EDGAR 10-K Filing

Company CIK: 1677897
Filing Year: 2021
Filename: 1677897_10-K_2021_0001552781-21-000544.json

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ITEM 1. BUSINESS
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 LEWFIN’S paying for services rendered, including software rental, transaction fees and software development. We have also engaged with Alemán Financial Services, to design a new loan website. Alemán Financial Services is a licensed bonded and registered Credit Service Organization based in San Antonia, Texas.
(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.
(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 separate structure and independent business to our existing business.
MiWay Finance, Inc. 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 (Twenty Million) shares in MiWay Finance, Inc in exchange for an investment of $20,000 (twenty thousand dollars). This investment represents 48.66% of the shareholding currently held in MiWay Finance Inc. MiWay Finance will run separate and independent from us but use our software, services and integrations exclusively, for all its clients. MiWay Finance 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.
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.
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, where we agree with our clients for development or administration services to be offered on a monthly basis.
US Business Operation:
We are a holding company for our South African and US operations. We have launched our US based software as a Proof of Concept with one lender first and are in the process of onboarding a second lender and also the MiWay Finance group, of which we are also a shareholder.
Our developers continue their work on the continuous regulatory changes necessary and the further development needed, to customize our system for the US environment, for the State of Texas. We are currently able to provide our web-based client and loan administration software platform and our custom loan websites to registered lenders in Texas; thereafter, contingent upon adequate financing, we will offer our software to additional states once further customization of our software for these states have been completed. We are currently working on websites for Alemán Financial Services and MiWay Finance and to integrate those lending websites with our Loan Management Software.
We provide a cloud-based loan origination software system, fully compliant with all applicable state and federal legislation and we enable our customers to grant loans, sell products, offer monthly subscription products on terms, all within our software system. Our software platform features integrated third-party service providers such as registered payment gateways, credit bureaus, two-way texting, credit protection insurance and credit decision-making platforms in the US. We will also continue to develop tailor-made web sites for our customers that are fully integrated with our system.
Planned products and services in the USA
1. Loan Origination System
ACPAS - Automated Credit Provider Administration System. This is our management software system that we lease to our customers on a monthly basis. Our customers use this platform to manage their businesses, clients and processes.
2. Theme Studio Business Online
Customized websites that we develop for our customers. These websites are fully integrated with our ACPAS system that provides our customers with a public platform to interact and transact with their clients daily.
3. Credit Inquiries
We will aim to be a reseller of credit bureau products or screening products. We provide our customers with the functionality within the ACPAS software system to do consumer credit inquiries on consumers, in order 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 or charge an integration or transaction handling fee.
4. Credit Protection Insurance
We also plan to act as an agent for a registered insurance company and to provide our customers with functionality within the ACPAS software system that will enable our customers to sell credit protection insurance to consumers when taking out credit. We should receive monthly commission on insurance sales generated through our system.
5. ACPAS Transaction fee
We will invoice our customers per transaction, for the volume of transactions effected within the ACPAS system during each month. A transaction fee is added with any agreement/loan made on the system and is affected with all receipts made on the system during this period.
6. Debit order transaction fees
In the US, in some states, we plan to charge a service fee for debit order transactions that we plan to facilitate between parties. This will be a percentage-based fee that we will charge for every installment due for repayment, that we successfully collected by debit order from the bank account of a consumer for the benefit of our customers.
This service will have two billing options.
o Cost to Client (CTC) - The cost of the transaction is paid by the bank merchant’s client/consumer; and
o Cost to Merchant (CTM) - The cost of the transaction is paid by our merchant (A merchant is a registered bank merchant and in our business case, a merchant refers to the registered lender or credit access business).
7. Development Service Fee & Staff Services
We will offer custom software development and general administration staff services to customers pursuant to a Service Level Agreement (SLA) on the price per hour for development or administration services to be offered on a monthly basis.
Revenue
In the US, we plan to charge a transaction fee for transactions between parties to facilitate credit transactions. This will be a percentage-based fee that we will charge for every installment due for repayment, that we collect by debit order from the bank account of a consumer (borrower) for the benefit of our customers (lenders).
This service will have two billing options:
o Cost to Client (CTC) - The cost of the transaction is paid by the consumer; and
o Cost to Merchant (CTM) The cost of the transaction is paid by our customer.
Planned US Revenue Segments
Item Price
Monthly software license fee $ 500
Installation and setup (one-time charge) 2,500.00
ACPAS Transaction fee (per transaction) (1) $ 0.50 -1.50
*The average ACPAS volume of transactions/per month/per branch historically has been 500 transactions
(1) Transaction Fee (CTC /CTM per successful transaction) per quote on % basis Transaction Fee (CTC /CTM per successful transaction) per quote on % basis (between 1.5% and 2.5% of transaction amount collected or a fixed fee if negotiated)
A transaction is calculated when a loan is created on our ACPAS platform but effected when a payment is receipted on our ACPAS platform on that agreement.
We will also provide custom website development services on a per quote basis.
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) 2.55 %
Ave volume of transactions/per month/per branch
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 US and 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, we attended 8 conferences, engaging with industry leaders.
Seasonality
We do not have a seasonal business cycle in South Africa. We do not anticipate our business in the US being materially affected by seasonal factors.
Raw Materials
We do not use raw materials in our business.
Target Market
Our target market consists of:
o Online lenders;
o Storefronts lenders;
o Retail establishments
o Lawyers, doctors, accountants; and
o Athletic or other clubs that charge monthly fees
Reliance Upon One or a Few Customers
During our Fiscal Year 2021, 3 customers accounted for 51.93__% of our revenues business in South Africa, as follows:
FINANCE 27 28 %
SOUTHERN FINANCE 11 %
CREDIT PROTECTION INSURANCE 11 %
Employees
We have 17 full-time employees: (a) our 2 officers, Wouter A Fouche and Jacob C Fölscher; (b) 1 project managers; (c) 1 administration manager; (d) 1 scientific programmer; (e) 5 systems engineers; and (f) 1 accounting/bookkeeping person, 2 assistants, 4 Software developers. Our scientific programmer and 5 system engineers and 3 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 African office, except Wouter Fouche and Desiree Fouche who are located at our Dallas Texas office.
To be Hired Employees
Contingent upon our revenues and adequate financing, we plan to hire 2 additional developers 4 sales representatives, 4 technical support staff members, 2 training consultants and 1 national sales manager in the US.
Geographic Territory
Our products and services have been offered since June 2008 in all South African provinces and will continue to be so offered. We have started offering our services in the US and continue with our proof of concept agreement with Lewfin America to improve the system for the USA We also started offering our products and services to other lenders recently, beginning with the State of Texas and then contingent upon adequate financing in other states.
Competition
Our primary competitors in the US are:
·
Infinity Enterprise Lending Systems based in Invise, Nevada; and
·
Epic Loan Systems based in Fort Lauderdale, Florida.
Our primary competitors in South Africa are
·
Compuscan; and
·
Delter
Each of the above competitors sell credit related software that is sold to payday and other lenders.
Competitive Advantages
o We are a Cloud based system and there is no need for physical installation;
o For the past 9 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;
o South Africa has a non-paying culture as evidenced by market data.
Competitive Disadvantages
o Our competitors in the US and South Africa, including those mentioned above, have greater operational, financial and personnel resources than we do;
o Apart from the POC, we have not yet commenced our operations in the US;
o We will have substantial development of our business and software program to adopt to the various states; and
o We have not tested our marketing or our product in the US.
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.
US Regulation
Federal
Lending Laws.
Our customers’ businesses are subject to the federal Truth in Lending Act and its underlying regulations, known as Regulation Z, the Fair Credit Reporting Act and the Equal Credit Opportunity Act. These laws require a company to provide certain disclosures to prospective borrowers and protect against unfair credit practices. The principal disclosures required under the Truth in Lending Act are intended to promote the informed use of consumer credit. Under the Truth in Lending Act, when acting as a lender, a company is required to disclose certain material terms related to a credit transaction, including, but not limited to, the annual percentage rate, finance charge, amount financed, total of payments, the number and amount of payments and payment due dates to repay the indebtedness. The Fair Credit Reporting Act regulates the collection, dissemination and use of consumer information, including consumer credit information. The federal Equal Credit Opportunity Act prohibits a company from discriminating against any credit applicant based on any protected category, such as race, color, religion, national origin, sex, marital status or age, and requires a company to notify credit applicants of any action taken on the individual’s credit application.
Consumer Reports and Information.
The use of consumer reports and other personal data used in credit underwriting is governed by the Fair Credit Reporting Act and similar state laws governing the use of consumer credit information. The Fair Credit Reporting Act establishes requirements that apply to the use of “consumer reports” and similar data, including certain notifications to consumers where their loan application has been denied because of information contained in their consumer report. The Fair Credit Reporting Act requires a company to promptly update any credit information reported to a credit reporting agency about a consumer and to allow a process by which consumers may inquire about credit information furnished by a company to a consumer reporting agency.
Information-Sharing Laws.
Our customers are also subject to the federal Fair and Accurate Credit Transactions Act, which limits the sharing of information with affiliates for marketing purposes and requires the Company to adopt written guidance and procedures for detecting, preventing and responding appropriately to mitigate identity theft and to adopt various policies and procedures and provide training and materials that address the importance of protecting non-public personal information and aid a company in detecting and responding to suspicious activity, including suspicious activity that may suggest a possible identity theft red flag, as appropriate.
Marketing Laws.
Our customers’ advertising and marketing activities are subject to several federal laws and regulations including the Federal Trade Commission Act, which prohibits unfair or deceptive acts or practices and false or misleading advertisements in all aspects of a company’s business. In furtherance of consumer protection, the Federal Trade Commission provides guidance and enforces federal laws concerning truthful advertising and marketing practices; fair financial practices in lending, loan servicing and debt collection; and protection of sensitive consumer information. As a financial services company, any advertisements related to a company’s products must also comply with the advertising requirements set forth in the Truth in Lending Act. Also, any of a company’s telephone marketing activities must comply with the Telephone Consumer Protection Act and the Telephone Sales Rule. The Telephone Consumer Protection Act prohibits the use of automatic telephone dialing systems for communications with wireless phone numbers without the express consent of the consumer, and the Telephone Sales Rule established the Do Not Call Registry and sets forth standards of conduct for all telemarketing. A company’s advertising and marketing activities are also subject to the CAN-SPAM Act of 2003 which establishes certain requirements for commercial email messages and specifies penalties for the transmission of commercial email messages that are intended to deceive the recipient as to the source of content.
Military Lending Laws
In July 2015, the Department of Defense published a finalized set of new rules under the Military Lending Act. The Military Lending Act (and rules previously adopted thereunder) restricts credit companies from offering its short-term unsecured credit products to members of the military or their dependents because none of the Company’s short-term unsecured credit products carry a military annual percentage rate of 36% or less. The new rule expands the scope of the credit products covered by the Military Lending Act to include certain non-purchase money loans secured by personal property or vehicles and certain unsecured installment loan products to the extent any of such products have a military annual percentage rate greater than 36. The rules under the Military Lending Act contain various disclosure requirements, limitations on renewals and refinancing and other restrictions, including restrictions on the use of prepayment penalties, arbitration provisions and certain waivers of rights. The rule provides that a lender is subject to fines and other penalties if it extends credit to a member of the military or a military dependent on terms prohibited by the rule. The new rule does provide a safe harbor for a lender if it verifies a potential borrower’s military status before extending credit by checking the Department of Defense’s database or a database of a national credit-reporting agency that provides military status information. In addition, Federal law also limits the annual percentage rate on existing loans when the consumer becomes an active-duty member of the military during the life of a loan, or the spouse of an active duty member of the military during the life of the loan. In accordance with federal law, the interest rate must be reduced to 6% per year on amounts outstanding during the time in which the service member is on active duty.
Funds Transfer and Signature Authentication Laws.
Our customers’ business is also subject to the federal Electronic Funds Transfer Act and various other laws, rules and guidelines relating to the procedures and disclosures required for debiting or crediting a debtor’s bank account relating to a consumer loan (i.e., ACH funds transfer). Furthermore, our customers are also subject to various state and federal e-signature rules mandating that certain disclosures be made, and certain steps be followed to obtain and authenticate e-signatures.
Debt Collection Practices.
Additionally, our customers’ CSO programs are required by both federal and some state laws to comply with the federal Fair Debt Collection Practices Act. Our customers also use the Fair Debt Collection Practices Act as a guide in connection with operating its other collection activities. Our customers are also required to comply with all applicable state collection practices laws.
Privacy and Security of Non-Public Customer Information.
Our customers are subject to various federal and state laws and regulations relating to privacy and data security. Under these laws, including the federal Gramm-Leach-Bliley Act, our customers must disclose to consumers its privacy policy and practices, including those policies relating to the sharing of consumers’ nonpublic personal information with third parties. This disclosure must be made to consumers when the customer relationship is established and, in some cases, at least annually thereafter. These regulations also require a company to ensure that its systems are designed to protect the confidentiality of consumers’ nonpublic personal information. These regulations also dictate certain actions that it must take to notify consumers if their personal information is disclosed in an unauthorized manner.
Anti-Money Laundering and Economic Sanctions.
Our customers are also subject to certain provisions of the USA PATRIOT Act and the Bank Secrecy Act under which a company must maintain an anti-money laundering compliance program covering certain of its business activities. In addition, the Office of Foreign Assets Control prohibits a company from engaging in financial transactions with specially designated nationals.
Consumer Financial Protection Bureau
In July 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which authorized the creation of the Consumer Financial Protection Bureau (“CFPB”) to regulate a variety of consumer finance transactions. The CFPB has regulatory, supervisory, and enforcement powers over non-bank providers of consumer financial products and services, like us. The CFPB has explicit supervisory authority to: (i) examine and require registration of providers of consumer financial products and services, including providers of consumer loans such as us; (ii) adopt rules describing specified acts and practices as being “unfair,” “deceptive,” or “abusive,” and hence unlawful; and (iii) impose recordkeeping obligations. We do not currently know the nature and extent of the rules the CFPB will consider for consumer loan products and services such as those offered by us or the timeframe in which the CFPB may consider such rules.
The CFPB has indicated that it intends to systematically gather data to obtain a complete understanding of the consumer loan market and its impact on consumers, and the CFPB has also released its Short-Term, Small-Dollar Lending Procedures, which, in conjunction with the CFPB’s supervision and examination manual is the field guide CFPB examiners will use when examining small-dollar lenders such as Advance America. The CFPB’s examination authority permits CFPB examiners to inspect our books and records and ask questions about our business. The CFPB’s examination procedures include specific modules for examining marketing activities, loan application and origination activities, payment processing activities, sustained use by consumers, collection activities, defaults, consumer reporting and third-party relationships. We have incurred, and will continue to incur, additional expenses to monitor and comply with CFPB regulations. Although the CFPB does not have the authority to regulate fees or interest rates, it is possible that the CFPB could propose and adopt rules that would make short-term consumer lending products and services materially less profitable or even impractical to offer, which could force us to modify or terminate certain of our product offerings in the United States. The CFPB also could adopt rules imposing new and potentially burdensome requirements and limitations with respect to other consumer loan products and services. Any such rules may have a material adverse effect on our business, results of operations, and financial condition or could make the continuance of all or part of our current U.S. business impractical or unprofitable.
In addition to the Dodd-Frank Act’s grant of regulatory and supervisory powers to the CFPB, the Dodd-Frank Act gives the CFPB authority to pursue administrative proceedings or litigation for violations of federal consumer financial laws (including the CFPB’s own rules). In these proceedings, the CFPB can obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief) and monetary penalties ranging from $5,000 per day for ordinary violations of federal consumer financial laws to $25,000 per day for reckless violations and $1 million per day for knowing violations. Also, where a company has violated Title X of the Dodd-Frank Act or CFPB regulations implemented under Title X of the Dodd-Frank Act, the Dodd-Frank Act empowers state attorneys general and state regulators to bring civil actions for the kind of cease and desist orders available to the CFPB. If the CFPB or one or more state officials believe that we have violated any of the applicable laws or regulations, they could exercise their enforcement powers in ways that could have a material adverse effect on our business, results of operations, and financial condition.
Other Federal Laws
Our customers’ products and services are subject to a variety of other federal laws and regulations, such as the Truth-in-Lending Act (“TILA”), the Equal Credit Opportunity Act (“ECOA”), the Fair Credit Reporting Act (“FCRA”), the Fair Debt Collection Practices Act (“FDCPA”), the Gramm-Leach-Bliley Act (“GLBA”), the Bank Secrecy Act, the Money Laundering Control Act of 1986, the Money Laundering Suppression Act of 1994, and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (the “PATRIOT Act”), and the regulations promulgated under each. Among other things, these laws require disclosure of the principal terms of each transaction to every customer, prohibit misleading advertising, protect against discriminatory lending practices, and proscribe unfair credit practices. TILA and Regulation Z, adopted under TILA, require disclosure of, among other things, the pertinent elements of consumer credit transactions, including the dollar amount of the finance charge and the charge expressed in terms of an annual percentage rate.
Our customers’ marketing efforts and representations made about their loan advances are subject to federal and state unfair and deceptive practices statutes. The Federal Trade Commission (“FTC”) enforces the Federal Trade Commission Act and the state attorneys general and private plaintiffs enforce the analogous state statutes.
Federal Legislative Proposals
Various anti-cash advance legislation has been proposed or introduced in the U.S. Congress. Federal and state legislators continue to receive pressure from consumer advocates and other industry opposition groups to adopt such legislation. In 2008 and 2009, bills were introduced in the U.S. Congress that would have placed a cap of 36% on the effective annual percentage rate (“APR”) on all consumer loan transactions. Another bill would have placed a 15-cents-per-dollar borrowed ($0.15/$1.00) cap on fees for cash advances and would have implemented other consumer protections. Other bills have been introduced that would have limited to six the number of cash advances a customer would be permitted to receive in any 12-month period. Any federal legislation or regulation that places restrictions on cash advances and similar services could have a material adverse effect on our customers’ business, prospects, results of operations, and financial condition. Any federal law that would impose a 36% APR limit or prohibit or severely restrict cash advance services may eliminate our customers’ ability to continue their current operations and in turn negatively affect our revenues and results of operations.
State and Local Regulations
Our customers’ consumer loan business is regulated under a variety of enabling state statutes and is also subject to various local rules and regulations. The scope of state regulation, including the fees and terms of a company’s consumer loan products and services, varies from state to state. The terms of our customers’ loan products and services will vary from state to state to comply with the laws and regulations of the states in which it operates. The states with laws that specifically regulate the consumer loan products and services typically limit the principal amount of a consumer loan and set maximum fees or interest rates that customers may be charged. Most states also limit a customer’s ability to renew a short-term consumer loan and require various disclosures to consumers. State statutes often specify minimum and maximum maturity dates for consumer loans and, in some cases, specify mandatory cooling-off periods between transactions. Our customers’ collection activities regarding past due amounts are subject to consumer protection laws and state regulations relating to debt collection practices. In addition, some states require certain disclosures or content to accompany a company’s advertising and marketing materials. Also, some states require a company to report loan activity to statewide databases and restrict the number and/or principal amount of loans a consumer may have outstanding at any time or over the course of a period, typically twelve months. The local rules and regulations vary widely from city to city. The most restrictive local rules and regulations relate to zoning and land use restrictions; however, local jurisdictions’ efforts to regulate or restrict the terms of a consumer loan product have recently increased, predominantly in the State of Texas.
In states or jurisdictions where the credit facilities offer CSO programs, our customers are required to comply with that jurisdiction’s Credit Services Organization Act, Credit Access Business law or a similar statute. These laws generally define the services that the Company can provide to consumers and require the Company to provide a contract to the customer outlining the Company’s services and the cost of those services to the customer. In addition, these laws may require additional disclosures to consumers and may require the Company to be registered with the jurisdiction and/or be bonded.
Over the last few years, legislation that prohibits or severely restricts our customers’ loan products and services or the profitability of the loan products and services has been introduced or adopted in a number of states.
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 market place 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:
o To apply for credit
o To be protected against discrimination in the granting of credit
o To be informed why credit has not been granted, should you ask
o To receive a free copy of your credit agreement
o To receive a credit agreement in plain and simple language
o To have your personal and financial information treated confidential
o To understand all fees, costs, interest rates, the total installment and any other details
o To say no to increases on your credit limit
o To decide whether or not you want to be informed about products or services via telephone, SMS, mail or e-mail campaigns
o 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.
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 have a verbal agreement with our Chief Executive Officer, Wouter Fouche, 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.
Verbal Agreement with Jacob C Fölscher
We have a 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 would be applicable. The monthly salary and $10,000 relocation expense are the sole terms of this verbal agreement.
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.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
As a “Smaller Reporting Company”, we are not required to provide this information.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
As a “Smaller Reporting Company”, we are not required to provide this information.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
We pay monthly rent of $1,275 per month for our Grapevine, Texas office. Our office is 100 square feet and is adequate for our current needs. Our lease is for a period of 12 months and expire on 2/7/2022.
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 $1,463 and its lease expires on 31 January 2023. The total office space currently is 2475 square feet as of 1 February 2021.

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ITEM 3. LEGAL PROCEEDINGS
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.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
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, 2021, our common stock was held by 50 stockholders of record and we had 23,269,878 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.

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ITEM 6. SELECTED FINANCIAL DATA
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.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
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:
·
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.
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 29, 2020 and February 28, 2021.
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 29, 2020 and February 28, 2021.
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 2020
Results of Operations: For the year ended February 28, 2021 and February 29, 2020
COMPARATIVE RESULTS FOR FISCAL YEARS 2020 AND 2021
Results of Operations: For the year ended February 28, 2021 and February 29, 2020
Liquidity and Capital Resources
Revenues
Our revenues for the years ended February 28, 2021 and February 29, 2020 were $1,110,397 and $1,371,625, respectively, reflecting decreased revenues of $261,228. The $261,228 decreased revenues are primarily attributable to slowdown of the economy from lockdowns due to the Covid 19 pandemic and subsequent decrease in transactional revenue in our South African business.
Net Profit/Net Loss
We had a net loss of $179,543 for the year ended February 28, 2021 and a net loss of $20,702 for the year February 29, 2020, reflecting decreased net loss of $158,841, which is primarily attributable to decrease in revenue in our South African operations. We had a working capital surplus of $8,172and $39,440 at February 28, 2021 and February 29, 2020, respectively. The $8,172 of working capital surplus in fiscal year 2020 is primarily attributable to increase in current liabilities.
Operating Expenses
We incurred total expenses of $984,390 and $1,016,563 for the years ended February 28, 2021 and February 29, 2020, respectively, reflecting a decrease of $32,173 from fiscal year 2020 to fiscal year 2021. The decrease in total expenses from the prior fiscal year is primarily attributable to our decreasing operational cost, contributing to general and administrative expenses of $929,441 from fiscal year 2021 compared to $961,620 from fiscal year 2020, representing a $32,179 decrease in general and administrative expenses.
Our net cash flows used in operating activities was $(102,547) for the year ended February 28, 2021 compared to cash flows provided by operating activities of $(394,841) for the year ended February 29, 2020, representing a decrease of $292,294.
Our net cash provided by investing activities were $(25,905) and $(8,052) for the years ended February 28, 2021 and February 29, 2020, respectively, reflecting a $17,853 increase in net cash used in investing activities. This $17,853 increase in net cash used in investing activities is primarily attributable to an investment made into MiWay Finance.
Our net cash provided by financing activities was $144,119 and $1,551 for the fiscal years ended February 28, 2021 and February 29, 2020, respectively, representing a $142,568 increase from fiscal year 2020 to fiscal year 2021.
We estimate that we will have operating costs of $1,200,000 from June 14, 2021 to the remainder of fiscal year 2021 assuming we receive sufficient funding.
Going forward, our monthly estimated cash needs of $140,000 over the next 12 months from June 2021 to June 2022 including the following estimated expenditures:
Description
$ Amount
Rent
$
Phone
$
IT
$
Legal fees
$
Salaries
$
SEC reporting
$
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 $57,100 as of June 14, 2021 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.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
UPAY, Inc.
Consolidated Financial Statements
Index
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Stockholders’ Equity and Accumulated Other Comprehensive Loss
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
REPORT OF 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 balance sheets of UPAY, Inc. (the Company) as of February 28, 2021 and February 29, 2020, and the related consolidated statements of operations and comprehensive loss, consolidated statement of stockholders’ equity and accumulated other comprehensive loss, and cash flows for each of the years in the two-year period ended February 28, 2021, 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, 2021 and February 29, 2020 and the results of its operations and its cash flows for each of the years in the two-year period ended February 28, 2021 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 and had negative cash flows 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 Matters
The critical audit matters communicated below are matters 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 matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
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 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 as well as having negative cash flows from operations during the year ended February 28, 2021.
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 23, 2021
UPAY, Inc.
Consolidated Balance Sheets
(Expressed in U.S. dollars)
February 28,
February 29,
ASSETS
Current Assets
Cash and cash equivalents $ 307,949 $ 287,425
Accounts receivable, net of allowance 106,318 94,992
Prepaid expenses and other current assets 5,052 3,437
Total Current Assets 419,319 385,854
Equity Method Investment (Note 3) 16,638 -
Property and Equipment, Net (Note 4) 98,725 136,868
Right-of-use Assets, Net (Note 5) 92,803 37,487
Total Assets $ 627,485 $ 560,209
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 356,493 $ 329,294
Taxes payable 5,647 5,365
Current portion of notes payable (Note 6) 25,000 -
Current portion of lease liabilities (Note 7) 24,007 11,755
Total Current Liabilities 411,147 346,414
Non-Current Liabilities
Lease Liabilities (Note 7) 71,458 26,810
Notes Payable (Note 6) 77,800 -
Total Liabilities 560,405 373,224
Stockholders’ Equity
Preferred Stock, $0.001 par value, 10,000,000 shares authorized;
no shares issued and outstanding - -
Common Stock, $0.001 par value, 100,000,000 shares authorized;
23,269,878 shares and 23,255,310 shares issued and outstanding, respectively 23,270 23,255
Additional Paid-in Capital 398,227 393,142
Common Stock Subscribed 51,977 -
Accumulated Deficit (382,660 ) (203,117 )
Accumulated Other Comprehensive Loss (23,734 ) (26,295 )
Total Stockholders’ Equity 67,080 186,985
Total Liabilities and Stockholders’ Equity $ 627,485 $ 560,209
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)
Year Year
Ended Ended
February 28, February 29,
Revenue $ 1,110,397 $ 1,371,625
Cost of Revenue (299,842 ) (359,017 )
Gross Profit 810,555 1,012,608
Expenses
Amortization of right-of-use assets (Note 5) 10,917 10,833
Depreciation (Note 4) 44,032 44,110
General and administrative 929,441 961,620
Total Expenses 984,390 1,016,563
Loss Before Other Income (Expenses) and Income Taxes (173,835 ) (3,955 )
Other Income (Expenses)
Other income 3,000 -
Interest income 2,354 7,286
Interest expense (8,054 ) (7,071 )
Loss on equity method investment (Note 3) (3,362 ) -
Loss on sale of non-current assets -
Loss Before Income Taxes (179,543 ) (3,740 )
Provision for income taxes - (16,962 )
Net Loss (179,543 ) (20,702 )
Other Comprehensive Income (Loss)
Foreign currency translation adjustments 2,561 (3,455 )
Comprehensive Loss $ (176,982 ) $ (24,157 )
Net Loss Per Share - Basic and Diluted $ (0.01 ) $ (0.00 )
Weighted-average Common Shares Outstanding - Basic and Diluted 23,257,186 24,953,425
The accompanying notes are an integral part of these consolidated financial statements.
UPAY, Inc.
Consolidated Statement of Stockholders’ Equity 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 28, 2019 25,975,310 $ 25,975 $ 376,672 - $ (182,415 ) $ (22,840 ) $ 197,392
Issuance of units for cash 40,000 9,960 - - - 10,000
Issuance of shares pursuant to Employee Stock Compensation Agreement 15,000 3,735 - - - 3,750
Return and cancellation of common stock (2,775,000 ) (2,775 ) 2,775 - - - -
Net loss - - - - (20,702 ) - (20,702 )
Foreign currency translation adjustments - - - - - (3,455 ) (3,455 )
Balance - February 29, 2020 23,255,310 $ 23,255 $ 393,142 - $ (203,117 ) $ (26,295 ) $ 186,985
Issuance of common stock for cash 14,568 5,085 - - - 5,100
Common stock subscriptions received - - - 34,200 - - 34,200
Common stock issuable for services - - - 17,777 - - 17,777
Net loss - - - - (179,543 ) - (179,543 )
Foreign currency translation adjustments - - - - - 2,561 2,561
Balance - February 28, 2021 23,269,878 $ 23,270 $ 398,227 $ 51,977 $ (382,660 ) $ (23,734 ) $ 67,080
The accompanying notes are an integral part of these consolidated financial statements.
UPAY, Inc.
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
Year Ended
February 28,
Year Ended
February 29, 2020
Cash Flows from Operating Activities
Net Loss $ (179,543 ) $ (20,702 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Amortization of right-of-use assets 10,917 10,833
Common stock issuable for services 17,777 -
Depreciation 44,032 44,110
Interest expense on lease liability 3,791
Loss on equity method investment 3,362 -
Loss on theft of non-current assets -
Stock-based compensation - 3,750
Changes in operating assets and liabilities:
Accounts receivable (11,326 ) 7,735
Prepaid expenses and other current assets (1,615 ) 1,439
Accounts payable 23,506 (442,193 )
Accrued expenses 3,975 -
Net Cash Used in Operating Activities (84,770 ) (394,841 )
Cash Flows from Investing Activities
Purchase of property and equipment (5,905 ) (8,052 )
Cash paid for purchase of shares (20,000 ) -
Net Cash Used in Investing Activities (25,905 ) (8,052 )
Cash Flows from Financing Activities
Proceeds from sale of common stock 5,100 10,000
Proceeds from common stock subscriptions 34,200 -
Proceeds from promissory notes 102,800 -
Repayment of lease liabilities (15,758 ) (8,449 )
Net Cash Provided by Financing Activities 126,342 1,551
Effect of Exchange Rate Changes on Cash 4,857 (2,450 )
Change in Cash and Cash Equivalents 20,524 (403,792 )
Cash and Cash Equivalents - Beginning of Year 287,425 691,217
Cash and Cash Equivalents - End of Year $ 307,949 $ 287,425
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 8,054 $ 7,071
Income taxes paid $ - $ 14,318
Non-cash Investing and Financing Activities:
Return and cancellation of common stock $ - $ 2,775
The accompanying notes are an integral part of these consolidated financial statements.
UPAY, Inc.
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)
1. Nature of Operations and Continuance of Business
UPAY, Inc. (the “Company”) was incorporated in the State of Nevada on July 8, 2015. By a Share Exchange Agreement dated November 4, 2015, the Company agreed to acquire all of the issued and outstanding shares of Rent Pay (Pty) Ltd (“Rent Pay”), in exchange for 200,000 shares of the Company’s common stock. The acquisition 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 Company’s supply chain, operations, and customer demand. The COVID-19 pandemic has impacted and could further impact the Company’s operations and the operations of the Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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.
UPAY, Inc.
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)
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, 2021, the Company has recognized an allowance for doubtful accounts of $920 (February 29, 2020 - $7,133).
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:
IT equipment years
Computer software years
Office equipment years
Furniture and fixtures years
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, 2021, and February 29, 2020.
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 years
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, 2021, and February 29, 2020.
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 year ended February 28, 2021, or February 29, 2020. 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.
UPAY, Inc.
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)
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.
i) Leases
The Company adopted ASC 842, “Leases”, and its amendments and applied the transition provisions as of March 1, 2019, which included recognizing a cumulative-effect adjustment through opening retained earnings as of that date. Prior year amounts were not recast under this transition approach and, therefore, prior year amounts are excluded from the leased properties footnote. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical assessments of: (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. The Company elected a policy of not recording leases on its consolidated balance sheets when the leases have a term of 12 months or less and the Company is not reasonably certain to elect an option to purchase the leased asset. The Company recognizes payments on these leases within general and administrative expenses on a straight-line basis over the lease term.
For contracts entered into before March 1, 2019, the Company determined whether the arrangement contained a lease under Topic 840. Prior to the adoption of ASC 842, these leases were classified as operating or finance leases based on an assessment of whether the lease transferred significantly all the risks and rewards of ownership of the underlying asset. The Company leases office space and vehicles.
On transition, the Company elected to apply the practical expedient to grandfather the determination of which contract is or contains a lease and applied ASC 842 to those contracts that were previously identified as leases. Upon transition to the new standard, right-of-use assets and lease liabilities were measured at the present value of the remaining lease payments discounted by the Company’s incremental borrowing rate as at March 1, 2019. The non-cash adjustment has been excluded from the consolidated statement of cash flows. The weighted average incremental borrowing rate applied to lease liabilities recognized under ASC 842 was 10.25%.
Adoption of ASC 842 had the following impact on the financial position as at March 1, 2019:
(As Previously
Reported Under
ASC 842)
February 28,
ASC 842
Effects March 1,
Assets
Property and equipment, net $ 224,126 $ (50,185 ) $ 173,941
Right-of-use assets, net - 71,086 71,086
Total Assets 1,022,946 20,901 1,043,847
Liabilities
Obligations under finance leases 48,702 (48,702 ) -
Lease liabilities - 69,619 69,619
Total Liabilities 825,554 20,917 846,471
Accumulated Other Comprehensive Loss $ (22,840 ) $ (16 ) $ (22,856 )
UPAY, Inc.
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)
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.
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.
UPAY, Inc.
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)
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 signup 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, that 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 is 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.
k) Stock-based Compensation
The Company records stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation” and ASC 505, “Equity Based Payments to Non-Employees”, 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, 2021, and February 29, 2020, the only item that represents comprehensive income (loss) was foreign currency translation.
UPAY, Inc.
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)
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, 2021, the Company does not have revenues sufficient to execute its business plan. The Company intends to fund operations through equity financing arrangements. There is no assurance that this will be successful. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
o) Recent Accounting Pronouncements
In June 2018, the FASB issued ASU 2018-07, which simplifies the accounting for nonemployee share-based payment transactions. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The adoption of this standard did not have a significant impact on the Company’s results of operations, financial condition, cash flows, and financial statement disclosures.
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 20,000,000 shares of Miway Finance Inc. (“Miway”) at $0.001 per share for a purchase price of $20,000, which comprises approximately 48.66% of Miway’s issued and outstanding shares of common stock.
Ownership
Interest $
Carrying cost at date of acquisition, June 10, 2020 48.66 % 20,000
Equity losses in Miway - (3,362 )
Net carrying value, February 28, 2021 48.66 % 16,638
4. Property and Equipment, Net
Property and equipment, net, consists of the following:
Cost Accumulated
Depreciation February 28,
Net Carrying Value February 29,
Net Carrying Value
IT equipment $ 9,175 $ (6,303 ) $ 2,872 $ 1,942
Furniture and fixtures 10,915 (5,798 ) 5,117 3,563
Office equipment 3,907 (3,016 ) 1,923
Computer software 206,000 (116,155 ) 89,845 129,440
Total $ 229,997 $ (131,272 ) $ 98,725 $ 136,868
During the year ended February 28, 2021, the Company recorded depreciation expense of $40,032 (2020 - $44,110).
During the year ended February 28, 2021, the Company acquired computer equipment of $1,820, office equipment of $2,485, and computer software of $1,600.
UPAY, Inc.
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)
5. Right-Of-Use Assets, Net
Right-of-use assets, net, consist of the following:
Cost Accumulated
Amortization February 28,
Net Carrying Value February 29,
Net Carrying Value
Right-of-use building (operating lease) $ 68,329 $ (1,424 ) $ 66,905 $ 2,767
Right-of-use vehicles (finance lease) 53,248 (27,350 ) 25,898 34,720
Total $ 121,577 $ (28,774 ) $ 92,803 $ 37,487
During the year ended February 28, 2021, the Company recorded rent expense of $3,731 related to Company’s right-of-use building and amortization expense of $10,917 (2020 - $10,833) related to the Company’s right-of-use vehicles.
6. Notes Payable
a) On May 20, 2020, the Company entered into a promissory note with a third-party lender for $25,000, which is unsecured, bears interest of 10% per annum and matures on May 20, 2021. As at February 28, 2021, the Company has recognized accrued interest of $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 $77,800, which is secured by the assets of the Company, bears interest of 3.75% per annum and matures on May 27, 2050. Instalment payments, including principal and interest, of $380 per month will begin 12 months from the date of the promissory note. As at February 28, 2021, the Company has recognized accrued interest of $2,174, which is included in accounts payable and accrued liabilities.
7. 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 $449 (R6,658) and $637 (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, 2021, the Company paid a total of $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 $1,341 (R22,000) for the first year, $1,435 (R23,540) in the second year, $1,535 (R25,188) in the third year, and $1,643 (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, 2021:
Years ending February 28: Building Lease Vehicle Leases Total
$ 14,828 $ - $ 14,828
18,935 13,033 31,968
20,261 13,033 33,294
21,679 6,444 28,123
1,817 - 1,817
Net minimum lease payments 77,520 32,510 110,030
Less: amount representing interest payments (10,276 ) (4,290 ) (14,566 )
Present value of net minimum lease payments 67,245 28,220 95,465
Less: current portion (13,619 ) (10,388 ) (24,007 )
Long-term portion $ 53,626 $ 17,832 $ 71,458
UPAY, Inc.
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)
8. Common Stock
On April 2, 2019, the Company issued 40,000 units for cash at $0.25 per unit for proceeds of $10,000. Each unit consisted of one share of common stock and one share purchase warrant. Each warrant is exercisable at $0.40 per warrant for a period of one year. The fair value of the warrants included in the units totaled $1,679, which was determined using the Black-Scholes option pricing model with the following range of assumptions: Risk-free rate - 2.52% to 2.54%, dividend yield - 0%, expected volatility - 193.23% to 193.92%, and expected life - 2 years.
On April 2, 2019, the Company issued 15,000 shares of common stock with a fair value of $0.25 per share for services of $3,750 pursuant to an Employee Stock Compensation Agreement.
On September 19, 2019, the Company received and cancelled 900,000 shares of common stock, which were received from a shareholder of the Company for no consideration.
On October 21, 2019, the Company received and cancelled 1,875,000 shares of common stock, which were received from a shareholder of the Company for no consideration.
On January 12, 2021, the Company issued a total of 14,568 shares of common stock for cash at $0.35 per share for proceeds of $5,100.
As at February 28, 2021, the Company received common stock subscriptions totalling $34,200, of which $30,000 was received pursuant to a shares purchase and services agreement. Pursuant to the share purchase and services agreement, the Company agreed to issue a consultant 1,000,000 shares of common stock in consideration for 18 months of consulting services and $30,000. As at February 28, 2021, the Company accrued $17,777 of common stock issuable for services related to the agreement, which is included in common stock subscribed. As at February 28, 2021, the shares have not been issued (Note 12).
9. Warrants
The following table summarizes the continuity of the Company’s warrants:
Number of
warrants Weighted
average
exercise
price
$
Balance, February 28, 2019 - -
Issued 40,000 0.40
Extended 2,000,000 3.50
Expired (20,000 ) 0.40
Balance, February 29, 2020 2,020,000 3.50
Expired (2,020,000 ) 3.50
Balance, February 28, 2021 - -
* On November 19, 2019, the Company extended the expiry date of 2,000,000 warrants, which originally had an expiry date of December 5, 2018. The amended warrants had an exercise price of $3.50 and expired on December 6, 2020. The Company estimated the fair value of the modified warrants using the Black-Scholes option pricing model, and determined that the incremental fair value of the modification was immaterial.
10. Concentrations and Contingencies
The Company’s revenues were concentrated among four customers for the year ended February 28, 2021, and two customers for the year ended February 29, 2020:
Customer Year Ended
February 28, 2021
28 %
11 %
11 %
7 %
Customer Year Ended
February 29, 2020
36 %
17 %
UPAY, Inc.
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)
The Company’s receivables were concentrated among three customers as at February 28, 2021, and three customers as at February 29, 2020:
Customer February 28,
25 %
19 %
18 %
Customer February 29,
32 %
13 %
10 %
11. 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, 2021, or February 29 2020. Rent Pay incurred an income tax expense of $nil for the year ended February 28, 2021 (2020 - $16,692). 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 Company’s US net operating loss is approximately $318,000 (2020 - $195,000) at February 28, 2021, 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, 2021, and February 29, 2020.
Income Tax at Statutory Rate (21 )%
Effect of Operating Losses 21 %
Foreign Income Tax 18 %
18 %
A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal statutory rate for the years ended February 28, 2021, and February 29, 2020, is summarized as follows:
$
$
Loss before income taxes (179,543 ) (3,740 )
Income tax recovery at statutory rates (37,000 ) (785 )
Permanent differences - 1,000
Temporary differences 8,000 11,000
Change in statutory, foreign tax, foreign exchange rates and other 29,000 5,747
Income tax expenses - 16,962
The unrecognized deferred tax assets include US net operating losses as follows:
$
$
Deferred tax assets:
Non-capital losses available for future periods 68,000 41,000
Valuation allowance (68,000 ) (41,000 )
Deferred income taxes recovered - -
UPAY, Inc.
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)
The Company has US net operating losses available to offset future taxable income as follows:
$ 35,000
78,000
71,000
6,000
5,000
130,000
$ 325,000
12. Subsequent Event
On April 12, 2021, the Company issued 12,000 shares of common stock pursuant to a private placement at $0.35 per share for gross proceeds of $4,200, which were received at February 28, 2021 (Note 8). The Company also issued 1,000,000 shares of common stock pursuant to a share purchase and services agreement that the Company entered into on February 5, 2021.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

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ITEM 9A. CONTROLS AND PROCEDURES
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 February 28, 2021. 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, 2021. 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 29, 2020 and 2019. 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 February 28, 2021 that has materially adversely affected, or is reasonably likely to materially adversely affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
None.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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:
Name: Age Position
Wouter Fouche Vice president/ CEO/VP/Director
Jacob Fölscher President/CFO/CAO/COO/Director
Background of Officers and Directors
Wouter Fouche
Wouter Fouche has been our Vice President and Director since July 8, 2015 and our Chief Executive Officer since March 1, 2016. From Rent Pay’s inception in July 2008, he served as Rent Pay’s head of research and development and Director and continues to serve in that capacity. From 2006 to 2008, Wouter Fouche operated Loantech, a company owned and operated by him in South Africa that developed and sold credit software. At Loantech, Wouter Fouche developed the credit provider software system that was integrated into Rent Pay in 2009 when he became a Director and co-owner of Rent Pay. From September 2004 to June 2006, Wouter Fouche was a Software Engineer for Onesys (Pty) Ltd. (“Onesys”), a credit provider, located in South Africa. In this capacity, he developed Onesys’ fully automated and integrated payment systems.
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 is the cofounder and he has been the Operational director of Rent Pay (Pty) Ltd, since July 2008. 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 28, 2021, 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.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
Name: Position Year Salary Bonus
Jacob C Folscher CFO/COO $ 110,911.27 $ 8,324.10
$ 112,785.60 $ 10,009.05
Wouter A Fouche CEO $ 131,535.38 $ 9,000
Wouter A Fouche CEO 116,311.42 3,351.25
BOARD OF DIRECTOR COMPENSATION
We have not compensated our Directors with any director compensation since our inception.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
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 June __, 2021 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
9,165,000
Jacob C Fölscher
9,175,000
TWIN HARBOR WEB SOLUTIONS INC
2,030,000
Executive Officers/Directors (2)
Wouter A. Fouche (6)
9,165,000
Jacob C Fölscher (7)
9,175,000
Total - All officers
18,340,000
Total - All over 5% shareholders and officers
20,370,000
We presently have 24,281,878 common shares outstanding. Of these shares, 5,941,878 common shares are held by non-affiliates and 18,340,000 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 24,281,878 issued and outstanding shares of common stock.
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 Wouter A. Fouche is 1701 W. Northwest Highway, Suite 100, Grapevine, Texas, 76051. The address for Chief Financial Officer Jacob C. Fölscher is no 6 Uitzicht Office Park, 2 Bellingham Street, Centurion 0157, South Africa.
7. Wouter Fouche’s ownership is composed of: (a) 9,025,000 shares he individually owns; (b) 100,000 shares in the name of LoanTech Trust, a trust he controls; and (c) 40,000 shares owned by his wife, Desiree Fouche.
8. Jacob C. Fölscher’s 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.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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 Fölscher’s wife, at an aggregate value of $5,000.
On December 12, 2015, we issued 40,000 shares to Desiree Fouche, Wouter Fouche’s wife, at an aggregate value of $4,000.
Verbal Agreements with our Founders
Verbal Agreement with Wouter Fouche
We have 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 are 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. Fouche’s 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.
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.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
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
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
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