10-K: UPAY, Inc. Files Annual Report on Form 10-K

UPAY, Inc. has filed its annual report on Form 10-K for the fiscal year ended February 28, 2026, detailing its financial performance, business operations, and risk factors.

Summary

• UPAY, Inc. has filed its annual report on Form 10-K for the fiscal year ended February 28, 2026.
• The company reported revenues of $746,311 for the fiscal year ended February 28, 2026, an increase from $715,269 in the prior year, primarily due to growth in transactional revenue in its South African operations.
• However, the company experienced a net loss of $1,406,623 for the fiscal year ended February 28, 2026, an increase from a net loss of $540,062 in the prior year. This increase is attributed to a $904,400 loss on settlement of debt, increased interest expense, and higher general and administrative expenses.
• The company has a working capital deficit of ($266,715) as of February 28, 2026.
• UPAY continues to focus its operations in Southern Africa with its ACPAS loan management software, AML GO compliance solutions, and HUNTPAL digital marketplace, while evaluating selective expansion opportunities in the United States.
• The company's primary U.S. focus will be scaling HUNTPAL LLC and introducing AML GO's platform into the U.S. market.
• The company's auditor has raised substantial doubt about its ability to continue as a going concern due to recurring losses from operations.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the significant increase in net loss, substantial debt settlement loss, and the auditor's going concern warning, despite some revenue growth and strategic acquisitions.

Positives

• Revenues increased by $31,042 to $746,311 for the year ended February 28, 2026, primarily driven by growth in transactional revenue in South African operations.
• Net cash used in operating activities decreased by $476,635 to $(288,039) for the year ended February 28, 2026, due to improved working capital management and reduced outflows.
• Net cash provided by financing activities increased by $170,000 to $320,000 for the fiscal year ended February 28, 2026, mainly from higher proceeds from related party financing.
• The company acquired full ownership of HUNTPAL LLC and a controlling interest in AML GO (Pty) Ltd, strengthening its digital marketplace and compliance service offerings.
• AML GO has accelerated market penetration by onboarding over 30 additional clients in South Africa.
• ACPAS has entered into a service level agreement to provide device financing software for a South African retail network and a multi-phase development agreement with a pan-African financial services group.

Negatives

• Net loss increased significantly by $866,561 to $1,406,623 for the year ended February 28, 2026.
• A substantial loss of $904,400 on settlement of debt was recognized in fiscal 2026.
• Total expenses increased by $47,807 to $1,001,027 for the year ended February 28, 2026, primarily due to higher general and administrative expenses.
• The company has a working capital deficit of ($266,715) as of February 28, 2026.
• The company's auditor has raised substantial doubt about its ability to continue as a going concern due to recurring losses and lack of profitable operations.
• The company's internal controls over financial reporting were assessed as ineffective.
• Revenue concentration among the top two customers for the year ended February 28, 2026 (24% and 9%) and for the year ended February 28, 2025 (28.32% and 9.86%) indicates a reliance on a few key clients.

Risks

• The company's results are vulnerable to economic conditions.
• The company's ability to raise adequate working capital is a significant risk.
• Loss of customers or sales weakness could materially impact financial performance.
• Inability to achieve sales levels or other operating results could negatively affect the company.
• The unavailability of funds for capital expenditures poses a risk to future growth.
• Operational inefficiencies could impact profitability.
• Increased competitive pressures from existing competitors and new entrants could affect market share and profitability.
• The company's auditor has raised substantial doubt about its ability to continue as a going concern.
• The company has identified material weaknesses in its internal controls over financial reporting, including a lack of formal control processes for identifying related party transactions.

Future Outlook

The company plans to continue expanding HUNTPAL's digital marketing, outfitter partnerships, and online platform capabilities. It also anticipates launching certain AML and compliance-related services in the United States within the next six months. The company plans to meet its cash needs over the next 12 months through its current cash position and existing business in South Africa, though success is not assured. The company continues to evaluate selective expansion opportunities within the United States market.

Management Comments

• The Company believes the U.S. consumer finance and credit management market may present future opportunities for expansion of its software platforms, technology solutions, and related financial services offerings.
• The Company believes the U.S. regulatory compliance market may present future growth opportunities for its AML GO compliance platform.
• The Company believes that HUNTPAL may benefit from continued growth in online outdoor marketplaces and increasing consumer interest in destination hunting experiences.
• The Company believes that increasing regulatory compliance requirements, digital payment adoption, and demand for automated credit management systems may continue to support growth opportunities within the South African lending and financial technology sectors.
• The Company believes that increasing consumer participation in credit markets and continued growth in digital financial services may further support demand for the Company's software platforms and related services.
• The Company believes participation in CASA industry events strengthens its relationships within the South African credit and compliance industries while supporting continued market visibility for the ACPAS and AML GO platforms.

Industry Context

StockSavvy.ai notes that UPAY operates in dynamic sectors: consumer lending and credit management, financial compliance and AML software, and the outdoor recreation and hunting marketplace. The company's strategy involves leveraging its South African operations (ACPAS, AML GO) while exploring U.S. market expansion, particularly with HUNTPAL and AML GO. The U.S. consumer lending market is substantial, and the AML software market is growing due to increased regulatory oversight. The outdoor recreation sector is also seeing growth, amplified by digital platforms.

Comparison to Industry Standards

• The U.S. check-cashing and payday-loan services industry generated approximately $21.4 billion in revenue during 2023 (IBISWorld). UPAY's current revenue is significantly smaller, indicating a focus on niche software and services rather than direct lending in the U.S.
• The global AML software market was valued at several billion dollars in 2023 and is expected to continue growing (Fortune Business Insights). UPAY's AML GO platform is positioned to capitalize on this trend, though specific market share data is not provided.
• The U.S. outdoor recreation economy generated approximately $1.1 trillion in economic output in recent years (Outdoor Industry Association, U.S. Bureau of Economic Analysis). HUNTPAL operates within this large market, focusing on a specific segment of hunting tourism.
• In South Africa, the total value of new credit granted increased to approximately R158.70 billion for Q4 2024 (National Credit Regulator). UPAY's ACPAS platform serves credit providers in this market, competing with companies like Compuloan, Delter, and Mycomax.

Corporate Governance

Legal Proceedings

• The company is not currently involved in any litigation that it believes could have a material adverse effect on its financial condition or results of operations.

Related Party Transactions

• Promissory notes with the CEO totaling $40,000 principal outstanding with accrued interest.
• Promissory notes with companies controlled by a significant shareholder totaling $264,000 principal outstanding with accrued interest.
• A third-party lender purchased a promissory note from a company controlled by a significant shareholder for $15,000 principal outstanding with accrued interest.
• Advances from officers totaling $681.
• Salary expenses of $110,168 incurred to the CEO.
• Director fees of $67,000 to a Director and former COO.
• Director fees of $5,162 to a Director.
• Director fees of $70,000 to a Director and former COO.
• Stock issuances to founders and related parties, including to the CEO's wife and former CEO's wife.
• Verbal agreements with founders for salaries and relocation expenses.
• Consulting agreement with Ferdinand Labuschagne (former CEO's brother-in-law) which has ended.
• Acquisition of Theme Studio software from Twin Harbor Web Solutions, Inc. (a related party and significant shareholder) for 2,000,000 common shares.
• Service level agreement for development and hosting solutions with Twin Harbor.

Stakeholder Impact

• Shareholders: Increased net loss and going concern doubt may negatively impact share value. Potential for future equity financing could dilute existing shareholders.
• Employees: The company has 16 full-time employees, with plans to hire more contingent on revenue and financing. The going concern issue could create job security concerns.
• Creditors: The company has a working capital deficit and significant liabilities, which could impact its ability to meet obligations.
• Customers: Continued operation of ACPAS, AML GO, and HUNTPAL platforms is dependent on the company's financial stability. The company's focus on compliance software and lending platforms suggests a direct impact on businesses using these services.

Next Steps

• Launch certain AML and compliance-related services in the United States within the next six months.
• Continue expanding HUNTPAL's digital marketing, outfitter partnerships, and online platform capabilities.
• Scale HUNTPAL LLC and leverage the Texas office to drive growth of the Hunt Now Pay Later marketplace.
• Maintain momentum in Africa through HUNTPAL (Pty) Ltd and continue broader Southern Africa expansion.
• Prepare to introduce AML GO's advanced compliance and risk-management platform into the U.S. market.
• Meet monthly estimated cash needs of $70,000 over the next 12 months through current cash position and South African business.

Key Dates

Recommendation

The company's significant increase in net loss, substantial debt settlement loss, and the auditor's explicit statement of substantial doubt about its ability to continue as a going concern are critical red flags. Despite revenue growth and strategic acquisitions, the financial deterioration and internal control weaknesses suggest a high level of risk for investors. The need for future equity financing also poses a dilution risk. Therefore, a sell recommendation is warranted.

Keywords

UPAY, Form 10-K, Annual Report, Financial Statements, South Africa, ACPAS, AML GO, HUNTPAL, Consumer Lending, Compliance Software, Fintech, Going Concern, Net Loss, Revenue Growth