| Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies
a) Basis of Presentation These consolidated financial statements and related
notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in U.S.
dollars. The Company’s fiscal year end is February 28. The financial statements include the accounts of the Company and its
subsidiary Rent Pay. All significant intercompany transactions and accounts have been eliminated in consolidation.
b) Interim Financial Statements The accompanying unaudited interim financial statements
of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US
GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with
the audited financial statements and notes thereto. In the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented
have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected
for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited
financial statements for the most recent fiscal year end February 29, 2020, have been omitted.
c) Use of Estimates The preparation of consolidated financial statements in
conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates
estimates and assumptions related to useful life and recoverability of long-lived assets, and deferred income tax asset valuations.
The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes
to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of
assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results
experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material
differences between the estimates and the actual results, future results of operations will be affected.
d) Cash and Cash Equivalents Cash includes cash on hand and cash held with banks.
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
e) Accounts Receivable Trade accounts receivable are recorded at net invoice
value and such receivables are non-interest bearing. Receivables are considered past due based on the contractual payment terms.
Receivables are reviewed and specific amounts are reserved if collectability is no longer reasonably assured. As at August 31, 2020, the Company has recognized an
allowance for doubtful accounts of $469 (February 29, 2020 - $7,133).
f) Property and Equipment Property and equipment are stated at cost, less accumulated
depreciation and any impairment in value. Depreciation is computed using the straight-line method over the following estimated
lives of the assets:
IT equipment 3 years
Computer software 5 years
Office equipment 5 years
Furniture and fixtures 6 years The Company periodically performs
impairment testing on its long-lived assets either annually or whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable in accordance with ASC 360. All property and equipment assets were deemed recoverable at August 31,
2020, and February 29, 2020.
g) Right-of-use Assets Right-of-use assets are stated at cost, less accumulated
amortization and any impairment in value. Amortization is computed using the straight-line method over the following estimated
lives of the assets:
Right-of-use building Term of lease
Right-of-use vehicles 5 years The Company periodically performs
impairment testing on its long-lived assets either annually or whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable in accordance with ASC 360. All right-of-use assets were deemed recoverable at August 31, 2020, and
February 29, 2020.
h) Value of Financial Instruments The Company measures and discloses the estimated fair
value of financial assets and liabilities using the fair value hierarchy in accordance with ASC 820, “ Fair Value Measurements
and Disclosures The three-level hierarchy is defined as follows: Level 1 – quoted prices for identical instruments
in active markets. Level 2 – quoted prices for similar instruments
in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations
in which significant inputs and significant value drivers are observable in active markets. Level 3 – fair value measurements derived from
valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Financial instruments consist principally of cash and
cash equivalents, accounts receivable, accounts payable, and taxes payable. There were no transfers into or out of “Level
3” during the six months ended August 31, 2020, or 2019. The recorded values of all financial instruments approximate their
current fair values because of their nature and respective relatively short maturity dates or durations. Fair value estimates are made at a specific point in
time, based on relevant market information and information about the financial statement. These estimates are subjective in nature
and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions
could significantly affect the estimates.
i) Foreign Currency Translation Management has adopted ASC 830, “ Foreign Currency
Translation Matters
j) Leases The Company adopted ASC 842, “ Leases For contracts entered into before March 1, 2019, the
Company determined whether the arrangement contained a lease under Topic 840. Prior to the adoption of ASC 842, these leases were
classified as operating or finance leases based on an assessment of whether the lease transferred significantly all the risks and
rewards of ownership of the underlying asset. The Company leases office space and vehicles. On transition, the Company elected to apply the practical
expedient to grandfather the determination of which contract is or contains a lease and applied ASC 842 to those contracts that
were previously identified as leases. Upon transition to the new standard, right-of-use assets and lease liabilities were measured
at the present value of the remaining lease payments discounted by the Company’s incremental borrowing rate as at March 1,
2019. The non-cash adjustment has been excluded from the consolidated statement of cash flows. The weighted average incremental
borrowing rate applied to lease liabilities recognized under ASC 842 was 10.25%. Adoption of ASC 842 had the following impact on
the financial position as at March 1, 2019:
(As Previously
February 28, ASC 842 March 1,
Assets
Property and equipment, net $ 224,126 $ (50,185 ) $ 173,941
Right-of-use assets, net — 71,086 71,086
Total Assets 1,022,946 20,901 1,043,847
Liabilities
Obligations under finance leases 48,702 (48,702 ) —
Lease liabilities — 69,619 69,619
Total Liabilities 825,554 20,917 846,471
Accumulated Other Comprehensive Loss $ (22,840 ) $ (16 ) $ (22,856 )
k) Revenue Recognition The Company recognizes revenue in accordance with ASC
606, Revenue from Contracts with Customers. The Company derives revenue through licensing its software
and by collecting various transaction fees from third party debit orders. The Company has several revenue streams and they are
recognized as below: Branch Setup Fees This is a once off, non-refundable cost that the company
charges when a customer is onboarded. Revenue is recognized immediately and is collected in the same month. This results in no
accounts receivable at the end of the month as revenue is recognized and collected immediately. Data Migration Fees This only applies to a customer applying to migrate
client data from a previous system to our system. We invoice for this service as soon as data is successfully transferred, imported
and verified by our customer. Revenue is recognized upon invoicing and payment is collected within two days due to debit order
mandates signed by the customer as part of the agreement. This results in no outstanding accounts receivable as of the end of each
month. Monthly Rental Fees Our software is made available on a web-based software
platform and is offered as software as a service. Our agreement is an evergreen agreement (auto-renewed) and if not terminated
by a customer, remains intact. Termination may occur by either party at any point with 30 days’ notice. The monthly software
rental fee is payable every month per branch. Monthly software rental fees are payable in the beginning of each month. The monthly
rental fees are invoiced during the first few days of a month and is recognized over the period of the month. Payments are collected
via debit order a few days later, prior to the end of that month, due to debit order mandate signed by the customer. This results
in no accounts receivable as invoicing and payment happens within the same month. Development Service Fee We have some clients that we do custom software development
for, on some versions of our software. Here we adopt a scrum methodology with 2-week development sprints. We agree on a price per
hour for development with these clients, typically through email communication. We send an invoice for the work completed and usually
get paid within the same month. On this revenue stream we do not run a debit order, but clients need to pay invoices before we
continue with the next development increment. Payments are due and revenue is recognized upon invoicing. At times collecting payment
can take up to 30 days. Unpaid invoices, if any, are recorded to accounts receivable at the end of each month but invoicing and
payment usually happen within the same month. Transactional Fees We offer an integrated debit order facility built into
our software. When our clients (lenders) create loans with consumers, the consumer contracts directly with us on a separate agreement.
We then act as a third-party payment provider, to facilitate the repayment of loans from the consumer to the lender by debit order.
We are registered as a third-party payment provider and all payments collected on this stream are settled by the bank directly
into our bank account. We only charge a fee on successful debit order collections and retain that fee when we distribute funds
collected on behalf of consumers. The transaction fees charged for these transactions are called CTC and they are displayed on
the signed agreement that the consumer signs with us. The CTC fees are paid by the consumer, in addition to the loan installment
collected. The loan installment and CTC are collected as one amount, but the CTC is retained by us upon distribution of funds to
lenders. Revenue is recognized as each new order is processed and the transaction fee is charged. Our software system counts and
accounts for each individual transaction and its amount and this is generated on a report on our Acpas software. We use this report
to confirm the revenue recognition in our billing system. If there are any CTC that has yet to be collected at an end of a period,
it is recorded as accounts receivable. Credit Protection Insurance Commission Some insurance companies offer insurance products on loans
that cover the consumer for the full repayment of his debt to the lender, in case of unforeseen events. There is an insurance product
from one of our suppliers (an insurance company) that we make available for the insurance company on our software program. In return
for making this product available the insurance company would pay us monthly commission on premiums they received. This is a product
offered by the insurance company directly to the consumer and we only make it available on our software platform. If this option
is selected when a loan is created, an additional fee is added to the loan repayment amount. The software system calculates the
insurance premiums and all premiums for a given month are paid by lenders to the insurance company, or lenders use our payment
service and instruct us to manage the payments on their behalf. After receiving the premiums and supporting reports, the insurance
company will then calculate and verify the premiums paid and premium claw back to this point and work out the commission payable
based on the premiums received. Upon collection of the premiums, the insurance company will complete their final calculations and
the insurance company will then pay all commissions earned by us and the lenders. We distribute the commission amounts due to the
lenders within two days of receiving such payments from the insurance company. Revenue is recognized upon collection of the premiums
from the consumers.
l) Stock-based Compensation The Company records stock-based compensation in accordance
with ASC 718, “ Compensation – Stock Compensation Equity Based Payments to Non-Employees
m) Comprehensive Income (Loss) ASC 220, “ Comprehensive Income”,
n) Earnings (Loss) Per Share The Company computes earnings (loss) per share (“EPS”)
in accordance with ASC 260, “ Earnings per Share
o) Going Concern The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and
the liquidation of liabilities in the normal course of business. As of August 31, 2020, the Company does not have revenues sufficient
to execute its business plan. The Company intends to fund operations through equity financing arrangements. There is no assurance
that this will be successful. These factors, among others, raise substantial doubt about the Company’s ability to continue
as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
p) Recent Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07, which simplifies
the accounting for nonemployee share-based payment transactions. The amendments specify that Topic 718 applies to all share-based
payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by
issuing share-based payment awards. The adoption of this standard did not have a significant impact on the Company’s results
of operations, financial condition, cash flows, and financial statement disclosures. The Company has implemented all new accounting pronouncements
that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements
that have been issued that might have a material impact on its financial position or results of operations. |
