UPAY Narrows Quarterly Loss Amidst Revenue Growth, Faces Going Concern Doubt

TL;DR

**UPYY is a speculative bet on a company bleeding cash and relying on related-party loans, with a high risk of going bust.**

AI Summary

UPAY, Inc. reported a net loss of $117,252 for the three months ended August 31, 2025, an improvement from the $191,324 net loss in the same period last year. Revenue increased to $188,947 for the quarter, up from $168,071 year-over-year, while gross profit rose to $143,746 from $118,693. However, for the six months ended August 31, 2025, revenue decreased to $359,361 from $425,320 in the prior year, and the net loss for the six-month period was $259,238, an improvement from $342,001. The company's total assets declined to $173,165 as of August 31, 2025, from $234,149 on February 28, 2025, while total liabilities increased significantly to $834,010 from $703,005. A substantial portion of liabilities, $503,664, are current, including $251,000 in notes payable to related parties. The company explicitly states it does not have sufficient revenues to execute its business plan and raises substantial doubt about its ability to continue as a going concern, intending to fund operations through equity financing arrangements.

Why It Matters

UPAY's continued 'going concern' warning is a critical red flag for investors, indicating significant financial instability and a high risk of business failure without external funding. The increasing reliance on related-party debt, now at $251,000 in current notes payable, suggests a lack of access to conventional financing, further highlighting its precarious position. For employees and customers, this uncertainty could lead to operational disruptions or service interruptions. In a competitive market, UPAY's inability to generate sufficient revenue and its shrinking asset base make it vulnerable to more financially stable competitors, potentially leading to market share loss or even acquisition.

Risk Assessment

Risk Level: high — The company explicitly states it 'does not have sufficient revenues to execute its business plan' and raises 'substantial doubt about the Company's ability to continue as a going concern.' This is compounded by a significant increase in total liabilities to $834,010 from $703,005, and a decrease in cash and cash equivalents to $35,518 from $55,362 over six months, indicating severe liquidity issues.

Analyst Insight

Investors should avoid UPYY due to the explicit 'going concern' warning, declining cash, and increasing liabilities, which signal extreme financial distress. Existing shareholders should consider divesting, as the company's reliance on related-party financing and lack of sufficient revenue present an unsustainable business model.

Financial Highlights

debt To Equity

N/A

revenue

$188,947

operating Margin

N/A

total Assets

$173,165

total Debt

$834,010

net Income

-$117,252

eps

-$0.01

gross Margin

76.1%

cash Position

$35,518

revenue Growth

12.4%

Key Numbers

• $117,252 — Net Loss (Q3 2025) (Improved from $191,324 in Q3 2024)
• $188,947 — Revenue (Q3 2025) (Increased from $168,071 in Q3 2024)
• $359,361 — Revenue (6 months ended Aug 31, 2025) (Decreased from $425,320 in the prior year period)
• $259,238 — Net Loss (6 months ended Aug 31, 2025) (Improved from $342,001 in the prior year period)
• $173,165 — Total Assets (Aug 31, 2025) (Decreased from $234,149 on Feb 28, 2025)
• $834,010 — Total Liabilities (Aug 31, 2025) (Increased from $703,005 on Feb 28, 2025)
• $35,518 — Cash and Cash Equivalents (Aug 31, 2025) (Decreased from $55,362 on Feb 28, 2025)
• $251,000 — Notes Payable – Related parties (Current Liabilities) (Significant portion of current liabilities, indicating reliance on related-party financing)
• 10% — Interest Rate (Applied to most related-party promissory notes)
• $55,120 — Salary Expenses to CEO (6 months ended Aug 31, 2025) (Paid to the CEO, a related party)

Key Players & Entities

• UPAY, Inc. (company) — issuer of the 10-Q filing
• Rent Pay (Pty) Ltd (company) — acquired subsidiary, accounting acquirer
• Miway Finance Inc. (company) — controlled subsidiary
• Huntpal LLC (company) — wholly-owned subsidiary
• AML Go (Pty) Ltd (company) — controlled subsidiary
• CEO (person) — recipient of promissory notes and salary expenses
• SEC (regulator) — Securities and Exchange Commission
• Nevada (other) — state of incorporation
• South Africa (other) — primary operating region for Rent Pay and AML
• Bloomberg (other) — financial news outlet

FAQ

Risk Factors

• Going Concern Uncertainty [high — financial]: The company explicitly states it does not have sufficient revenues to execute its business plan and raises substantial doubt about its ability to continue as a going concern. This is supported by a declining asset base ($173,165 as of Aug 31, 2025, down from $234,149 on Feb 28, 2025) and increasing liabilities ($834,010 as of Aug 31, 2025, up from $703,005 on Feb 28, 2025).
• Reliance on Related-Party Financing [high — financial]: A significant portion of current liabilities, $251,000, consists of notes payable to related parties. Additionally, non-current liabilities include $220,000 in notes payable to related parties. The company intends to fund operations through equity financing, suggesting a continued reliance on external or related-party capital.
• Declining Six-Month Revenue [medium — operational]: For the six months ended August 31, 2025, revenue decreased to $359,361 from $425,320 in the prior year period. This indicates a negative trend in the company's core business operations over a longer timeframe.
• Negative Cash Flow from Operations [medium — financial]: The company used $188,768 in cash for operating activities during the six months ended August 31, 2025, compared to $651,056 in the prior year. While this shows an improvement, it still indicates a significant cash burn that requires continuous funding.
• High Interest Expense on Related-Party Debt [medium — financial]: Most related-party promissory notes carry an interest rate of 10%. With $251,000 in current notes payable to related parties and $220,000 in non-current notes payable to related parties, this represents a substantial interest burden.

Industry Context

UPAY operates in a sector that likely involves payment processing or financial technology. This industry is characterized by rapid technological advancements, intense competition, and evolving regulatory landscapes. Companies in this space often require significant investment in technology and compliance to maintain market share and attract customers.

Regulatory Implications

As a financial services entity, UPAY is subject to various regulations concerning data privacy, anti-money laundering, and consumer protection. Failure to comply with these regulations could result in significant fines, legal action, and reputational damage, further exacerbating its precarious financial situation.

What Investors Should Do

1. Monitor equity financing arrangements closely.
2. Scrutinize related-party transactions and debt terms.
3. Assess the sustainability of revenue growth in the current quarter.
4. Evaluate the company's ability to manage its liabilities.

Key Dates

• 2025-08-31: Quarterly period ended — Reporting period for the 10-Q, showing net loss of $117,252 and revenue of $188,947.
• 2025-02-28: Previous balance sheet date — Comparison point for asset and liability changes, showing a decrease in assets and an increase in liabilities.
• 2025-11-04: Share Exchange Agreement with Rent Pay (Pty) Ltd — Acquisition accounted for as a recapitalization, with Rent Pay being the acquirer for accounting purposes.

Glossary

Accumulated Deficit

The cumulative net losses of a company that have not been offset by net income or other gains. (UPAY has a significant accumulated deficit of $2,422,489 as of August 31, 2025, highlighting its history of unprofitability.)

Going Concern

The assumption that a business will continue to operate for the foreseeable future. (The company explicitly states substantial doubt about its ability to continue as a going concern due to insufficient revenues.)

Notes Payable – Related parties

Money owed by the company to individuals or entities that have a close relationship with the company, such as officers, directors, or major shareholders. (A substantial portion of UPAY's liabilities, $251,000 in current and $220,000 in non-current, are owed to related parties.)

Recapitalization

A significant alteration of a company's capital structure, often involving the exchange of one class of securities for another or a change in the mix of debt and equity. (The acquisition of Rent Pay was accounted for as a recapitalization, impacting the presentation of the consolidated financial statements.)

Smaller reporting company

A company that meets certain criteria regarding public float, average annual revenue, and filing history, allowing for scaled disclosure requirements. (UPAY is classified as a smaller reporting company, which may affect the complexity and detail of its SEC filings.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, UPAY has shown an improvement in its net loss for both the three-month period (from $191,324 to $117,252) and the six-month period (from $342,001 to $259,238). Revenue for the three months also increased to $188,947 from $168,071. However, revenue for the six-month period declined to $359,361 from $425,320. Total assets have decreased, while total liabilities have increased substantially, raising significant going concern issues not as pronounced in the prior period.

Filing Documents

• upyy-20250831.htm (10-Q) — 3022KB
• upyy028_ex-31-1.htm (EX-31.1) — 48KB
• upyy028_ex-31-2.htm (EX-31.2) — 50KB
• upyy028_ex-32-1.htm (EX-32.1) — 19KB
• upyy028_ex-32-2.htm (EX-32.2) — 23KB
• 0001575872-25-000609.txt ( ) — 7181KB
• upyy-20250831.xsd (EX-101.SCH) — 692KB
• upyy-20250831_htm.xml (XML) — 906KB

From the Filing

UPAY UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 2025 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____to ___. 333-212447 Commission File Number UPAY, Inc. (Exact name of small business issuer as specified in its charter) NEVADA 37-1793622 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 3010 LBJ Freeway , 12 th Floor Dallas , Texas 75234 (Address of principal executive offices) ( 972 ) 888-6052 (Company's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company x Emerging Growth Company x If an emerging growth company, indicate by check mark if the registrant has elected no t to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x The Company has 16,595,211 shares outstanding as of October 3, 2025. UPAY, Inc. Consolidated Financial Statements (unaudited) Index Table of Contents Consolidated Balance Sheets (unaudited) F-2 Consolidated Statements of Operations and Comprehensive Loss (unaudited) F-3 Consolidated Statements of Stockholders' Deficit and Accumulated Other Comprehensive Loss (unaudited) F-4 Consolidated Statements of Cash Flows (unaudited) F-6 Notes to the Consolidated Financial Statements (unaudited) F-7 F-1 UPAY, INC. Consolidated Balance Sheets (Expressed in U.S. dollars) August 31, 2025 February 28, 2025 (unaudited) ASSETS Current Assets Cash and cash equivalents $ 35,518 $ 55,362 Accounts receivable, net of allowance 41,222 39,704 Prepaid expenses and other current assets 17,545 52,648 Total Current Assets 94,285 147,714 Property and Equipment, Net (Note 3) 13,893 15,912 Right-of-use Assets, Net (Note 4) 53,719 59,716 Deposit (Note 11) 11,268 10,807 Total Assets $ 173,165 $ 234,149 LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Accounts payable and accrued liabilities $ 79,922 $ 133,172 Due to related parties (Note 5) 101,069 80,817 Current portion of lease liabilities (Note 7) 19,530 17,077 Current portion of notes payable (Note 6) 1,643 1,635 Current portion of notes payable in default (Note 6) 50,500 50,500 Notes payable – Related parties (Note 5) 251,000 251,000 Total Current Liabilities 503,664 534,201 Non-Current Liabilities Lease liabilities (Note 7) 34,189 42,639 Notes payable (Note 6) 76,157 76,165 Notes payable – Related parties (Note 5) 220,000 50,000 Total Liabilities 834,010 703,005 Stockholders' Deficit 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; 16,595,211 shares issued and outstanding 16,595 16,595 Common Stock Issuable 172,000 103,500 Additional Paid-in Capital 1,646,037 1,646,037 Accumulated Deficit ( 2,422,489 ) ( 2,163,251 ) Accumulated Other Comprehensive Loss ( 72,988 ) ( 71,737 ) Total Stockholders' Deficit ( 660,845 ) ( 468,856 ) Total Liabilities and Stockholders' Deficit $ 173,165 $ 234,149 The accompanying notes are an integral part of these consolidated financial statements. F-2 UPAY, Inc. Consolidated Statements of Operations and Comprehensive Loss (Expressed in U.S. dollars) (unaudited) Three Months Three Months Six Months Six Mont

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