UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the annual period ended February 28, 2022

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __ to __.

Commission File Number

333-212447

UPAY, Inc.

(Exact name of small business issuer as specified in its charter)

3010 LBJ Freeway, 12^th Floor

Dallas, Texas 75234

(Address of principal executive offices)

(972) 888-6052

(Company’s telephone number, including area code)

Indicate by check mark if the Registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes o No x

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 No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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:

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

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 $2,079,657.

As of June 16, 2022, there were 17,156,878 shares outstanding.

TABLE OF CONTENTS

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

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

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.

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.

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.

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.

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.

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

(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.

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:

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

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

Each of the above competitors sell credit related software that is sold to lenders.

Competitive Advantages

Competitive Disadvantages

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:

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.

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 Consumer’s 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 NCR’s decisions; matters referred to by the NCR or complaints related to allegations of prohibited

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 Fouche’s 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 13^th 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 company’s 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 Pay’s 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 Pay’s 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 company’s shares are publicly traded. As disclosed, Ferdinand Labuschagne is Wouter A. Fouche’s brother-in-law and the consulting agreement is a related party transaction.

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 Company’s 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 Company’s securities counsel and provide advice on US distribution agreements for the Company’s products and refer possible US distributors for its products in the US.

In consideration and exchange for the Consultant’s 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 Company’s Board of Directors. Mr. Byrd is to perform such duties and responsibilities as are customarily related to such position in accordance with Company’s bylaws, Code of Ethics, and applicable law, including, but not limited to, assisting the Company in the following: (a) obtaining DTC eligibility for the Company’s common stock; (b) assisting in the Company’s 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.

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 Pay’s 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.

PART II

ITEM 5. MARKET FOR REGISTRANT’S 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. MANAGEMENT’S 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:

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.

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:

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.

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

UPAY, Inc.

Consolidated Financial Statements

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. Management’s 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 Company’s management. Our responsibility is to express an opinion on the Company’s 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 Company’s 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 management’s 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 management’s 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 management’s plans to mitigate the going concern and management’s disclosure on going concern.

/s/ M&K CPAS, PLLC

We have served as the Company’s auditor since 2018.

Houston, TX

June 16, 2022

UPAY, Inc.

Consolidated Balance Sheets

(Expressed in U.S. dollars)

The accompanying notes are an integral part of these consolidated financial statements.

UPAY, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(Expressed in U.S. dollars)

The accompanying notes are an integral part of these consolidated financial statements.

UPAY, Inc.

Consolidated Statement of Stockholders’ Equity (Deficit) and Accumulated Other Comprehensive Loss

(Expressed in U.S. dollars)

The accompanying notes are an integral part of these consolidated financial statements.

UPAY, Inc.

Consolidated Statements of Cash Flows

(Expressed in U.S. dollars)

The accompanying notes are an integral part of these consolidated financial statements.

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 SEC’s 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

Management’s 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.

Management’s assessment was not subject to attestation by the Company’s 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 management’s 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.

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 director’s successor is elected and has been qualified, or until such director’s 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:

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:

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.

Code of Ethics

We adopted a Code of Business Conduct and Code of Ethics that applies to, among other persons, our company’s 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 company’s 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 company’s 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 company’s 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.

ITEM 11. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

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.