutions, Inc
We have an April 16, 2018 Asset Purchase Agreement with Twin Harbor Web Solutions, Inc, where we acquired the software known as Theme Studio from Twin Harbor Web Solutions in exchange for 2,000,000 restricted common stock shares. The software acquired includes a customizable client loan or product website with templates that include a client and document management platform as well as an electronic document signature solution. This means that we now own all right, title and deed to the Theme Studio software and can further develop the platform.
Software Acquisition Agreement with Finbond Mutual Bank
We have a January 9, 2019 Software Acquisition Agreement with Finbond Mutual Bank, where Finbond will acquire a copy of the current UPAY software, for $240,279. Our subsidiary, Rent Pay (Pty) Ltd, will then further develop and customize the software at an agreed development rate per hour. Upon successful completion of the further development, Finbond will use the software in their South African operations. Finbond paid a deposit to initiate the project of $141, 341.
We have a February 5, 2021 share purchase and services agreement with James S Byrd, PA (Consultant), where the company appointed the Consultant, for a period of 18 months from the date of the agreement, to provide legal, business, strategic and other consulting services to Company to assist the Company, by providing the names of possible financing capital sources for the Companys growth and expansion plans, assist and advise on any potential up-listing, merger or acquisition that the company may pursue in future and assist in the preparation of documents pertaining thereto. The consultant will also assist the Company in developing corporate governance practices and strategies and assist with the preparation of documents to affect corporate governance measures, including those that will be consistent with an up-listing and review, edit, and comment on Regulation A offering document and amendments prepared by the Companys securities counsel and provide advice on US distribution agreements for the Companys products and refer possible US distributors for its products in the US.
In consideration and exchange for the Consultants services and a cash investment of $30,000 by the Consultant in UPAY, the Company agreed to issue One million (1,000,000) shares of common stock in the Company to the Consultant, effective upon execution of the agreement.
We also have a October 11, 2021 Director Agreement with James S Byrd, for a period of 12 months, through October 11, 2022, to serve as director on the Companys Board of Directors. Mr. Byrd is to perform such duties and responsibilities as are customarily related to such position in accordance with Companys bylaws, Code of Ethics, and applicable law, including, but not limited to, assisting the Company in the following: (a) obtaining DTC eligibility for the Companys common stock; (b) assisting in the Companys Regulation A filing; (c) advise the Company on its public company and business needs. Mr. Byrd will be paid $5000 per month for his services.
F-11
ITEM 1A. RISK FACTORS
As a Smaller Reporting Company, we are not required to provide this information.
ITEM 1B. UNRESOLVED STAFF COMMENTS
As a Smaller Reporting Company, we are not required to provide this information.
ITEM 2. PROPERTIES
We pay monthly rent of $66.11 per month for our Texas office. Our office is adequate for our current needs. Our lease is on a month-to-month basis.
Rent Pays offices are located at Centurion, South Africa and comprised of 2475 square feet. The South Africa offices are composed of reception area, two boardrooms, one sales and, support floor, an administration office and 3 separate offices for management. There is also a fully fitted kitchen and entertainment area. Rent Pay pays monthly rent of $1,492 and its lease expires on 31 January 2023. The total office space currently is 2475 square feet as of 1 February 2021.
ITEM 3. LEGAL PROCEEDINGS
We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting us, our common stock, any of our subsidiaries or of our companies or our subsidiaries officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
F-12
PART II
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Effective as of June 7, 2021, we became quoted on the OTCQB under the symbol, UPYY. We have no historical trading data to report.
Common Stock
As of February 28, 2022, our common stock was held by 54 stockholders of record and we had 17,256,878.00 shares of common stock issued and outstanding.
Dividend Policy
We have never declared or paid any cash dividends on our common stock. We do not anticipate paying any cash dividends to stockholders in the foreseeable future. In addition, any future determination to pay cash dividends will be at the discretion of the board of directors and will be dependent upon our financial condition, results of operations, capital requirements, and such other factors as the Board of Directors deem relevant. There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends.
ITEM 6. SELECTED FINANCIAL DATA
We are a smaller reporting company as defined by Rule 229.10(f) (1) and are not required to provide the information required by this Item.
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any 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 and may include:
● | projections about accounting and finances; |
● | plans and objectives for the future; |
● | projections or estimates about assumptions relating to our performance; or |
● | our opinions, views or beliefs about the effects of current or future events, circumstances or performance. |
These forward-looking statements present our estimates and assumptions only as of the date of this report. Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.
F-13
Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any or our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. 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 capital expenditures; |
● | Operational inefficiencies; |
● | Increased competitive pressures from existing competitors and new entrants; |
You should view these statements with caution. These statements are no guarantees of future performance, circumstances or events. They are based on facts and circumstances known to us as of the date the statements are made. All aspects of our business are subject to uncertainties, risks and other influences, many of which we do not control. Any of these factors, either alone or taken together, could have a material adverse effect on us and could change whether any forward-looking statement ultimately turns out to be true. Additionally, we assume no obligation to update any forward-looking statement as a result of future events, circumstances or developments. The following discussion should be read together with the Consolidated Financial Statements and the notes thereto. Outlined below are some of the risks that we believe could affect our business and financial statements for 2020 and beyond and that could cause actual results to be materially different from those that may be set forth in forward-looking statements that we make.
GENERAL
Recent Developments
Overview
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Inflation
The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.
Critical Accounting Policies and Estimates
Our significant accounting policies are more fully described in the notes to our consolidated financial statements included herein for our fiscal years ended February 28, 2021 and February 28, 2022.
Recent Accounting Pronouncements
The recent accounting pronouncements applicable to the Company are more fully described in the notes to our consolidated financial statements included herein for our fiscal years ended February 28, 2021 and February 28, 2022.
Management does not believe that any other recently issued, but not effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements.
F-14
COMPARATIVE RESULTS FOR FISCAL YEARS 2021 AND 2022
Results of Operations: For the year ended February 28, 2021 and February 28, 2022
Liquidity and Capital Resources
Revenues
Our revenues for the years ended February 28, 2022 and February 28, 2021 were $1,458,809 and $1,110,397, respectively, reflecting increased revenues of $348,412. The $348,412 of increased revenues are primarily attributable to the gradual recovery of the industry out of the Covid-19 pandemic and transactional growth in our operations.
Net Profit/Net Loss
We had a net loss of $368,851 for the year ended February 28, 2022 and a net loss of $179,543 for the year February 28, 2021, reflecting an increased net loss of $189,308, which is primarily attributable to the increase in general administrative cost. We had a working capital deficit of $269,594 and a surplus of $8,172 at February 28, 2022 and February 28, 2021, respectively. The $269,594 of working capital deficit in fiscal year 2022 is primarily attributable to an increase in accounts payable and accrued liabilities.
Operating Expenses
We incurred total expenses of $1,276,525 and $984,390 for the years ended February 28, 2022 and February 28, 2021, respectively, reflecting an increase of $292,135 from fiscal year 2022 to fiscal year 2021. The increase in total expenses from the prior fiscal year is primarily attributable to an increase in general and administrative expenses.
Our net cash flows used in operating activities was $788,818 for the year ended February 29, 2022 compared to cash flows provided by operating activities of $(84,770) for the year ended February 28, 2021, representing an increase of $873,588.
Our net cash provided by investing activities were $(4,096) and $(25,905) for the years ended February 28, 2022 and February 28, 2021, respectively, reflecting a $21,809 decrease in net cash used in investing activities. This $21,809 decrease in net cash used in investing activities is primarily attributable to an investment made in the prior year of $ 20,000 compared to no investment in the current year.
Our net cash provided by financing activities was $83,459 and $126,342 for the fiscal years ended February 28, 2022 and February 28, 2021, respectively, representing a $42,883 decrease from fiscal year 2021 to fiscal year 2022.
We estimate that we will have operating costs of $735,000 for the remainder of fiscal year 2022 assuming we receive sufficient funding.
Going forward, our monthly estimated cash needs of $85,000 per month over the next 12 months from April 2022 to April 2023 include the following estimated expenditures:
Description
Rent $1613 per month,
Phone $1250 per month,
IT $1450 per month,
Legal fees $3500 per month,
Salaries $45,000 per month
These estimated expenditures are based upon current expenses and anticipated increases and growth.
We plan on meeting our cash needs over the next 12 months, including our SEC reporting costs, through our current cash position of $72,366 as of May 27, 2022 and our existing business in South Africa, although we cannot provide any assurances whatsoever that we will generate sufficient revenues to meet these cash needs.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company, as defined by Rule 229.10(f) (1) and are not required to provide the information required by this Item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
F-15
UPAY, Inc.
Consolidated Financial Statements
F-16
REPORT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Shareholders of UPAY, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of UPAY, Inc. (the Company) as of February 28, 2022 and February 28, 2021, and the related consolidated statements of operations and comprehensive loss, stockholders equity (deficit) and accumulated other comprehensive loss, and cash flows for each of the years in the two-year period ended February 28, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 28, 2022 and February 28, 2021 and the results of its operations and its cash flows for each of the years in the two-year period ended February 28, 2022 in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company suffered a net loss from operations which raises substantial doubt about its ability to continue as a going concern. Managements plans regarding those matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the Companys financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below are matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.
Auditing managements evaluation of a going concern can be a significant judgement given the fact that the Company uses management estimates on future revenues and expenses which are not able to be substantiated.
As discussed in Note 2, the Company has a going concern due to net loss during the year during the year ended February 28, 2022.
Going Concern
Due to the net loss for the year, the Company evaluated the need for a going concern.
Auditing managements evaluation of a going concern can be a significant judgement given the fact that the Company uses management estimates on future revenue and expenses, which are difficult to substantiate.
To evaluate the appropriateness of the going concern, we examined and evaluated the financial information along with managements plans to mitigate the going concern and managements disclosure on going concern.
/s/
We have served as the Companys auditor since 2018.
June 16, 2022
F-17
UPAY, Inc.
Consolidated Balance Sheets
(Expressed in U.S. dollars)
February 28, 2022 | February 28, 2021 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Accounts receivable, net of allowance | ||||||||
Prepaid expenses and other current assets | ||||||||
Total Current Assets | ||||||||
Equity Method Investment (Note 3) | ||||||||
Property and Equipment, Net (Note 4) | ||||||||
Right-of-use Assets, Net (Note 5) | ||||||||
Deposit (Note 12) | ||||||||
Total Assets | $ | $ | ||||||
LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued liabilities | $ | $ | ||||||
Due to related parties (Note 6) | ||||||||
Taxes payable | ||||||||
Current portion of notes payable (Note 7) | ||||||||
Current portion of lease liabilities (Note 8) | ||||||||
Total Current Liabilities | ||||||||
Non-Current Liabilities | ||||||||
Lease Liabilities (Note 8) | ||||||||
Notes Payable (Note 7) | ||||||||
Total Liabilities | ||||||||
Stockholders (Deficit) Equity | ||||||||
Preferred Stock, $ | par value, shares authorized; shares issued and outstanding||||||||
Common Stock, $ | par value, shares authorized; shares and shares issued and outstanding, respectively||||||||
Additional Paid-in Capital | ||||||||
Common Stock Subscribed | ||||||||
Accumulated Deficit | ( | ) | ( | ) | ||||
Accumulated Other Comprehensive Loss | ( | ) | ( | ) | ||||
Total Stockholders (Deficit) Equity | ( | ) | ||||||
Total Liabilities and Stockholders (Deficit) Equity | $ | $ |
The accompanying notes are an integral part of these consolidated financial statements.
F-18
UPAY, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(Expressed in U.S. dollars)
Year | Year | |||||||
Ended | Ended | |||||||
February 28, | February 28, | |||||||
2022 | 2021 | |||||||
Revenue | $ | $ | ||||||
Cost of Revenue | ( | ) | ( | ) | ||||
Gross Profit | ||||||||
Expenses | ||||||||
Amortization of right-of-use assets (Note 5) | ||||||||
Depreciation (Note 4) | ||||||||
General and administrative | ||||||||
Total Expenses | ||||||||
Loss Before Other Income (Expenses) and Income Taxes | ( | ) | ( | ) | ||||
Other Income (Expenses) | ||||||||
Other income | ||||||||
Interest income | ||||||||
Interest expense | ( | ) | ( | ) | ||||
Gain (loss) on equity method investment (Note 3) | ( | ) | ||||||
Gain on sale of non-current assets | ||||||||
Loss Before Income Taxes | ( | ) | ( | ) | ||||
Provision for income taxes | ( | ) | ||||||
Net Loss | ( | ) | ( | ) | ||||
Other Comprehensive Income (Loss) | ||||||||
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-19
UPAY, Inc.
Consolidated Statement of Stockholders Equity (Deficit) and Accumulated Other Comprehensive Loss
(Expressed in U.S. dollars)
Accumulated | ||||||||||||||||||||||||||||
Additional | Common | Other | ||||||||||||||||||||||||||
Common Stock | Paid-in | Stock | Accumulated | Comprehensive | ||||||||||||||||||||||||
Shares | Amount | Capital | Subscribed | Deficit | Loss | Total | ||||||||||||||||||||||
Balance – February 29, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
Issuance of common stock for cash | ||||||||||||||||||||||||||||
Common stock subscriptions received | — | |||||||||||||||||||||||||||
Common stock issuable for services | — | |||||||||||||||||||||||||||
Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
Foreign currency translation adjustments | — | |||||||||||||||||||||||||||
Balance – February 28, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
Issuance of common stock for stock payable | ( | ) | ||||||||||||||||||||||||||
Issuance of common stock for services | ( | ) | ||||||||||||||||||||||||||
Cancellation of common stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
Foreign currency translation adjustments | — | ( | ) | ( | ) | |||||||||||||||||||||||
Balance – February 28, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) |
The accompanying notes are an integral part of these consolidated financial statements.
F-20
UPAY, Inc.
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
Year Ended February 28, 2022 | Year Ended February 28, 2021 | |||||||
Cash Flows from Operating Activities | ||||||||
Net Loss | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Amortization of right-of-use assets | ||||||||
Common stock issuable for services | ||||||||
Depreciation | ||||||||
Interest expense on lease liability | ||||||||
(Gain) loss on equity method investment | ( | ) | ||||||
Loss on theft of non-current assets | ||||||||
Non-cash lease expense | ||||||||
Deposits | ( | ) | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | ( | ) | ||||||
Prepaid expenses and other current assets | ( | ) | ||||||
Accounts payable | ||||||||
Accrued expenses | ||||||||
Operating lease liability | ( | ) | ||||||
Due to related parties | ||||||||
Net Cash Provided by (Used in) Operating Activities | ( | ) | ||||||
Cash Flows from Investing Activities | ||||||||
Purchase of property and equipment | ( | ) | ( | ) | ||||
Cash paid for purchase of shares | ( | ) | ||||||
Net Cash Used in Investing Activities | ( | ) | ( | ) | ||||
Cash Flows from Financing Activities | ||||||||
Proceeds from sale of common stock | ||||||||
Proceeds from common stock subscriptions | ||||||||
Proceeds from shareholder promissory note | ||||||||
Proceeds from promissory notes | ||||||||
Payment for cancellation of common stock | ( | ) | ||||||
Repayment of lease liabilities | ( | ) | ( | ) | ||||
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 Year | ||||||||
Cash and Cash Equivalents - End of Year | $ | $ | ||||||
Supplemental Disclosures of Cash Flow Information: | ||||||||
Interest paid | $ | $ | ||||||
Income taxes paid | $ | $ | ||||||
Promissory note transfer from related party to non-related party | $ | $ |
The accompanying notes are an integral part of these consolidated financial statements.
F-21
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 Companys common stock. The acquisition is a capital transaction in substance and therefore has been accounted for as a recapitalization. Rent Pay was incorporated in South Africa on February 1, 2012. Because Rent Pay is 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.
Rent Pay operates principally in South Africa and engages in software development and licensing and provides services to the credit provider industry.
The recent outbreak of the novel coronavirus COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the U.S. and global economies, disruptions of financial markets, and created uncertainty regarding potential impacts to the Companys supply chain, operations, and customer demand. The COVID-19 pandemic has impacted and could further impact the Companys operations and the operations of the Companys suppliers and vendors as a result of quarantines, facility closures, and travel and logistics restrictions. The extent to which the COVID-19 pandemic impacts the Companys business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to the duration, spread, severity, and impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on the Companys customers, suppliers, and vendors and the remedial actions and stimulus measures adopted by local and federal governments, and to what extent normal economic and operating conditions can resume. The management team is closely following the progression of COVID-19 and its potential impact on the Company. Even after the COVID-19 pandemic has subsided, the Company may experience adverse impacts to its business as a result of any economic recession or depression that has occurred or may occur in the future. Therefore, the Company cannot reasonably estimate the impact at this time our business, liquidity, capital resources and financial results.
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 Companys fiscal year end is February 28. The consolidated financial statements include the accounts of the Company and its subsidiary Rent Pay. All significant intercompany transactions and accounts have been eliminated in consolidation.
b) | 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 Companys estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
c) | Cash and Cash Equivalents |
Cash includes cash on hand and cash held with banks. The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
d) | Accounts Receivable |
Trade accounts receivable are recorded at net invoice value and such receivables are non-interest bearing. Receivables are considered past due based on the contractual payment terms. Receivables are reviewed and specific amounts are reserved if collectability is no longer reasonably assured.
As
at February 28, 2022, the Company has recognized an allowance for doubtful accounts of $
F-22
e) | Property and Equipment |
Property and equipment are stated at cost, less accumulated depreciation, and any impairment in value. Depreciation is computed using the straight-line method over the following estimated lives of the assets:
Computer equipment | |
Computer software | |
Office equipment | |
Furniture and fixtures |
The Company periodically performs impairment testing on its long-lived assets either annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with ASC 360. All property and equipment assets were deemed recoverable at February 28, 2022 and 2021.
f) | Right-of-use Assets |
Right-of-use assets are stated at cost, less accumulated amortization and any impairment in value. Amortization is computed using the straight-line method over the following estimated lives of the assets:
Right-of-use building | Term of lease |
Right-of-use vehicles |
The Company periodically performs impairment testing on its long-lived assets either annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with ASC 360. All right-of-use assets were deemed recoverable at February 28, 2022 and 2021.
g) | Value of Financial Instruments |
The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy in accordance with ASC 820, Fair Value Measurements and Disclosures. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available.
The three-level hierarchy is defined as follows:
Level 1 – quoted prices for identical instruments in active markets.
Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets.
Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
Financial instruments consist principally of cash and cash equivalents, accounts receivable, equity method investment, accounts payable, taxes payable and notes payable. There were no transfers into or out of Level 3 during the years ended February 28, 2022 and 2021. The recorded values of all financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
h) | Foreign Currency Translation |
Management has adopted ASC 830, Foreign Currency Translation Matters, as the functional currency of the Company is the South African rand and the reporting currency is U.S. dollars. Assets and liabilities are translated into U.S. dollars at rates of exchange in effect at the balance sheet date. Average rates for the period are used to translate revenues and expenses. The cumulative translation adjustment is reported as a component of accumulated other comprehensive loss.
F-23
i) | Leases |
Effective March 1, 2019, the Company adopted FASB ASC Topic 842, Leases (ASC 842). This standard requires lessees to recognize in the statement of financial position a liability to make lease payments and a right-of-use (ROU) asset representing the Companys right to use the underlying asset for the lease term. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances within the arrangement. A lease is identified where an arrangement conveys the right to control the use of identified property, plant, and equipment for a period of time in exchange for consideration. Leases which are identified within the scope of ASC 842 and which have a term greater than one year are recognized on the Companys balance sheet as ROU assets and lease liabilities. Operating lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected remaining lease term. The lease term includes any renewal options and termination options that are reasonably certain to be exercised. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its incremental borrowing rate. The incremental borrowing rate is determined based on the rate of interest that the Company would pay to borrow on a collateralized basis an amount equal to the lease payments for a similar term and in a similar economic environment. The interest rate implicit in lease contracts to calculate the present value is typically not readily determinable. As such, significant management judgment is required to estimate the incremental borrowing rate.
j) | Revenue Recognition |
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The guidance under ASC 606 is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Under ASC 606, the Company recognizes revenue by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
The Company derives revenue through licensing its software and by collecting various transaction fees from third party debit orders.
The Company has several revenue streams and they are recognized as below:
Branch Setup Fees
This is a once off, non-refundable cost that the company charges when a customer is onboarded. Revenue is recognized immediately and is collected in the same month. This results in no accounts receivable at the end of the month as revenue is recognized and collected immediately.
Data Migration Fees
This only applies to a customer applying to migrate client data from a previous system to our system. We invoice for this service as soon as data is successfully transferred, imported and verified by our customer. Revenue is recognized upon invoicing and payment is collected within two days due to debit order mandates signed by the customer as part of the agreement. This results in no outstanding accounts receivable as of the end of each month.
Monthly Rental Fees
Our software is made available on a web-based software platform and is offered as software as a service. Our agreement is an evergreen agreement (auto-renewed) and if not terminated by a customer, remains intact. Termination may occur by either party at any point with 30 days notice. The monthly software rental fee is payable every month per branch. Monthly software rental fees are payable in the beginning of each month. The monthly rental fees are invoiced during the first few days of a month and is recognized over the period of the month. Payments are collected via debit order a few days later, prior to the end of that month, due to debit order mandate signed by the customer. This results in no accounts receivable as invoicing and payment happens within the same month.
F-24
Development Service Fee
We have some clients that we do custom software development for, on some versions of our software. Here we adopt a scrum methodology with 2-week development sprints. We agree on a price per hour for development with these clients, typically through email communication. We send an invoice for the work completed and usually get paid within the same month. On this revenue stream we do not run a debit order, but clients need to pay invoices before we continue with the next development increment. Payments are due and revenue is recognized upon invoicing. At times collecting payment can take up to 30 days. Unpaid invoices, if any, are recorded to accounts receivable at the end of each month, but invoicing and payment usually happen within the same month.
Transactional Fees
We offer an integrated debit order facility built into our software. When our clients (lenders) create loans with consumers, the consumer contracts directly with us on a separate agreement. We then act as a third-party payment provider, to facilitate the repayment of loans from the consumer to the lender by debit order. We are registered as a third-party payment provider and all payments collected on this stream are settled by the bank directly into our bank account. We only charge a fee on successful debit order collections and retain that fee when we distribute funds collected on behalf of consumers. The transaction fees charged for these transactions are called CTC and they are displayed on the signed agreement that the consumer signs with us. The CTC fees are paid by the consumer, in addition to the loan installment collected. The loan installment and CTC are collected as one amount, but the CTC is retained by us upon distribution of funds to lenders. Revenue is recognized as each new order is processed and the transaction fee is charged. Our software system counts and accounts for each individual transaction and its amount and this is generated on a report on our Acpas software. We use this report to confirm the revenue recognition in our billing system. If there are any CTC that has yet to be collected at an end of a period, it is recorded as accounts receivable.
Credit Protection Insurance Commission
Some insurance companies offer insurance products on loans that cover the consumer for the full repayment of his debt to the lender, in case of unforeseen events. There is an insurance product from one of our suppliers (an insurance company) that we make available for the insurance company on our software program. In return for making this product available the insurance company would pay us monthly commission on premiums they received. This is a product offered by the insurance company directly to the consumer and we only make it available on our software platform. If this option is selected when a loan is created, an additional fee is added to the loan repayment amount. The software system calculates the insurance premiums and all premiums for a given month are paid by lenders to the insurance company, or lenders use our payment service and instruct us to manage the payments on their behalf. After receiving the premiums and supporting reports, the insurance company will then calculate and verify the premiums paid and premium claw back to this point and work out the commission payable based on the premiums received. Upon collection of the premiums, the insurance company will complete their final calculations and the insurance company will then pay all commissions earned by us and the lenders. We distribute the commission amounts due to the lenders within two days of receiving such payments from the insurance company. Revenue is recognized upon collection of the premiums from the consumers.
Credit Bureau transactions
Some credit bureaus like XDS or VeriCred, offer consumer screening products, that we make available on our software platform as integration. Lenders can sign up for these service and access credit information of consumers that they would like to screen, directly from our software platform. In return for making these products available on a seamless integration, we charge a fee on the products.
The Company enters into an agreement with the credit bureau and lender to the agreed fees. The agreement with the credit bureau determines the commission fee paid or the markup to be charged on transactions by the company, as reseller. If there are any credit bureau fees that has yet to be collected at an end of a period, it is recorded as accounts receivable.
Payroll transactions
Some of our client (lenders) have arrangements with employers where these employers deduct loan installments payable to the lender from the payroll of that employer, on behalf of the lender. The deduction is made from employees that have taken loans from the lender. We provide these payroll lenders with adequate reporting in our software, that can be used to help identify the amounts to be deducted from each individual consumer, with unique identifiers, which is sent to the employers. We also assist lenders to capture payments received from employers on our software in bulk, where requested.
We charge a payroll transaction fee to the lender, for each successful payment made in a month on the system. The fee is charged as a combined amount for the payments received on payroll for that month. The payroll transaction fees are set out and agreed to with the lender on the signed agreement they have with us. Our software system counts and accounts for each individual payment receipted, and this is generated on a payment report on our ACPAS software. We use this report for revenue recognition in our billing system. Revenue is recorded as a lump sum based on this report at the end of each month. If there are any payroll transaction fees, that still needs to be recognized at an end of a period, it is recorded as accounts receivable.
F-25
k) | Stock-based Compensation |
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.
l) | Comprehensive Income (Loss) |
ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive income (loss) and its components in the financial statements. As at February 28, 2022 and 2021, the only item that represents comprehensive income (loss) was foreign currency translation.
m) | Earnings (Loss) Per Share |
The Company computes earnings (loss) per share (EPS) in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share on the face of the statement of operations. EPS is calculated using the weighted-average number of common shares outstanding during the period. Diluted EPS if applicable is calculated by dividing net income available to common stockholders for the period by the diluted weighted-average number of common shares outstanding during the period. Diluted EPS would reflect the potential dilution from common shares issuable through stock options, performance-based restricted stock units that have satisfied their performance factor and restricted stock units using the treasury stock method.
n) | 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 February 28, 2022, 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 Companys 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.
o) | Recent Accounting Pronouncements |
The Company has implemented all new accounting pronouncements that are in effect and that may impact its 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. | Equity Method Investment |
On June 10, 2020, the Company purchased shares of Miway Finance Inc. (Miway) at $0.001 per share for a purchase price of $20,000, which comprises approximately 48.66% of Miways issued and outstanding shares of common stock.
Ownership Interest | $ | |||||
Carrying cost at date of acquisition, June 10, 2020 | ||||||
Equity losses in Miway | — | ( | ) | |||
Net carrying value, February 28, 2021 | ||||||
Equity income in Miway | — | |||||
Net carrying value, February 28, 2022 |
F-26
4. | Property and Equipment, Net |
Property and equipment, net, consists of the following:
Cost | Accumulated Depreciation | February 28, 2022 Net Carrying Value | February 28, 2021 Net Carrying Value | |||||||||||||
Computer equipment | $ | $ | ( | ) | $ | $ | ||||||||||
Computer software | ( | ) | ||||||||||||||
Furniture and fixtures | ( | ) | ||||||||||||||
Office equipment | ( | ) | ||||||||||||||
Total | $ | $ | ( | ) | $ | $ |
During
the year ended February 28, 2022, the Company recorded depreciation expense of $
5. | Right-Of-Use Assets, Net |
Right-of-use assets, net, consist of the following:
Cost | Accumulated Amortization | February 28, 2022 Net Carrying Value | February 28, 2021 Net Carrying Value | |||||||||||||
Right-of-use building (operating lease) | $ | $ | ( | ) | $ | $ | ||||||||||
Right-of-use vehicles (finance lease) | ( | ) | ||||||||||||||
Total | $ | $ | ( | ) | $ | $ |
During
the year ended February 28, 2022, the Company recorded rent expense of $
6. | 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 $ |
b) | On
April 14, 2021, the Company entered into a promissory note with a third-party lender, who
became a Director of the Company on October 11, 2021, for $ |
c) | On
September 7, 2021, the Company entered into a promissory note with the former CEO of the
Company for $ |
d) | As
at February 28, 2022, the Company owed $ |
e) | On
September 7, 2021, the Company entered into a promissory note with the CEO of the Company
for $ |
f) | On
February 11, 2022, the Company entered into a promissory note with the CEO of the Company
for $ |
F-27
g) | During
the year ended February 28, 2022, the Company incurred salary expenses of $ |
h) | During
the year ended February 28, 2022, the Company incurred salary expenses of $ |
i) | During
the year ended February 28, 2022, the Company incurred directors fees of $ |
7. | 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, 2021. During the year ended February 28, 2022, an addendum was entered into to extend the maturity date to May 20, 2023. As at February 28, 2022, the Company has recognized accrued interest of $4,445 (2021 – $1,801), 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 $ |
c) | On
April 14, 2021, the Company entered into a promissory note with a third-party lender for
$ |
d) | During the year ended February 28, 2022, a third-party lender purchased from a Director of the Company a promissory note in the amount of $15,000 (note 6(b)), which is unsecured, bears interest of 10% per annum and has an original maturity date of October 13, 2021. The maturity date was amended to October 13, 2023 during the year ended February 28, 2022. As at February 28, 2022, the Company has recognized accrued interest of $1,315, which is included in accounts payable and accrued liabilities. |
e) | On
October 22, 2021, the Company entered into a promissory note with a third-party lender for
$ |
f) | On
February 11, 2022, the Company entered into a promissory note with a third-party lender for
$ |
8. | Lease Liabilities |
The
Company commenced the leasing of two motor vehicles on May 23, 2018, and October 10, 2018, for a term of five years each. The monthly
minimum lease payments are for $
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 commences on January 1, 2023. Rental payments are due at the beginning of each month and
increase at an annual rate of 7%. The base rental rate is $
F-28
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 February 28, 2022:
Years ending February 28: | Building Lease | Vehicle Leases | Total | |||||||||
2023 | ||||||||||||
2024 | ||||||||||||
2025 | ||||||||||||
Net minimum lease payments | ||||||||||||
Less: amount representing interest payments | ( | ) | ( | ) | ( | ) | ||||||
Present value of net minimum lease payments | ||||||||||||
Less: current portion | ( | ) | ( | ) | ( | ) | ||||||
Long-term portion | $ | $ | $ |
9. | Common Stock |
a) | On
April 15, 2021, the Company issued a total of |
b) | On
April 15, 2021, the Company issued |
c) | On February 15, 2022, the Company repurchased shares of common stock from the former CEO of the Company, pursuant to the Share Purchase and Separation Agreement described in Note 11. |
10. | Concentrations |
The Companys revenues were concentrated among five customers for the year ended February 28, 2022, and four customers for the year ended February 28, 2021:
Customer | Year Ended February 28, 2022 | |
1 | ||
2 | ||
3 | ||
4 | ||
5 | ||
Customer | Year Ended February 28, 2021 | |
1 | ||
2 | ||
3 | ||
4 |
F-29
The Companys receivables were concentrated among four customers as at February 28, 2022, and three customers as at February 28, 2021:
Customer | February 28, 2022 | |
1 | ||
2 | ||
3 | ||
4 | ||
Customer | February 28, 2021 | |
1 | ||
2 | ||
3 |
11. | Commitments and Contingencies |
On February 3, 2022 (the Effective Date), the former CEO of the Company and the Company entered into a Share Purchase and Separation 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., for $240,000, payable with a $150,000 cash payment within 10 days of the Effective Date (closing 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 Companys 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 (Note 6(c)) with the Company, as well as $1,170 in expenses incurred on behalf of the Company (Note 6(d)). As of February 28, 2022, the Company has received 7,025,000 of the 7,125,000 shares of common stock of the Company and has not received the 3,7000,000 shares of common stock of MiWay Finance, Inc. The transaction closed on March 2, 2022.
Management has evaluated commitments and contingencies and is unaware of any legal matters or other contingencies requiring disclosure through period-end.
12. | Deposit |
On
October 15, 2021, the Company paid a $
13. | Income Taxes |
The potential benefit of net operating losses for the Company have not been recognized in the consolidated financial statements because the Company cannot be assured that it is more likely than not that it will utilize the net operating losses carried forward in future years. The Company did not incur any income tax expense to the Internal Revenue Services for the years ended February 28, 2022 and 2021. Rent Pay incurred an income tax expense of $41,299 for the year ended February 28, 2022 (2021 – $nil). Given the short history of the Company and the uncertainty as to the likelihood of future taxable income, the Company has recorded a 100% valuation reserve against the anticipated recovery from the use of the net operating losses. The Company will evaluate the appropriateness of the valuation allowance on an annual basis and adjust the allowance as considered necessary. The Companys US net operating loss is approximately $756,000 (2021 – $325,000) at February 28, 2022, which starts to expire in 2037.
The table below reconciles the US federal income tax rate to the effective rate for the years ended February 28, 2022 and 2021.
Income Tax at Statutory Rate | ( | |
Effect of Operating Losses | ||
Foreign Income Tax | ||
F-30
A reconciliation of the Companys effective tax rate as a percentage of income before taxes and federal statutory rate for the years ended February 28, 2022 and 2021, is summarized as follows:
2022 $ | 2021 $ | |||||||
Loss before income taxes | ( | ) | ( | ) | ||||
Income tax recovery at statutory rates | ( | ) | ( | ) | ||||
Permanent differences | ||||||||
Temporary differences | ||||||||
Change in statutory, foreign tax, foreign exchange rates and other | ||||||||
Income tax expenses |
The unrecognized deferred tax assets include US net operating losses as follows:
2022 $ | 2021 $ | |||||||
Deferred tax assets: | ||||||||
Non-capital losses available for future periods | ||||||||
Valuation allowance | ( | ) | ( | ) | ||||
Deferred income taxes recovered |
The Company has US net operating losses available to offset future taxable income as follows:
2016 | $ | |||
2017 | ||||
2018 | ||||
2019 | ||||
2020 | ||||
2021 | ||||
2022 | ||||
$ |
14. | US Operational Cost/Restructuring of Operations |
In order to reduce the cost of the Companys US operations, the Company decided to close its sales office in Grapevine Texas and to only keep the registered Dallas office. As of February 2022, the Company will no longer drive US operations because apart from the one client the Company has in Texas, which is derived from the Companys South Africa support centre, the Company will focus on its Africa based expansion in the near future.
There are no assets or liabilities applicable to the Companys US operations for its fiscal year ended February 28, 2022 or its fiscal year February 28, 2021.
We derived no revenues from the Companys US operations for its fiscal year ended February 28, 2022 or its fiscal year ended February 28, 2021.
The
Company has total General and Administrative Expenses of $
The
Company has total General and Administrative Expenses of $
F-31
15. | Subsequent Event |
On
March 2, 2022, the Company received the remaining
F-32
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our principal executive and principal financial officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were ineffective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms and (ii) accumulated and communicated to our management, including our principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Internal Control over Financial Reporting
Managements Annual Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) for the Company. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent nor detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
Management has assessed the effectiveness of our internal control over financial reporting as of June 15, 2022. In making its assessment of internal control over financial reporting, management used the criteria established in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. This assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those controls. Based on the results of this assessment, management has concluded that our internal controls over financial reporting were ineffective as of February 28, 2022. A material weakness is a deficiency, or combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The company has no formal control process related to the identification of related party transactions at this point in time.
Managements assessment was not subject to attestation by the Companys independent registered public accounting firm and as such, no attestation was performed pursuant to SEC Final Rule Release Nos. 33-8934; 34-58028 that permit the Company to provide only managements assessment report for the years ended February 28, 2022 and 2021. Due to a control failure with respect to the financial closing process, our independent auditors identified multiple adjusting journal entries as part of their current year audit procedures. The financial closing process will be improved going forward to address any weaknesses.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting that occurred in our fiscal year ended June 15, 2022, that has materially adversely affected, or is reasonably likely to materially adversely affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
F-33
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
All board of Directors and Committee Members were in attendance for all required meetings pursuant to our compliance calendar.
Directors and Executive Officers, Promoters and Control Persons
All directors of our directors and officers hold office until the next annual meeting of our shareholders and until such directors successor is elected and has been qualified, or until such directors earlier death, resignation or removal. The following table sets forth the names, positions and ages of our executive officers and directors. Our board of directors elect officers and their terms of office are at the discretion of our board of directors.
Name:
Name: | Age | Position |
James S Byrd | 63 | Director |
Jacob Fölscher | 43 | President,CEO/CFO/CAO/COO/Director |
Background of Officers and Directors
James S Byrd
James S Byrd has been our Director since October 11, 2021. James Byrd is a Florida Licensed Attorney and has practiced corporate and securities law since 1986. He has tried cases in state and federal court, FINRA, the Florida Supreme Court, and the US Court of Appeals. James Byrd has built, advised and managed companies from start up to publicly traded status. From 1998 to 200, he was Vice Chairman of Success Magazine. During the past 5 years, Jim has held the following officer/director positions:
● | 2015 to Present - Legion Capital Corporation, a registered broker-dealer – Chairman/Chief Executive Officer/Director |
● | 2012 – 2015 - Engage Mobility, Inc., - a Mobile Technology Company – Chairman/Chief Executive Officer/Director |
Jacob C. Fölscher
Jacob C Fölscher has been our President, Chief Operating Officer and Director since January 25, 2015 and our Chief Financial Officer/Chief Accounting Officer since June 10, 2016. He currently serves as Chief Executive Officer of UPAY Inc and is the cofounder. He has been the Operational director of Rent Pay (Pty) Ltd, since July 2008 and he currently serves as the Chief Executive Officer of Rent Pay (Pty) Ltd. Rent Pay (Pty) Ltd is our wholly owned subsidiary in South Africa and is a credit related Software Company. He was also the founder of Isidingo Financial Services (Isidingo) in March 2009. Isidingo is a micro lending company operating in Pretoria South Africa and still in operation today. From March 2006 to February 2009, Jacob Fölscher was the Regional Manager/Operations Manager of Credicor Financial Services, a micro lending firm operating in South Africa. From January 2004 to February 2006, he was the Group Accounting Officer for that same company and from January 2000 to December 2003, he was the NCR compliance officer and Branch Manager, also for Credicor.
Litigation
None
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended February 28, 2019, all filing requirements applicable to our officers, directors and greater than 10% percent beneficial owners were complied with.
F-34
Code of Ethics
We adopted a Code of Business Conduct and Code of Ethics that applies to, among other persons, our companys president (being our principal executive officer, principal financial officer and principal accounting officer), as well as persons performing similar functions. As adopted, our Code of Business Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote;
1. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
2. Full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us;
3. Compliance with applicable governmental laws, rules and regulations;
4. The prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the Code of Business Conduct and Ethics; and
5. Accountability for adherence to the Code of Business Conduct and Ethics
Our Code of Business Conduct and Ethics requires, among other things, that all of our personnel shall be accorded full access to our president with respect to any matter which may arise relating to the Code of Business Conduct and Ethics. Further, all of our companys personnel are to be accorded full access to our board of directors if any such matter involves an alleged breach of the Code of Business Conduct and Ethics by our president.
In addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly managers and/or supervisors, have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal, provincial and state securities laws. Any employee who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to his or her immediate supervisor or to our companys president. If the incident involves an alleged breach of the Code of Business Conduct and Ethics by the president, the incident must be reported to any member of our board of directors. Any failure to report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter. It is against our policy to retaliate against any individual who reports in good faith the violation or potential violation of our companys Code of Business Conduct and Ethics.
Our Code of Business Conduct and Ethics was filed as an exhibit with our Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 31, 2016. We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request. Requests can be sent to the Company address listed above.
Nomination Process
As of February 29, 2020, we did not affect any material changes to the procedures by which shareholders may recommend nominees to the board of directors and there were no subsequent events and directors have remained the same. We do not have any defined policy or procedure requirements for shareholders to submit recommendations or nominations for directors. The board of directors believes that, given the current stage of our development, a specific nominating policy would be premature and of little assistance until our operations develop to a more advanced level. We do not currently have any specific or minimum criteria for the election of nominees to the board of directors and there is no specific process or procedure for evaluating such nominees. The board of directors assesses all candidates, whether submitted by management or shareholders, and makes recommendations for election or appointment.
A shareholder who wishes to communicate with the board of directors may do so by directing a written request addressed to our Chief Executive Officer or the Chief Financial Officer at the address appearing on the face page of this report.
Committees of the Board
All proceedings of the board of directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada Business Corporation Act and our Bylaws as valid and effective as if they had been passed at a meeting of the directors duly called and held.
F-35
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
Name: | Position | Year | Salary | Bonus | |||||||||||||
Jacob C Folscher | CFO/COO | 2021 | $ | 112,785.60 | $ | 10,009.05 | |||||||||||
Jacob C Folscher | CFO/COO | 2022 | $ | 111,118.82 | $ | 9,339.59 | |||||||||||
Wouter A Fouche | Former CEO | 2021 | $ | 116,311.42 | $ | 3,351.25 | |||||||||||
Wouter A Fouche | Former CEO | 2022 | $ | 120,610.90 | $ | 0 | |||||||||||
James S Byrd | Director | 2021 | $ | 0 | $ | 0 | |||||||||||
James S Byrd (Board of director compensation) | Director | 2022 | $ | 37,000 | $ | 0 |
BOARD OF DIRECTOR COMPENSATION
We have only compensated one of our directors. James Byrd, $5,000 per month since October 2021 for director compensation since our inception.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth certain information as of May 29, 2022 with respect to the beneficial ownership of our Common Stock by: (i) all persons known by the Company to be beneficial owners of more than 5% of our Common Stock, (ii) each director and Named Executive Officer, and (iii) by all executive officers and directors as a group.
Name | ||||||||
Beneficial Owners over 5% | ||||||||
Wouter A. Fouche | 2,040,000 | |||||||
Jacob C Fölscher | 9,175,000 | |||||||
TWIN HARBOR WEB SOLUTIONS INC | 2,030,000 | |||||||
James S Byrd | 1,000,285 | |||||||
Emerging Markets Consulting, LLC | 975,000 | |||||||
Executive Officers/Directors (2) | ||||||||
Jacob C Fölscher | 9,175,000 | |||||||
James S Byrd | 1,000,285 | |||||||
Total – All officers | 10,175,285 | |||||||
Total – All over 5% shareholders and officers | 15,220,285 |
We presently have 17,256,878 common shares outstanding. Of these shares, 2,831,593 common shares are held by non-affiliates and 14,425,285 common shares are held by affiliates, which Securities Act of 1933 Rule 144 defines as restricted securities.
1. Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided.
2. Based on 17,256,878 issued and outstanding shares of common stock.
F-36
5. The principal of Twin Harbor Web Solutions is Michael McCloy, who has sole dispositive and voting power over the shares. The business address of Twin Harbor Web Solutions is 29 Creek Road, Bayville, NY 11709 US. Twin Harbor Web Solutions is a beneficial owner and a related party.
6. The address for Chief Executive Officer Jacob C. Fölscher is no 92 Jean avenue, Centurion 0157, South Africa.
7. Wouter Fouches ownership is composed of: (a) 2,000,000 shares he individually owns; (b) and (b) 40,000 shares owned by his wife, Desiree Fouche.
8. Jacob C. Fölschers ownership is composed of: (a) 9,025,000 shares he individually owns; (b) 100,000 shares in the name of Fölscher Family Trust, a trust he controls through which he has dispositive and voting power; and (c) 50,000 shares owned by his wife, Kim Elizabeth Fölscher.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Stock Issuances to our Founders
On October 1, 2015, we issued 9,025,000 shares to our co-founder, Wouter A. Fouche, at an aggregate value of $12,033.
On October 1, 2015, we issued 9,025,000 shares to our co-founder, Jacob C Fölscher, at an aggregate value of $12,033.
On November 5, 2015, pursuant to the Share Exchange with Rent Pay, we issued 100,000 common stock shares to LoanTech Trust, a trust controlled by our officer, Wouter Fouche, at an aggregate value of $10,000.
On November 5, 2015, pursuant to the Share Exchange with Rent Pay, we issued 100,000 common stock shares to Fölscher Family Trust, a trust controlled by our officer, Jacob C Fölscher, at an aggregate value of $10,000.
On April 20, 2016, we issued 50,000 shares to Kim Elizabeth Fölscher, Jacob Fölschers wife, at an aggregate value of $5,000.
On December 12, 2015, we issued 40,000 shares to Desiree Fouche, Wouter Fouches wife, at an aggregate value of $4,000.
Verbal Agreements with our Founders
Verbal Agreement with Wouter Fouche
We had a February 2014 verbal agreement with our Chief Executive Officer, Wouter Fouche, to pay him a monthly salary of $6,000 for our fiscal years 2015 and 2016 based upon available funds. This monthly salary was since increased to $9,000, for 2018 and 2019 and $9,500 for 2021 dependent on available funds. There is also a 13th check that is payable yearly. A $10,000 relocation expense for relocating to the US was also paid to Wouter Fouche previously. This monthly salary and $10,000 relocation expense already paid were the sole terms of this verbal agreement.
Verbal Agreement with Jacob C Fölscher
We have a February 2014 verbal agreement with our Chief Financial Officer, Jacob C. Fölscher, to pay him a monthly salary of $6,000 for our fiscal years 2015 and 2016 based upon available funds. This monthly salary was since increased to $9,000 for 2018 and 2019 and $9,500 for 2021dependent on available funds. There is also a 13th check that is payable yearly. Additionally, we verbally agreed to pay Jacob C. Fölscher a $10,000 relocation expense for relocating, should this be needed in future. The $9,500 monthly salary and $10,000 relocation expense are the sole terms of this verbal agreement.
Consulting Agreement
We have a June 3, 2016 consulting agreement with Ferdinand Labuschagne to perform business advisory services in return for 300,000 restricted common stock shares for an aggregate value of $30,000 and two million cashless warrants, the details of which are contained in our Material Agreements Section beginning at page 39. Ferdinand Labuschagne is Wouter A. Fouches brother-in-law. The consulting agreement has since come to an end and the 300,000 shares were issued previously. The two million cashless warrants have since expired.
Twin Harbor Web Solutions (Twin Harbor) individually owns more than 5% of our common stock. On 16 April 2018, we acquired the Theme Studio software from Twin Harbor in exchange for 2,000,000 common shares for an aggregate purchase price of $200,000. In addition, we have a service level agreement for development and hosting solutions with Twin Harbor. The transactions are related party transactions and Twin Harbor is a related party.
F-37
Emerging Markets Consulting, LLC (EMC) and James Painter, the owner of EMC, has made loans to us totaling the amount of $171,000, of which $130,000 is by James Painter and $41,000 by EMC.
Apart from the above transaction, none of our Officers or Directors has any direct or indirect material interest in any transaction to which we are a party during the past two years, or in any proposed transaction to which we are proposed to be a party.
Given our small size, we have not adopted formal policies and procedures, apart from our company Bylaws and Code of Ethics, for the review, approval or ratification of related party transactions with our executive officer(s), Director(s) and significant stockholders. We intend to establish more formal policies and procedures in the future so that such transactions will be subject to the stricter review, approval or ratification of our Board of Directors, or an appropriate committee thereof. On a moving forward basis, our Directors will continue to approve or disapprove any and all related party transaction.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees
Audit fees and related accounting fees for the year ended February 28, 2021 amounted to $58,227.
All Other Fees
None
F-38
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
23* | Consent of M&K CPAS, PLLC |
31.1* | Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer |
31.2* | Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer |
32.1* | Section 1350 Certification of Chief Executive Officer |
32.2* | Section 1350 Certification of Chief Financial Officer |
101.INS* | XBRL Instance Document |
101.XSD* | XBRL Taxonomy Extension Schema Document |
101.CAL* | XBRL Taxonomy Calculation Linkbase Document |
101.DEF* | XBRL Taxonomy Definition Linkbase Document |
101.LAB* | XBRL Taxonomy Label Linkbase Document |
101.PRE* | XBRL Taxonomy Presentation Linkbase Document |
* | Filed herewith |
F-39
Signatures
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
UPAY, Inc. | ||
By: | /s/ Jacob C. Folscher | |
Jacob C. Fölscher Chief Executive Officer/Chief Financial Officer/Chief Accounting Officer(Principal Executive Officer/Financial Officer) |
Dated: June 16, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
By: | /s/ Jacob C. Folscher | |
Jacob C. Fölscher Chief Executive Officer/Financial Officer/Chief Accounting Officer Principal Executive Officer/Principal Financial Officer |
Dated: June 16, 2022
By: | /s/ Jacob C. Folscher |
Jacob C. Fölscher Director |
F-40
Exhibit 23
Consent of Independent Registered Public Accounting Firm
We hereby consent to the inclusion in this Form 10-K of our report dated June 16, 2022 of UPAY, Inc., relating to the audit of the financial statements for the period ending February 28, 2022 and 2021.
/s/ M&K CPAS, PLLC | |
www.mkacpas.com | |
Houston, Texas |
Exhibit 31.1
SECTION 302 CERTIFICATION
OF PRINCIPAL EXECUTIVE OFFICER OF UPAY, INC.
I, Jacob C. Folscher, certify that:
1. | I have reviewed this report on Form 10-K of UPAY, Inc. |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions): |
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: June 16, 2022
/s/ Jacob C. Folscher | |
Jacob C. Folscher, Chief Executive Officer | |
(Principal Executive Officer ) |
Exhibit 31.2
SECTION 302 CERTIFICATION
OF PRINCIPAL FINANCIAL OFFICER/PRINCIPAL ACCOUNTING OFFICER OF UPAY, INC.
I, Jacob C. Fölscher certify that:
1. | I have reviewed this report on Form 10-K of UPAY, Inc. |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions): |
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: June 16, 2022
/s/ Jacob C. Fölscher | |
Jacob C. Fölscher | |
Chief Financial Officer, Chief Accounting Officer | |
(Principal Financial Officer) |
Exhibit 32.1
SECTION 906 CERTIFICATION OF
PRINCIPAL EXECUTIVE OFFICER
OF UPAY, INC.
In connection with the accompanying Annual Report on Form 10-K of UPAY, Inc. for the year ended February 28, 2022, the undersigned, Wouter A. Fouche, Principal Executive Officer/Chief Executive Officer of UPAY, Inc., does hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) such Annual Report on Form 10-K for the year ended February 28, 2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) the information contained in such Annual Report on Form 10-K for the year ended February 28, 2022 fairly presents, in all material respects, the financial condition and results of operations of UPAY, Inc.
Date: June 16, 2022
/s/ Jacob C Folscher | |
Jacob C. Folscher, Chief Executive Officer | |
(Principal Executive Officer) |
Exhibit 32.2
SECTION 906 CERTIFICATION OF
PRINCIPAL FINANCIAL OFFICER/PRINCIPAL ACCOUNTING OFFICER
OF UPAY, INC.
In connection with the accompanying Annual Report on Form 10-K of UPAY, Inc. for the year ended February 28, 2022, the undersigned, Jacob C. Fölscher, Chief Financial Officer/Principal Accounting Officer of UPAY, Inc., does hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) such Annual Report on Form 10-K for the year ended February 28, 2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) the information contained in such Annual Report on Form 10-K for the year ended February 28, 2022 fairly presents, in all material respects, the financial condition and results of operations of UPAY, Inc.
Date: June 16, 2022
/s/ Jacob C. Fölscher | |
Jacob C. Fölscher | |
Chief Financial Officer, Chief Accounting Officer | |
(Principal Financial Officer) |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Feb. 28, 2022 |
Feb. 28, 2021 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares, Outstanding | 17,256,878 | 23,269,878 |
Common Stock, Shares, Issued | 17,256,878 | 23,269,878 |
Nature of Operations and Continuance of Business |
12 Months Ended | |||
---|---|---|---|---|
Feb. 28, 2022 | ||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
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 Companys common stock. The acquisition is a capital transaction in substance and therefore has been accounted for as a recapitalization. Rent Pay was incorporated in South Africa on February 1, 2012. Because Rent Pay is 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.
Rent Pay operates principally in South Africa and engages in software development and licensing and provides services to the credit provider industry.
The recent outbreak of the novel coronavirus COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the U.S. and global economies, disruptions of financial markets, and created uncertainty regarding potential impacts to the Companys supply chain, operations, and customer demand. The COVID-19 pandemic has impacted and could further impact the Companys operations and the operations of the Companys suppliers and vendors as a result of quarantines, facility closures, and travel and logistics restrictions. The extent to which the COVID-19 pandemic impacts the Companys business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to the duration, spread, severity, and impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on the Companys customers, suppliers, and vendors and the remedial actions and stimulus measures adopted by local and federal governments, and to what extent normal economic and operating conditions can resume. The management team is closely following the progression of COVID-19 and its potential impact on the Company. Even after the COVID-19 pandemic has subsided, the Company may experience adverse impacts to its business as a result of any economic recession or depression that has occurred or may occur in the future. Therefore, the Company cannot reasonably estimate the impact at this time our business, liquidity, capital resources and financial results. |
Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies |
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 Companys fiscal year end is February 28. The consolidated financial statements include the accounts of the Company and its subsidiary Rent Pay. All significant intercompany transactions and accounts have been eliminated in consolidation.
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 Companys estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Cash includes cash on hand and cash held with banks. The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
Trade accounts receivable are recorded at net invoice value and such receivables are non-interest bearing. Receivables are considered past due based on the contractual payment terms. Receivables are reviewed and specific amounts are reserved if collectability is no longer reasonably assured.
As at February 28, 2022, the Company has recognized an allowance for doubtful accounts of $1,768 (2021 - $920).
Property and equipment are stated at cost, less accumulated depreciation, and any impairment in value. Depreciation is computed using the straight-line method over the following estimated lives of the assets:
The Company periodically performs impairment testing on its long-lived assets either annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with ASC 360. All property and equipment assets were deemed recoverable at February 28, 2022 and 2021.
Right-of-use assets are stated at cost, less accumulated amortization and any impairment in value. Amortization is computed using the straight-line method over the following estimated lives of the assets:
The Company periodically performs impairment testing on its long-lived assets either annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with ASC 360. All right-of-use assets were deemed recoverable at February 28, 2022 and 2021.
The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy in accordance with ASC 820, Fair Value Measurements and Disclosures. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available.
The three-level hierarchy is defined as follows:
Level 1 – quoted prices for identical instruments in active markets.
Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets.
Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
Financial instruments consist principally of cash and cash equivalents, accounts receivable, equity method investment, accounts payable, taxes payable and notes payable. There were no transfers into or out of Level 3 during the years ended February 28, 2022 and 2021. The recorded values of all financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Management has adopted ASC 830, Foreign Currency Translation Matters, as the functional currency of the Company is the South African rand and the reporting currency is U.S. dollars. Assets and liabilities are translated into U.S. dollars at rates of exchange in effect at the balance sheet date. Average rates for the period are used to translate revenues and expenses. The cumulative translation adjustment is reported as a component of accumulated other comprehensive loss.
Effective March 1, 2019, the Company adopted FASB ASC Topic 842, Leases (ASC 842). This standard requires lessees to recognize in the statement of financial position a liability to make lease payments and a right-of-use (ROU) asset representing the Companys right to use the underlying asset for the lease term. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances within the arrangement. A lease is identified where an arrangement conveys the right to control the use of identified property, plant, and equipment for a period of time in exchange for consideration. Leases which are identified within the scope of ASC 842 and which have a term greater than one year are recognized on the Companys balance sheet as ROU assets and lease liabilities. Operating lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected remaining lease term. The lease term includes any renewal options and termination options that are reasonably certain to be exercised. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its incremental borrowing rate. The incremental borrowing rate is determined based on the rate of interest that the Company would pay to borrow on a collateralized basis an amount equal to the lease payments for a similar term and in a similar economic environment. The interest rate implicit in lease contracts to calculate the present value is typically not readily determinable. As such, significant management judgment is required to estimate the incremental borrowing rate.
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The guidance under ASC 606 is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Under ASC 606, the Company recognizes revenue by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
The Company derives revenue through licensing its software and by collecting various transaction fees from third party debit orders.
The Company has several revenue streams and they are recognized as below:
Branch Setup Fees
This is a once off, non-refundable cost that the company charges when a customer is onboarded. Revenue is recognized immediately and is collected in the same month. This results in no accounts receivable at the end of the month as revenue is recognized and collected immediately.
Data Migration Fees
This only applies to a customer applying to migrate client data from a previous system to our system. We invoice for this service as soon as data is successfully transferred, imported and verified by our customer. Revenue is recognized upon invoicing and payment is collected within two days due to debit order mandates signed by the customer as part of the agreement. This results in no outstanding accounts receivable as of the end of each month.
Monthly Rental Fees
Our software is made available on a web-based software platform and is offered as software as a service. Our agreement is an evergreen agreement (auto-renewed) and if not terminated by a customer, remains intact. Termination may occur by either party at any point with 30 days notice. The monthly software rental fee is payable every month per branch. Monthly software rental fees are payable in the beginning of each month. The monthly rental fees are invoiced during the first few days of a month and is recognized over the period of the month. Payments are collected via debit order a few days later, prior to the end of that month, due to debit order mandate signed by the customer. This results in no accounts receivable as invoicing and payment happens within the same month. Development Service Fee
We have some clients that we do custom software development for, on some versions of our software. Here we adopt a scrum methodology with 2-week development sprints. We agree on a price per hour for development with these clients, typically through email communication. We send an invoice for the work completed and usually get paid within the same month. On this revenue stream we do not run a debit order, but clients need to pay invoices before we continue with the next development increment. Payments are due and revenue is recognized upon invoicing. At times collecting payment can take up to 30 days. Unpaid invoices, if any, are recorded to accounts receivable at the end of each month, but invoicing and payment usually happen within the same month.
Transactional Fees
We offer an integrated debit order facility built into our software. When our clients (lenders) create loans with consumers, the consumer contracts directly with us on a separate agreement. We then act as a third-party payment provider, to facilitate the repayment of loans from the consumer to the lender by debit order. We are registered as a third-party payment provider and all payments collected on this stream are settled by the bank directly into our bank account. We only charge a fee on successful debit order collections and retain that fee when we distribute funds collected on behalf of consumers. The transaction fees charged for these transactions are called CTC and they are displayed on the signed agreement that the consumer signs with us. The CTC fees are paid by the consumer, in addition to the loan installment collected. The loan installment and CTC are collected as one amount, but the CTC is retained by us upon distribution of funds to lenders. Revenue is recognized as each new order is processed and the transaction fee is charged. Our software system counts and accounts for each individual transaction and its amount and this is generated on a report on our Acpas software. We use this report to confirm the revenue recognition in our billing system. If there are any CTC that has yet to be collected at an end of a period, it is recorded as accounts receivable.
Credit Protection Insurance Commission
Some insurance companies offer insurance products on loans that cover the consumer for the full repayment of his debt to the lender, in case of unforeseen events. There is an insurance product from one of our suppliers (an insurance company) that we make available for the insurance company on our software program. In return for making this product available the insurance company would pay us monthly commission on premiums they received. This is a product offered by the insurance company directly to the consumer and we only make it available on our software platform. If this option is selected when a loan is created, an additional fee is added to the loan repayment amount. The software system calculates the insurance premiums and all premiums for a given month are paid by lenders to the insurance company, or lenders use our payment service and instruct us to manage the payments on their behalf. After receiving the premiums and supporting reports, the insurance company will then calculate and verify the premiums paid and premium claw back to this point and work out the commission payable based on the premiums received. Upon collection of the premiums, the insurance company will complete their final calculations and the insurance company will then pay all commissions earned by us and the lenders. We distribute the commission amounts due to the lenders within two days of receiving such payments from the insurance company. Revenue is recognized upon collection of the premiums from the consumers.
Credit Bureau transactions
Some credit bureaus like XDS or VeriCred, offer consumer screening products, that we make available on our software platform as integration. Lenders can sign up for these service and access credit information of consumers that they would like to screen, directly from our software platform. In return for making these products available on a seamless integration, we charge a fee on the products.
The Company enters into an agreement with the credit bureau and lender to the agreed fees. The agreement with the credit bureau determines the commission fee paid or the markup to be charged on transactions by the company, as reseller. If there are any credit bureau fees that has yet to be collected at an end of a period, it is recorded as accounts receivable.
Payroll transactions
Some of our client (lenders) have arrangements with employers where these employers deduct loan installments payable to the lender from the payroll of that employer, on behalf of the lender. The deduction is made from employees that have taken loans from the lender. We provide these payroll lenders with adequate reporting in our software, that can be used to help identify the amounts to be deducted from each individual consumer, with unique identifiers, which is sent to the employers. We also assist lenders to capture payments received from employers on our software in bulk, where requested.
We charge a payroll transaction fee to the lender, for each successful payment made in a month on the system. The fee is charged as a combined amount for the payments received on payroll for that month. The payroll transaction fees are set out and agreed to with the lender on the signed agreement they have with us. Our software system counts and accounts for each individual payment receipted, and this is generated on a payment report on our ACPAS software. We use this report for revenue recognition in our billing system. Revenue is recorded as a lump sum based on this report at the end of each month. If there are any payroll transaction fees, that still needs to be recognized at an end of a period, it is recorded as accounts receivable.
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.
ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive income (loss) and its components in the financial statements. As at February 28, 2022 and 2021, the only item that represents comprehensive income (loss) was foreign currency translation.
The Company computes earnings (loss) per share (EPS) in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share on the face of the statement of operations. EPS is calculated using the weighted-average number of common shares outstanding during the period. Diluted EPS if applicable is calculated by dividing net income available to common stockholders for the period by the diluted weighted-average number of common shares outstanding during the period. Diluted EPS would reflect the potential dilution from common shares issuable through stock options, performance-based restricted stock units that have satisfied their performance factor and restricted stock units using the treasury stock method.
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 February 28, 2022, 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 Companys 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.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its 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. |
Equity Method Investment |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investment |
On June 10, 2020, the Company purchased shares of Miway Finance Inc. (Miway) at $0.001 per share for a purchase price of $20,000, which comprises approximately 48.66% of Miways issued and outstanding shares of common stock.
|
Property and Equipment, Net |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, Net |
Property and equipment, net, consists of the following:
During the year ended February 28, 2022, the Company recorded depreciation expense of $45,129 (2021 - $44,032). During the year ended February 28, 2022, the Company acquired computer equipment of $nil (2021 - $1,820), office equipment of $4,096 (2021 - $2,485) and computer software of $nil (2021 - $1,600). |
Right-Of-Use Assets, Net |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Right-of-use Assets Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Right-Of-Use Assets, Net |
Right-of-use assets, net, consist of the following:
During the year ended February 28, 2022, the Company recorded rent expense of $17,909 (2021 - $nil) related to Companys right-of-use building and amortization expense of $10,317 (2021 - $10,917) related to the Companys right-of-use vehicles. |
Due to Related Parties |
12 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | |||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||
Due to Related Parties |
|
Notes Payable |
12 Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | ||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||
Notes Payable |
|
Lease Liabilities |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Liabilities |
The Company commenced the leasing of two motor vehicles on May 23, 2018, and October 10, 2018, for a term of five years each. The monthly minimum lease payments are for $431 (R6,658) and $612 (R9,456). The motor vehicle leases are classified as finance leases. The interest rate underlying the obligation in the leases are both 11.25% per annum. During the year ended February 28, 2022, the Company paid a total of $13,041 (2021 - $8,839) in principal and interest payments on the two motor vehicle leases.
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 commences on January 1, 2023. Rental payments are due at the beginning of each month and increase at an annual rate of 7%. The base rental rate is $1,424 (R22,000) for the first year, $1,524 (R23,540) in the second year, $1,630 (R25,188) in the third year, and $1,745 (R26,951) in the final year of the lease. The office space lease was classified as an operating lease. The interest rate underlying the obligation in the lease was 7% 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 February 28, 2022:
|
Common Stock |
12 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | |||||||||||||
Equity [Abstract] | |||||||||||||
Common Stock |
|
Concentrations |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risks and Uncertainties [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentrations |
The Companys revenues were concentrated among five customers for the year ended February 28, 2022, and four customers for the year ended February 28, 2021:
The Companys receivables were concentrated among four customers as at February 28, 2022, and three customers as at February 28, 2021:
|
Commitments and Contingencies |
12 Months Ended | |||
---|---|---|---|---|
Feb. 28, 2022 | ||||
Commitments and Contingencies Disclosure [Abstract] | ||||
Commitments and Contingencies |
On February 3, 2022 (the Effective Date), the former CEO of the Company and the Company entered into a Share Purchase and Separation 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., for $240,000, payable with a $150,000 cash payment within 10 days of the Effective Date (closing 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 Companys 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 (Note 6(c)) with the Company, as well as $1,170 in expenses incurred on behalf of the Company (Note 6(d)). As of February 28, 2022, the Company has received 7,025,000 of the 7,125,000 shares of common stock of the Company and has not received the 3,7000,000 shares of common stock of MiWay Finance, Inc. The transaction closed on March 2, 2022.
Management has evaluated commitments and contingencies and is unaware of any legal matters or other contingencies requiring disclosure through period-end. |
Deposit |
12 Months Ended | |||
---|---|---|---|---|
Feb. 28, 2022 | ||||
Deposit | ||||
Deposit |
On October 15, 2021, the Company paid a $51,784 (R800,000) deposit to set up an electronic funds transfer debit facility with a vendor. The deposit will remain for as long as the Company uses the facility. |
Income Taxes |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
The potential benefit of net operating losses for the Company have not been recognized in the consolidated financial statements because the Company cannot be assured that it is more likely than not that it will utilize the net operating losses carried forward in future years. The Company did not incur any income tax expense to the Internal Revenue Services for the years ended February 28, 2022 and 2021. Rent Pay incurred an income tax expense of $41,299 for the year ended February 28, 2022 (2021 – $nil). Given the short history of the Company and the uncertainty as to the likelihood of future taxable income, the Company has recorded a 100% valuation reserve against the anticipated recovery from the use of the net operating losses. The Company will evaluate the appropriateness of the valuation allowance on an annual basis and adjust the allowance as considered necessary. The Companys US net operating loss is approximately $756,000 (2021 – $325,000) at February 28, 2022, which starts to expire in 2037.
The table below reconciles the US federal income tax rate to the effective rate for the years ended February 28, 2022 and 2021.
A reconciliation of the Companys effective tax rate as a percentage of income before taxes and federal statutory rate for the years ended February 28, 2022 and 2021, is summarized as follows:
The unrecognized deferred tax assets include US net operating losses as follows:
The Company has US net operating losses available to offset future taxable income as follows:
|
US Operational Cost/Restructuring of Operations |
12 Months Ended | |||
---|---|---|---|---|
Feb. 28, 2022 | ||||
Restructuring and Related Activities [Abstract] | ||||
US Operational Cost/Restructuring of Operations |
In order to reduce the cost of the Companys US operations, the Company decided to close its sales office in Grapevine Texas and to only keep the registered Dallas office. As of February 2022, the Company will no longer drive US operations because apart from the one client the Company has in Texas, which is derived from the Companys South Africa support centre, the Company will focus on its Africa based expansion in the near future.
There are no assets or liabilities applicable to the Companys US operations for its fiscal year ended February 28, 2022 or its fiscal year February 28, 2021.
We derived no revenues from the Companys US operations for its fiscal year ended February 28, 2022 or its fiscal year ended February 28, 2021.
The Company has total General and Administrative Expenses of $1,221,079 for its fiscal year ended February 28, 2022, $120,611 of which represents the Companys former Chief Executive Officers salary during fiscal year 2022 and $11,379 of which represents the Companys total rent expense for its sales office in Grapevine, Texas.
The Company has total General and Administrative Expenses of $929,441 for its fiscal year ended February 28, 2021, the following of which is applicable to the Companys US operations: (a) $116,311 representing the Companys former Chief Executive Officers salary during fiscal year 2021; (b) a bonus of $3,551 paid to our former CEO during fiscal year 2021; and (c) $11,379 of total rent expense for the Companys sales office in Grapevine, Texas. |
Subsequent Event |
12 Months Ended | |||
---|---|---|---|---|
Feb. 28, 2022 | ||||
Subsequent Events [Abstract] | ||||
Subsequent Event |
On March 2, 2022, the Company received the remaining 477 as described in Note 6(c)) and $1,170 of expense owed to the former CEO as described in Note 6(d). shares of common stock of the Company and shares of common stock of MiWay Finance, Inc. from the former CEO, pursuant to the Share Purchase and Separation Agreement described in Note 11. In relation to the agreement, the former CEO has forgiven the $10,000 promissory note and accrued interest of $ |
Summary of Significant Accounting Policies (Policies) |
12 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | ||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||
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 Companys fiscal year end is February 28. The consolidated financial statements include the accounts of the Company and its subsidiary Rent Pay. All significant intercompany transactions and accounts have been eliminated in consolidation. |
|||||||||||||
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 Companys estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
|||||||||||||
Cash and Cash Equivalents |
Cash includes cash on hand and cash held with banks. The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. |
|||||||||||||
Accounts Receivable |
Trade accounts receivable are recorded at net invoice value and such receivables are non-interest bearing. Receivables are considered past due based on the contractual payment terms. Receivables are reviewed and specific amounts are reserved if collectability is no longer reasonably assured.
As at February 28, 2022, the Company has recognized an allowance for doubtful accounts of $1,768 (2021 - $920). |
|||||||||||||
Property and Equipment |
Property and equipment are stated at cost, less accumulated depreciation, and any impairment in value. Depreciation is computed using the straight-line method over the following estimated lives of the assets:
The Company periodically performs impairment testing on its long-lived assets either annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with ASC 360. All property and equipment assets were deemed recoverable at February 28, 2022 and 2021. |
|||||||||||||
Right-of-use Assets |
Right-of-use assets are stated at cost, less accumulated amortization and any impairment in value. Amortization is computed using the straight-line method over the following estimated lives of the assets:
The Company periodically performs impairment testing on its long-lived assets either annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with ASC 360. All right-of-use assets were deemed recoverable at February 28, 2022 and 2021. |
|||||||||||||
Value of Financial Instruments |
The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy in accordance with ASC 820, Fair Value Measurements and Disclosures. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available.
The three-level hierarchy is defined as follows:
Level 1 – quoted prices for identical instruments in active markets.
Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets.
Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
Financial instruments consist principally of cash and cash equivalents, accounts receivable, equity method investment, accounts payable, taxes payable and notes payable. There were no transfers into or out of Level 3 during the years ended February 28, 2022 and 2021. The recorded values of all financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. |
|||||||||||||
Foreign Currency Translation |
Management has adopted ASC 830, Foreign Currency Translation Matters, as the functional currency of the Company is the South African rand and the reporting currency is U.S. dollars. Assets and liabilities are translated into U.S. dollars at rates of exchange in effect at the balance sheet date. Average rates for the period are used to translate revenues and expenses. The cumulative translation adjustment is reported as a component of accumulated other comprehensive loss. |
|||||||||||||
Leases |
Effective March 1, 2019, the Company adopted FASB ASC Topic 842, Leases (ASC 842). This standard requires lessees to recognize in the statement of financial position a liability to make lease payments and a right-of-use (ROU) asset representing the Companys right to use the underlying asset for the lease term. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances within the arrangement. A lease is identified where an arrangement conveys the right to control the use of identified property, plant, and equipment for a period of time in exchange for consideration. Leases which are identified within the scope of ASC 842 and which have a term greater than one year are recognized on the Companys balance sheet as ROU assets and lease liabilities. Operating lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected remaining lease term. The lease term includes any renewal options and termination options that are reasonably certain to be exercised. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its incremental borrowing rate. The incremental borrowing rate is determined based on the rate of interest that the Company would pay to borrow on a collateralized basis an amount equal to the lease payments for a similar term and in a similar economic environment. The interest rate implicit in lease contracts to calculate the present value is typically not readily determinable. As such, significant management judgment is required to estimate the incremental borrowing rate. |
|||||||||||||
Revenue Recognition |
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The guidance under ASC 606 is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Under ASC 606, the Company recognizes revenue by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
The Company derives revenue through licensing its software and by collecting various transaction fees from third party debit orders.
The Company has several revenue streams and they are recognized as below:
Branch Setup Fees
This is a once off, non-refundable cost that the company charges when a customer is onboarded. Revenue is recognized immediately and is collected in the same month. This results in no accounts receivable at the end of the month as revenue is recognized and collected immediately.
Data Migration Fees
This only applies to a customer applying to migrate client data from a previous system to our system. We invoice for this service as soon as data is successfully transferred, imported and verified by our customer. Revenue is recognized upon invoicing and payment is collected within two days due to debit order mandates signed by the customer as part of the agreement. This results in no outstanding accounts receivable as of the end of each month.
Monthly Rental Fees
Our software is made available on a web-based software platform and is offered as software as a service. Our agreement is an evergreen agreement (auto-renewed) and if not terminated by a customer, remains intact. Termination may occur by either party at any point with 30 days notice. The monthly software rental fee is payable every month per branch. Monthly software rental fees are payable in the beginning of each month. The monthly rental fees are invoiced during the first few days of a month and is recognized over the period of the month. Payments are collected via debit order a few days later, prior to the end of that month, due to debit order mandate signed by the customer. This results in no accounts receivable as invoicing and payment happens within the same month. Development Service Fee
We have some clients that we do custom software development for, on some versions of our software. Here we adopt a scrum methodology with 2-week development sprints. We agree on a price per hour for development with these clients, typically through email communication. We send an invoice for the work completed and usually get paid within the same month. On this revenue stream we do not run a debit order, but clients need to pay invoices before we continue with the next development increment. Payments are due and revenue is recognized upon invoicing. At times collecting payment can take up to 30 days. Unpaid invoices, if any, are recorded to accounts receivable at the end of each month, but invoicing and payment usually happen within the same month.
Transactional Fees
We offer an integrated debit order facility built into our software. When our clients (lenders) create loans with consumers, the consumer contracts directly with us on a separate agreement. We then act as a third-party payment provider, to facilitate the repayment of loans from the consumer to the lender by debit order. We are registered as a third-party payment provider and all payments collected on this stream are settled by the bank directly into our bank account. We only charge a fee on successful debit order collections and retain that fee when we distribute funds collected on behalf of consumers. The transaction fees charged for these transactions are called CTC and they are displayed on the signed agreement that the consumer signs with us. The CTC fees are paid by the consumer, in addition to the loan installment collected. The loan installment and CTC are collected as one amount, but the CTC is retained by us upon distribution of funds to lenders. Revenue is recognized as each new order is processed and the transaction fee is charged. Our software system counts and accounts for each individual transaction and its amount and this is generated on a report on our Acpas software. We use this report to confirm the revenue recognition in our billing system. If there are any CTC that has yet to be collected at an end of a period, it is recorded as accounts receivable.
Credit Protection Insurance Commission
Some insurance companies offer insurance products on loans that cover the consumer for the full repayment of his debt to the lender, in case of unforeseen events. There is an insurance product from one of our suppliers (an insurance company) that we make available for the insurance company on our software program. In return for making this product available the insurance company would pay us monthly commission on premiums they received. This is a product offered by the insurance company directly to the consumer and we only make it available on our software platform. If this option is selected when a loan is created, an additional fee is added to the loan repayment amount. The software system calculates the insurance premiums and all premiums for a given month are paid by lenders to the insurance company, or lenders use our payment service and instruct us to manage the payments on their behalf. After receiving the premiums and supporting reports, the insurance company will then calculate and verify the premiums paid and premium claw back to this point and work out the commission payable based on the premiums received. Upon collection of the premiums, the insurance company will complete their final calculations and the insurance company will then pay all commissions earned by us and the lenders. We distribute the commission amounts due to the lenders within two days of receiving such payments from the insurance company. Revenue is recognized upon collection of the premiums from the consumers.
Credit Bureau transactions
Some credit bureaus like XDS or VeriCred, offer consumer screening products, that we make available on our software platform as integration. Lenders can sign up for these service and access credit information of consumers that they would like to screen, directly from our software platform. In return for making these products available on a seamless integration, we charge a fee on the products.
The Company enters into an agreement with the credit bureau and lender to the agreed fees. The agreement with the credit bureau determines the commission fee paid or the markup to be charged on transactions by the company, as reseller. If there are any credit bureau fees that has yet to be collected at an end of a period, it is recorded as accounts receivable.
Payroll transactions
Some of our client (lenders) have arrangements with employers where these employers deduct loan installments payable to the lender from the payroll of that employer, on behalf of the lender. The deduction is made from employees that have taken loans from the lender. We provide these payroll lenders with adequate reporting in our software, that can be used to help identify the amounts to be deducted from each individual consumer, with unique identifiers, which is sent to the employers. We also assist lenders to capture payments received from employers on our software in bulk, where requested.
We charge a payroll transaction fee to the lender, for each successful payment made in a month on the system. The fee is charged as a combined amount for the payments received on payroll for that month. The payroll transaction fees are set out and agreed to with the lender on the signed agreement they have with us. Our software system counts and accounts for each individual payment receipted, and this is generated on a payment report on our ACPAS software. We use this report for revenue recognition in our billing system. Revenue is recorded as a lump sum based on this report at the end of each month. If there are any payroll transaction fees, that still needs to be recognized at an end of a period, it is recorded as accounts receivable. |
|||||||||||||
Stock-based Compensation |
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. |
|||||||||||||
Comprehensive Income (Loss) |
ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive income (loss) and its components in the financial statements. As at February 28, 2022 and 2021, the only item that represents comprehensive income (loss) was foreign currency translation. |
|||||||||||||
Earnings (Loss) Per Share |
The Company computes earnings (loss) per share (EPS) in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share on the face of the statement of operations. EPS is calculated using the weighted-average number of common shares outstanding during the period. Diluted EPS if applicable is calculated by dividing net income available to common stockholders for the period by the diluted weighted-average number of common shares outstanding during the period. Diluted EPS would reflect the potential dilution from common shares issuable through stock options, performance-based restricted stock units that have satisfied their performance factor and restricted stock units using the treasury stock method. |
|||||||||||||
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 February 28, 2022, 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 Companys 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. |
|||||||||||||
Recent Accounting Pronouncements |
The Company has implemented all new accounting pronouncements that are in effect and that may impact its 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. |
Summary of Significant Accounting Policies (Tables) |
12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | |||||||||||
Accounting Policies [Abstract] | |||||||||||
Schedule of Use Life of Assets |
|
||||||||||
Summary of Significant Accounting Policies |
|
||||||||||
Schedule of Estimated Life of Assets |
|
||||||||||
Summary of Significant Accounting Policies (Details 2) |
|
Equity Method Investment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | |||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments |
|
||||||||||||||||||||||||||||||||||||||||||
Equity Method Investment |
|
Property and Equipment, Net (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment, net | Property and equipment, net, consists of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, Net |
|
Right-Of-Use Assets, Net (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Right-of-use Assets Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Right-of-Use Assets, Net | Right-of-use assets, net, consist of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Right-Of-Use Assets, Net |
|
Lease Liabilities (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Minimum Lease Payments | 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 February 28, 2022:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Liabilities |
|
Concentrations (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of Concentration of Risk, by Risk Factor | The Companys revenues were concentrated among five customers for the year ended February 28, 2022, and four customers for the year ended February 28, 2021:
The Companys receivables were concentrated among four customers as at February 28, 2022, and three customers as at February 28, 2021:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[custom:DisclosureConcentrationsAndContingenciesDetailsAbstract] |
The Companys receivables were concentrated among four customers as at February 28, 2022, and three customers as at February 28, 2021:
|
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Rate For Income Tax Reconciliation | The table below reconciles the US federal income tax rate to the effective rate for the years ended February 28, 2022 and 2021.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Tax Components | A reconciliation of the Companys effective tax rate as a percentage of income before taxes and federal statutory rate for the years ended February 28, 2022 and 2021, is summarized as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes (Details 2) |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Tax Assets | The unrecognized deferred tax assets include US net operating losses as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes (Details 3) |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Operating Losses Available to Offset Future Taxable Income | The Company has US net operating losses available to offset future taxable income as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes (Details 4) |
|
Summary of Significant Accounting Policies (Details) |
12 Months Ended |
---|---|
Feb. 28, 2022 | |
Technology Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Furniture and fixtures | 3 years |
Software and Software Development Costs [Member] | |
Property, Plant and Equipment [Line Items] | |
Furniture and fixtures | 5 years |
Office Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Furniture and fixtures | 5 years |
Furniture and Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Furniture and fixtures | 6 years |
Summary of Significant Accounting Policies (Details 2) |
12 Months Ended |
---|---|
Feb. 28, 2022 | |
Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Right-of-use vehicles | 5 years |
Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
Feb. 28, 2022 |
Feb. 28, 2021 |
---|---|---|
Accounting Policies [Abstract] | ||
Allowance for Doubtful Accounts, Premiums and Other Receivables | $ 1,768 | $ 920 |
Equity Method Investment (Details) - USD ($) |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Feb. 28, 2021 |
Feb. 28, 2022 |
Feb. 28, 2021 |
|
Defined Benefit Plan Disclosure [Line Items] | |||
Equity Method Investments | $ 16,638 | ||
Equity Method Investment, Realized Gain (Loss) on Disposal | 8,047 | $ (3,362) | |
Equity Method Investments | $ 16,638 | $ 24,685 | $ 16,638 |
Equity Method Investee [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Equity Method Investment, Ownership Percentage | 48.66% | 48.66% | |
Equity Method Investments | $ 20,000 | $ 16,638 | |
Equity Method Investment, Realized Gain (Loss) on Disposal | $ (3,362) | ||
Equity Method Investment, Ownership Percentage | 48.66% | 48.66% | 48.66% |
Equity Method Investments | $ 16,638 | $ 16,638 |
Equity Method Investment (Details Narrative) |
Jun. 10, 2020
shares
|
---|---|
Equity Method Investee [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Subsidiary or Equity Method Investee, Cumulative Number of Shares Issued for All Transactions | 20,000,000 |
Property and Equipment, Net (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Feb. 28, 2022 |
Feb. 28, 2021 |
|
Property, Plant and Equipment [Line Items] | ||
Depreciation | $ 45,129 | $ 44,032 |
Payments to Acquire Property, Plant, and Equipment | 4,096 | 5,905 |
Technology Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Payments to Acquire Property, Plant, and Equipment | 0 | 1,820 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Payments to Acquire Property, Plant, and Equipment | 4,096 | 2,485 |
Software and Software Development Costs [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Payments to Acquire Property, Plant, and Equipment | $ 0 | $ 1,600 |
Right-Of-Use Assets, Net (Details) - USD ($) |
Feb. 28, 2022 |
Feb. 28, 2021 |
---|---|---|
Lease Cost | $ 116,759 | |
Accumulated Depreciation | (50,614) | |
Operating Lease, Right-of-Use Asset | 66,145 | |
[custom:RightOfUseAsset-0] | 66,145 | $ 92,803 |
Share Exchange Agreement [Member] | ||
Lease Cost | 65,621 | |
Accumulated Depreciation | (14,120) | |
Operating Lease, Right-of-Use Asset | 51,501 | 66,905 |
Vehicle Lease [Member] | ||
Lease Cost | 51,138 | |
Accumulated Depreciation | (36,494) | |
Operating Lease, Right-of-Use Asset | $ 14,644 | $ 25,898 |
Right-Of-Use Assets, Net (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Feb. 28, 2022 |
Feb. 28, 2021 |
|
Right-of-use Assets Net | ||
Rent Expense | $ 17,909 | |
Operating Lease, Right-of-Use Asset, Amortization Expense | $ 10,317 | $ 10,917 |
Lease Liabilities (Details) - USD ($) |
Feb. 28, 2022 |
Feb. 28, 2021 |
---|---|---|
2023 | $ 30,908 | |
2024 | 25,869 | |
2025 | 19,190 | |
Net minimum lease payments | 75,967 | |
Less: amount representing interest payments | (7,340) | |
Present value of net minimum lease payments | 68,627 | |
Less: current portion | (26,426) | $ (24,007) |
Long-term portion | 42,201 | $ 71,458 |
Share Exchange Agreement [Member] | ||
2023 | 18,392 | |
2024 | 19,679 | |
2025 | 19,190 | |
Net minimum lease payments | 57,261 | |
Less: amount representing interest payments | (5,759) | |
Present value of net minimum lease payments | 51,502 | |
Less: current portion | (15,267) | |
Long-term portion | 36,235 | |
Vehicle Lease [Member] | ||
2023 | 12,516 | |
2024 | 6,190 | |
2025 | ||
Net minimum lease payments | 18,706 | |
Less: amount representing interest payments | (1,581) | |
Present value of net minimum lease payments | 17,125 | |
Less: current portion | (11,159) | |
Long-term portion | $ 5,966 |
Lease Liabilities (Details Narrative) - USD ($) |
1 Months Ended | ||||
---|---|---|---|---|---|
Feb. 29, 2024 |
Feb. 28, 2023 |
Feb. 28, 2022 |
Feb. 28, 2021 |
Oct. 10, 2018 |
|
Lessee, Lease, Description [Line Items] | |||||
Operating Lease, Lease Income, Lease Payments | $ 1,745 | $ 1,630 | $ 1,524 | $ 1,424 | |
Vehicles 1 [Member] | |||||
Lessee, Lease, Description [Line Items] | |||||
Lessee, Finance Lease, Term of Contract | 5 years | ||||
Finance Lease, Liability | 431 | ||||
Vehicles 2 [Member] | |||||
Lessee, Lease, Description [Line Items] | |||||
Lessee, Finance Lease, Term of Contract | 5 years | ||||
Finance Lease, Liability | $ 612 |
Common Stock (Details Narrative) - USD ($) |
12 Months Ended | ||||
---|---|---|---|---|---|
Feb. 15, 2022 |
Apr. 15, 2021 |
Feb. 28, 2021 |
Feb. 28, 2022 |
Feb. 28, 2021 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Stock Issued During Period, Shares, New Issues | 12,000 | ||||
Shares Issued, Price Per Share | $ 0.35 | ||||
Stock Issued During Period, Value, New Issues | $ 4,200 | $ 5,100 | |||
Stock Issued During Period, Shares, Issued for Services | 1,000,000 | ||||
Stock Issued During Period, Value, Issued for Services | $ 30,000 | 302,223 | |||
Professional Fees | $ 302,223 | ||||
Common Stock [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Stock Issued During Period, Shares, New Issues | 12,000 | 14,568 | |||
Stock Issued During Period, Value, New Issues | $ 12 | $ 15 | |||
Stock Issued During Period, Shares, Issued for Services | 1,000,000 | ||||
Stock Issued During Period, Value, Issued for Services | $ 1,000 | ||||
Stock Repurchased and Retired During Period, Shares | 7,025,000 | 7,025,000 |
Deposit (Details Narrative) - USD ($) |
Feb. 28, 2022 |
Oct. 15, 2021 |
Feb. 28, 2021 |
---|---|---|---|
Deposit | |||
Deposits Assets, Noncurrent | $ 51,784 | $ 51,784 |
Income Taxes (Details) |
12 Months Ended |
---|---|
Feb. 28, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Tax at Statutory Rate | (21.00%) |
Effect of Operating Losses | 21.00% |
Foreign Income Tax | 18.00% |
Effective Income Tax Rate | 18.00% |
Income Taxes (Details 2) - USD ($) |
12 Months Ended | |
---|---|---|
Feb. 28, 2022 |
Feb. 28, 2021 |
|
Income Tax Disclosure [Abstract] | ||
Loss before income taxes | $ (368,851) | $ (179,543) |
Income tax recovery at statutory rates | (77,000) | (37,000) |
Permanent differences | ||
Temporary differences | 75,000 | 8,000 |
Change in statutory, foreign tax, foreign exchange rates and other | 43,299 | 29,000 |
Income tax expenses | $ 41,299 |
Income Taxes (Details 3) - USD ($) |
Feb. 28, 2022 |
Feb. 28, 2021 |
---|---|---|
Deferred tax assets: | ||
Non-capital losses available for future periods | $ 159,000 | $ 68,000 |
Valuation allowance | (159,000) | (68,000) |
Deferred income taxes recovered |
US Operational Cost/Restructuring of Operations (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Feb. 28, 2022 |
Feb. 28, 2021 |
|
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||
General and Administrative Expense | $ 1,221,079 | $ 929,441 |
Operating Leases, Rent Expense | 11,379 | 11,379 |
Former Chief Executive Officer [Member] | ||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||
Salary and Wage, Officer, Excluding Cost of Good and Service Sold | $ 120,611 | $ 119,863 |