Amendment to Quarterly Report (Form 10-Q/A)

PreAxia Health Care Payment Systems Inc (PreAxia) is filing this Form 10-Q/A2 (this "Amendment No. 2") to its Quarterly Report on Form 10-Q/A for the three months ended August 31, 2025. This amendment 2 is a restatement of the amended Form 10-Q/A filed on October 24, 2025. This restatement in Form 10-Q/A2 contains material changes to the assets, equity, expenses, and other expenses of the consolidated companies as well as expanded disclosure on stock-based compensation and equity as described below.

PREAXIA HEALTH CARE PAYMENT SYSTEMS INC.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	1
ITEM 1. FINANCIAL STATEMENTS	1
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	6
ITEM 4. CONTROLS AND PROCEDURES	6
PART II - OTHER INFORMATION	6
ITEM 1. LEGAL PROCEEDINGS	6
ITEM 1A. RISK FACTORS	6
ITEM 1C CYBER SECURITY	6
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	6
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	6
ITEM 4. MINE SAFETY DISCLOSURES	6
ITEM 5. OTHER INFORMATION	6
ITEM 6. EXHIBITS	7
SIGNATURES	8

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 three-month period ended August 31, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ended May 31, 2026. 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, 2025.

Unaudited Condensed Consolidated Financial Statements	Page
Condensed Consolidated Balance Sheets as of August 31, 2025 (unaudited) and May 31, 2025	F-1
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended August 31, 2025 and 2024	F-2
Unaudited Condensed Consolidated Statements of Changes in Stockholders' Deficit for the three months ended August 31, 2025 and 2024	F-3
Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended August 31, 2025 and 2024	F-4
Notes to Unaudited Condensed Consolidated Financial Statements	F-5

PreAxia Health Care Payment Solutions Inc

Condensed Consolidated Balance Sheets

As of August 31, 2025, and May 31, 2025

Unaudited

			August 31, 2025 As Restated				May 31, 2025
Assets
Current assets
Cash and cash equivalents		$	130,285			$	-
			130,285				-
Total assets		$	130,285			$	-
Liabilities and Shareholders' Deficit
Current liabilities
Accounts payable and accruals		$	47,163			$	43,683
Accruals and other current liabilities - related party			501,387				468,725
Related party loans			97,708				1,627,421
Bank indebtedness			-				10
Short-term loans payable			89,784				201,330
			736,042				2,341,169
		$	736,042			$	2,341,169
Commitments and Contingencies (Note 8)
Shareholders' Equity or Deficit
Common stock, 75,000,000 shares authorized, $0.001 par value,43,514,782 and 19,767,698 issued and outstanding at August 31, 2025, and May 31, 2025 , respectively			43,515				19,768
Additional paid in capital			5,243,943				2,782,203
Stock subscription			-				7,825
Accumulated deficit			(5,955,598	)			(5,210,390	)
Accumulated other comprehensive income			62,383				59,425
Total shareholders' equity or deficit			(605,757	)			(2,341,169	)
Total liabilities and shareholders' equity or deficit		$	130,285			$	-

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

PreAxia Health Care Payment Solutions Inc

Condensed Consolidated Statements of Operations and Comprehensive Loss

Three Months Ended August 31, 2025, and 2024

Unaudited

		August 31, 2025 As Restated				August 31, 2024
Revenues		$	-			$	-
General and administrative expenses
Consulting			28,920				-
Research and development			307,605
Management and labor			192,360				-
Professional fees			31,809				2,500
General and administration			15,440				2,127
			576,134				4,627
Operating loss			(576,134	)			(4,627	)
Other income and (expenses)
Interest income			82				-
Interest expense			(13	)			-
Loss on settlement			(169,143	)			-
Net loss before income taxes			(745,208	)			(4,627	)
Less Income tax expense			-				-
Net loss			(745,208	)			(4,627	)
Other comprehensive income			2,958				-
Net comprehensive loss		$	(742,250	)		$	(4,627	)
Weighted average shares			34,935,717				19,767,698
Earnings per share - basic and diluted		$	(0.02	)		$	(0.00	)

See Accompanying Notes to the Unaudited Condensed Consolidated

PreAxia Health Care Payment Solutions Inc

Condensed Consolidated Statement of Changes in Shareholders' Deficit

For the Three Months Ended August 31, 2025, and 2024

Unaudited

		Number of shares				Par $0.001 Common stock				Additional Paid in Capital				Stock Subscription				Other Comp Income				Accumulated deficit				Total
Balance, May 31, 2024			19,767,698			$	19,768			$	2,655,236				-				57,197			$	(5,128,380	)		$	(2,396,179	)
Net loss							-				-												(4,627	)			(4,627	)
Balance, August 31, 2024			19,767,698				19,768				2,655,236				-				57,197				(5,133,007	)			(2,400,806	)
Balance, May 31, 2025			19,767,698				19,768				2,782,203				7,825				59,425				(5,210,390	)			(2,341,169	)
Stock issued for cash			800,000				800				199,200								-				-				200,000
Stock issued for debt			15,255,770				15,256				1,510,321												-				1,525,577
Settlement on debt			491,314				491				294,297				(7,825	)			-				-				286,963
Proceeds from warrants and options exercised			7,200,000				7,200				-																7,200
Option expense			-				-				457,922												-				457,922
Net comprehensive income (loss)							-				-								2,958				(745,208	)			(742,250	)
Balance, August 31, 2025, As restated			43,514,782				43,515				5,243,943				-				62,383				(5,955,598	)			(605,757	)

See Accompanying Notes to the Unaudited Condensed Consolidated

PreAxia Health Care Payment Solutions Inc

Condensed Consolidated Statement of Cash Flows

Three Months Ended August 31, 2025, and 2024

		August 31, 2025 As Restated				August 31, 2024
Cash used in Operating activities
Net loss			(745,208	)			(4,627	)
Adjustments to reconcile net loss to net cash used by operating activities:
Option expense			457,922				-
Loss on settlement of debt			169,143				-
Shares issued for services			7,200				-
Changes in non-cash working capital:
Accounts payable			3,480				2,231
Other current liabilities - related party			32,662
Net cash flows used by operating activities			(74,801	)			(2,396	)
Investing activities
Net cash flows from investing activities			-				-
Financing activities
Bank overdrafts			(10	)			169
Proceeds from short-term debt			12,628				-
Repayments on short-term debt			(6,354	)			-
Proceeds from related party loans			4,130				2,214
Repayments on related party loans			(8,118	)
Proceeds from sale of stock			200,000				-
Net cash flows from financing activities			202,276				2,383
Foreign currency change			2,810				-
Increase (decrease) in cash during the year			130,285				(13	)
Cash, beginning of the period			-				14
Cash, end of the period		$	130,285			$	1
			-
Supplemental disclosures
Cash paid for income taxes		$	-			$	-
Cash paid for interest		$	13			$	-
Stock issued for related party loans		$	1,525,577			$	-
Stock issued for short-term debt		$	117,820			$	-

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

PREAXIA HEALTH CARE PAYMENT SYSTEMS INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended August 31, 2025, and May 31, 2025

(Unaudited)

As Restated

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 personal financial management applications, websites, and products. The Company's products are in the development stage.

Formerly development operations of the Company were 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 Payments still manages the Calgary office activity.

On May 23, 2025, the Company created a wholly owned subsidiary in Alberta Canada, named Zane Inc. CA. This subsidiary will develop and market the personal financial management products and perfect the health care payment processing services. Zane Inc had no operations before June 30, 2025.

Note 2 - Summary of Significant Accounting Policies

Basis of presentation

The unaudited condensed consolidated financial statements of the Company for the three months ended August 31, 2025, and 2024 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, 2025 was derived from the audited financial statements included in the Company's financial statements as of and for the fiscal year ended May 31, 2025 included in the Company's Annual Report on Form I0-K filed with the Securities and Exchange Commission (the "SEC") on September 30, 2025. These financial statements should be read in conjunction with that report.

Principles of Consolidation

The consolidated financial statements include the accounts of PreAxia Health Care Systems Inc and its wholly owned subsidiaries (i) PreAxia Health Care Payment Ltd., (ii) Zane Inc CA,. All inter-company accounts and transactions have been eliminated in consolidation.

Restatement of the three months ended August 2025.

The Original Form 10-Q and 10-Q/A presented three-year management and consulting contracts as prepaid expenses, being amortized on a straight-line basis over the life of the contracts. Management later determined that due to the stock wording on the contracts and the vesting period provided, the contracts should be reported as warrants. The fair value of these warrants were measured using a plain vanilla Black-Scholes calculation to calculate fair value with standard market inputs. The cost of the warrants were amortized according the vesting periods provided in the contracts.

The Original Form 10-Q and 10-Q/A presented common shares transactions that were authorized and executed but pending the associated stock certificates as stock subscriptions. This 10-Q/A2 amendment recognized the common stock transactions pending certificates as outstanding as of the date of the agreement of transaction.

Additional accounting fees were accrued as of August 31, 2025, a related party loan was adjusted for foreign exchange gain and stock transactions that had been exercised were recognized in the financial statements.

The effect of these changes in presentation of three contracts and the stock transactions resulted in the following changes to the financial statements and the management discussion and analysis:

1. Removal of current and long-term prepaid expenses from the August 31, 2025, balance sheet.

2. Removal of the stock subscription associated with the contracts and recognition of the partial exercise of the warrants associated with the contracts.

3. Recognition of certain debt conversions and stock purchases as completed and resulting in outstanding common shares.

4. Reduction of the recognized management and consulting expenses associated with the contracts.

5. Recognition of loss on the conversion of debt.

6. Expanded disclosure of the contracts, warrants, options, and debt conversions.

7. An increase in accounts payable.

8. An adjustment to a related party loan.

9. An increase in net comprehensive income.

The above changes required changes throughout the document. A summary of the changes to the individual line items in the financial statements is as follows:

Balance sheet changes on August 31, 2025					10-Q/A as filed				Change				10-Q/A2 As Restated
1			Prepaid expense - current		$	360,000			$	(360,000	)			-
1			Prepaid expense - long-term			660,000				(660,000	)			-
			Total Assets			1,150,285				(1,020,000	)			130,285
7			Accounts payable			31,354				15,809				47,163
8			Related party loans			100,438				(2,730	)			97,708
			Total Liabilities			722,963				13,079				736,042
2, 3,			Common stock			19,768				23,747				43,515
3, 4,			Additional paid in capital			2,782,203				2,461,740				5,243,943
			Stock subscriptions			3,651,222				(3,651,222	)			-
2, 4, 5,			Accumulated deficit			(6,085,524	)			129,926				(5,955,598	)
9,			Accumulated other comprehensive Income			59,653				2,730				62,383
			Total shareholder equity or (deficit)		$	427,322			$	(1,033,079	)			(605,757	)

Statement of operations and comprehensive income changes for the three months ended August 31, 2025, and 2024				10-Q/A as filed				Change				10-Q/A2
		General and administrative expenses
2, 4		Consulting		$	65,000			$	(36,080	)			28,920
4,		Research and development			391,263				(83,658	)			307,605
4,		Management and labor			387,500				(195,140	)			192,360
7,		Professional fees			23,200				8,609				31,809
4,		General and administration			8,240				7,200				15,440
					875,203				(299,069	)			576,134
5,		Loss on settlement of debt			-				(169,143	)			(169,143	)
8, 9		Other comprehensive income			228				2,730				2,958
		Net comprehensive loss		$	(874,906	)		$	132,656				(742,250	)

Statement of Changes in Shareholder Deficit changes for the three months ended August 31, 2025				10-Q/A as filed				Change				10-Q/A2
					Number of shares				Change				Number of shares
3,		Stock issued for cash			-				800,000				800,000
3,		Stock issued for debt			-				15,255,770				15,255,770
3,		Settlement of Debt			-				491,314				491,314
4,		Proceeds from options and warrants			-				7,200,000				7,200,000
		Total shares outstanding August 31, 2025			19,767,698				23,747,084				43,514,782
					Common Stock par value $				Change				Common Stock par value $ as Restated
3,		Stock issued for cash			-				800				800
3,		Stock issued for debt			-				15,256				15,256
3,		Settlement of Debt			-				491				491
4,		Proceeds from options and warrants			-				7,200				7,200
		Total common stock par value outstanding August 31, 2025			19,768				23,747				43,515
					Additional Paid in Capital $				Change				Additional Paid in Capital $ as Restated
3,		Stock issued for cash			-				199,200				199,200
3,		Stock issued for debt			-				1,510,321				1,510,321
3,		Settlement of Debt			-				294,297				294,297
4,		Option expense			-				457,922				457,922
		Total additional paid in capital August 31, 2025			2,782,203				2,461,740				5,243,943
					Stock Subscriptions $				Change				Stock Subscriptions $ as Restated
3,		Stock issued for cash			200,000				(200,000	)			-
3,		Stock issued for debt			1,800,000				(1,800,000	)			-
3,		Settlement of Debt			1,643,397				(1,643,397	)			-
4,		Proceeds from options and warrants			-				-
		Total stock subscriptions August 31, 2025			3,651,222				(3,651,222	)			-
					Accumulated Other Comprehensive Income $				Change				Accumulated Other Comprehensive Income $ as Restated
8		Net comprehensive income			228				2,730				2,958
		Total accumulated other comprehensive income August 31, 2025			59,653				2,730				62,383
					Accumulated deficit				Change				Accumulated deficit $ as Restated
2, 4, 5,		Net loss			(875,134	)			129,926				(745,208	)
		Total accumulated deficit August 31, 2025			(6,085,524	)			129,926				(5,955,598	)
					Total Equity $				Change				Total Equity $ as Restated
1,		Stock subscriptions issued for cash		$	200,000				(200,000	)		$	-
2,		Stock subscriptions issued for services		$	1,800,000				(1,800,000	)		$	-
5,		Stock subscriptions issued for debt		$	1,643,397				(1,643,397	)		$	-
3,		Stock issued for cash			-				200,000				200,000
3,		Stock issued for debt			-				1,525,577				1,525,577
5,		Settlement of Debt			-				286,963				286,963
4, 6,		Proceeds from options and warrants			-				7,200				7,200
6,		Option expense			-				457,922				457,922
4, 5, 6, 8		Net comprehensive loss			(874,906	)			132,656				(742,250	)
		Total shareholder deficit August 31, 2025		$	427,322				(1,033,079	)		$	(605,757	)

Statement of Cash Flow changes for the three months ended August 31, 2025					10-Q/A as filed				Change				10-Q/A2
			Net loss		$	(875,134	)			129,926			$	(745,208	)
2,			Subscriptions issued for services			780,000				(780,000	)			-
5,			Loss on settlement of debt							169,143				169,143
4, 6,			Option expense							457,922				457,922
4, 6,			Share issued for services							7,200				7,200
7,			Accounts payable			(12,329	)			15,809				3,480
			Net cash flows used by operating activities			(74,801	)			-				(74,801	)
8,			Proceeds from related party loans			-				4,130				4,130
8,			Repayments on related party loans			(1,406	)			(6,712	)			(8,118	)
			Net cash flows from financing activities			204,858				(2,582	)			202,276
8, 9,			Foreign currency change			228				2,582				2,810

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 three months ended August 31, 2025, the Company incurred a net comprehensive loss of ($742,250) and used cash in operating activities of $74,801, and as of August 31, 2025, had a stockholders' equity of ($605,757) and an accumulated deficit of ($5,955,598). 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 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 =l.37515 Canadian Dollars (August 31, 2025), 1.00 USD Dollar =0.7272 GBP, and 1.00 US Dollar =l.3605 Canadian Dollars (May 31, 2025), 1.00 USD Dollar =0.593 GBP;

ii)

income and expenses are translated at average exchange rates for the three months ended August 31, 2025, of 1.00 US Dollar = 1.3721 Canadian Dollars and 1.00 US Dollar

= 0.72882 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 three months ended August 31, 2025 and August 31, 2024, were $2,958 and $0, respectively.

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 l) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

□

Level l - 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 l 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 August 31, 2025, and May 31, 2024. 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 500,000 shares of potential common stock equivalents in outstanding options during the periods ended August 31, 2025, 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 three months ended August 31, 2025, and August 31, 2024, we incurred $307,605 and $0, 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.

During the three and three months ended August 31, 2025, and 2024, the Company had revenue of $0 and $0, respectively.

Stock-Based Compensation

Our stock-based compensation awards principally consist of stock options and warrants. The Company follows Section 718-55-10 of the FASB Accounting Standards Codification, which requires we determine the fair value of the equity-based awards.

We estimate the fair value of stock options and warrants to purchase our common stock using the Black-Scholes-Merton ("Black-Scholes") option-pricing model. The Black-Scholes option pricing model considers several variables and assumptions in estimating the fair value of stock-based awards. These variables include:

	The per share fair value of the underlying common stock;
	The exercise price;
	The risk-free interest rate
	The expected term
	The expected stock price volatility over the expected term; and
	The expected annual dividend yield.

The fair value of these options was measured using the Black-Scholes valuation model at the grant date. The table above sets forth the assumptions for Black-Scholes valuation model on the respective reporting date. For options granted to employes, we use a plain vanilla Black-Scholes calculation to calculate fair value with standard market inputs.The warrants are subject to service-based or time-based vesting terms. For such awards, our accounting requires that we evaluate the probability of achievement of the vesting terms. Management concluded that the achievement of a vesting term is probable, we recognize compensation cost for that award according to the vesting schedule.

We classify stock-based compensation expense in our consolidated statements of operations and comprehensive loss in the same manner in which the award recipient's salary and related costs are classified or in which the award recipient's service payments are classified. In future periods, we expect stock-based compensation expenses to increase, due in part to our existing unrecognized stock-based compensation expense and as we grant additional stock-based awards to continue to attract and retain employees.

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.

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.

Segment reporting required by ASU 2023-07 Segment Reporting-Improvements to Reportable Segment Disclosures are included in these statements. There have been no other recent accounting pronouncements or changes in accounting pronouncements during the period ended August 31, 2025, that are of significance or potential significance to the Company. See note 10 below.

Note 4 - Property and equipment, net

The Company has recorded the following property and equipment:

		August 31, 2025		May 31, 2025
Software acquisition costs	$	-	$	102,151
Less accumulated amortization		-		(102,151)
Net property and equipment	$	-	$	-

Amortization expense recorded for three months ended August 31, 2025, and 2024 were $0 and $0, respectively.

Note 5 - Short term loans payable

Short-term loans payable consists of a number of loans from friends of the Company. The loans are normally on open accounts bearing no interest. On August 31, 2025, and May 31, 2025, the short-term loans totaled $89,784 and $201,330, respectively.

As of August 31, 2025, the Board of Directors negotiated with several loan holders and agreed to convert several loans to PreAxia common stock. Three holders agreed to convert $117,821 in debt and subscriptions to 471,314 shares of common stock. Management determined the fair value of the common stock at $0.25, following a sale of stock in August. A loss of $164,968 was recognized on the settlement of the debt.

Note 6 - Related Party Transactions

On June 30, 2025, Pavel Bondarev became a director, shareholder, and a related party.

Accruals and other liabilities

Both Tom Zapatinas and Pavel Bondarev have employment agreements with the Company.

As of August 31, 2025, and May 31, 2025, accruals and other current liabilities - related party included accrued officer compensation due to Tom Zapatinas (Chief Executive Officer and a Director of the Company) totaling $420,000 and $400,000, respectively, and related payroll taxes and deductions totaling $68,725 and $68,725, respectively. As of August 31, 2025, and May 31, 2025, accruals and other current liabilities - related party included accrued officer compensation due to Pavel Bondarev (CEO of Zane Inc and Director of PreAxia) totaling $12,661 and $0, respectively. The accrued officers' compensation is non-interest bearing and payable or convertible on demand.

During the three months ended August 31, 2025, and 2024, Tom Zapatinas, earned $20,000 and $0, respectively, for consulting services provided to the Company and Pavel Bondarev earned $20,000 and $0, respectively for contracted management services provided to the Company.

Related party loans

As of August 31, 2025, and May 31, 2025, the related party loans included advances payable due to Tom Zapatinas totaled $97,708 and $1,627,421, respectively. During the three months ended August 31, 2025, and 2024, Tom Zapatinas, received $8,118 from the Company and provided $4,130 respectively, in cash. The related party loans also included two loans outlined below:

As of August 31, 2025, and May 31, 2025, promissory note - related party of $0 and $466,817, respectively, due to Tom Zapatinas. On June 30, 2025, the Note was converted to a stock subscription at $0.10 per for 4,668,170 shares

As of August 31, 2025, and May 31, 2025, convertible note payable - related party of $0 and $1,058,760, respectively, due to Tom Zapatinas. On June 30, 2025, the Note was converted to a stock subscription at $0.10 per for 10,587,600 shares. Intercompany loans have been eliminated.

Note 7 - Stockholders' Deficit

Common Stock

Common Stock, par value of $0.001 per share; 75,000,000 shares authorized: 43,514,782 and 19,767,698 shares issued and outstanding on August 31, 2025, and May 31, 2025, respectively. Holders of Common Stock have one vote per share of Common Stock held.

On June 30, 2025, the Company issued warrants for 16,500,000 shares of common stock to acquire an exclusive contract with a vendor. Management used a Black-Scholes model to value the award at $778,800. Forty percent (40%) of the stock was issued as of the grant date and sixty percent (60%) of the stock is being held in escrow to be released over the next three (3) years. The unissued value of the management contract is being amortized to expenses over three (3) years. The Contractor immediately exercised warrant for 6,600,000 shares of common stock. The agreement allowed cashless exercise, so the company recorded stock-based compensation of $6,600 on the issuance of the warrants

Also on June 30, 2025, 1,500,000 warrants for common stock were issued to contractors for past services. The consulting contracts were valued at $70,800. Forty percent (40%) stock was issued as of the grant date as consulting expenses and sixty percent (60%) of the stock is being held in escrow to be released over the next three (3) years. The unissued value of the consulting contract is being amortized to expenses over three (3) years. The Contractors immediately exercised warrant for 600,000 shares of common stock. The agreement allowed cashless exercise, so the company recorded stock-based compensation of $600 on the issuance of the warrants.

On August 18, 2025, the Company sold 800,000 shares to common stock for $200,000 cash. Management determined the sale of stock was an arm's length transaction and established a new market price of $0.25 per share. No gain or loss was recognized on this transaction.

As of August 31, 2025, the Board of Directors negotiated with several loan holders and agreed to convert several loans to PreAxia common stock. Three holders agreed to convert 117,820 in debt to 471,314 shares of common stock. Based on the new market price at the date of conversion, the company recognized $164,968 of loss on the conversion

As of August 31, 2026, and 2025, the Company had a liability for a stock subscription of $0 and $7,825. On August 31, 2025, the Company issued 20,000 shares for the stock subscription according to the original agreement. The Company recognized $4,175 loss on the issuance.

2025 Stock Plan

In connection with the ramp up of operations with the signing of the management contract with INARE, the Company adopted the 2025 Stock Plan, which provides for the issuance of stock options, restricted stock awards, RSUs and other stock-based compensation awards to employees, directors, officers, consultants or others who provide services to the Company. The specific terms of such awards are to be established by the board of directors or a committee thereof. As of July 1, 2025, 2,900,000 shares of the Company's Common Stock are available for the grant of awards under the 2025 Stock Plan.

A summary of activity in the Company's stock-option grants for the quarter ended August 31, 2025, is as follows:

Stock Options		Vesting				Number				Value
Outstanding at May 31, 2025			-				-				-
Issued			500,000				500,000				299,900
Forfeited							-				-
Vested			200,000								24,159
Exercised			-				-
Outstanding at August 31, 2025							500,000			$	275,741
Unvested at August 31, 2025			300,000

Option inputs
The per share fair value of the underlying common stock;		$0.22 - $0.60
The exercise price;		$	0.10
The risk-free interest rate			11	%
The expected term			5 yrs
The expected stock price volatility over the expected term			63.20	%
The expected annual dividend yield.			0

The option expense recorded as contract labor costs for the quarter ended August 31, 2025, and 2024, was $118,082 and $0, respectively.

Unrecognized compensation expense related to options was $167,158 as of August 31, 2025 and is expected to be recognized over a weighted-average period of 2.8 years.

Management Contract

As of July 1, 2025, the Company committed to issue to a certain vendor, contingent with the signing of an exclusive management contract to provide management services, director services, and access to talent and intellectual property of the vendor and its associates, an aggregate of 16,500,000 shares of the Common Stock. The award has a vesting schedule for release of the stock to the vendor over three years, 40% down and 20% at the end of each contract year end. As the vendor has full rights and benefits of the stock, except for the right to sell, the Company issued all 6,600,000 shares of the stock to the vendor and is holding 9,900,000 shares of stock in escrow.

Because the vesting of these awards was subject to only a service condition and the vendor provided a board member, subsidiary president, planning in the form of milestones, budgets, subcontractors and talent, the Company initially determined that vesting of the awards was probable and recognized the stock-based compensation expense for these awards on July 1, 2025. Within 60 days of signing, the performance condition was satisfied, and vesting of the award is only subject to a service condition, the full value of the contract as of the grant, based on a Black-Scholes pricing model value $778,800 at the grant date 40% of the award value was recognized as management expense on July 1, 2025. The unissued value of the management contract is being amortized to expenses over three (3) years.

During the quarters ended August 31, 2025, and 2024, the Company recognized $311,520 and $0, respectively, of the contract value as a management fee.

Consulting contracts

As of July 1, 2025, the Company committed to issue to certain consultants an aggregate of 1,500,000 shares of the Common Stock for past services. The award has a vesting schedule for release of the stock to the vendor over three years, 40% down and 20% at the end of each contract year end. As the consultants have full rights and benefits of the stock, except for the right to sell, the Company issued 600,000 shares of the stock to the consultants and is holding 900,000 shares of stock in escrow.

Because the vesting of these awards was subject to only a timed release and services have already been provided, the Company initially determined that vesting of the awards was probable and recognized the 40% of the stock-based compensation expense for these awards on July 1, 2025. The full value of the contracts as of the grant, based on the market value of the stock award was $43,800 at the grant date. , The unissued value of the consulting contract is being amortized to expenses over three (3) years.

During the quarters ended August 31, 2025 and 2024, the Company recognized $28,290 and $0, respectively, in consulting expenses.

A summary of activity in the Company's warrants for the quarter ended August 31, 2025, is as follows:

Warrants Outstanding at May 31, 2025

Issued		Name			Shares
		Management contract			16,500,000
		Consulting contracts			1,500,000
					18,000,000
Forfeited					-
Vested and exercised
		Management contract			6,600,000
		Consulting contracts			600,000
					7,200,000
Non-vested at August 31, 2025					10,800,000

Unrecognized compensation expense related to the warrants was $509,760 and $0 as of August 31, 2025, and May 31, 2025, respectively, and is expected to be recognized over a weighted-average period of 2.8 years.

Note 8 - 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.

Zane Inc CA started leasing an executive suite on a month-to-month basis in September 2025.

Note 9 - Segment reporting

FASB ASU 2023-07 requires all public entities to expand segment reporting on all significant segments and to report significant segment expenses when the chief operating decision maker uses this information to make decisions about resource allocation. The president and CEO of PreAxia was the chief operating decision maker during fiscal years ended, May 31, 2025, and the quarter ended August 31, 2025

In July the Company focus switched to personal financial management software development. During the quarter ended August 31, 2025, management determined the Company is only operating in one segment but two locations. There are no revenues, and the expenses are split between a Canadian office and the US Holding company. Corporate expenses associated with public reporting, finance, and management are associated with the US holding Company. Software development and office costs are associated with the Canadian subsidiaries. The basic information on segments is as follows:

Assets		August 31, 2025				May 31, 2025
Canadian assets		$	43,946			$	-
US assets			86,337				-
		$	130,283			$	-

Operations			August 31, 2025				August 31, 2024
Canadian revenues		$	-			$	-
Canadian expenses			(475,487	)			(2,329	)
Net			(475,487	)			(2,329	)
US revenues			-				-
US expenses			(100,578	)			(147,567	)
US Other income			(169,143	)			70,114
Net			(269,721	)			(77,453	)
Combined net loss		$	(745,208	)		$	(79,782	)

Note 10 - Subsequent Events

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

On September 11, 2025, the Company created a wholly owned subsidiary in Nevada, named Zane Inc US. This subsidiary will develop and market the personal financial management products and perfect the health care payment processing services. Zane Inc had no operations before October 20, 2025.

Zane Inc CA started leasing an executive suite on a month-to-month basis in September 2025.

On December 10, 2025, the Company sold 800,000 shares of common stock for $200,000 cash.

On December 10, 2025, the Company granted 50,000 options to a contractor.

On March 6, 2026, a contractor exercised options for 200,000 shares of common stock. The option allowed cashless exercise and $20,000 was recorded as stock-based compensation.

On March 9, 2026, the Company sold 200,000 shares of common stock for $50,000 in cash.

On April 7, 2026, a related party lent the Company $25,000 for a convertible note with 10% interest and convertible at $0.25 at the demand of the holder.

On June 10, 2026, the company issued convertible notes for $100,000 and $150,000 in cash to two related parties.

On July 1, 2026, 3,600,000 warrants were exercised for common stock to contractors for $3,600 in services.

On July 15, 2026, the Company issued a convertible note for $50,000 cash. to a related party.

On August 26, 2026, the Company issued a convertible note for $50,000 in cash to a related party.

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, 2024, 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. 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. On October 21, 2025, the Company was domiciles in Florida.

The business objective of the Company is the development, distribution, marketing and sale of health care payment processing services and personal financial management applications, websites, and products. The Company's products are in the development stage.

The operations of the Company were formerly 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 still manages the Calgary office activity.

On May 23, 2025, the Company created a wholly owned subsidiary in Alberta Canada, named Zane Inc. CA. This subsidiary is developing and plans to market personal financial management products and perfect the health care payment processing services. Zane Inc had no operations before June 30, 2025.

On September 11, 2025, the Company created a wholly owned subsidiary in Nevada, named Zane Inc US. This subsidiary will market the personal financial management products and the health care payment processing services in the United States. Zane Inc US had no operations before October 20, 2025.

General Overview

PreAxia Health Care Payment Solutions Inc, is a holding company dedicated to developing and marketing health care and personal financial management application to retail and wholesale markets.

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.

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.

Our new subsidiaries, Zane Inc CA and Zane US Inc., will concentrate on developing and marketing personal financial tools. Zane's product philosophy centers on a fundamental belief: everyone deserves access to genius level financial guidance. Zane is building the financial operating system for Generation Z - an AI-powered super-app that not only tracks money but also actively and automatically manages it. We're creating what we call a "personal AI-banker in your pocket" - a revolutionary platform that combines the entire world's banking and financial knowledge with an intimate understanding of each user's unique situation, goals, and needs.

The platform centers around three breakthrough innovations:

1.

High-Interest Super Account (HISA): Eliminates boundaries between checking, savings, and investment accounts, allowing every dollar to grow at a 10% APY average while remaining instantly accessible

2.

Smart Debit Card: Enforces daily spending limits based on predictive budgeting, making overspending physically impossible while building credit automatically

3.

MoneyNet: A distributed financial network monitors all user accounts across every institution, automatically orchestrating fund movements to prevent overdrafts, maximize returns, and minimize fees

The Company will then concentrate on incorporating the comprehensive suite of solutions and services directed at the emerging health payment market into personal financial management solutions and marketing the combined solutions to retail and wholesale customers.

Plan of Operation

Over the next twelve months, we plan to:

(a)

Raise additional capital to execute our business plans;

(b)

Fill the positions of senior management sales, administrative and engineering positions.

(c)

Develop state-of-the-art personal financial management applications for younger professionals.

(a)

Penetrate markets in Canada, the United States and worldwide, with comprehensive financial and health care products and services; and

(b)

Build up a network of strategic alliances with several types of large employers, health insurance companies, governments and other alliances in various vertical markets.

Liquidity and Capital Resources

As of August 31, 2025, PreAxia's cash balance was $130,285 compared to $0 as of May 31, 2025. Our Company will be required to raise capital to fund our operations. PreAxia had a working capital deficit of ($605,757) as of August 31, 2025, compared with a working capital deficit of ($2,341,169) as of May 31, 2025.

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.

Working Capital
		August 31, 2025				May 31, 2025
Current Assets		$	130,285			$
Current Liabilities			(736,042	)			(2,341,169	)
Working Capital Deficit		$	(605,757	)		$	(2,341,169	)

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.

The decrease in our working capital deficit of $1,735,412 was primarily due to the conversion of debt, the sale of stock for cash, and stock issued for services.

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 August 31, 2025, and August 31, 2024

The following summary of our results of operations should be read in conjunction with our condensed consolidated financial statements for the three months ended August 31, 2025, and 2024.

For the three months ended August 31, 2025, and 2024

Our operating results for the three months ended August 31, 2025, compared to the three months ended August 31, 2024, are described below:

Revenue

During the three months ended August 31, 2025, and 2024, the Company had revenue of $0 and $0, respectively.

Expenses

Our total expenses for the three months ended August 31, 2025, were $576,134 compared to $4,627 for the three months ended August 31, 2024. The increase in total expenses of ($571,507) for the three months ended August 31, 2025, is due to an increase in consulting fees of $28.920, an increase of $307,605 in research and development, an increase of $192,360 in management costs, an increase of $29,309 in professional fees, and an increase in office and administration fees of $13,313.

Consulting Fees

During each of the three months ended August 31, 2025, two contractors received $28,920 in consulting fees, compared to $0 consulting fees paid during the three months ended August 31, 2024.

Research and Development

Research and development expenses during the three months ended August 31, 2025, increased by $307,605 to $307,605, as compared to $0 during the three months ended August 31, 2024. Most of the increase was due to contractors and office expenses allocated to developing new software.

Management and labor

During each of the three months ended August 31, 2025, and August 31, 2024, Tom Zapatinas, the Chief Executive Officer and Director of the Company, earned $20,000 and $0, respectively, for consulting services provided to the Company, which is included in accounts payable and accrued liabilities - related party.

Pavel Bondarez, a director and CEO of Zane Inc CA and Zane Inc US, earned $20,000 for management services and recognized two months of restricted stock award equaling $311,520. His compensation was split between management and research and development during the three months ended August 31, 2025. He received $0 in the three months ended August 31, 2024.

Professional Fees

Professional fees during the three months ended August 31, 2025, increased by $29,309 to $31,809, as compared to $2,500 during the three months ended August 31, 2024.

Interest Expense

Interest- net consists of $82 of interest income and ($13) of interest expense the three months ended August 31, 2025, and $0 for the three months ended August 31, 2024. Accounts payable, accrued liabilities - related party loans, and short-term loans are non-interest bearing.

Loss on settlement

The Company recorded a loss on settlement of ($169,143) during the three months ended August 31, 2025, compared to a gain of $0 gain during the three months ended August 31, 2024. The loss on settlement in 2025 was due to the conversion of debt at below market prices for the stock.

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 August 31, 2025, 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.

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 August 31, 2025, 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 lA. RISK FACTORS

Not applicable to smaller reporting companies.

ITEM-1C. CYBERSECURITY

One of the key functions of our Board of Directors is informed oversight of our risk management process, including risks arising from cybersecurity threats. Our Chief Financial Officer and Chief Operating Officer are primarily responsible for assessing and managing material risks from cybersecurity threats on a day-to-day basis. Our Board of Directors is responsible for monitoring and assessing strategic risk exposure, and our management team is additionally responsible for the day-to-day management of the material risks we face. Our Board of Directors administers its cybersecurity risk oversight function directly as a whole. We additionally may utilize the assistance of a third-party service provider, an information technology solutions service for purposes of broadly managing our cybersecurity risks.

We have not maintained any current customer lists or sensitive data, but will create the procedures to assess, identify, and manage material risks from cybersecurity threats in the upcoming year.

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.

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)
10.1	Share Exchange Agreement dated May 31, 2005 between Kimberley Coonfer, Caribbean Overseas Investments Ltd., Sun World Partners Inc. and Tiempo De Mexico Ltd. (Incorporated by reference to the Exhibits filed with the Form SB-2 filed with the SEC on March 16, 2006)
10.2	Letter of Intent dated February 22, 2008 between Sun World Partners Inc. and H Pay Card Ltd. (Incorporated by reference to the Exhibits filed with the Form 8-K on March 5, 2008)
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

* Filed herewith.

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.

September 11, 2026

	/s/ Tom Zapatinas
	Tom Zapatinas, President, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer)