10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 (Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 29, 2024

or

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ______________

Commission File Number:  000-52365

PREAXIA HEALTH CARE PAYMENT SYSTEMS INC.

 (Exact name of registrant as specified in its charter)

Nevada	20-4395271
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

PO Box 34075 Westbrook PO, 1610-37^th Street S.W., Calgary, Alberta T3C 3W2

(Address of principal executive offices) (Zip Code)

(403) 850-4120

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value
(Title of class)

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 every Interactive Data File required to be submitted 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 such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[   ]	Accelerated filer	[   ]
Non-accelerated filer	[X]	Smaller reporting company	[X]
Emerging growth company	[   ]

1

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    

Yes [  ]  No [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of April 17, 2024 the registrant had 19,767,698 outstanding shares of Common Stock.

2

PREAXIA HEALTH CARE PAYMENT SYSTEMS INC.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION	4
ITEM 1.   FINANCIAL STATEMENTS	4
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	5
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	9
ITEM 4. CONTROLS AND PROCEDURES	9
PART II – OTHER INFORMATION	10
ITEM 1. LEGAL PROCEEDINGS	10
ITEM 1A. RISK FACTORS	10
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	10
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES	10
ITEM 4. MINE SAFETY DISCLOSURES	10
ITEM 5.  OTHER INFORMATION	11
ITEM 6.   EXHIBITS	11
SIGNATURES	12

3

PART I – FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 210 8-03 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included.  All such adjustments are of a normal recurring nature.  Operating results for the nine-month period ended February 29, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ended May 31, 2024.  For further information refer to the consolidated financial statements and footnotes thereto included in Preaxia’s Annual Report on Form 10-K for the year ended May 31, 2023. 

	Page
Unaudited Condensed Consolidated Financial Statements
Unaudited Condensed Consolidated Balance Sheets as of February 29, 2024 and May 31, 2023	F-1
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended February 29, 2024 and February 28, 2023	F-2
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three and nine months ended February 29, 2024 and February 28, 2023	F-3
Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended February 29, 2024 and February 28, 2023	F-4
Notes to Unaudited Condensed Consolidated Financial Statements	F-5

4

PREAXIA HEALTHCARE PAYMENT SYSTEMS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

		February 29, 2024			May 31, 2023
ASSETS
Current assets
Cash	$	1,194		$	6
Total current assets		1,194			6
Total assets	$	1,194		$	6
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	$	165,934		$	158,348
Accounts payable and accrued liabilities - related party		300,000			240,000
Advances - related party		75,130			64,952
Loans payable - shareholders		191,329			173,067
Liability for unissued shares		134,792			134,792
Promissory note - related party		466,817			466,817
Convertible note payable - related party		1,058,760			1,058,760
Total current liabilities		2,392,762			2,296,736
Total liabilities		2,392,762			2,296,736
Commitments and Contingencies		—			—
STOCKHOLDERS' DEFICIT
Common Stock, $0.001 par value, 75,000,000 shares authorized 19,767,698 shares issued and outstanding		19,768			19,768
Additional paid-in capital		2,655,236			2,655,236
Accumulated other comprehensive income		57,197			57,197
Accumulated deficit		(5,123,769	)		(5,028,931	)
Total stockholders' deficit		(2,391,568	)		(2,296,730	)
Total liabilities and stockholders' deficit	$	1,194		$	6

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

F-1

PREAXIA HEALTHCARE PAYMENT SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

		Three months ended						Nine months ended
		February 29, 2024			February 28, 2023			February 29, 2024			February 28, 2023
Revenue	$	—		$	—		$	—		$	—
Operating expenses
Consulting		—			30,442			60,000			90,442
Professional		3,472			2,996			15,623			12,536
Office and administration		2,902			2,679			13,079			10,734
Research and development		2,436			371			6,136			5,215
Total operating expenses		8,810			36,488			94,838			118,927
Loss from operations		(8,810	)		(36,488	)		(94,838	)		(118,927	)
Net loss and comprehensive loss	$	(8,810	)	$	(36,488	)	$	(94,838	)	$	(118,927	)
Net loss per share - basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)
Weighted average number of common shares outstanding - basic and diluted		19,767,698			19,767,698			19,767,698			19,767,698

  See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

F-2

PREAXIA HEALTHCARE PAYMENT SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

(Unaudited)

	Common Stock				Additional Paid-in		Accumulated Other Comprehensive		Accumulated			Total Stockholders'
	Shares		Amount		Capital		Income		Deficit			Deficit
Balance, November 30, 2023	19,767,698	$	19,768	$	2,655,236	$	57,197	$	(5,114,959	)	$	(2,382,758	)
Net loss and comprehensive loss	—		—		—		—		(8,810	)		(8,810	)
Balance, February 29, 2024	19,767,698	$	19,768	$	2,655,236	$	57,197	$	(5,123,769	)	$	(2,391,568	)
	Common Stock				Additional Paid-in		Accumulated Other Comprehensive		Accumulated			Total Stockholders'
	Shares		Amount		Capital		Income		Deficit			Deficit
Balance, May 31, 2023	19,767,698	$	19,768	$	2,655,236	$	57,197	$	(5,028,931	)	$	(2,296,730	)
Net loss and comprehensive loss	—		—		—		—		(94,838	)		(94,838	)
Balance, February 29, 2024	19,767,698	$	19,768	$	2,655,236	$	57,197	$	(5,123,769	)	$	(2,391,568	)
	Common Stock				Additional Paid-in		Accumulated Other Comprehensive		Accumulated			Total Stockholders'
	Shares		Amount		Capital		Income		Deficit			Deficit
Balance, November 30, 2022	19,767,698	$	19,768	$	2,655,236	$	57,197	$	(4,955,104	)	$	(2,222,903	)
Net loss and comprehensive loss	—		—		—		—		(36,488	)		(36,488	)
Balance, February 28, 2023	19,767,698	$	19,768	$	2,655,236	$	57,197	$	(4,991,592	)	$	(2,259,391	)
	Common Stock				Additional Paid-in		Accumulated Other Comprehensive		Accumulated			Total Stockholders'
	Shares		Amount		Capital		Income		Deficit			Deficit
Balance, May 31, 2022	19,767,698	$	19,768	$	2,655,236	$	57,197	$	(4,872,665	)	$	(2,140,464	)
Net loss and comprehensive loss	—		—		—		—		(118,927	)		(118,927	)
Balance, February 28, 2023	19,767,698	$	19,768	$	2,655,236	$	57,197	$	(4,991,592	)	$	(2,259,391	)

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

F-3

PREAXIA HEALTHCARE PAYMENT SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

		Nine months ended
		February 29, 2024			February 28, 2023
Cash flows from operating activities
Net loss	$	(94,838	)	$	(118,927	)
Change in operating assets and liabilities
Increase in accounts payable and accrued liabilities - related party		60,000			90,000
Decrease in accounts payable and accrued liabilities		7,585			(3,028	)
Cash flows used in operating activities		(27,253	)		(31,955	)
Cash flows from investing activities		—			—
Cash flows from financing activities
Advances - loans payable - shareholders		18,262			4,992
Advances - related party		11,764			27,303
Repayment of advances - related party		(1,585	)		(567	)
Net cash provided by financing activities		28,441			31,728
Net change in cash		1,188			(227	)
Cash, beginning of the period		6			259
Cash, end of the period	$	1,194		$	32
Supplemental Disclosure:
Cash paid for income taxes	$	—		$	—
Cash paid for interest	$	—		$	—

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

F-4

PREAXIA HEALTH CARE PAYMENT SYSTEMS INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Nine months ended February 29, 2024 and February 28, 2023

Note 1 – Organization and Description of Business

PreAxia Health Care Payment Systems Inc. (the “Company” or “PreAxia”) was incorporated on April 3, 2000 in the State of Nevada. On May 31, 2005, the Company acquired all of the outstanding stock of Tiempo de Mexico Ltd. (“Tiempo”) in exchange for 5,000,000 shares of the common stock of the Company with a par value of $0.001. The Company had no operations prior to the date of the aforementioned acquisition.

The business objective of the Company is the development, distribution, marketing and sale of health care payment processing services and products. The Company has realized only nominal revenues from its planned operations. 

The operations of the Company are expected to be primarily undertaken by its wholly owned subsidiary, PreAxia Health Care Payment Ltd. (“PreAxia Payment”), incorporated pursuant to the laws of the Province of Alberta on November 26, 2015.

PreAxia Payment is in the process of developing an online access system creating a health spending account that will facilitate card payment and processing services to third-party administrators, insurance companies and others.

Note 2 – Summary of Significant Accounting Policies

Basis of presentation

The unaudited condensed consolidated financial statements of the Company for the three and nine months ended February 29, 2024 and February 28, 2023 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of May 31, 2023 was derived from the audited financial statements included in the Company's financial statements as of and for the fiscal year ended May 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on August 30, 2023. These financial statements should be read in conjunction with that report.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries (i) PreAxia Health Care Payment Systems Inc., incorporated pursuant to the laws of the Province of Alberta on January 28, 2008 (ii) PreAxia Canada Inc., incorporated pursuant to the laws of the Province of Alberta on January 28, 2008 and (iii) PreAxia Health Care Payment Ltd., incorporated pursuant to the laws of the Province of Alberta on November 26, 2015 (collectively, the “Subsidiaries”). All inter-company accounts and transactions have been eliminated in consolidation.

Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the nine months ended February 29, 2024, the Company incurred a net loss of $94,838 and used cash in operating activities of $27,253, and as of February 29, 2024, had a stockholders’ deficit of $2,391,568 and an accumulated deficit of $5,123,769. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the consolidated financial statements are issued. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty should we be unable to continue as a going concern.

F-5

The Company’s ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and to ultimately achieve profitable operations. Currently, the Company does not have significant cash or other material assets, nor does it have operations or a source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. The Company’s officers or principal shareholders are committed to making advances or loans to pay for certain legal, accounting, and administrative costs.

The Company hopes to be able to attract suitable investors for our business plan, which will not require us to use our cash. There can be no assurance that the Company will be successful in this situation. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions that our company may undertake in the future, actual results could differ from those estimates.

Foreign Currency Translation

The functional currency of the Company is the United States dollar. The functional currency of the Subsidiaries is the Canadian dollar. Assets and liabilities in the accompanying consolidated financial statements are translated into United States dollars at the exchange rate in effect at the balance sheet date and capital accounts are translated at historical rates. Income statement accounts are translated at the average rates of exchange prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included in the accumulated other comprehensive income (loss) account in stockholders’ deficit.

Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date. Any transaction exchange gains and losses are included in the statement of operations and comprehensive loss.

The Company's reporting currency is the U.S. dollar. All transactions initiated in Canadian Dollars are translated into U.S. dollars in accordance with Accounting Standards Codification ("ASC") 830-30, "Translation of Financial Statements," as follows:

i) assets and liabilities are translated at the closing rate at the date of the balance sheet of 1.00 US Dollar =1.3567 Canadian Dollars (February 29, 2024), 1.00 USD Dollar=0.7914 GBP, and 1.00 US Dollar=1.3605 Canadian Dollars (May 31, 2023), 1.00 USD Dollar=0.593 GBP;

ii) income and expenses are translated at average exchange rates for the nine months ended February 29, 2024 of 1.00 US Dollar = 1.3477 Canadian Dollars and 1.00 US Dollar = 1.3285 Canadian Dollars (February 28, 2023);

iii) all resulting exchange differences are recognized as other comprehensive income, a separate component of equity. The exchange differences during the nine months ended February 29, 2024 and February 28, 2023 were insignificant and no amounts have been recorded.

F-6

Fair Value of Financial Instruments

The Company defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Management uses a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

☐ Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

☐ Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

☐ Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

The fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of February 29, 2024 and May 31, 2023. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

Net Income (Loss) Per Share

Net loss per share of common stock is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The Company has 10,587,600 shares of potential common stock equivalents for convertible note payable – related party outstanding during the periods ended February 29, 2024 and May 31, 2023, which have been excluded from the loss per share computation as their effect would have been anti-dilutive due to net losses.

Research and Development Costs

The Company expenses research and development costs as incurred in accordance with FASB ASC 730 “Research and Development.” During the nine months ended February 29, 2024 and February 28, 2023, we incurred $6,136 and $5,215, respectively, in research and development expenses.

Software Development Costs

The Company accounts for software development costs in accordance with several accounting pronouncements, including FASB ASC 730, “Research and Development,” FASB ASC 350-40, “Internal-Use Software,” FASB 985-20, “Costs of Computer Software to be Sold, Leased, or Marketed” and FASB ASC 350-50, “Website Development Costs.”

Costs incurred during the period of planning and design, prior to the period determining technological feasibility, for all software developed for use internal and external, has been charged to operations in the period incurred as research and development costs.  Additionally, costs incurred after determination of readiness for market have been expensed as research and development.

The Company will capitalize certain costs in the development of our proprietary software (computer software to be sold, leased or licensed) for the period after technological feasibility was determined and prior to our marketing and initial sales.

Website development costs are capitalized under the same criteria as our marketed software.

F-7

Impairment of Long-lived Assets

Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable.  When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset.  The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required.  If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset.  When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets.  We did not recognize any impairment losses for any periods presented.

Commitments and Contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies.  Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

Revenue Recognition

In accordance with ASC 606, “Revenue from Contracts with Customers,” revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation.

Gross Versus Net Revenue

ASC 606 provides guidance on proper recognition of principal versus agent considerations which is used to determine gross versus net revenue recognition. Under ASC 606, the core objective of the guidance on gross versus net revenue recognition is to help determine whether an entity is a principal or an agent in a transaction. In general, the primary difference between these two is the performance obligation being satisfied. The principal has a performance obligation to provide the desired goods or services to the end customer, whereas the agent arranges for the principal to provide the desired goods or services. Additionally, a fundamental characteristic of a principal in a transaction is control. A principal substantively controls the goods and services before they are transferred to the customer as well as controlling the price of the good or service being provided. An agent normally receives a commission or fee for these activities. In addition to control, the level at which an entity controls the price of the good or service being transferred determines principal versus agent status. The more discretion over setting price a company has in providing the good or service, the more likely they are considered a principal rather than an agent. Under the guidance when another party is involved in providing a good or service to a customer, an entity is a principal if the entity obtains control of the asset or right to a service performed by the other party.

The Company provides administrative services for Health Spending Accounts sponsored by employers (the “customer”). The Company does not take possession of goods or control the services provided as the employees of the customer are free to determine their health care provider. As such, the Company records revenue net of reimbursements to employees. The Company’s services to the customer consist of reviewing medical costs for eligibility and reimbursing employees for eligible costs.

During the three and nine months ended February 29, 2024 and February 28, 2023, the Company had revenue of $0 and $0, respectively. The Company earns a 10% commission on amounts reimbursed for eligible expenses.

Income Taxes

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income and Comprehensive Income in the period that includes the enactment date.

F-8

The Company follows section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertain income tax positions.  Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.  

Per Share Data

Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, "Earnings per Share". Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation. On February 29, 2024 and May 31, 2023, we excluded the common stock issuable upon conversion of Convertible Note Payable – Related Party of 10,587,600 shares and 10,587,600 shares, respectively, as their effect would have been anti-dilutive.

Note 3 – Recent Accounting Pronouncements

The Company reviews new accounting standards as issued or updated. No new standards or updates had any material effect on these consolidated financial statements. The accounting pronouncements issued subsequent to the date of these consolidated financial statements that were considered significant by management were evaluated for the potential effect on these consolidated financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these consolidated financial statements as presented.

Note 4 – Related Party Transactions

Accounts Payable and Accrued Liabilities - Related Party

As of February 29, 2024 and May 31, 2023, accounts payable and accrued liabilities – related party due to Tom Zapatinas (Chief Executive Officer and a Director of the Company) totaled $300,000 and $240,000, respectively. Advances are non-interest bearing, unsecured and payable on demand. During the nine months ended February 29, 2024 and February 28, 2023, Tom Zapatinas, earned $60,000 and $90,000, respectively, for consulting services provided to the Company.

Advances – Related Party

As of February 29, 2024 and May 31, 2023, advances payable due to Tom Zapatinas totaled $75,130 and $64,952, respectively. During the nine months ended February 29, 2024 and February 28, 2023, Tom Zapatinas, advanced the Company $11,764 and $27,303, respectively, in cash and was repaid $1,585 and $567, respectively, in cash.

Loans Payable – Shareholders

As of February 29, 2024 and May 31, 2023, loans payable - shareholders are $191,329 and $173,067, respectively. Loans payable – shareholders are unsecured, non-interest bearing and due on demand. During the nine months ended February 29, 2024 and February 28, 2023, the Company was advanced $18,262 and $4,992, respectively, in cash, and was repaid $0 and $0, respectively, in cash.

Promissory Note – Related Party

As of February 29, 2024 and May 31, 2023, promissory note - related party of $466,817 and $466,817, respectively, is due to Tom Zapatinas. The Note is non-interest bearing, unsecured and payable on demand.

Convertible Note Payable – Related Party

As of February 29, 2024 and May 31, 2023, convertible note payable - related party of $1,058,760 is due to Tom Zapatinas. The Note is non-interest bearing, unsecured, payable on demand and convertible in whole or in part into shares of common stock of the Company at a conversion price of $0.10 per share, which equates to 10,587,600 shares.

F-9

Note 5 – Stockholders’ Deficit

Common Stock

Common Stock, par value of $0.001 per share; 75,000,000 shares authorized: 19,767,698 shares issued and outstanding on February 29, 2024 and May 31, 2023. Holders of Common Stock have one vote per share of Common Stock held.

Note 6 – Contingencies and Commitments

From time to time the Company may be a party to litigation matters involving claims against the Company.  Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations. 

The Company does not have long-term commitments for equipment purchases or leases. The Company does not lease office space as the CEO operates the business from his personal residence.

Note 7 – Subsequent Events

The Company has evaluated all subsequent events through the date these financial statements were issued, and no subsequent events occurred that required disclosure.

F-10

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This quarterly report contains forward-looking statements relating to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “intends,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.

Such factors include, among others, the following: international, national and local general economic and market conditions; demographic changes; the ability of PreAxia to sustain, manage or forecast its growth; the ability of PreAxia to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or failure to comply with government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other factors referenced in this and previous filings.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Given these uncertainties, readers of this Form 10-Q and investors are cautioned not to place undue reliance on such forward-looking statements.  PreAxia disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments, except as required by applicable law, including the securities laws of the United States.

All amounts stated herein are in US dollars unless otherwise indicated.

The management’s discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements for the year ended May 31, 2023, together with notes thereto.  As used in this quarterly report, the terms “we,” “us,” “our,” “PreAxia” and the “Company” means PreAxia Health Care Payment Systems Inc. and its wholly-owned subsidiaries, unless the context clearly requires otherwise.

General Overview

Corporate Overview

PreAxia Health Care Payment Systems Inc. (the “Company” or “PreAxia”) was incorporated on April 3, 2000 in the State of Nevada.

The Company primarily undertakes its operations through its wholly-owned subsidiary, PreAxia Health Care Payment Limited (“PreAxia Payment”). PreAxia Payment was incorporated pursuant to the laws of the Province of Alberta on November 26, 2015.

General Overview

PreAxia Payment is a company which intends to deliver a comprehensive suite of solutions and services directed at the emerging health payment market, specifically the opportunities tied to the growth of health spending accounts (“HSA”). There is a rapid shift in healthcare traditional payment models to consumer-directed healthcare that is creating significant opportunities for financial services and insurance industries to deliver new dynamic products to this emerging market.

5

Spawned by the need to address escalating health care costs, changes in the regulatory environment and the growing consumer desire for greater participation in the management of their health benefits, the boundaries between health care and the financial services industries are becoming increasingly blurred. With the trend towards self-directed health payment solutions and the growing demand for faster, easier and more convenient benefit services, the insurance and benefits industries are banking on HSA medical payments being their next big growth conduit. Studies suggest that HSAs in the US reached $122.8 billion in assets in 2023 and 33.9 million consumers in 2022, an increase of more than 11% of assets over the prior year. This coupled with the continued growth of the Canadian group insurance industry illustrates the emerging opportunity for innovative health payment services. We intend to initially launch our products in Canada. We believe that Canadian businesses are embracing a new healthcare financing vehicle to provide greater value to employees, increase profitability and get more return from their investment. We intend to provide them with services to capture this market opportunity.

Plan of Operation

Over the next twelve months, we plan to:

(a)	Raise additional capital to execute our business plans;
(b)	Penetrate the health care processing markets in Canada, the United States and worldwide, by continuing to develop innovative health care processing products and services;
(c)	Build up a network of strategic alliances with several types of health insurance companies, governments and other alliances in various vertical markets, and;
(d)	Fill the positions of senior management sales, administrative and engineering positions.

Liquidity and Capital Resources

As of February 29, 2024, PreAxia’s cash balance was $1,194 compared to $6 as of May 31, 2023.  Our Company will be required to raise capital to fund our operations.  PreAxia had a working capital deficit of $2,391,568 as of February 29, 2024, compared with a working capital deficit of $2,296,730 as of May 31, 2023.  

Our ability to meet our financial liabilities and commitments is primarily dependent upon the continued issuance of equity to new stockholders and our ability to achieve and maintain profitable operations.  PreAxia's cash and cash equivalents will not be sufficient to meet its working capital requirements for the next twelve-month period.   We will not initially have any cash flow from operating activities as we are in the startup stage.   We project that we will require an estimated $1,000,000 over the next twelve-month period to pay our arms-length creditors approximately $300,000 plus an additional $700,000 to complete our business plan. The Company plans to raise the capital required to satisfy our immediate short-term needs and additional capital required to meet our estimated funding requirements for the next twelve months primarily through the private placement of our equity securities or by way of loans or such other means as PreAxia may determine.  

There are no assurances that we will be able to obtain the funds required for our continued operations.  There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms.  If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due, and we will be forced to scale down or perhaps even cease the operation of our business.

There is substantial doubt about our ability to continue as a going concern as the continuation of our business is dependent upon obtaining further long-term financing, successful and sufficient market acceptance of our products and achieving a profitable level of operations.  The Company hopes to be able to attract suitable investors for our business plan, which will not require us to use our cash. There can be no assurance that the Company will be successful in this situation. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders.  Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

6

Our working capital deficit as of February 29, 2024 and May 31, 2023 is summarized as follows:

Working Capital

	February 29, 2024			May 31, 2023
Current Assets	$	1,194		$	6
Current Liabilities		(2,392,762	)		(2,296,736	)
Working Capital Deficit	$	(2,391,568	)	$	(2,296,730	)

The increase in our working capital deficit of $94,838 was primarily due to increases in accrued liabilities – related party of $60,000 and Loans payable - shareholders of $18,262.

Off-balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Results of Operations – Three Months ended February 29, 2024 and February 28, 2023

The following summary of our results of operations should be read in conjunction with our condensed consolidated financial statements for the three months ended February 29, 2024 and February 28, 2023.

For the three months ended February 29, 2024 and February 28, 2023

Our operating results for the three months ended February 29, 2024 compared to the three months ended February 28, 2023 are described below:

Revenue

During the three months ended February 29, 2024 and February 28, 2023, the Company had revenue of $0 and $0, respectively. The Company earns a 10% commission on amounts reimbursed for eligible expenses.

Expenses

Our total expenses for the three months ended February 29, 2024 were $8,810 compared to $36,488 for the three months ended February 28, 2023. The decrease in total expenses of $27,678 for the three months ended February 29, 2024 is due to a decrease in consulting fees of $30,442, an increase of $2,065 in research and development, an increase of $476 in professional fees, and an increase in office and administration fees of $223.

Consulting Fees

During each of the three months ended February 29, 2024 and February 28, 2023, Tom Zapatinas, the Chief Executive Officer and Director of the Company, earned $0 and $30,000, respectively, for consulting services provided to the Company, which is included in accounts payable and accrued liabilities – related party.

Research and Development

Research and development expenses during the three months ended February 29, 2024 increased by $2,065 to $2,436, as compared to $371 during the three months ended February 28, 2023.

7

Wages and Benefits

There were no wages and benefits during the three months ended February 29, 2024 and February 28, 2023.

Office and Administration

Office and administration expenses increased by $223 for the three months ended February 29, 2024 due to an increase in office supply expenses.

Professional Fees

Professional fees during the three months ended February 29, 2024 increased by $476 to $3,472, as compared to $2,996 during the three months ended February 28, 2023.

Interest Expense

Interest expense is $0 for the three months ended February 29, 2024 and February 28, 2023 because accounts payable and accrued liabilities – related party, convertible note payable – related party and loans payable – shareholders are non-interest bearing.

Results of Operations – Nine months ended February 29, 2024 and February 28, 2023

The following summary of our results of operations should be read in conjunction with our condensed consolidated financial statements for the nine months ended February 29, 2024 and February 28, 2023.

For the nine months ended February 29, 2024 and February 28, 2023

Our operating results for the nine months ended February 29, 2024 compared to the nine months ended February 28, 2023 are described below:

Revenue

During the nine months ended February 29, 2024 and February 28, 2023, the Company had revenue of $0 and $0, respectively. The Company earns a 10% commission on amounts reimbursed for eligible expenses.

Expenses

Our total expenses for the nine months ended February 29, 2024 were $94,838 compared to $118,927 for the nine months ended February 28, 2023. The decrease in total expenses of $24,089 for the nine months ended February 29, 2024 is due to a decrease in consulting fees of $30,442, an increase in professional fees of $3,087, an increase of $2,345 in office and administration fees, and an increase in research and development of $921.

Consulting Fees

During each of the nine months ended February 29, 2024 and February 28, 2023, Tom Zapatinas, the Chief Executive Officer and Director of the Company, earned $60,000 and $90,000, respectively, for consulting services provided to the Company, which is included in accounts payable and accrued liabilities – related party.

Research and Development

Research and development expenses during the nine months ended February 29, 2024 increased by $921 to $6,136, as compared to $5,215 during the nine months ended February 28, 2023.

Wages and Benefits

There were no wages and benefits during the nine months ended February 29, 2024 and February 28, 2023.

8

Office and Administration

Office and administration expenses increased by $2,345 for the nine months ended February 29, 2024 due to an increase in office supply expenses.

Professional Fees

Professional fees during the nine months ended February 29, 2024 increased by $3,087 to $15,623, as compared to $12,536 during the nine months ended February 28, 2023.

Interest Expense

Interest expense is $0 for the nine months ended February 29, 2024 and February 28, 2023 because accounts payable and accrued liabilities – related party, convertible note payable – related party and loans payable – shareholders are non-interest bearing.

Critical Accounting Policies 

We have identified certain accounting policies, described below, that are the most important to the portrayal of our current financial condition and results of operations. Please refer to Note 2 of the accompanying consolidated financial statements for a full and complete disclosure of our accounting policies.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Management evaluated the effectiveness of our disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of February 29, 2024, the disclosure controls and procedures, based on the Framework of Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) 2013, were not effective.

9

Disclosure controls and procedures are the controls and other procedures that are designed to ensure that information required to be disclosed in our Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities Exchange Commission’s rules and forms.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended February 29, 2024 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We know of no material pending legal proceedings to which our company or subsidiary is a party or of which any of our property is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.

We know of no material proceedings in which any director, officer or affiliate of our company, or any registered or beneficial stockholder of our company, or any associate of any such director, officer, affiliate, or stockholder is a party adverse to our company or subsidiary or has a material interest adverse to our company or subsidiary.

ITEM 1A. RISK FACTORS

Not applicable to smaller reporting companies.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

10

ITEM 5.  OTHER INFORMATION

None.

ITEM 6.   EXHIBITS

Exhibit Number	Description
3.1	Articles of Incorporation (Incorporated by reference to the Exhibits filed with the Form SB-2 filed with the SEC on March 16, 2006)
3.2	Certificate of Amendment to Articles of Incorporation (Incorporated by reference to the Exhibits filed with Schedule 14C on November 14, 2008)
3.3	Bylaws (Incorporated by reference to the Exhibits filed with the Form SB-2 filed with the SEC on March 16, 2006)
3.4	Amended Bylaws (Incorporated by reference to the Exhibits filed with the Form SB-2 filed with the SEC on March 16, 2006)
10.3	Acquisition Agreement dated April 22, 2008 (Incorporated by reference to the Exhibits filed with the Form 8-K on May 19, 2008)
10.4	Promissory note dated June 1, 2011 issued to Macleod Projects Inc. (Incorporated by reference to the Exhibits filed with the annual report on Form 10-K  for the year ended May 31, 2011 filed with the SEC on October 21, 2011)
10.5	Promissory note dated August 5, 2011 issued to Macleod Projects Inc. (Incorporated by reference to the Exhibits filed with the annual report on Form 10-K  for the year ended May 31, 2011 filed with the SEC on October 21, 2011 )
31.1*	Section 302 Certification of Principal Executive Officer
32.1*	Certification Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	XBRL INSTANCE DOCUMENT
101.SCH*	XBRL TAXONOMY EXTENSION SCHEMA
101.CAL*	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF*	XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB*	XBRL TAXONOMY EXTENSION LABEL LINKBASE
101.PRE*	XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
104	Cover page formatted as Inline XBRL and contained in Exhibit 101

* Filed herewith.

11

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PREAXIA HEALTH CARE PAYMENT SYSTEMS INC.

By:  /s/Tom Zapatinas                                                                           

Name: Tom Zapatinas

Title:   President, Chief Executive Officer and Chief Financial Officer

(Principal Executive Officer and Principal Financial Officer)

Date: April 17, 2024

12

EX-31

EXHIBIT 31.1

RULE 13a-14(a)/15d-14(a) CERTIFICATION

I, Tom Zapatinas, certify that:

1.           I have reviewed this quarterly report on Form 10-Q for the quarter ended February 29, 2024 of PreAxia Health Care Payment Systems Inc.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer(s) and I are responsible for establishing for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles,

c.           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

April 17, 2024

/s/ Tom Zapatinas

Tom Zapatinas, Chief Executive Officer and Chief Financial Officer

(Principal Executive Officer and Principal Financial Officer)

1

EX-32

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PreAxia Health Care Payment Systems Inc. (the “Company”) on Form 10-Q for the quarter ended February 29, 2024 as filed with the Securities and Exchange Commission (the “Report”), I, Tom Zapatinas, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that:

1.         The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.         The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

April 17, 2024	/s/ Tom Zapatinas
	Tom Zapatinas, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

1

XML

Cover - shares	9 Months Ended
	Feb. 29, 2024	Apr. 17, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Feb. 29, 2024
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--05-31
Entity File Number	000-52365
Entity Registrant Name	PREAXIA HEALTH CARE PAYMENT SYSTEMS INC.
Entity Central Index Key	0001350156
Entity Tax Identification Number	20-4395271
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	PO Box 34075 Westbrook PO
Entity Address, Address Line Two	1610-37th Street S.W
Entity Address, City or Town	Calgary
Entity Address, State or Province	AB
Entity Address, Postal Zip Code	T3C 3W2
City Area Code	403
Local Phone Number	850-4120
Title of 12(g) Security	Common Stock, $0.001 par value
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		19,767,698

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Feb. 29, 2024	May 31, 2023
Current assets
Cash	$ 1,194	$ 6
Total current assets	1,194	6
Total assets	1,194	6
Current liabilities
Accounts payable and accrued liabilities	165,934	158,348
Accounts payable and accrued liabilities - related party	300,000	240,000
Advances - related party	75,130	64,952
Loans payable - shareholders	191,329	173,067
Liability for unissued shares	134,792	134,792
Promissory note - related party	466,817	466,817
Convertible note payable - related party	1,058,760	1,058,760
Total current liabilities	2,392,762	2,296,736
Total liabilities	2,392,762	2,296,736
Commitments and Contingencies
STOCKHOLDERS' DEFICIT
Common Stock, $0.001 par value, 75,000,000 shares authorized 19,767,698 shares issued and outstanding	19,768	19,768
Additional paid-in capital	2,655,236	2,655,236
Accumulated other comprehensive income	57,197	57,197
Accumulated deficit	(5,123,769)	(5,028,931)
Total stockholders' deficit	(2,391,568)	(2,296,730)
Total liabilities and stockholders' deficit	$ 1,194	$ 6

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Feb. 29, 2024	May 31, 2023
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	19,767,698	19,767,698
Common stock, shares outstanding	19,767,698	19,767,698

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Feb. 29, 2024	Feb. 28, 2023	Feb. 29, 2024	Feb. 28, 2023
Income Statement [Abstract]
Revenue	$ 0	$ 0	$ 0	$ 0
Operating expenses
Consulting	0	30,442	60,000	90,442
Professional	3,472	2,996	15,623	12,536
Office and administration	2,902	2,679	13,079	10,734
Research and development	2,436	371	6,136	5,215
Total operating expenses	8,810	36,488	94,838	118,927
Loss from operations	(8,810)	(36,488)	(94,838)	(118,927)
Net loss and comprehensive loss	$ (8,810)	$ (36,488)	$ (94,838)	$ (118,927)
Net loss per share - basic	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.01)
Net loss per share - diluted	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.01)
Weighted average number of common shares outstanding - basic	19,767,698	19,767,698	19,767,698	19,767,698
Weighted average number of common shares outstanding - diluted	19,767,698	19,767,698	19,767,698	19,767,698

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Beginning balance, value at May. 31, 2022	$ 19,768	$ 2,655,236	$ 57,197	$ (4,872,665)	$ (2,140,464)
Beginning balance, shares at May. 31, 2022	19,767,698
Net loss and comprehensive loss				(118,927)	(118,927)
Ending balance, value at Feb. 28, 2023	$ 19,768	2,655,236	57,197	(4,991,592)	(2,259,391)
Ending balance, shares at Feb. 28, 2023	19,767,698
Beginning balance, value at Nov. 30, 2022	$ 19,768	2,655,236	57,197	(4,955,104)	(2,222,903)
Beginning balance, shares at Nov. 30, 2022	19,767,698
Net loss and comprehensive loss				(36,488)	(36,488)
Ending balance, value at Feb. 28, 2023	$ 19,768	2,655,236	57,197	(4,991,592)	(2,259,391)
Ending balance, shares at Feb. 28, 2023	19,767,698
Beginning balance, value at May. 31, 2023	$ 19,768	2,655,236	57,197	(5,028,931)	(2,296,730)
Beginning balance, shares at May. 31, 2023	19,767,698
Net loss and comprehensive loss				(94,838)	(94,838)
Ending balance, value at Feb. 29, 2024	$ 19,768	2,655,236	57,197	(5,123,769)	(2,391,568)
Ending balance, shares at Feb. 29, 2024	19,767,698
Beginning balance, value at Nov. 30, 2023	$ 19,768	2,655,236	57,197	(5,114,959)	(2,382,758)
Beginning balance, shares at Nov. 30, 2023	19,767,698
Net loss and comprehensive loss				(8,810)	(8,810)
Ending balance, value at Feb. 29, 2024	$ 19,768	$ 2,655,236	$ 57,197	$ (5,123,769)	$ (2,391,568)
Ending balance, shares at Feb. 29, 2024	19,767,698

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Feb. 29, 2024	Feb. 28, 2023
Cash flows from operating activities
Net loss	$ (94,838)	$ (118,927)
Change in operating assets and liabilities
Increase in accounts payable and accrued liabilities - related party	60,000	90,000
Decrease in accounts payable and accrued liabilities	7,585	(3,028)
Cash flows used in operating activities	(27,253)	(31,955)
Cash flows from investing activities	0	0
Cash flows from financing activities
Advances - loans payable - shareholders	18,262	4,992
Advances - related party	11,764	27,303
Repayment of advances - related party	(1,585)	(567)
Net cash provided by financing activities	28,441	31,728
Net change in cash	1,188	(227)
Cash, beginning of the period	6	259
Cash, end of the period	1,194	32
Supplemental Disclosure:
Cash paid for income taxes	0	0
Cash paid for interest	$ 0	$ 0

XML

Organization and Description of Business

9 Months Ended

Feb. 29, 2024

Accounting Policies [Abstract]

Organization and Description of Business

Note 1 – Organization and Description of Business

PreAxia Health Care Payment Systems Inc. (the “Company” or “PreAxia”) was incorporated on April 3, 2000 in the State of Nevada. On May 31, 2005, the Company acquired all of the outstanding stock of Tiempo de Mexico Ltd. (“Tiempo”) in exchange for 5,000,000 shares of the common stock of the Company with a par value of $0.001. The Company had no operations prior to the date of the aforementioned acquisition.

The business objective of the Company is the development, distribution, marketing and sale of health care payment processing services and products. The Company has realized only nominal revenues from its planned operations. 

The operations of the Company are expected to be primarily undertaken by its wholly owned subsidiary, PreAxia Health Care Payment Ltd. (“PreAxia Payment”), incorporated pursuant to the laws of the Province of Alberta on November 26, 2015.

PreAxia Payment is in the process of developing an online access system creating a health spending account that will facilitate card payment and processing services to third-party administrators, insurance companies and others.

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Summary of Significant Accounting Policies

9 Months Ended

Feb. 29, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

Basis of presentation

The unaudited condensed consolidated financial statements of the Company for the three and nine months ended February 29, 2024 and February 28, 2023 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of May 31, 2023 was derived from the audited financial statements included in the Company's financial statements as of and for the fiscal year ended May 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on August 30, 2023. These financial statements should be read in conjunction with that report.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries (i) PreAxia Health Care Payment Systems Inc., incorporated pursuant to the laws of the Province of Alberta on January 28, 2008 (ii) PreAxia Canada Inc., incorporated pursuant to the laws of the Province of Alberta on January 28, 2008 and (iii) PreAxia Health Care Payment Ltd., incorporated pursuant to the laws of the Province of Alberta on November 26, 2015 (collectively, the “Subsidiaries”). All inter-company accounts and transactions have been eliminated in consolidation.

Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the nine months ended February 29, 2024, the Company incurred a net loss of $94,838 and used cash in operating activities of $27,253, and as of February 29, 2024, had a stockholders’ deficit of $2,391,568 and an accumulated deficit of $5,123,769. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the consolidated financial statements are issued. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty should we be unable to continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and to ultimately achieve profitable operations. Currently, the Company does not have significant cash or other material assets, nor does it have operations or a source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. The Company’s officers or principal shareholders are committed to making advances or loans to pay for certain legal, accounting, and administrative costs.

The Company hopes to be able to attract suitable investors for our business plan, which will not require us to use our cash. There can be no assurance that the Company will be successful in this situation. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions that our company may undertake in the future, actual results could differ from those estimates.

Foreign Currency Translation

The functional currency of the Company is the United States dollar. The functional currency of the Subsidiaries is the Canadian dollar. Assets and liabilities in the accompanying consolidated financial statements are translated into United States dollars at the exchange rate in effect at the balance sheet date and capital accounts are translated at historical rates. Income statement accounts are translated at the average rates of exchange prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included in the accumulated other comprehensive income (loss) account in stockholders’ deficit.

Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date. Any transaction exchange gains and losses are included in the statement of operations and comprehensive loss.

The Company's reporting currency is the U.S. dollar. All transactions initiated in Canadian Dollars are translated into U.S. dollars in accordance with Accounting Standards Codification ("ASC") 830-30, "Translation of Financial Statements," as follows:

i) assets and liabilities are translated at the closing rate at the date of the balance sheet of 1.00 US Dollar =1.3567 Canadian Dollars (February 29, 2024), 1.00 USD Dollar=0.7914 GBP, and 1.00 US Dollar=1.3605 Canadian Dollars (May 31, 2023), 1.00 USD Dollar=0.593 GBP;

ii) income and expenses are translated at average exchange rates for the nine months ended February 29, 2024 of 1.00 US Dollar = 1.3477 Canadian Dollars and 1.00 US Dollar = 1.3285 Canadian Dollars (February 28, 2023);

iii) all resulting exchange differences are recognized as other comprehensive income, a separate component of equity. The exchange differences during the nine months ended February 29, 2024 and February 28, 2023 were insignificant and no amounts have been recorded.

Fair Value of Financial Instruments

The Company defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Management uses a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

☐ Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

☐ Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

☐ Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

The fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of February 29, 2024 and May 31, 2023. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

Net Income (Loss) Per Share

Net loss per share of common stock is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The Company has 10,587,600 shares of potential common stock equivalents for convertible note payable – related party outstanding during the periods ended February 29, 2024 and May 31, 2023, which have been excluded from the loss per share computation as their effect would have been anti-dilutive due to net losses.

Research and Development Costs

The Company expenses research and development costs as incurred in accordance with FASB ASC 730 “Research and Development.” During the nine months ended February 29, 2024 and February 28, 2023, we incurred $6,136 and $5,215, respectively, in research and development expenses.

Software Development Costs

The Company accounts for software development costs in accordance with several accounting pronouncements, including FASB ASC 730, “Research and Development,” FASB ASC 350-40, “Internal-Use Software,” FASB 985-20, “Costs of Computer Software to be Sold, Leased, or Marketed” and FASB ASC 350-50, “Website Development Costs.”

Costs incurred during the period of planning and design, prior to the period determining technological feasibility, for all software developed for use internal and external, has been charged to operations in the period incurred as research and development costs.  Additionally, costs incurred after determination of readiness for market have been expensed as research and development.

The Company will capitalize certain costs in the development of our proprietary software (computer software to be sold, leased or licensed) for the period after technological feasibility was determined and prior to our marketing and initial sales.

Website development costs are capitalized under the same criteria as our marketed software.

Impairment of Long-lived Assets

Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable.  When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset.  The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required.  If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset.  When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets.  We did not recognize any impairment losses for any periods presented.

Commitments and Contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies.  Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

Revenue Recognition

In accordance with ASC 606, “Revenue from Contracts with Customers,” revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation.

Gross Versus Net Revenue

ASC 606 provides guidance on proper recognition of principal versus agent considerations which is used to determine gross versus net revenue recognition. Under ASC 606, the core objective of the guidance on gross versus net revenue recognition is to help determine whether an entity is a principal or an agent in a transaction. In general, the primary difference between these two is the performance obligation being satisfied. The principal has a performance obligation to provide the desired goods or services to the end customer, whereas the agent arranges for the principal to provide the desired goods or services. Additionally, a fundamental characteristic of a principal in a transaction is control. A principal substantively controls the goods and services before they are transferred to the customer as well as controlling the price of the good or service being provided. An agent normally receives a commission or fee for these activities. In addition to control, the level at which an entity controls the price of the good or service being transferred determines principal versus agent status. The more discretion over setting price a company has in providing the good or service, the more likely they are considered a principal rather than an agent. Under the guidance when another party is involved in providing a good or service to a customer, an entity is a principal if the entity obtains control of the asset or right to a service performed by the other party.

The Company provides administrative services for Health Spending Accounts sponsored by employers (the “customer”). The Company does not take possession of goods or control the services provided as the employees of the customer are free to determine their health care provider. As such, the Company records revenue net of reimbursements to employees. The Company’s services to the customer consist of reviewing medical costs for eligibility and reimbursing employees for eligible costs.

During the three and nine months ended February 29, 2024 and February 28, 2023, the Company had revenue of $0 and $0, respectively. The Company earns a 10% commission on amounts reimbursed for eligible expenses.

Income Taxes

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income and Comprehensive Income in the period that includes the enactment date.

The Company follows section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertain income tax positions.  Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.  

Per Share Data

Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, "Earnings per Share". Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation. On February 29, 2024 and May 31, 2023, we excluded the common stock issuable upon conversion of Convertible Note Payable – Related Party of 10,587,600 shares and 10,587,600 shares, respectively, as their effect would have been anti-dilutive.

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Recent Accounting Pronouncements

9 Months Ended

Feb. 29, 2024

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Note 3 – Recent Accounting Pronouncements

The Company reviews new accounting standards as issued or updated. No new standards or updates had any material effect on these consolidated financial statements. The accounting pronouncements issued subsequent to the date of these consolidated financial statements that were considered significant by management were evaluated for the potential effect on these consolidated financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these consolidated financial statements as presented.

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Related Party Transactions

9 Months Ended

Feb. 29, 2024

Related Party Transactions [Abstract]

Related Party Transactions

Note 4 – Related Party Transactions

Accounts Payable and Accrued Liabilities - Related Party

As of February 29, 2024 and May 31, 2023, accounts payable and accrued liabilities – related party due to Tom Zapatinas (Chief Executive Officer and a Director of the Company) totaled $300,000 and $240,000, respectively. Advances are non-interest bearing, unsecured and payable on demand. During the nine months ended February 29, 2024 and February 28, 2023, Tom Zapatinas, earned $60,000 and $90,000, respectively, for consulting services provided to the Company.

Advances – Related Party

As of February 29, 2024 and May 31, 2023, advances payable due to Tom Zapatinas totaled $75,130 and $64,952, respectively. During the nine months ended February 29, 2024 and February 28, 2023, Tom Zapatinas, advanced the Company $11,764 and $27,303, respectively, in cash and was repaid $1,585 and $567, respectively, in cash.

Loans Payable – Shareholders

As of February 29, 2024 and May 31, 2023, loans payable - shareholders are $191,329 and $173,067, respectively. Loans payable – shareholders are unsecured, non-interest bearing and due on demand. During the nine months ended February 29, 2024 and February 28, 2023, the Company was advanced $18,262 and $4,992, respectively, in cash, and was repaid $0 and $0, respectively, in cash.

Promissory Note – Related Party

As of February 29, 2024 and May 31, 2023, promissory note - related party of $466,817 and $466,817, respectively, is due to Tom Zapatinas. The Note is non-interest bearing, unsecured and payable on demand.

Convertible Note Payable – Related Party

As of February 29, 2024 and May 31, 2023, convertible note payable - related party of $1,058,760 is due to Tom Zapatinas. The Note is non-interest bearing, unsecured, payable on demand and convertible in whole or in part into shares of common stock of the Company at a conversion price of $0.10 per share, which equates to 10,587,600 shares.

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Stockholders’ Deficit

9 Months Ended

Feb. 29, 2024

Equity [Abstract]

Stockholders’ Deficit

Note 5 – Stockholders’ Deficit

Common Stock

Common Stock, par value of $0.001 per share; 75,000,000 shares authorized: 19,767,698 shares issued and outstanding on February 29, 2024 and May 31, 2023. Holders of Common Stock have one vote per share of Common Stock held.

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Contingencies and Commitments

9 Months Ended

Feb. 29, 2024

Commitments and Contingencies Disclosure [Abstract]

Contingencies and Commitments

Note 6 – Contingencies and Commitments

From time to time the Company may be a party to litigation matters involving claims against the Company.  Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations. 

The Company does not have long-term commitments for equipment purchases or leases. The Company does not lease office space as the CEO operates the business from his personal residence.

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Subsequent Events

9 Months Ended

Feb. 29, 2024

Subsequent Events [Abstract]

Subsequent Events

Note 7 – Subsequent Events

The Company has evaluated all subsequent events through the date these financial statements were issued, and no subsequent events occurred that required disclosure.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Feb. 29, 2024

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation

The unaudited condensed consolidated financial statements of the Company for the three and nine months ended February 29, 2024 and February 28, 2023 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of May 31, 2023 was derived from the audited financial statements included in the Company's financial statements as of and for the fiscal year ended May 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on August 30, 2023. These financial statements should be read in conjunction with that report.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries (i) PreAxia Health Care Payment Systems Inc., incorporated pursuant to the laws of the Province of Alberta on January 28, 2008 (ii) PreAxia Canada Inc., incorporated pursuant to the laws of the Province of Alberta on January 28, 2008 and (iii) PreAxia Health Care Payment Ltd., incorporated pursuant to the laws of the Province of Alberta on November 26, 2015 (collectively, the “Subsidiaries”). All inter-company accounts and transactions have been eliminated in consolidation.

Going Concern

Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the nine months ended February 29, 2024, the Company incurred a net loss of $94,838 and used cash in operating activities of $27,253, and as of February 29, 2024, had a stockholders’ deficit of $2,391,568 and an accumulated deficit of $5,123,769. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the consolidated financial statements are issued. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty should we be unable to continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and to ultimately achieve profitable operations. Currently, the Company does not have significant cash or other material assets, nor does it have operations or a source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. The Company’s officers or principal shareholders are committed to making advances or loans to pay for certain legal, accounting, and administrative costs.

The Company hopes to be able to attract suitable investors for our business plan, which will not require us to use our cash. There can be no assurance that the Company will be successful in this situation. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents.

Use of Estimates

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions that our company may undertake in the future, actual results could differ from those estimates.

Foreign Currency Translation

Foreign Currency Translation

The functional currency of the Company is the United States dollar. The functional currency of the Subsidiaries is the Canadian dollar. Assets and liabilities in the accompanying consolidated financial statements are translated into United States dollars at the exchange rate in effect at the balance sheet date and capital accounts are translated at historical rates. Income statement accounts are translated at the average rates of exchange prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included in the accumulated other comprehensive income (loss) account in stockholders’ deficit.

Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date. Any transaction exchange gains and losses are included in the statement of operations and comprehensive loss.

The Company's reporting currency is the U.S. dollar. All transactions initiated in Canadian Dollars are translated into U.S. dollars in accordance with Accounting Standards Codification ("ASC") 830-30, "Translation of Financial Statements," as follows:

i) assets and liabilities are translated at the closing rate at the date of the balance sheet of 1.00 US Dollar =1.3567 Canadian Dollars (February 29, 2024), 1.00 USD Dollar=0.7914 GBP, and 1.00 US Dollar=1.3605 Canadian Dollars (May 31, 2023), 1.00 USD Dollar=0.593 GBP;

ii) income and expenses are translated at average exchange rates for the nine months ended February 29, 2024 of 1.00 US Dollar = 1.3477 Canadian Dollars and 1.00 US Dollar = 1.3285 Canadian Dollars (February 28, 2023);

iii) all resulting exchange differences are recognized as other comprehensive income, a separate component of equity. The exchange differences during the nine months ended February 29, 2024 and February 28, 2023 were insignificant and no amounts have been recorded.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Management uses a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

☐ Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

☐ Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

☐ Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

The fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of February 29, 2024 and May 31, 2023. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

Net Income (Loss) Per Share

Net Income (Loss) Per Share

Net loss per share of common stock is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The Company has 10,587,600 shares of potential common stock equivalents for convertible note payable – related party outstanding during the periods ended February 29, 2024 and May 31, 2023, which have been excluded from the loss per share computation as their effect would have been anti-dilutive due to net losses.

Research and Development Costs

Research and Development Costs

The Company expenses research and development costs as incurred in accordance with FASB ASC 730 “Research and Development.” During the nine months ended February 29, 2024 and February 28, 2023, we incurred $6,136 and $5,215, respectively, in research and development expenses.

Software Development Costs

Software Development Costs

The Company accounts for software development costs in accordance with several accounting pronouncements, including FASB ASC 730, “Research and Development,” FASB ASC 350-40, “Internal-Use Software,” FASB 985-20, “Costs of Computer Software to be Sold, Leased, or Marketed” and FASB ASC 350-50, “Website Development Costs.”

Costs incurred during the period of planning and design, prior to the period determining technological feasibility, for all software developed for use internal and external, has been charged to operations in the period incurred as research and development costs.  Additionally, costs incurred after determination of readiness for market have been expensed as research and development.

The Company will capitalize certain costs in the development of our proprietary software (computer software to be sold, leased or licensed) for the period after technological feasibility was determined and prior to our marketing and initial sales.

Website development costs are capitalized under the same criteria as our marketed software.

Impairment of Long-lived Assets

Impairment of Long-lived Assets

Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable.  When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset.  The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required.  If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset.  When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets.  We did not recognize any impairment losses for any periods presented.

Commitments and Contingencies

Commitments and Contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies.  Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

Revenue Recognition

Revenue Recognition

In accordance with ASC 606, “Revenue from Contracts with Customers,” revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation.

Gross Versus Net Revenue

Gross Versus Net Revenue

ASC 606 provides guidance on proper recognition of principal versus agent considerations which is used to determine gross versus net revenue recognition. Under ASC 606, the core objective of the guidance on gross versus net revenue recognition is to help determine whether an entity is a principal or an agent in a transaction. In general, the primary difference between these two is the performance obligation being satisfied. The principal has a performance obligation to provide the desired goods or services to the end customer, whereas the agent arranges for the principal to provide the desired goods or services. Additionally, a fundamental characteristic of a principal in a transaction is control. A principal substantively controls the goods and services before they are transferred to the customer as well as controlling the price of the good or service being provided. An agent normally receives a commission or fee for these activities. In addition to control, the level at which an entity controls the price of the good or service being transferred determines principal versus agent status. The more discretion over setting price a company has in providing the good or service, the more likely they are considered a principal rather than an agent. Under the guidance when another party is involved in providing a good or service to a customer, an entity is a principal if the entity obtains control of the asset or right to a service performed by the other party.

The Company provides administrative services for Health Spending Accounts sponsored by employers (the “customer”). The Company does not take possession of goods or control the services provided as the employees of the customer are free to determine their health care provider. As such, the Company records revenue net of reimbursements to employees. The Company’s services to the customer consist of reviewing medical costs for eligibility and reimbursing employees for eligible costs.

During the three and nine months ended February 29, 2024 and February 28, 2023, the Company had revenue of $0 and $0, respectively. The Company earns a 10% commission on amounts reimbursed for eligible expenses.

Income Taxes

Income Taxes

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income and Comprehensive Income in the period that includes the enactment date.

The Company follows section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertain income tax positions.  Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.  

Per Share Data

Per Share Data

Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, "Earnings per Share". Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation. On February 29, 2024 and May 31, 2023, we excluded the common stock issuable upon conversion of Convertible Note Payable – Related Party of 10,587,600 shares and 10,587,600 shares, respectively, as their effect would have been anti-dilutive.

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Organization and Description of Business (Details Narrative) - Tiempo De Mexico Ltd [Member] - Common Stocks [Member]	May 31, 2005 $ / shares shares
Shares issued for acquisition | shares	5,000,000
Share issued price | $ / shares	$ 0.001

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Summary of Significant Accounting Policies (Details Narrative)	3 Months Ended		9 Months Ended		12 Months Ended
	Feb. 29, 2024 USD ($)	Feb. 28, 2023 USD ($)	Feb. 29, 2024 USD ($) shares	Feb. 28, 2023 USD ($)	May 31, 2023 USD ($) shares	Nov. 30, 2023 USD ($)	Nov. 30, 2022 USD ($)	May 31, 2022 USD ($)
Net loss			$ 94,838
Cash used in operating activities			27,253	$ 31,955
Stockholders deficit	$ 2,391,568	$ 2,259,391	2,391,568	2,259,391	$ 2,296,730	$ 2,382,758	$ 2,222,903	$ 2,140,464
Accumulated deficit	5,123,769		5,123,769		$ 5,028,931
Research and development expenses	2,436	371	6,136	5,215
Revenue	$ 0	$ 0	$ 0	$ 0
Convertible Notes Payable Related Party [Member]
Antidilutive shares | shares			10,587,600		10,587,600
UNITED STATES | Income And Expenses [Member]
Foreign currency exchange rate translation	1.00	1.00	1.00	1.00
UNITED STATES | Assets And Liabilities [Member]
Foreign currency exchange rate translation	1.00		1.00		1.00
Canada Dollars [Member] | Income And Expenses [Member]
Foreign currency exchange rate translation	1.3477	1.3285	1.3477	1.3285
Canada Dollars [Member] | Assets And Liabilities [Member]
Foreign currency exchange rate translation	1.3567		1.3567		1.3605
USD [Member] | Assets And Liabilities [Member]
Foreign currency exchange rate translation	1.00		1.00		1.00
GBP [Member] | Assets And Liabilities [Member]
Foreign currency exchange rate translation	0.593		0.593		0.7914

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Related Party Transactions (Details Narrative) - USD ($)	9 Months Ended
	Feb. 29, 2024	Feb. 28, 2023	May 31, 2023
Tom Zapatinas [Member]
Related Party Transaction [Line Items]
Accounts payable and accrued liabilities related party	$ 300,000		$ 240,000
Consulting services	60,000	$ 90,000
Advance payable amount	75,130		64,952
Advanced amount	11,764	27,303
Repayment of advances	1,585	567
Note payable - related party	466,817		466,817
Convertible note payable related party	$ 1,058,760		1,058,760
Conversion price	$ 0.10
Common stock convertible shares	10,587,600
Loans Payable To Shareholders [Member]
Related Party Transaction [Line Items]
Advanced amount	$ 18,262	4,992
Repayment of advances	0	$ 0
Loans payable current	$ 191,329		$ 173,067

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Stockholders’ Deficit (Details Narrative) - $ / shares	Feb. 29, 2024	May 31, 2023
Equity [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	19,767,698	19,767,698
Common stock, shares outstanding	19,767,698	19,767,698