QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | o | Accelerated filer | o | |
o | Smaller reporting company | |||
Emerging Growth Company |
Index | |
Table of Contents | |
F - 2 |
May 31, 2023 | February 28, 2023 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Accounts receivable, net of allowance | ||||||||
Prepaid expenses and other current assets | ||||||||
Total Current Assets | ||||||||
Property and Equipment, Net (Note 4) | ||||||||
Right-of-use Assets, Net (Note 5) | ||||||||
Deposit (Note 12) | ||||||||
Total Assets | $ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued liabilities | $ | $ | ||||||
Due to related parties (Note 6) | ||||||||
Taxes payable | ||||||||
Current portion of lease liabilities (Note 8) | ||||||||
Current portion of notes payable (Note 7) | ||||||||
Current portion of notes payable – Related party (Note 6) | ||||||||
Total Current Liabilities | ||||||||
Non-Current Liabilities | ||||||||
Lease Liabilities (Note 8) | ||||||||
Notes Payable (Note 7) | ||||||||
Total Liabilities | ||||||||
Stockholders’ Deficit | ||||||||
Preferred Stock, $ | ||||||||
Common Stock, $ | ||||||||
Common Stock Issuable | ||||||||
Additional Paid-in Capital | ||||||||
Accumulated Deficit | ( | ) | ( | ) | ||||
Accumulated Other Comprehensive Loss | ( | ) | ( | ) | ||||
Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | $ |
F - 3 |
Three Months | Three Months | |||||||
Ended | Ended | |||||||
May 31, | May 31, | |||||||
2023 | 2022 | |||||||
Revenue | $ | $ | ||||||
Cost of Revenue | ( | ) | ( | ) | ||||
Gross Profit | ||||||||
Expenses | ||||||||
Amortization of right-of-use assets (Note 5) | ||||||||
Depreciation (Note 4) | ||||||||
General and administrative | ||||||||
Total Expenses | ||||||||
(Loss) Income Before Other Income (Expenses) and Income Taxes | ( | ) | ||||||
Other Income (Expenses) | ||||||||
Interest income | ||||||||
Interest expense | ( | ) | ( | ) | ||||
Gain on settlement of lease (Note 8) | ||||||||
Gain on disposal of equipment | ||||||||
(Loss) Income Before Income Taxes | ( | ) | ||||||
Provision for income taxes | ||||||||
Net (Loss) Income | ( | ) | ||||||
Other Comprehensive Loss | ||||||||
Foreign currency translation adjustments | ( | ) | ( | ) | ||||
Comprehensive (Loss) Income | $ | ( | ) | $ | ||||
Net (Loss) Income Per Share – Basic and Diluted | $ | ( | ) | $ | ||||
Weighted-average Common Shares Outstanding – Basic and Diluted |
F - 4 |
Accumulated | ||||||||||||||||||||||||||||
Additional | Common | Other | ||||||||||||||||||||||||||
Common Stock | Paid-in | Stock | Accumulated | Comprehensive | ||||||||||||||||||||||||
Shares | Amount | Capital | Issuable | Deficit | Loss | Total | ||||||||||||||||||||||
Balance – February 28, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
Acquisition of Miway Finance Inc. | – | ( | ) | ( | ) | |||||||||||||||||||||||
Cancellation of common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Settlement of related party note payable | – | |||||||||||||||||||||||||||
Net income | – | |||||||||||||||||||||||||||
Foreign currency translation adjustments | – | ( | ) | ( | ) | |||||||||||||||||||||||
Balance –May 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
Balance – February 28, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
Common stock issuable for services | – | |||||||||||||||||||||||||||
Common stock subscribed | – | |||||||||||||||||||||||||||
Net loss | – | ( | ) | ( | ) | |||||||||||||||||||||||
Foreign currency translation adjustments | – | ( | ) | ( | ) | |||||||||||||||||||||||
Balance – May 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) |
F - 5 |
Three Months Ended May 31, 2023 | Three Months Ended May 31, 2022 | |||||||
Cash Flows from Operating Activities | ||||||||
Net (Loss) Income | $ | ( | ) | $ | ||||
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
Amortization of right-of-use assets | ||||||||
Common stock issued or issuable for services | ||||||||
Depreciation | ||||||||
Gain on disposal of equipment | ( | ) | ||||||
Gain on settlement of lease | ( | ) | ||||||
Interest expense on lease liability | ||||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | ||||||||
Prepaid expenses and other current assets | ||||||||
Deposits | ||||||||
Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
Accounts payable – related party | ||||||||
Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
Cash Flows from Investing Activities | ||||||||
Purchase of property and equipment | ( | ) | ( | ) | ||||
Proceeds received on disposal of property and equipment | ||||||||
Net Cash (Used in) Provided by Investing Activities | ( | ) | ||||||
Cash Flows from Financing Activities | ||||||||
Proceeds from common stock subscriptions | ||||||||
Proceeds from shareholder promissory note | ||||||||
Proceeds from promissory notes | ||||||||
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 Period | ||||||||
Cash and Cash Equivalents - End of Period | $ | $ | ||||||
Supplemental Disclosures of Cash Flow Information: | ||||||||
Interest paid | $ | $ | ||||||
Income taxes paid | $ | $ | ||||||
Non-cash Investing and Financing Activities: | ||||||||
Return and cancellation of common stock | $ | $ | ||||||
Settlement of related party note payable | $ | $ |
F - 6 |
1. |
2. | Summary of Significant Accounting Policies |
a) | Basis of Presentation |
b) | Interim Financial Statements |
c) | Use of Estimates |
d) | Cash and Cash Equivalents |
e) | Accounts Receivable |
F - 7 |
f) | Property and Equipment |
Computer equipment | ||||
Computer software | ||||
Office equipment | ||||
Vehicles | ||||
Furniture and fixtures |
g) | Right-of-use Assets |
Right-of-use building | Term of lease | |||
Right-of-use vehicles |
h) | Value of Financial Instruments |
i) | Foreign Currency Translation |
F - 8 |
j) | Leases |
k) | Revenue Recognition |
F - 9 |
l) | Stock-based Compensation |
m) | Comprehensive Income (Loss) |
F - 10 |
n) | Earnings (Loss) Per Share |
o) | Going Concern |
p) | Recent Accounting Pronouncements |
3. | Acquisition of Miway Finance Inc. |
March 2, 2022 $ | ||||
Due from related party | ||||
Accounts payable | ( | ) | ||
Net assets assumed |
F - 11 |
4. | Property and Equipment, Net |
Cost | Accumulated Depreciation | May 31, 2023 Net Carrying Value | February 28, 2023 Net Carrying Value | |||||||||||||
Computer equipment | $ | $ | ( | ) | $ | $ | ||||||||||
Computer software | ( | ) | ||||||||||||||
Furniture and fixtures | ( | ) | ||||||||||||||
Motor vehicle | ( | ) | ||||||||||||||
Office equipment | ( | ) | ||||||||||||||
Total | $ | $ | ( | ) | $ | $ |
5. | Right-Of-Use Assets, Net |
Cost | Accumulated Amortization | May 31, 2023 Net Carrying Value | February 28, 2023 Net Carrying Value | |||||||||||||
Right-of-use building (operating lease) | $ | $ | ( | ) | $ | $ | ||||||||||
Right-of-use vehicles (finance lease) | ||||||||||||||||
Total | $ | $ | ( | ) | $ | $ |
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 September 7, 2021, the Company entered into a promissory note with the CEO of the Company for $ |
c) | On February 11, 2022, the Company entered into a promissory note with the CEO of the Company for $ |
d) | On April 14, 2021, the Company entered into a promissory note with a company controlled by a Director of the Company for $ |
e) | On February 11, 2022, the Company entered into a promissory note with a company controlled by a Director of the Company for $ |
F - 12 |
f) | During the year ended February 28, 2022, a third-party lender purchased from a company controlled by a Director of the Company a promissory note in the amount of $ October 13, 2021 . The maturity date was amended to |
g) | On May 2, 2022, the Company entered into a promissory note with a company controlled by a Director of the Company for $ |
h) | On September 9, 2022, the Company entered into a promissory note with a company controlled by a Director of the Company for $ |
i) | On May 31, 2023, the Company entered into a promissory note with a company controlled by a Director of the Company for $ |
j) | During the three months ended May 31, 2023, the Company incurred salary expenses of $ |
k) | During the three months ended May 31, 2023, the Company incurred directors’ fees of $ |
l) | During the three months ended May 31, 2023, 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 $ As at May 31, 2023, the Company has recognized accrued interest of $ $ ), 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 $ $ ), which is included in accounts payable and accrued liabilities. |
c) | On October 22, 2021, the Company entered into a promissory note with a third-party lender for $ (February 28, 2023 – $ included in accounts payable and accrued liabilities. |
8. | Lease Liabilities |
F - 13 |
Years ending February 28: | Building Lease (Operating Lease) | Vehicle Leases (Finance Leases) | Total | |||||||||
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) | As at May 31, 2023, the Company received common stock subscriptions of $ |
b) | On March 2, 2022, the Company repurchased |
10. | Concentrations |
Customer | Three Months Ended May 31, 2023 | |
1 | ||
2 | ||
3 | ||
4 |
Customer | Three Months Ended May 31, 2022 | |
1 | ||
2 | ||
3 | ||
4 |
Customer | May 31 , 2023 | |
1 | ||
2 | ||
3 |
Customer | February 28 , 2023 | |
1 | ||
2 | ||
3 |
F - 14 |
11. | Commitments and Contingencies |
a) | On February 3, 2022 (the “Effective Date”), the former CEO of the Company and the Company entered into a Share Purchase and Separation Agreement with the following terms: (a) former CEO sells the Company |
b) | On September 1, 2022, the Company entered into an agreement with a new director for a term of 12 months. In consideration for the services to be provided, the Company agreed to pay the director |
12. | Deposit |
13. | Subsequent Event |
F - 15 |
· | Our results are vulnerable to economic conditions; |
· | Our ability to raise adequate working capital; |
· | Loss of customers or sales weakness; |
· | Inability to achieve sales levels or other operating results; |
· | The unavailability of funds for expansion purposes; |
· | Operational inefficiencies; |
· | Increased competitive pressures from existing competitors and new entrants. |
· | Whether our system will be adaptable to our plans to expand to Africa countries |
· | Whether we will develop interest in our software system in Africa countries |
· | The level of activity of credit facilities and their need for our software |
F - 16 |
F - 17 |
F - 18 |
Exhibit Number | Description | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
F - 19 |
UPAY, INC. |
By: /s/ Jacob C. Folscher | |
Jacob C. Folscher | |
Chief Executive Officer | |
(Principal Executive Officer & Chief Executive Officer) | |
Chief Financial Officer | |
(Chief Financial Officer/Chief Accounting Officer) |