UPAY Releases Q2 2024 10-Q Report Highlighting Financial and Operational Challenges

UPAY, a fintech company specializing in loan administration software, has released its Form 10-Q report for the second quarter of Fiscal Year 2024. The report provides a detailed overview of the company's financial performance and operational activities, highlighting both achievements and challenges faced during the period.

Financial Highlights

• Revenues: $257,249, reflecting a decrease of $75,327 compared to the same period in 2023, primarily due to a decline in transactional revenue from South African operations.
• Net Loss: $150,677, an increase of $118,457 from the net loss of $32,220 in the same period in 2023, mainly attributable to decreased revenue in South African operations.
• Operating Expenses: $266,914, reflecting a $67,409 increase compared to the same period in 2023, driven by a $76,112 increase in general and administrative expenses.
• Negative Working Capital: $288,324 as of May 31, 2024, compared to negative working capital of $229,865 at the fiscal year ended February 28, 2023, representing a decrease of $58,459.
• Net Cash Flows from Operating Activities: ($425,730) for the 3 months ended May 31, 2024, compared to ($134,044) for the same period in 2023, indicating a $291,686 increase in negative cash flows.

Business Highlights

• Corporate Background: The company was formed in Nevada in 2018 and expanded through a share exchange with Rent Pay, a South African company, making Rent Pay a wholly owned subsidiary. This strategic move has positioned the company to leverage Rent Pay's established operations in South Africa.
• Mission and Business Model: The company's mission is to provide loan administration software to various industries, including credit providers and retail stores, ensuring compliance with US and South African laws. It operates as a fintech company offering cloud-based loan and client administration software solutions.
• South African Operations: Rent Pay (Pty) Ltd, the South African subsidiary, provides a web-based client and loan administration software platform called ACPAS. This platform integrates with payment gateways and credit bureaus, serving both physical branch outlets and online customers.
• US Market Entry: The company plans to enter the US market by August 2024 through its subsidiary Huntpal LLC, which targets the US hunting and adventure travel industry. Huntpal offers a platform connecting US hunters with South African hunting destinations, promoting responsible hunting practices.
• Recent Developments: The company completed new software integrations with US systems, including Payliance for payments and Decision Logic for credit bureau services. Additionally, Huntpal launched a new website to enhance its service offerings to the hunting community.
• Product Offerings in South Africa: The company offers several products, including the ACPAS loan origination system, customized websites through Theme Studio, credit inquiries, credit protection insurance, and debit order transaction services.
• Planned US Products: The company plans to offer similar products in the US, including the ACPAS system, Theme Studio websites, credit inquiries, credit protection insurance, and transaction fee services.
• Revenue Segments: In South Africa, revenue is generated from monthly license fees for ACPAS, transaction fees, and commissions on insurance sales. The company plans to replicate this model in the US with additional revenue from custom website development.
• Reliance on Key Customers: In Fiscal Year 2024, four customers accounted for 67.63% of the company's revenue in South Africa, indicating a significant reliance on a few key clients.
• Trends and Uncertainties: The company faces uncertainties regarding the adaptability of its system to US needs and the level of interest in its software in the US market. The activity level of credit facilities also impacts demand for its software.
• Going Concern: The company has an accumulated deficit and insufficient revenues to execute its business plan fully. It intends to fund operations through equity financing but acknowledges the uncertainty of success.

SEC Filing: UPAY Releases Q2 2024 Highlighting Financial and Operational Challenges [ OTC:UPYY ] - 10-Q - Jul. 15, 2024