NetPay International, Inc. (the “Company” or "NetPay") was incorporated under the laws of the State of Nevada on March 31, 2016. The Company issued 5,500,000 shares of its common stock to its founder in exchange for organizational services incurred upon incorporation. Upon incorporation, the Company acquired the hair-care formula that its business had been based upon. The Company had been engaged in the business of developing, manufacturing, marketing and selling of an all-natural organic products collection. The Company sold the rights to certain intellectual property that was the main ingredient in the Company’s hair care collection to a vendor.

On August 29, 2018, the Company experienced a change in control (“Change in Control”). With the Change in Control, certain liabilities of the Company were forgiven and/or paid for on behalf of the Company by its founder and former president and chief executive officer. Total liabilities at the time approximated $225,000. On August 29, 2018, the board of directors nominated Mr. Alon Elbaz to the board and appointed him Chief Executive Officer. Mr. Elbaz serves in the same capacity for the Company’s majority shareholder, Compunet Holdings AA Ltd. It is the intent of Compunet Holdings to expand its operations to the United States and the North American continent with the Company as its primary operational entity.

On September 17, 2018, the board of directors and a majority of the shareholders of record approved the name change from Allegro Beauty Products, Inc. to NetPay International, Inc. On or about October 16, 2018, the Company mailed an Information Statement to its shareholders. The holders of a majority of the outstanding shares of the Company’s common stock executed a written consent in lieu of a special meeting approving the amendment to the Articles of Incorporation to change the name to NetPay International, Inc. The effective date of the name change was November 7, 2018. The Company is rebranding itself as NetPay.

On December 5, 2018, the Company launched its Delaware subsidiary, NetPay (USA), Inc., to act as an independent sales organization (ISO) to seek opportunities related to the provision to merchants of merchant's credit card acquiring clearing, and other value-added services. The services provided by NetPay (USA), Inc. will be different than the payment facilitation business, which will be the core business of the Company. The Company owns ninety percent (90%) of NetPay (USA), with the remaining ten percent (10%) owned by two experienced executives in the credit card services industry.

Recent Developments

On August 11, 2020, Ms. Limor Mamon, a director of the Company and the Company's Chief Financial Officer, resigned from the Board of Directors and from her position as CFO of the Company.

On March 26, 2020, the Company entered into an Affiliate Partner Agreement with Network Merchants, LLC, pursuant to which the Company may access and use Network Merchants’ FACe Platform for payment facilitation processing. The FACe platform is a unified commerce platform that operates on a sub-merchant basis such that each merchant is not required to obtain its own Merchant Identification Number (MID).

On March 24, 2020, the Company entered into a ProFac Agreement with ProPay, Inc., pursuant to which the Company may (a) refer its clients to ProPay to participate in ProPay’s transaction processing program in relation to financial services cards issued by Mastercard International Incorporated, Visa U.S.A. Inc., American Express Travel Related Services Company, Inc., and DFS Services LLC, and (b) incorporate ProPay’s transaction processing program into the Company’s own service offering. ProPay will deduct its fees from the proceeds received from referred clients and pay the residual amounts to the Company. This agreement allows the Company to utilize ProPay’s services to clear card transactions through MasterCard, Visa and other networks.

In March 2020, the World Health Organization (“WHO”) declared the outbreak of the novel coronavirus (“COVID-19”) as a pandemic, which has spread globally and created significant volatility, uncertainty and economic disruption in many countries in which we operate, including the United States, Mexico, Canada, Singapore, Malaysia, China, and India. National, state and local governments in these countries have implemented a variety of measures in response to the COVID-19 pandemic that have the effect of restricting or limiting, among other activities, the operations of certain businesses. However, our business products and services have generally not been classified as critical, essential or life-sustaining businesses exempted from these government shutdowns and despite this we have been able to continue our business operations at a reduced capacity. Please see the discussion in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as in Item 1A "Risk Factors" for further information regarding the COVID-19 pandemic declared by the WHO in March 2020.

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Plan of Operations

As of August 14, 2020, we have one employee, our President and Chief Executive Officer, Mr. Alon Elbaz, and a consultant who is based out of New York City in order to expand our business operations. NetPay is a development stage company and has little to no financial resources besides existing shareholder loans. We have not established or attempted to establish a source of equity or debt financing.

As of March 31, 2020, we had assets which consist of cash ($619,338) (which mostly consists of $500,000 certificate of deposit as collateral for our letter of credit with the financial institution) and prepaid expenses ($30,207). We expect to increase our assets over the next year as we further develop our payment processing business with capital investment in fixed assets such as computers and management information systems to improve and secure services and product offering. In order to fund our business activities over the next 12 months, we will attempt to secure sufficient and satisfactory funding from our majority shareholder, Compunet Holdings AA Ltd., an international Israeli-based company, from Mr. Elbaz, as well as others. There can be no assurance that we will be able to obtain any funds or that such funds will be offered on terms acceptable to us.

Netpay EUR Limited (“Netpay Europe”) is a payment service provider owned by Compunet Holdings AA Ltd. and managed by Mr. Elbaz. Founded in 1998, Netpay Europe built a successful credit card clearing service based on state-of-the-art technologies. Netpay Europe evolved over the years to better satisfy and understand the needs of e-commerce and the payment services industry. Netpay Europe acts as a one-stop-shop for e-commerce merchant’s payments needs by providing secure and innovative payment solutions and enhanced payment services. Netpay Europe’s goal is to support and protect the interests of its customers by providing industry leading technology combined with premier-quality service. Netpay Europe provides secure and safe credit card clearing (payment) services for years. These services are easy to use and include innovative and strategic payment solutions. Based on Netpay Europe’s technology, transactions are completed speedily and simply, with stringent data-security standards. Netpay Europe’s tech-team has been working for more than twenty years to improve systems for merchant payment and servicing needs, with a key focus on risk management. Netpay Europe offers businesses a complete turn-key solution, and acts as a one-stop-shop for all merchants’ payment servicing needs.

In order to achieve Netpay Europe’s global business goals, Compunet Holdings AA Ltd., a company controlled by Mr. Alon Elbaz (Netpay Europe’s founder and Chief Executive Officer), acquired the Company, a publicly traded and reporting company in the United States of America. Under the guidance of Mr. Elbaz and Netpay Europe, the Company believes that it will expand its services through its recently acquired payment facilitator license (or PayFac) and other license agreements. This allows the Company to become a sub-merchant account for a merchant service provider in order to provide payment processing services to merchant clients, particularly in the e-commerce marketplace. A payment facilitator license will allow the Company to offer merchant services on a sub-merchant platform. Allowing sub-merchants to be on-boarded under the master of the Company, which will be sponsored by a bank or financial institution.

Put simply, the Company has set out to build a payment facilitator model for streamlining merchant services within the U.S. as well as partnering with Netpay Europe’s well-established international business. As a payment facilitator, the Company will eliminate the need for individual merchants to establish a traditional merchant account. In the payment facilitator model, a software provider registers with an acquirer to provide payment services to sub-merchants that utilize its software. By registering as a payment facilitator with an acquirer, the software provider acts as a “master” merchant account provider, including the onboarding of sub-merchants under its own account in order to facilitate payment transactions for the sub-merchants.

In this model there are three main parties involved: The acquirer, the payment facilitator (the Company), and the sub-merchant. The acquirer provides overall structure for operations while the Company acts as the go-between with the acquirer and the sub-merchants. The sub-merchants will operate underneath the Company. The acquirer works with the Company to get these sub-merchants running and servicing their payment needs. This includes application administration and the underwriting process, working out pricing agreements and facilitating payment technology integration. The acquirer is responsible for monitoring the Company’s compliance with operating regulations and ensuring due diligence when the Company on-boards (signs-on) sub-merchants. The Company will undergo a comprehensive process in order to register with an acquirer, including integrating the payment technology and infrastructure needed. The Company will assume all risk and liability for its sub-merchants. Industry standards are that sub-merchants sign up with payment facilitators in order to be able to accept payments from their customers.

The greatest benefit of the Company’s payment facilitator model will be the ability to simplify and streamline the merchant account enrollment and onboarding process by offering a complete, white-label payment processing solution. This is expected to lead to more control over the processing experience, higher merchant conversion rates, and the opportunity to earn more revenue from credit card processing for the sub-merchant. This process has been implemented by Netpay Europe and its management in Europe, and Netpay Europe intends on providing that knowledge and service to the US market through the Company.

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The greatest challenge to the Company’s payment facilitator model will be the level of responsibility the Company will be required to assume with the acquirer. This includes greater liability for fraud, chargebacks, and data breaches, and the ability to meet compliance mandates and ever-changing regulatory rules.

On December 5, 2018, we launched a new Delaware subsidiary, NetPay (USA), Inc., to act as an independent sales organization (ISO) to seek opportunities related to the provision of merchant's credit card acquiring clearing service, and other value-added services. These services to be provided by NetPay (USA), Inc. will be different than the payment facilitation business, which is our core business. To date, Netpay (USA), Inc. has entered into a binding agreement with eData Financial Group LLC, located in Florida, for the resale of merchant's credit card acquiring and processing services, and a memorandum of understanding with Blue Parasol Group LLC for the provision of similar services to that of eData Financial Group and NetPay (USA). We currently own ninety percent (90%) of NetPay (USA), with the remaining ten percent (10%) owned by two highly qualified experienced executives in the credit card payment services industry. We believe that with their expertise and guidance NetPay (USA) is well-positioned to become an industry leader within the North American market and worldwide. A brief description of the services to be provided by NetPay (USA) is set forth below:

·NetPay (USA) will act as an independent sales organization (ISO). 

·NetPay (USA) will seek merchants that will obtain services primarily from us, such as - clearing, providing credit, and other value-added services. 

·Merchant underwriting. 

·Managing and monitoring merchant activity, and irregularity resolution. 

·Margin sharing between the Company and NetPay (USA). 

·Onboard interface with merchants, e-commerce support, and high-risk merchant assessment. 

We anticipate that our new business will begin to generate sales of core services before calendar year 2020 ends, although no assurances can be given that we will achieve this goal. The launch of our new business will depend on our ability to obtain sufficient financing.

In order to further our plan of operations, we will need to secure additional financing of approximately $3,000,000. If we are not successful in securing this capital, we will not be able to proceed with our business plan as contemplated. Our plan of operations will require us to establish additional sources of capital to fulfill our operational requirements if we do not obtain sufficient financing from our majority shareholder. These funds will go towards building out the US operations to ultimately generate sales.

Alongside the development of our business activities, we will continue to pursue additional sources of financing and attempt to establish a public market for our common stock, which may then allow us to seek financing from sources that would not be available to us if we were private. Accordingly, we believe that we may be able to negotiate from increased strength in pursuing financing or agreements with vendors, manufacturers, and capital sources. We cannot predict the likelihood or timing of any success from our intended actions.

Our goal as stated above is for us to become a leading payment/service facilitator in the United States. We believe that our key alliance with Netpay Europe will assist us in achieving that goal. We currently have no other sources of or commitment for financing beyond a verbal commitment from our majority shareholder and its management personnel. There are no assurances we will obtain sufficient financing or resources from others or enter into beneficial agreements with others in our industry. We believe that we must raise additional capital or debt financing in order to fully execute and implement our business strategy and develop our proposed services.

Necessity of Additional Financing

Management believes that if it is successful in raising the necessary funds, of which there can be no assurances, we may generate revenue within the next 12 months. While we hope that we will be successful in these efforts, additional equity or debt financing may not be available to us on acceptable terms or at all, and thus we would fail to satisfy our future cash requirements. We received approximately $837,000 in loans from our majority shareholder. We expect this amount to increase over the next year as our plan of operations is rolled out.

Securing additional financing is critical to implementation of our timeline. If and when we obtain the required additional financing, we should be able to take our business plan through the necessary steps. In the event we are unable to raise any additional funds we will not be able to pursue our business plan, and we may fail entirely. We have no committed sources of financing besides the verbal commitment from our majority shareholder to provide us with financing in the short term until we are able to obtain reliable sources of financing.

Intellectual Property

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Government Regulation and Industry Standards

Government regulation may affect key aspects of our business, in the U.S. as well as internationally. In addition, we plan to register with Visa, Mastercard, American Express and the Discover Network as a service provider, and we believe the Company will be subject to their respective rules which will subject us to a variety of fines or penalties that may be levied by the card networks for certain acts or omissions. Set forth below is a brief summary of some of the significant laws and regulations that we believe will apply to us. These descriptions are not exhaustive and are qualified in their entirety by reference to the particular statutory or regulatory provision, which provisions are subject to change.

Banking Laws and Regulations.

Because we intend to provide electronic payment processing services to banks and other financial institutions, we will be subject to examination by the Federal Financial Institutions Examination Council (“FFIEC”), an interagency body comprised primarily of federal banking regulators, and also subject to examination by the various state financial regulatory agencies which supervise and regulate the financial institutions for which we provide electronic payment processing and other payment related services. The FFIEC examines large data processors in order to identify and mitigate risks associated with systemically significant service providers, including specifically the risks they may pose to the banking industry.

Money Transmission, Sale of Checks and Payment Instrument Laws and Regulations.

Our business will be subject to money transfer and payment instrument licensing regulations. We plan to obtain the required licenses to operate as a money transmitter, seller of checks and/or provider of payment instruments in at least 48 states and the District of Columbia. The remaining U.S. jurisdictions do not currently regulate money transmission.

In the states where we will be licensed as a money transmitter, seller of checks and/or provider of payment instruments, our Consumer Solutions business will be subject to direct supervision and regulation by the relevant state banking departments or similar agencies charged with enforcement of the relevant statutes and we will be required to comply with various requirements, such as those related to the maintenance of a certain level of net worth, surety bonding, selection and oversight of our authorized agents, maintaining permissible investments in an amount equal to or in excess of our outstanding payment obligations, recordkeeping and reporting and disclosures to consumers. Our Consumer Solutions business will also be subject to periodic examinations by the relevant licensing authorities, which include reviews of our compliance practices, policies and procedures, financial position and related records, various agreements that we have with our issuing banks, distributors and other third parties, privacy and data security policies and procedures and other matters related to our business.

Privacy, Information Security, and Other Business Practices Regulation.

Aspects of our business are also subject, directly or indirectly, to business and trade practices regulation in the United States, the European Union and elsewhere. For example, in the United States, we and our financial institution clients are subject, respectively, to the Federal Trade Commission’s and the federal banking regulators’ privacy and information safeguarding requirements under the Gramm-Leach-Bliley Act. These requirements limit the manner in which personal information may be collected, stored, used and disclosed. The Federal Trade Commission’s information safeguarding rules require us to develop, implement and maintain a written, comprehensive information security program containing safeguards that are appropriate for our size and complexity, the nature and scope of our activities and the sensitivity of any customer information at issue. Our financial institution clients in the United States are subject to similar requirements under the guidelines issued by the federal banking regulators. As part of their compliance with these requirements, each of our U.S. financial institution clients is expected to have a program in place for responding to unauthorized access to, or use of, customer information that could result in substantial harm or inconvenience to customers and they are also responsible for our compliance efforts as a major service provider. In many jurisdictions, including every U.S. State, consumers must be notified in the event of a data breach, and such notification requirements continue to increase in scope and cost. The changing privacy laws in the United States, Europe and elsewhere, including the adoption by the European Union of the General Data Protection Regulation, which became effective in May 2018, and the California Consumer Privacy Act, which became effective in January 2020, created new individual privacy rights and imposed increased obligations on companies handling personal data. In addition, multiple states, Congress and regulators outside the United States are considering similar laws or regulations which could create new individual privacy rights and impose increased obligations on companies handling personal data. Information concerning our cybersecurity risks and how a cybersecurity incident could materially affect our business are discussed under “Risk Factors” in Part I, Item IA of this annual report under the caption “Security breaches of our systems, including as a result of cyber-attacks, may damage client relations, our reputation and expose us to financial liability.” 

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Anti-money Laundering and Counter Terrorist Regulation.

The Financial Crimes Enforcement Network of the U.S. Department of the Treasury (“FinCEN”) has issued a rule regarding the applicability of the Bank Secrecy Act's anti-money laundering provisions to “prepaid access programs.” This rulemaking clarifies the anti-money laundering obligations for entities, such as our Consumer Solutions business and its distributors, engaged in the provision and sale of prepaid access devices like prepaid cards. We plan to register with FinCEN as a money services business. This registration will result in our having direct responsibility to maintain and implement an anti-money laundering compliance program.

We are subject to anti-corruption laws and regulations, including the U.S. Foreign Corrupt Practices Act, the UK Bribery Act and other laws that generally prohibit the making or offering of improper payments to foreign government officials and political figures for the purpose of obtaining or retaining business or to gain an unfair business advantage. In addition, as are all U.S. persons, we are also subject to regulations imposed by the U.S. Department of the Treasury Office of Foreign Assets Control (“OFAC”) which prohibit or restrict financial and other transactions with specified countries and designated individuals and entities such as terrorists and narcotics traffickers. We plan to implement procedures and controls designed to protect against having direct business dealings with such prohibited countries, individuals or entities. We also plan to implement procedures and controls designed to ensure that our processing clients will not have direct business dealings with such prohibited countries, individuals or entities.

The Dodd-Frank Act.

We and the rest of the financial services industry continue to experience increased legislative and regulatory scrutiny, including the enactment of additional legislative and regulatory initiatives such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Reform Act”) in 2010. The Reform Act has resulted in significant structural and other changes to the regulation of the financial services industry. The Reform Act, among other things, provides for the regulation and oversight by the Board of Governors of the Federal Reserve System (“Board”) of debit interchange fees that are typically paid by acquirers and charged or received by a payment card network for the purpose of compensating an issuer for its involvement in an electronic debit transaction. In accordance with the Reform Act, the Board capped the maximum U.S. debit interchange fee assessed for debit cards issued by large financial institutions at twenty-one cents per transaction plus five basis points, before applying a fraud prevention adjustment of up to an additional one cent. The cap on debit interchange fees has not had a significant negative impact on our business.

The Reform Act also created the Consumer Financial Protection Bureau (“CFPB”) with responsibility for regulating consumer financial products and services and enforcing most federal consumer protection laws in the area of financial services, including consumer credit and the prepaid card industry. For example, the CFPB has promulgated a new rule regarding prepaid financial products, which, among other things, will establish new disclosure requirements specific to prepaid accounts, eliminate certain fees that may currently be imposed on prepaid accounts, and make it more difficult for a prepaid card provider such as our Consumer Solutions segment to offer courtesy overdraft protection on prepaid accounts. The rule went in effect on April 1, 2019. Similarly, other future actions of the CFPB may make payment card or product transactions generally less attractive to card issuers, acquirers, consumers and merchants, and thus negatively impact our business. In addition, the Reform Act created a Financial Stability Oversight Council that has the authority to determine whether nonbank financial companies such as ours would be supervised by the Board because they are systemically important to the U.S. financial system. To date, the Financial Stability Oversight Council does not appear to be focused on regulating entities such as ours. However, any such future designation would result in increased regulatory burdens on our business.

State Wage Payment Laws and Regulations.

The use of payroll card programs as a means for an employer to remit wages or other compensation to its employees or independent contractors is governed by state labor laws related to wage payments, which laws are subject to change. Part of our future solutions segment may include payroll cards and convenience checks designed to allow employers to comply with applicable state wage and hour laws. Most states permit the use of payroll cards as a method of paying wages to employees, either through statutory provisions allowing such use or, in the absence of specific statutory guidance, the adoption by state labor departments of formal or informal policies allowing for their use. Nearly every state allowing payroll cards places certain requirements and/or restrictions on their use as a wage payment method, the most common of which involve obtaining the prior written consent of the employee, limitations on fees and disclosure requirements.

Telephone Consumer Protection Act.

We will be subject to the Federal Telephone Consumer Protection Act and various state laws to the extent we place telephone calls and short message service (“SMS”) messages to clients and consumers. The Telephone Consumer Protection Act regulates certain telephone calls and SMS messages placed using automatic telephone dialing systems or artificial or prerecorded voices.

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Escheat Laws.

We will be subject to unclaimed or abandoned property laws in the United States and in foreign countries that require us to transfer to certain government authorities the unclaimed property of others that we hold when that property has been unclaimed for a certain period of time. Moreover, we will be subject to audit by state regulatory authorities with regard to our escheatment practices.

United Kingdom's Exit from the European Union​

On June 23, 2016, a referendum was held on the United Kingdom’s membership in the European Union, the outcome of which was a vote in favor of leaving the European Union. Effective as of January 31, 2020, the United Kingdom formally withdrew its membership from the European Union. The United Kingdom’s decision to leave the European Union has created an uncertain political and economic environment in the United Kingdom and across other European Union member states. The political and economic instability created by the United Kingdom’s decision to leave the European Union has caused and may continue to cause volatility in global financial markets and the value of the British Pound or other currencies, including the Euro. In addition, this uncertainty may cause some of our customers or potential customers to curtail or delay spending. Depending on the market and regulatory effects of the United Kingdom’s exit from the European Union, it is possible that there may be adverse practical or operational implications on our business. For example, the UK Data Protection Act, which substantially implements the GDPR, became effective in May 2018. It remains unclear, however, how United Kingdom data protection laws or regulations will develop and be interpreted in the medium- to longer-term and how data transfers to and from the United Kingdom will be regulated and how those regulations may differ from those in the European Union. Further, the United Kingdom’s exit from the European Union may create increased compliance costs and an uncertain regulatory.

Management believes that Brexit-related issues will not affect our financial statement recognition, measurement or disclosure items, such as inventory write-downs, long-lived asset impairments, collectability of receivables, assumptions underlying fair value measurements, foreign currency matters, hedge accounting or income taxes for the Company and its consolidated financial statements.

Employees

There is no written employment contract or employment agreement with Mr. Elbaz, our CEO, . We are not actively seeking employees, additional independent contractors or consultants through formal contracts or agreements. This may change in the event that we are able to secure adequate financing through equity or loans. We believe that Mr. Elbaz will continue to provide his services at no cost to the Company. We have no current plans to compensate Mr. Elbaz for her efforts. We intend to use independent contractors and other professional organizations to assist Mr. Elbaz in our business growth, development and roll-out on an as needed basis pending our financial resources. Even then, we may continue to principally rely upon Mr. Elbaz as much as we can.

Property

Our corporate office address is 2 Hamanofim Street, Herzliya Pituach 46722562 Israel. This space is provided to us by our majority shareholder Compunet Holdings AA Ltd. at no cost. The space is located in Netpay Europe’s business location. Netpay Europe incurs no incremental costs as a result of our using this space. There is currently no written or oral agreement between Compunet Holdings AA Ltd. and the Company for utilizing this space. In addition, on February 27, 2019, we entered into an agreement with WeWork for the lease of non-exclusive access to office space in New York, NY on a month-to-month basis, commencing March 1, 2019, for a fee of $700 per month. Our US mailing and office address is 880 3rd Avenue, New York, NY 10022. These offices are available to our employee, Mr. Elbaz, as well as our outside consultant to use 24/7 while in the United States. Our website is www.netpayin.com

Litigation

We are not party to any pending, or to our knowledge, threatened litigation of any type.

WHERE YOU CAN GET ADDITIONAL INFORMATION

We are required to file annual, quarterly and current reports, and other information with the Securities and Exchange Commission (the “SEC”). You may read and copy our reports or other filings made with the SEC at the SEC’s Public Reference Room, located at 100 F Street, N.E., Washington, DC 20549. You can obtain information on the operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also access these reports and other filings electronically on the SEC’s web site, www.sec.gov.

We are not currently required to deliver an annual report to our security holders and do not expect to do so for the foreseeable future.

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ITEM 1A. RISK FACTORS 

The following risk factors should be considered in connection with an evaluation of our business as described in Plan of Operations:

In addition to other information in this Report, the following risk factors should be carefully considered in evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial condition. As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements. Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business, result of operations, liquidity and financial condition. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, if and when a trading market for our securities is established, the trading price of our securities could decline, and you may lose all or part of your investment.

THE SECURITIES ISSUED BY THE COMPANY INVOLVE A HIGH DEGREE OF RISK AND, THEREFORE, SHOULD BE CONSIDERED EXTREMELY SPECULATIVE. THEY SHOULD NOT BE PURCHASED BY PERSONS WHO CANNOT AFFORD THE POSSIBILITY OF THE LOSS OF THE ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD READ ALL OF THE COMPANY’S FILINGS, INCLUDING ALL EXHIBITS, AND CAREFULLY CONSIDER, AMONG OTHER FACTORS THE FOLLOWING RISK FACTORS.

Risks Related to the Business

1. NetPay has virtually no financial resources.  

NetPay is an early stage company and has virtually no financial resources. As of March 31, 2020 and March 31, 2019, we had a negative working capital balance of $253,991 and $28,624, respectively, and stockholders’ deficit of $253,991 and $28,624, respectively. The Notes to our financial statements as of and for the year ended March 31, 2020 explain that notwithstanding that the Company has not generated any revenue and has no committed sources of capital or financing besides the $840,000 in funding from the Company’s majority shareholder, in reliance on the Company’s majority shareholder’s verbal commitment to fund the execution of the Company’s new business plan, the Company’s financial statements have been prepared assuming that the Company has alleviated its going concern issue. No assurances can be given that we will generate sufficient revenue or obtain necessary financing to continue as a going concern in future years.

2. NetPay is and will continue to be completely dependent on the services of our executive officer, Mr. Elbaz; the loss of his services may cause our business operations to cease. 

Our operations and business strategy are completely dependent upon the knowledge and business connections of Mr. Elbaz. He is under no contractual obligation to remain employed by us. If he should choose to leave us for any reason or if he becomes ill and is unable to work for an extended period of time before we have hired additional personnel or a replacement, our operations may likely fail. Even if we are able to find additional personnel or a replacement, it is uncertain whether that person(s) could continue to develop our business along the lines described in this report. The interruption of services of Mr. Elbaz will have a material adverse effect on the Company's future operations, potential profits and development, if suitable replacements are not promptly obtained. We most likely will fail without the services of Mr. Elbaz or an appropriate replacement(s).

3. No assurance can be given that NetPay will be able to attract and retain qualified employees and consultants. 

The Company's success depends, in part, upon its ability to attract and retain talented personnel to work with Mr. Elbaz and grow the business. No assurance can be given that the Company will be able to 1) retain our employees that we currently have; and 2) attract and retain such personnel necessary for the development and success of the Company’s business. Correspondingly, no assurance can be given that any key personnel would accept compensation other than cash for their services in the future.

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4. Security breaches of our systems, including as a result of cyber-attacks, may damage client relations, our reputation as well as expose NetPay to financial liability.  

In order to provide our intended services, we will process, store and transmit sensitive business information and personal consumer information which may include credit and debit card numbers, names and addresses, social security numbers, driver’s license numbers, bank account numbers and other types of personal information or sensitive business information. Under the card network rules, various federal, state and international laws, and client contracts, we are responsible for information provided to us by financial institutions, merchants, ISOs and others and for our failure to protect this information. Some of this information is also processed and stored by financial institutions, merchants and other entities, as well as third-party service providers to whom we outsource certain functions and other agents, which we refer to collectively as our associated third parties. The confidentiality of the sensitive business information and personal consumer information that resides on our systems and our associated third parties’ systems is critical to our business. While we maintain controls and procedures designed to protect the sensitive data we collect, we cannot be certain that these measures will be successful or sufficient to counter all current and emerging information security threats that we face on a daily basis.

Certain of our computer systems and certain of our associated third parties’ computer systems have been, and could be in the future, breached, and our data protection measures have not and may not in the future prevent unauthorized access. Information security risks for us and our competitors have substantially increased in recent years in part due to the proliferation of new technologies and the increased sophistication, resources and activities of hackers, terrorists, activists, organized crime, and other external parties, including hostile nation-state actors. The techniques used by these bad actors to breach and otherwise obtain unauthorized access, disable or degrade service, sabotage systems or utilize payment systems in an effort to perpetrate financial fraud change frequently and are often difficult to detect. Although we are not aware of any material breach of our computer systems or of our associated third parties’ computer systems that have had a material impact on us or caused us to incur material losses relating to cyber-attacks or other information security breaches to date, we and others in our industry are regularly the subject of sophisticated and numerous attempts by bad actors to gain unauthorized access to these computer systems and data or to obtain, change or destroy confidential data (including personal consumer information of individuals) through a variety of means, including, but not limited to, computer viruses, malware and phishing. In the future, these attacks may result in unauthorized individuals obtaining access to our confidential information or confidential information provided to us by financial institutions, merchants, ISOs and others, or otherwise accessing, damaging, or disrupting our computer systems or infrastructure. In addition, we expect bad actors to utilize increasingly sophisticated technology and techniques in the future to exploit vulnerabilities that may, or may not, be generally known. As a result, we must continuously develop and enhance our controls, processes, and practices designed to protect our computer systems, software, data and networks from attack, damage, or unauthorized access. This continuous development and enhancement will require us to expend additional resources, including to investigate and remediate significant information security vulnerabilities detected. Despite our investments in security measures, we are unable to assure that any security measures will be effective and will not be subject to breach, or system or human error. In addition, insider or employee cyber and security threats also pose a risk to all large companies, including ours. If one or more of the events described above were to occur, our computer systems or our associated third parties’ computer systems could be breached and the information stored there could be accessed, publicly disclosed, lost, changed, controlled or stolen. While we maintain insurance coverage that may cover certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses.

We could also be subject to liability for claims relating to misuse of personal consumer information, such as unauthorized marketing purposes and violation of data privacy laws. We cannot provide assurance that the contractual requirements related to security and privacy that we impose on our associated third parties’ who have access to customer data and personal consumer information will be followed or will be adequate to prevent the unauthorized use or disclosure of data. In addition, we have obligations under certain agreements to take certain protective measures to ensure the confidentiality of personal consumer information.

A breach of our systems processing or storing sensitive business information or personal consumer information may cause those systems to be unavailable; cause our clients and consumers to lose confidence in our services or deter the use of electronic payments generally; significantly harm our reputation; distract our management; delay future product rollouts; expose us to financial liability (as a result of uninsured liabilities, potential breaches of contract, litigation and penalties and fines from regulators and the card networks); result in the loss of our financial institution sponsorships; increase our risk of regulatory scrutiny; adversely affect our continued card network registration; cause us to modify our protective measures which would increase our expenses; and increase our expenses from containment and remediation costs, all of which could have a material adverse and long-term effect on our revenues, profitability, financial condition and future growth. Further, if we were to be removed from networks’ lists of PCI DSS compliant service providers, our existing clients may cease utilizing our services, and prospective clients may delay or choose not to consider us for their processing needs. In addition, card networks could refuse to allow us to process through their networks.

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5. We operate in a highly competitive market and therefore face a high risk of business failure or at the very least a competitive disadvantage. 

We are aware of many competitors to our planned business operations. Our success in this industry will be largely dependent on our ability to distinguish and establish a need for our services. Our ability to compete effectively in this industry also depends on our ability to be competitive in pricing, customer service, and results.

6. Because we will be dependent on advertising and marketing firms, we will be at a competitive disadvantage to companies having greater resources to pay larger fees or to companies with dedicated in-house departments for these purposes.  

We will need to be strategic in placing quality advertisements that will reach the maximum number of target customers, all while staying within our limited budget. We do not know if we will be able to obtain optimal advertising placement within our projected budget, which will likely be limited, or even find advertising placement for that matter. We may be pushed out of advertising opportunities typically reserved for companies with larger budgets and greater financial resources.

There is no guarantee that we will have adequate financial resources to retain advertising or marketing firms. As a result, we may be left with attempting to market our services ourselves or using advertising and marketing firms with less experience but who charge less than those firms with more valuable connections and resources. Even if we are able to retain advertising or marketing firms, the ability to obtain advertising slots in various forms of media (online, print, radio, television, etc.) will be entirely reliant upon the expertise and capabilities of the advertising and/or marketing firms that we hire, as well as our available budget to initiate such marketing campaigns, which again may be limited.

7. We have had no sales to date and can give no assurance that there will ever be any sales in the future.  

The Company is in the process of launching its new business, and accordingly we have not yet generated any revenues. There is no guarantee that we will ever develop commercially viable products and services. To become profitable, we will have to successfully develop, market and sell our products and services. There can be no assurance that our business development efforts will be completed or successful, that we will be able to market and sell our products and services at an acceptable cost and acceptable quality, that our products and services can be successfully marketed, or that there will be a market with customers willing to purchases our products and services. We currently do not expect to receive revenues from the sale of products and services until sometime before calendar year 2020 ends, if ever.

8. There is no guarantee that we will obtain a payment facilitator license or that our services will gain sufficient acceptance by customers and users in the e-commerce marketplace.  

We have not yet obtained a license to operate in the United States as a payment facilitator and have not yet commercially launched the offering of our services. There can be no assurance that we will obtain a payment facilitator license or that our services will gain broad acceptance among prospective customers or users.

Unless we can achieve a sufficient following of customers and merchants who will purchase and use our services, we will not operate profitably and may have to cease our operations. No assurance can be given that our services will achieve sufficient acceptance in the e-commerce marketplace.

We believe that our business is subject to material regulation under the laws of the United States and the states in which we plan to market our services. Laws and regulations often differ materially between states, and within individual states, and such laws and regulations are subject to amendment and reinterpretation by the agencies charged with their enforcement. If we become subject to any licensing or regulatory requirements, the failure to comply with any such requirements could lead to a revocation, suspension or loss of licensing status, termination of contracts and legal and administrative enforcement actions. We cannot be sure that a review of our current and proposed operations will not result in a determination that could materially and adversely affect our business, results of operations and financial condition. Moreover, regulatory requirements are subject to change from time to time and may in the future become more restrictive, thereby making compliance more difficult or expensive or otherwise affecting or restricting our ability to conduct our business as now conducted or proposed to be conducted.

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10. We became subject to the periodic reporting requirements of the Exchange Act. This requires us to incur audit fees and legal fees in connection with the preparation of such periodic reports. These additional costs could reduce or eliminate our ability to earn a profit. 

We are required to file periodic reports with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder. In order to comply with these requirements, our independent registered public accounting firm will perform a review of our quarterly (or interim) financial statements and perform an audit of our annual financial statements. Our legal counsel will need to review and assist our management in the preparation of these periodic reports. The costs charged by professionals for such services cannot be accurately predicted because factors such as the number and types of financial transactions that we engage in and the complexity of our financial reports cannot be determined at this time. These factors will determine the amount of time to be spent by our auditors and attorney performing these functions. We currently estimate annual maintenance and compliance costs of the periodic reporting to be upwards of $75,000 per year. Such costs will obviously be an additional expense to our operations and thus will have a negative effect on our ability to meet overhead requirements and ultimately earn a profit.

We may be exposed to increased costs and potential risks resulting from new requirements related to the periodic reporting. If we fail to provide reliable financial reports or prevent the occurrence of fraud, our business and operating results could be significantly harmed, investors would lose confidence in our reported financial information, and certainly the trading price of our common stock, if a market ever develops, could drop significantly. However, for as long as we remain an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, we may be able to take advantage of certain exemptions from some reporting requirements that are applicable to other public companies that are not “emerging growth companies”. These included, but are not limited to, not being required to comply with auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure regarding executive compensation in periodic reports and proxy statements, and exemption from the requirement of holding annual nonbinding advisory votes on executive compensation and the seeking of nonbinding stockholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting exemptions under the JOBS Act until we are no longer an “emerging growth company.”

We intend to remain an “emerging growth company” for up to five years (the maximum amount of time in which we can be an “emerging growth company”), although we may lose our status as an “emerging growth company” if: (a) we have more than $1.0 billion in annual revenue; (b) more than $700 million in market value of our common stock is held by non-affiliates; or (c) we issue more than $1.0 billion of non-convertible debt during a three-year period.

11. Our internal controls may become inadequate as we grow, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officers and put into effect by the board of directors, management and other personnel, 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 and includes those policies and procedures that:

·pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;  

·provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and  

·provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.  

With growth or an unmanageable increase in our business objectives, our internal control over financial reporting may become inadequate or ineffective, which could cause our financial reports to be unreliable and lead to financial misinformation being disseminated to the public. Investors relying on this misinformation may make an uninformed investment decisions with regards to an investment in our common stock. As a result, if investors are harmed from relying on the misleading financial information, we may be subject to significant legal liability. Failure to achieve and maintain an effective internal control environment could cause us to face regulatory action and also cause investors to lose confidence in our reported financial information, either of which could have a material adverse effect on the Company’s business, financial condition, results of operations and future business prospects.

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In order to mitigate the risks associated with maintaining internal controls, if and when the Company grows, we will rely on the use of outside professionals to assist us in maintaining these internal controls. We will seek to engage qualified professionals on an independent contractor basis to assist in reviewing and recording transactions. When and if finances permit, we will hire an experienced financial professional to oversee our reporting and control functions.

12. The costs of being a public company could result in the inability to continue as a going concern. 

As a public company, we will have to comply with numerous financial reporting and legal requirements, including those pertaining to audits and internal control system over our financial reporting. The costs of complying with being a public company could be significant and may preclude us from seeking financing or equity investment on acceptable terms. We estimate these costs to be $75,000 per year and may be even higher if our business volume and financial activity increases. Our estimate of costs does not include the necessary compliance, documentation and reporting requirements for Section 404 of the Sarbanes-Oxley Act of 2002 as we will not be subject to the full reporting requirements of Section 404 until we exceed $75 million in market capitalization. Our costs also stand to increase once we lose our “emerging growth company” status as defined in the JOBS Act, which allows us to take advantage of exemptions that should result in decreased compliance costs. If revenues are insufficient or non-existent, and/or we cannot support the additional costs associated with being a public company, we may be unable to satisfy these costs in the normal course of business which would result in our inability to continue as a going concern.

13. Having only one director limits our ability to establish effective independent corporate governance procedures and gives our CEO unbridled control. 

We have only one director who also serves as our Chief Executive Officer. Accordingly, we cannot establish board committees comprised of independent members to oversee functions like compensation or audit issues. In addition, a vote of the board members is decided in favor of our chairman (our sole director), which gives her significant control over all corporate issues and business decisions.

Until we have a larger board of directors that would include independent members, if ever, there will be limited oversight of our CEO’s decisions and activities and little ability for minority shareholders to challenge or reverse those activities and decisions, even if they are not in the best interests of our minority shareholders.

14. An occurrence of an uncontrollable event such as the COVID-19 pandemic is likely to negatively affect, and has to date negatively affected, our operations. 

The occurrence of an uncontrollable event such as the COVID-19 pandemic has negatively affected our operations. A pandemic typically results in social distancing, travel bans and quarantine, and the effects of, and response to, the COVID-19 pandemic has limited access to our facilities, customers, management, support staff and professional advisors. These, in turn, have not only negatively impacted our operations, financial condition and demand for our services, but our overall ability to react timely to mitigate the impact of this event. We anticipate that our first quarter and second quarter 2020 financial results, at a minimum, will be significantly negatively affected by COVID-19; however, the full effect on our business and operations is currently unknown.

Risks Related to Our Common Stock

15. We are an “emerging growth company” and we cannot be certain whether the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors. 

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding an annual non-binding advisory vote on executive compensation and nonbinding stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we are able to rely on these exemptions. If some investors find our common stock less attractive because of this, there may be a less active trading market for our common stock causing our stock price to be more volatile.

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Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we chose to “opt out” of such extended transition period, and as a result, we comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

16. We may not be able to raise sufficient financing or resources to develop, manufacture and market our services. 

We currently have no firm commitments for any funds. If we are unable to raise sufficient additional financing or other financial resources to develop, and market our services, our business will fail and investors will lose their entire investment.

17. A small number of persons purchased our shares in our initial public offering, and they may risk losing their investment without a market to develop for our shares. 

The sale of a small number of shares in our initial public offering (2,750,000 shares) increases the likelihood of no market ever developing for our shares. Since there was a limited number of shareholders that purchased our shares (30) we may be unable to create a public market for our shares. Without a public market for our shares, the limited number of shares sold and their investors may find the market highly illiquid or unable to be sold. In such an event, it is likely that our shareholder’s entire investment in our common stock may be lost.

18. Shareholders may be diluted significantly through our efforts to obtain financing and satisfy obligations through the issuance of additional shares of our common stock. 

We have no committed source of financing. Wherever possible, our board of directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock. Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized (100,000,000) but unissued (91,750,000) shares. In addition, if a significant and active trading market develops for our common stock, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market and again without action or vote of the shareholders. These actions will certainly result in dilution of the ownership interests of existing shareholders and further dilute common stock book value; this dilution may be material.

19. Shareholder interests may be undercut because we can issue shares of our common stock to individuals or entities that support existing management thereby enhancing existing management’s ability to maintain control of NetPay. 

Our board of directors, has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued common shares. Such issuances may be issued to parties or entities committed to supporting existing management and the interests of existing management may not be the same as the interests of other shareholders. Our ability to issue shares without shareholder approval serves to enhance existing management’s ability to maintain control of the Company.

20. Our Articles of Incorporation provide for indemnification of officers and directors at our expense and limit their liability, which may result in a major cost to us and hurt shareholder interests because corporate resources may be expended for the benefit of officers and/or directors.  

Our Articles of Incorporation in Article XI provide for indemnification as follows: “No director or officer of the Corporation shall be personally liable to the Corporation or any of its stockholders for damages for breach of fiduciary duty as a director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer: (i) for acts or omissions which involve intentional misconduct, fraud or knowing violation of law; or (ii) the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of an Article by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation of the personal liability of a director or officer of the Corporation for acts or omissions prior to such repeal or modification.”

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We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with our activities, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question of whether indemnification by us is against public policy as expressed in the Securities Act and we will abide by the final adjudication of such issue. The legal process relating to this issue if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares, if such a market ever develops.

21. Currently, there is no established public market for our securities, and there can be no assurances that any established public market will ever develop or that our common stock will be quoted for trading and, even if quoted, it is likely to be subject to significant price fluctuations. 

Prior to the date of this report, there has not been any established trading market for our common stock, and there is currently no established public market whatsoever for our securities. A market maker filed an application with FINRA on our behalf and was approved to quote the shares of our common stock on the OTC market. While the market maker’s application has been accepted by FINRA there can be no assurance as to whether:

(i)any market for our shares will develop; 

(ii)the prices at which our common stock will trade; or 

(iii)the extent to which investor interest in us will lead to the development of an active, liquid trading market. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors.  

While we are able to have our shares quoted on the OTC-Pink market, we plan to attempt to have our shares quoted on the OTCQB (the share price quotation service owned by OTC Markets, Inc., the former Pink Sheets). In addition, we are considering applying through a broker-dealer and its clearing firm to become eligible with the Depository Trust Company (“DTC”) to permit our shares to trade electronically. It is commonly believed if an issuer is not “DTC-eligible,” then its shares cannot be electronically transferred between brokerage accounts, which, based on the realities of the marketplace as it exists today (especially the OTC market and the OTCQB), means that shares of a company will not be traded (technically the shares can be traded manually between accounts, but this takes days and is not a realistic option for companies relying on broker dealers for stock transactions - like all companies on the OTC market and the OTCQB).. We firmly believe that it is a necessity to process trades on the OTC market and the OTCQB if we are going to trade with any volume.

In addition to the foregoing, our common stock is unlikely to be followed by market analysts, and there may be few institutions acting as market makers for our common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock. Until our common stock is fully distributed, and an orderly market develops in our common stock, if ever, the price at which it trades is likely to fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for shares of our common stock, developments affecting our business, including the impact of the factors referred to elsewhere, investor perception of the Company’s common stock and operations as well as general economic and market conditions. No assurances can be given that an orderly or liquid market will ever develop.

Because of the anticipated low price of the securities, many brokerage firms may not be willing to effect transactions in these securities. Purchasers of our securities should be aware that any market that develops in our stock will be subject to the penny stock restrictions.

22. Any market that develops in shares of our common stock will be subject to the penny stock regulations and restrictions pertaining to low priced stocks that will create a lack of liquidity and make trading difficult or impossible. 

The trading of our securities, if any, will be in the over-the-counter market which is commonly referred to as the OTC market or the OTCQB as maintained by FINRA and OTC Market Groups, respectively. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of, our securities.

Rule 3a51-1 of the Exchange Act establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. It is likely that our shares will be considered to be penny stocks for the immediately foreseeable future. This classification severely and adversely affects any market liquidity for our common stock.

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For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form:

·the basis on which the broker or dealer made the suitability determination, and 

·that the broker or dealer received a signed, written agreement from the investor prior to the transaction. 

Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Additionally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if and when our securities become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding decrease in the price of our securities. Our shares, in all probability, will be subject to such penny stock rules for the foreseeable future and our shareholders will, in all likelihood, find it difficult to sell their securities.

23. The market for penny stocks has experienced numerous frauds and abuses that could adversely impact our investors. 

Our management believes that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:

·Control of the market for a security by one or a few broker-dealers that are often related to the promoter or issuer;  

·Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;  

·“Boiler room” practices involving high pressure sales tactics and unrealistic price projections by sales persons;  

·Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and  

·Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses. 

24. Any trading market that may develop may be restricted by virtue of state securities “Blue Sky” laws that prohibit trading absent compliance with individual state laws. These restrictions may make it difficult or impossible to sell shares in those states. 

There is currently no established market for our common stock, and there can be no assurance that any established market will develop. Transfer of our common stock may be restricted under the securities or securities regulations laws promulgated by various states and foreign jurisdictions, commonly referred to as “Blue Sky” laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, such shareholders and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue sky law restrictions on the ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions prohibit the secondary trading of our common stock. We currently do not intend to and may not be able to qualify securities for resale in at least 17 states which do not offer manual exemptions (or may offer manual exemptions but may not offer one to us if we are considered to be a shell company at the time of application) and require shares to be qualified before they can be resold by our shareholders. Accordingly, investors should consider the secondary market for our securities to be a limited one.

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25. Our board of directors has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stockholders and with the ability to affect adversely stockholder voting power and perpetuate their control over us. 

Our Articles of Incorporation allows the board of directors to issue shares of preferred stock without any vote or further action by other stockholders. Our board of directors has the authority: (a) to fix and determine the relative rights and preferences of preferred stock; and (b) to issue preferred stock without further stockholder approval, including large blocks of preferred stock. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to common stockholders and the right to redeem the shares, together with a premium, before the redemption of any common stock.

26. The ability of our CEO to control our business may limit or eliminate minority shareholders’ ability to influence corporate affairs. 

Our CEO, Mr. Elbaz, beneficially owns approximately 75% of our outstanding common stock. Because of his beneficial stock ownership, our CEO continues in the position to elect our board of directors, decide all matters requiring stockholder approval and determine our policies. The interests of our CEO may differ from the interests of other shareholders with respect to the issuance of shares, business transactions with or sales to other companies, selection of officers and directors and other business decisions. Minority shareholders would have no way of overriding decisions made by our CEO. This level of control may also have an adverse impact on the market value of our shares because our CEO may institute or undertake transactions, policies or programs that may result in losses, may not take any steps to increase our visibility in the financial community and/or may sell sufficient numbers of shares to significantly decrease our price per share.

27. Most of our presently issued and outstanding common shares are restricted under Rule 144 of the Securities Act, as amended. When the restriction on any or all of these shares is lifted, and the shares are sold in the open market, the price of our common stock could be adversely affected. 

All of the shares of common stock (5,577,082 shares) owned by our majority shareholder are “restricted securities” as defined under Rule 144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. Rule 144 provides in essence that a person who is not an affiliate and has held restricted securities for a prescribed period of at least six (6) months if purchased from a reporting issuer or twelve (12) months if purchased from a non-reporting company, may, under certain conditions, sell all or any of their shares without volume limitation, in brokerage transactions. Affiliates, however, may not sell shares in excess of 1% of the Company’s outstanding common stock each three months. There is no limit on the amount of restricted securities that may be sold by a non-affiliate (i.e., a stockholder who has not been an officer, director or control person for at least 90 consecutive days) after the restricted securities have been held by the owner for the aforementioned prescribed period of time. A sale under amended Rule 144 or under any other exemption from the Act, if available, or pursuant to registration of common stock shares of present stockholders, may have a depressive effect on the price of the common stock in any market that may develop.

28. We do not expect to pay cash dividends in the foreseeable future.  

We have never paid cash dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our board of directors will consider. Since we do not anticipate paying cash dividends on our common stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.

29. Because we are not subject to rules requiring the adoption of certain corporate governance measures, our stockholders have limited protection against interested director transactions, conflicts of interest and similar matters.  

The Sarbanes-Oxley Act of 2002, as well as amendments proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.

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None of our directors is an independent director and therefore we do not currently have independent audit or compensation committees. As a result, our director has the ability, among other things, to determine his own level of compensation. Until we comply with prescribed corporate governance measures, regardless of whether such compliance is required, the absence of corporate governance standards may leave our stockholders without protection against interested director transactions, conflicts of interest, if any, and similar matters. As such, investors may be reluctant to provide us with the funds necessary to expand our operations.

We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management. The enactment of the Sarbanes-Oxley Act of 2002 resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk may make it more costly or deter qualified individuals from accepting these roles. Some of these corporate governance measures have been metered by the JOBS Act of 2012.

30. You may have limited access to information regarding our business because our obligations to file periodic reports with the SEC has been automatically suspended. 

As of the effective date of our registration statement, we became subject to certain informational requirements of the Exchange Act, as amended, and were required to file periodic reports (i.e., annual, quarterly and material events) with the SEC which will be immediately available to the public for inspection and copying. However, since the Company has not filed a Form 8-A, our reporting obligations were automatically suspended under Section 15(d) of the Exchange Act. Therefore, we are no longer obligated to file periodic reports with the SEC and your access to our business information may be restricted. In addition, since we are not a reporting issuer, we are not required to furnish proxy statements to security holders, and our directors, officers and principal beneficial owners will not be required to report their beneficial ownership of securities to the SEC pursuant to Section 16 of the Exchange Act.

For all of the foregoing reasons and others set forth herein, an investment in our securities in any market that may develop in the future involves a high degree of risk.

ITEM 1B. UNRESOLVED STAFF COMMENTS 

None.

ITEM 2. PROPERTIES 

Our corporate office address is 2 Hamanofim Street, Herzliya Pituach 46722562 Israel. This space is provided to us by our majority shareholder Compunet Holdings AA Ltd. at no cost. The space is located in Netpay Europe’s business location. Netpay Europe incurs no incremental costs as a result of our using this space. There is currently no written or oral agreement between Compunet Holdings AA Ltd. and the Company for utilizing this space. In addition, on February 27, 2019, we entered into an agreement with WeWork for the lease of non-exclusive access to office space in New York, NY on a month-to-month basis, commencing March 1, 2019, for a fee of $700 per month. Our US mailing and office address is 880 3rd Avenue, New York, NY 10022. These offices are available to our one employee, Mr. Elbaz, as well as our outside consultant to use 24/7 while in the United States. Our website is www.netpayin.com.

ITEM 3. LEGAL PROCEEDINGS 

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interests.

ITEM 4. MINE SAFETY DISCLOSURES 

Not applicable.

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Market for our Common Stock

Our common stock is not listed on any established national stock exchange. Our common stock has been listed on the OTC-Pinksheet market, under the symbol “NTPY” since July 11, 2018. Prior to that date, there was no public trading market for our common stock. While our common stock is quoted on the OTC-Pink Sheet market system, there is a limited public market for the shares of our common stock, and little to no trades of our common stock to date have taken place. Any quotations reflect interdealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. The following is the limited trading/market data that we have for our common stock.

As of August 14, 2020, an aggregate of 8,025,000 shares of our common stock were issued and outstanding and owned by 6 shareholders of record.

Recent Sales of Unregistered Securities

None.

Repurchase of Equity Securities

We have no plans, programs or other arrangements in regard to repurchases of our common stock.

Dividends

We have not since March 31, 2016 (date of inception) declared or paid any cash dividends on our common stock and currently do not anticipate paying such cash dividends. We currently anticipate that we will retain all of our future earnings for use in the development and expansion of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our Board of Directors (the “Board”) and will depend upon our results of operations, financial condition, tax laws and other factors as the Board, in its discretion, deems relevant.

Securities Authorized for Issuance under Equity Compensation Plans

None.

Use of Proceeds from the Sale of Registered Securities

None.

ITEM 6. SELECTED FINANCIAL DATA 

Selected financial data to our financial statements located elsewhere in this Annual Report on Form 10-K is not required for smaller reporting companies under Article 8 Regulation S-X.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

Cautionary Note Regarding Forward-Looking Statements

Certain of the statements contained in this report should be considered forward-looking statements. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about the Company’s plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These forward-looking statements are based on the Company’s current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward-looking statements. These risks and uncertainties include, but are not limited to, those set forth in the Company’s Annual Report on Form 10-K for the year ended March 31, 2019 and for the year ended March 31, 2020, and other risks and uncertainties listed from time to time in the Company’s other filings with the SEC. There may be other factors of which the Company is not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ materially from those discussed. In addition, there is uncertainty about the spread of the COVID-19 virus and the impact it may have on the Company’s operations, the demand for the Company’s products or services, global supply chains and economic activity in general. The Company does not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements other than as required by law. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statement. 

Management’s Discussion and Analysis should be read in conjunction with the financial statements included in this Annual Report on Form 10-K (the “Financial Statements”). The financial statements have been prepared in accordance with generally accepted accounting principles in the United States. Except as otherwise disclosed, all dollar figures included therein and in the following management discussion and analysis are quoted in United States dollars.

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that in addition to the description of historical facts contained herein, this report contains certain forward-looking statements that involve risks and uncertainties as detailed herein and from time to time in the Company’s other filings with the Securities and Exchange Commission and elsewhere. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those, described in the forward-looking statements. These factors include, among others: (a) the Company’s fluctuations in sales and operating results; (b) risks associated with international operations; (c) regulatory, competitive and contractual risks; (d) development risks; (e) the ability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth across the business segments through a combination of enhanced sales force, new products, and customer service; and (f) pending litigation.

The Company

NetPay International, Inc. (the “Company” or "NetPay") was incorporated under the laws of the State of Nevada on March 31, 2016. The Company issued 5,500,000 shares of its common stock to its founder in exchange for organizational services incurred upon incorporation. Upon incorporation, the Company acquired the hair-care formula that its business had been based upon. The Company had been engaged in the business of developing, manufacturing, marketing, and selling of an all-natural organic products collection. The Company sold the rights to certain intellectual property that was the main ingredient in the Company’s hair care collection to a vendor.

On August 29, 2018, the Company experienced a change in control (“Change in Control”). With the Change in Control, certain liabilities of the Company were forgiven and/or paid for on behalf of the Company by its founder and former president and chief executive officer. Total liabilities at the time approximated $225,000. On August 29, 2018, the board of directors nominated Mr. Alon Elbaz to the board and appointed him as the Chief Executive Officer. Mr. Elbaz serves in the same capacity for the Company’s majority shareholder, Compunet Holdings AA Ltd. It is the intent of Compunet Holdings to expand its operations to the United States and the North American continent with the Company as its primary operational entity.

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On September 17, 2018, the board of directors and a majority of the shareholders of record approved the name change from Allegro Beauty Products, Inc. to NetPay International, Inc. On or about October 16, 2018, the Company mailed an Information Statement to its shareholders. The holders of a majority of the outstanding shares of the Company’s common stock executed a written consent in lieu of a special meeting, approving the amendment to the Articles of Incorporation to change the name to NetPay International, Inc. The effective date of the name change was November 7, 2018. The Company is rebranding itself as NetPay.

On December 5, 2018, the Company launched its Delaware subsidiary, NetPay (USA), Inc., to act as an independent sales organization (ISO) to seek opportunities related to the provision to merchants of merchant's credit card acquiring, clearing, and other value-added services. The services provided by NetPay (USA), Inc. will be different from the payment facilitation business, which will be the core business of the Company. The Company owns ninety percent (90%) of NetPay (USA), with the remaining ten percent (10%) owned by two experienced executives in the credit card services industry.

Recent Developments

On August 11, 2020, Ms. Limor Mamon, a director of the Company and the Company's Chief Financial Officer, resigned from the Board of Directors and from her position as the CFO of the Company.

On March 26, 2020, the Company entered into an Affiliate Partner Agreement with Network Merchants, LLC, pursuant to which the Company may access and use Network Merchants’ FACe Platform for payment facilitation processing. The FACe platform is a unified commerce platform that operates on a sub-merchant basis such that each merchant is not required to obtain its own Merchant Identification Number (MID).

On March 24, 2020, the Company entered into a ProFac Agreement with ProPay, Inc., pursuant to which the Company may (a) refer its clients to ProPay to participate in ProPay’s transaction processing program in relation to financial services cards issued by Mastercard International Incorporated, Visa U.S.A. Inc., American Express Travel Related Services Company, Inc., and DFS Services LLC, and (b) incorporate ProPay’s transaction processing program into the Company’s own service offering. ProPay will deduct its fees from the proceeds received from referred clients and pay the residual amounts to the Company. This agreement allows the Company to utilize ProPay’s services to clear card transactions through MasterCard, Visa, and other networks.

On October 16, 2019, the Company entered into a long-term Payment Facilitator Merchant Agreement with WorldPay, LLC, pursuant to which the Company may process an unlimited amount of credit card transactions, subject to the terms of the agreement on fees, chargebacks, and other costs associated with the business and the agreement. According to the agreement, WorldPay will provide sponsorship services to the Company, and the Company will be registered through WorldPay as a Visa third-party agent and a MasterCard service provider. The sponsorship services allow the Company to route transactions under WorldPay’s membership in order to clear card transactions through MasterCard, Visa and other networks.

On October 11, 2019, the Company entered into an agreement with a commercial bank to issue a standby letter of credit on behalf of the Company to WorldPay, LLC for $500,000 allowing the Company to provide payment facilitator merchant services in the continental United States through WorldPay. The standby letter of credit is valid until cancelled or maturity and is collateralized by a revolving credit facility with the bank. The terms of the letter of credit are extended for a term of one year at a time. The Company intends to renew the standby letter of credit for as long as the Company continues to do business with WorldPay in the USA. No amounts have been drawn under the standby letter of credit. The Company funded the initial $500,000 with Bank Leumi, its commercial bank of record. The Company incurred a fee of approximately $12,600 in connection with the standby letter of credit. The Company amortizes the fee associated with the standby letter of credit over 12 months. The Company had a remaining balance associated with that fee at March 31, 2020 of $6,662. This amount is included in prepaid expense and other. The Company recognizes approximately $1,040 per month until maturity.

Impact of the Novel Coronavirus (“COVID-19”)

In March, 2020, the WHO declared the outbreak of COVID-19 as a pandemic, which has spread globally and created significant volatility, uncertainty, and economic disruption in many countries, including the countries in which we operate. National, state, and local governments in these countries have implemented a variety of measures in response to the COVID-19 pandemic that have the effect of restricting or limiting, among other activities, the operations of certain businesses.

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Our business has continued to operate but at a reduced capacity. We believe that the effects of the COVID-19 pandemic did not materially impact our financial results for the fourth quarter of fiscal 2019; however, the effects of the pandemic on our financial results for the first quarter of fiscal 2020 and other future periods may be significant and cannot currently be reasonably estimated due to the significant volatility, uncertainty and economic disruption caused by the pandemic. See Item 1A “Risk Factors” of this Form 10-K for further discussion of the potential impact of the COVID-19 pandemic on our business, results of operations and financial condition. We continue to analyze our cost structure and may implement cost reduction measures as may be necessary due to the on-going economic challenges resulting from the COVID-19 pandemic.

Plan of Operations

As of August 14, 2020, we have one employee, our President and Chief Executive Officer, Mr. Alon Elbaz, and a consultant who is based out of New York City in order to expand our business operations. NetPay is a development stage company and has little to no financial resources besides shareholder loans. We have not established or attempted to establish a source of equity or debt financing.

As of March 31, 2020, we had assets which consist of cash ($619,338) (which mostly consists of $500,000 certificate of deposit as collateral for our letter of credit with the financial institution) and prepaid expenses ($30,207). We expect to increase our assets over the next year as we further develop our payment processing business with capital investment in fixed assets such as computers and management information systems to improve and secure services and product offering. In order to fund our business activities over the next 12 months, we will attempt to secure sufficient and satisfactory funding from our majority shareholder, Compunet Holdings AA Ltd., an international Israeli-based company, from Mr. Elbaz, and from others. There can be no assurance that we will be able to obtain any funds or that such funds will be offered on terms acceptable to us.

Netpay EUR Limited (“Netpay Europe”) is a payment service provider owned by Compunet Holdings AA Ltd. and managed by Mr. Elbaz. Founded in 1998, Netpay Europe built a successful credit card clearing service based on state-of-the-art technologies. Netpay Europe evolved over the years to better satisfy and understand the needs of e-commerce and the payment services industry. Netpay Europe acts as a one-stop-shop for e-commerce merchant’s payments needs by providing secure and innovative payment solutions and enhanced payment services. Netpay Europe’s goal is to support and protect the interests of its customers by providing industry leading technology combined with premier-quality service. Netpay Europe has provided secure and safe credit card clearing (payment) services for years. These services are easy to use and include innovative and strategic payment solutions. Based on Netpay Europe’s technology, transactions are completed speedily and simply, with stringent data-security standards. Netpay Europe’s tech-team has been working for more than twenty years to improve systems for merchant payment and servicing needs, with a key focus on risk management. Netpay Europe offers businesses a complete turn-key solution, and acts as a one-stop-shop for all merchants’ payment servicing needs.

In order to achieve Netpay Europe’s global business goals, Compunet Holdings AA Ltd., a company controlled by Mr. Alon Elbaz (Netpay Europe’s founder and Chief Executive Officer), acquired the Company, a publicly traded and reporting company in the United States of America. Under the guidance of Mr. Elbaz and Netpay Europe, the Company believes that it will be able to establish and acquire a payment facilitator license (or PayFac). This will allow the Company to become a sub-merchant account for a merchant service provider in order to provide payment processing services to merchant clients, particularly in the e-commerce marketplace. A payment facilitator license will allow the Company to offer merchant services on a sub-merchant platform. Allowing sub-merchants to be on-boarded under the master of the Company, which will be sponsored by a bank or financial institution.

Put simply, the Company has set out to build a payment facilitator model for streamlining merchant services within the U.S. as well as partnering with Netpay Europe’s well-established international business. As a payment facilitator, the Company will eliminate the need for individual merchants to establish a traditional merchant account. In the payment facilitator model, a software provider registers with an acquirer to provide payment services to sub-merchants that utilize its software. By registering as a payment facilitator with an acquirer, the software provider acts as a “master” merchant account provider, including the onboarding of sub-merchants under its own account in order to facilitate payment transactions for the sub-merchants.

In this model, there are three main parties involved: The acquirer, the payment facilitator (the Company), and the sub-merchant. The acquirer provides overall structure for operations while the Company acts as the go-between with the acquirer and the sub-merchants. The sub-merchants will operate underneath the Company. The acquirer works with the Company to get these sub-merchants running and servicing their payment needs. This includes application administration and the underwriting process, working out pricing agreements and facilitating payment technology integration. The acquirer is responsible for monitoring the Company’s compliance with operating regulations and ensuring due diligence when the Company on-boards (signs-on) sub-merchants. The Company will undergo a comprehensive process in order to register with an acquirer, including integrating the payment technology and infrastructure needed. The Company will assume all the risk and liability for its sub-merchants. Industry standards are that sub-merchants sign up with payment facilitators in order to be able to accept payments from their customers.

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The greatest benefit of the Company’s payment facilitator model will be the ability to simplify and streamline the merchant account enrollment and onboarding process by offering a complete, white-label payment processing solution. This is expected to lead to more control over the processing experience, higher merchant conversion rates, and the opportunity to earn more revenue from credit card processing for the sub-merchant. This process has been implemented by Netpay Europe and its management in Europe, and Netpay Europe intends on providing that knowledge and service to the US market through the Company.

The greatest challenge to the Company’s payment facilitator model will be the level of responsibility the Company will be required to assume with the acquirer. This includes greater liability for fraud, chargebacks, and data breaches; the resources to build or purchase payments technology; and the ability to meet compliance mandates and ever-changing regulatory rules.

On December 5, 2018, we launched a new Delaware subsidiary, NetPay (USA), Inc., to act as an independent sales organization (ISO) to seek opportunities related to the provision of merchant's credit card acquiring clearing service, and other value-added services. These services to be provided by NetPay (USA), Inc. will be different than the payment facilitation business, which is our core business. To date, Netpay (USA), Inc. has entered into a binding agreement with eData Financial Group LLC, located in Florida, for the resale of merchant's credit card acquiring and processing services, and a memorandum of understanding with Blue Parasol Group LLC for the provision of similar services to that of eData Financial Group and NetPay (USA). We currently own ninety percent (90%) of NetPay (USA), with the remaining ten percent (10%) owned by two highly qualified experienced executives in the credit card payment services industry. We believe that with their expertise and guidance NetPay (USA) is well-positioned to become an industry leader within the North American market and worldwide. A brief description of the services to be provided by NetPay (USA) is set forth below:

·NetPay (USA) will act as an independent sales organization (ISO). 

·NetPay (USA) will seek merchants that will obtain services primarily from us, such as - clearing, providing credit, and other value-added services. 

·Merchant underwriting. 

·Managing and monitoring merchant activity, and irregularity resolution. 

·Margin sharing between the Company and NetPay (USA). 

·Onboard interface with merchants, e-commerce support, and high-risk merchant assessment. 

We anticipate that our new business will begin to generate sales of core services during 2021, although no assurances can be given that we will achieve this goal. The launch of our new business will depend on our ability to obtain sufficient financing.

In order to further our plan of operations, we will need to secure additional financing of approximately $3,000,000. If we are not successful in securing this capital, we will not be able to proceed with our business plan as contemplated. Our plan of operations will require us to establish additional sources of capital to fulfill our operational requirements if we do not obtain sufficient financing from our majority shareholder. These funds will go towards building out the US operations to ultimately generate sales.

Alongside the development of our business activities, we will continue to pursue additional sources of financing and attempt to establish a public market for our common stock, which may then allow us to seek financing from sources that would not be available to us if we were private. Accordingly, we believe that we may be able to negotiate from increased strength in pursuing financing or agreements with vendors, manufacturers, and capital sources. We cannot predict the likelihood or timing of any success from our intended actions.

Our goal as stated above is for us to become a leading payment/service facilitator in the United States. We believe that our key alliance with Netpay Europe will assist us in achieving that goal. We currently have no other sources of or commitment for financing beyond a verbal commitment from our majority shareholder and its management personnel. There are no assurances we will obtain sufficient financing or resources from others or enter into beneficial agreements with others in our industry. We believe that we must raise additional capital or debt financing in order to fully execute and implement our business strategy and develop our proposed services.

Necessity of Additional Financing

Management believes that if it is successful in raising the necessary funds, of which there can be no assurances, we may generate revenue within the next 12 months. While we hope that we will be successful in these efforts, additional equity or debt financing may not be available to us on acceptable terms or at all, and thus we would fail to satisfy our future cash requirements. We received approximately $837,000 in loans from our majority shareholder. We expect this amount to increase over the next year as our plan of operations is rolled out.

Securing additional financing is critical to the implementation of our timeline. If and when we obtain the required additional financing, we should be able to take our business plan through the necessary steps. In the event we are unable to raise any additional funds we will not be able to pursue our business plan, and we may fail entirely. We have no committed sources of financing besides the verbal commitment from our majority shareholder to provide us with financing in the short term until we are able to obtain reliable sources of financing.

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Other

As a corporate policy, we do not intend to incur obligations that we cannot satisfy with known resources. We do not intend to incur any obligation that needs to be satisfied with cash payments in the short-term unless we have a secure funding source to pay. We believe the perception that many people have of a public company makes it more likely that they will accept restricted securities as consideration for indebtedness owed to them than they would from a private company. We have not performed any studies on this matter. Our belief is based solely on the advice and informal consultation with professionals whom we know have public company experience. Being a public company may afford the business (management and its shareholders) with a higher degree of recognition than would be typically attained as a small private (or non-public) company and may increase its ability and/or options to obtain financing for growth.

In addition, we believe being a public company increases our opportunities to raise funds and to pay vendors by issuing restricted stock rather than cash. There can be no assurances that we will be successful in any of these efforts. Additionally, issuance of restricted stock would dilute the percentage of ownership for all of our stockholders.

Result of Operations for Year ended March 31, 2020 and for the Year ended March 31, 2019

Expenses

Expenses for the year ended March 31, 2020 and for the year ended March 31, 2019 was $206,340 and $45,497, respectively. This represents an increase of $160,843 or 353.5% for year over year. Product development costs for the year ended March 31, 2020 and for the year ended March 31, 2019 were none and $6,643, respectively. This represents a decrease of $6,643 or 100.0% for year over year. The Company for the year ended March 31, 2020 and for the year ended March 31, 2019 incurred $172,743 and none, respectively, in legal and other professional fees associated with its business expansion. A significant amount of these costs for the year ended March 31, 2020 would have not been incurred except for the efforts moving forward on the business expansion and start-up costs associated with this business expansion. The Company entered into several consulting agreements associated with its business expansion as well as incurred significant legal expense associated with its business expansion. The Company believes that its legal and other professional fees will increase as its business expansion accelerates in its growth. The Company for the year ended March 31, 2020 and for the year ended March 31, 2019 incurred $12,585 and $38,820, respectively, in consulting, administrative and other costs associated with its operations. This represents a decrease of $26,235 or 67.6% for year over year. The Company for the year ended March 31, 2020 and for the year ended March 31, 2019 incurred none and $34 in depreciation expense, respectively. The Company sold its prior business operations and intangible assets to a former vendor of the Company.

Other Income/(Expense)

Other income/(expense) for the year ended March 31, 2020 and for the year ended March 31, 2019 was $(18,227) and $220,910, respectively. The Company for the year ended March 31, 2019 recognized a gain on sale of assets of $9,748. This was a one-time sale. Additionally, the Company for the year ended March 31, 2019 realized income from forgiveness of certain debts of $211,162. Both of these transactions are considered one-time transactions and are not expected to occur again. The Company for the year ended March 31, 2020 recognized $15,847 in interest expense associated mostly from related party debt and $5,988 in interest expense associated with fees on our payment facilitator license. The Company for the year ended March 31, 2020 recognized $3,608 in interest income derived from its certificate of deposit in the amount of $500,000. Other income/(expense) is not able to be compared to year over year percentages or dollar increase or decrease.

Income/(Loss) before provision for income taxes

Income/(loss) before provision for income taxes for the year ended March 31, 2020 and for the year ended March 31, 2019 was $(225,367) and $175,413, respectively. The Company recorded provisions for income taxes of $800 for the year ended March 31, 2020 and $800 for the year ended March 31, 2019.

Basic and diluted income/(loss) per share

Basic and diluted income/(loss) per share for the year ended March 31, 2020 and for the year ended March 31, 2019 was $(0.03) and $0.02 per share, respectively. Basic and diluted number of shares outstanding was 8,025,000 and 8,025,000, respectively, for the periods presented.

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Liquidity

A significant portion of our public offering was used to pay for offering expenses. Our current cash position (approximately $619,000) was provided through a series of loans from our majority shareholder to cover working expenditures and to provide the necessary collateral for the Company’s $500,000 letter of credit established with a US financial institution. Prepaid expense was approximately $30,000 attributable to deposits on business activities and assets used within the US.

Prior to August 2018, most of our resources and efforts had been devoted to planning our business, implementing systems and controls for growth, and completing our public offering. Post-2018 we have been working diligently on our business expansion in the United States. We currently owe our majority shareholder approximately $837,000 as payment for expenses and other collateral assets incurred after our Change in Control transaction. We expect this amount to increase over the next 12 months.

Although there can be no assurances whatsoever that we will obtain this funding, we believe that if we do, we may be able to successfully commence the launch of our new business for 2020/2021. Obstacles may prevent us from launching our new business despite the availability of funding and our efforts. If we are unable to raise additional funds, significant funding amounts may have to be provided by our majority shareholder to the extent that it is capable and willing to provide such loans. We do not have any oral or written agreements in place with our majority shareholder or any third parties for such funds and cannot provide any assurances that we will be able to obtain such funds.

Private capital, if sought, will most likely be sought from business associates of our executive officers or a network of private investors referred to us by those same associates. To date, we have not sought any significant funding source, other than from sources that have provided loans to us already, and we have not authorized any persons or entities to seek funding on our behalf. If a market for our common stock develops, of which there can be no assurances, we may use our restricted shares to compensate others whenever possible. We cannot predict the likelihood of a source of capital or that funds needed to complete our planned business objectives will be obtained or identified.

As a public entity, we are subject to the reporting requirements of the Exchange Act, certain ongoing expenses will be incurred. These consist of various professional services along with a host of other expenses that surround the preparation of annual and quarterly reports as well as proxy statements required to be distributed to our stockholders. We estimate these costs can be more than $75,000 per year and maybe higher if business volume and activity increases.

There are no current plans to seek private investment. We do not have any current plans to raise funds through the sale of securities. We intend to seek additional financing from our current lender in order to further fund our working capital needs, especially in instances where we cannot defer payment of services.

Going Concern Alleviation

In prior years there was doubt about our ability to continue as a going concern. Our financial statements contained additional note disclosures with respect to this matter. During the year ended March 31, 2020 we achieved what would be called a Going Concern Alleviation.

Going Concern Alleviation - The accompanying financial statements have been prepared assuming that the Company no longer has a going concern issue. As of March 31, 2020, the Company still has not generated any revenue and has no committed sources of capital or financing besides the $840,000 in funding from the Company’s majority shareholder. The Company’s majority shareholder and its verbal commitment to fund the execution of the Company’s new business plan, however, make the going concern issue no longer relevant.

Management believes the actions recently taken by the Company to implement its business plan and the entering into a payment facilitator merchant agreement provides the basis for long term revenue production. The Company’s management believes that with the continued and substantial financial support of and backing from its majority shareholder, financing will become available to support its expansion plans. With the assistance and guidance of the Company’s majority shareholder, management believes that the Company will be in a position to thrive.

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Regulation

Government regulation could affect key areas of NetPay’s business, in the United States of America as well as internationally. NetPay, along with the rest of the financial services industry, continues to experience increased legislative and regulatory scrutiny, including the enactment of additional legislative and regulatory initiatives such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Financial Reform Act”) in 2010. This legislation, which provides for sweeping financial regulatory reform, may have a significant and negative impact on the Company and its clients, which could impact NetPay’s earnings through fee reductions, higher costs (both regulatory and implementation) and new restrictions on operations. The Financial Reform Act may also impact the competitive dynamics of the financial services industry in the U.S. by more adversely impacting large financial institutions, some of which may become NetPay clients, and by adversely impacting the competitive position of U.S. financial institutions in comparison to foreign competitors in certain businesses.

The Financial Reform Act created the Consumer Financial Protection Bureau (“CFPB”) with responsibility for regulating consumer financial products and services and enforcing most federal consumer protection laws in the area of financial services, including consumer credit and the prepaid card industry. For example, the CFPB has promulgated a new rule regarding prepaid financial products, which, among other things, will establish new disclosure requirements specific to prepaid accounts, eliminate certain fees that may currently be imposed on prepaid accounts, and make it more difficult for a prepaid provider such as the Company’s business to offer courtesy overdraft protection on prepaid accounts. The rule is scheduled to become effective on April 1, 2019. Similarly, other future actions of the CFPB may make payment card or product transactions generally less attractive to card issuers, acquirers, consumers and merchants, and thus negatively impact the Company’s business.

On June 23, 2016, a referendum was held on the United Kingdom’s membership in the European Union, the outcome of which was a vote in favor of leaving the European Union. Effective as of January 31, 2020, the United Kingdom formally withdrew its membership from the European Union. The United Kingdom’s decision to leave the European Union has created an uncertain political and economic environment in the United Kingdom and across other European Union member states. The political and economic instability created by the United Kingdom’s decision to leave the European Union has caused and may continue to cause volatility in global financial markets and the value of the British Pound or other currencies, including the Euro. In addition, this uncertainty may cause some of our customers or potential customers to curtail or delay spending. Depending on the market and regulatory effects of the United Kingdom’s exit from the European Union, it is possible that there may be adverse practical or operational implications on our business. For example, the UK Data Protection Act, which substantially implements the GDPR, became effective in May 2018. It remains unclear, however, how United Kingdom data protection laws or regulations will develop and be interpreted in the medium to longer term and how data transfers to and from the United Kingdom will be regulated and how those regulations may differ from those in the European Union. Further, the United Kingdom’s exit from the European Union may create increased compliance costs and an uncertain regulatory. Management believes that Brexit-related issues will not affect our financial statement recognition, measurement or disclosure items, such as inventory write-downs, long-lived asset impairments, collectability of receivables, assumptions underlying fair value measurements, foreign currency matters, hedge accounting or income taxes for the Company and its consolidated financial statements.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements. The Company 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.

Critical Accounting Policies

The preparation of financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

An accounting policy is considered to be critical: (a) if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made; and (b) if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.

Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. There are no critical policies or decisions that rely on judgments that are based on assumptions about matters that are highly uncertain at the time the estimate is made. Note 2 to the financial statements, included elsewhere in this prospectus, includes a summary of the significant accounting policies and methods used in the preparation of our financial statements.

28

Seasonality

We have not generated any revenues so we have no direct experience with seasonality for our business. We do not expect that our planned business operations as currently outlined will be affected by seasonality.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, obligations under any guarantee contracts or contingent obligations. We also have no other commitments other than the costs of being a public company that will increase our operating costs or cash requirements in the future.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

29

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 

NETPAY INTERNATIONAL, INC.

MARCH 31, 2020

INDEX TO FINANCIAL STATEMENTS

30

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

NetPay International, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of NetPay International, Inc. (the “Company”) as of March 31, 2020 and 2019, the related consolidated statements of operations, changes in shareholders' retained deficit, and cash flows for the years then ended, and the related notes to the financial statements (collectively, the consolidated financial statements). In our opinion, except for the previous chief financial officer’s refusal to provide representation letter, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The previous Chief Financial Officer departed from the Company under dubious circumstances. The Chief Financial Officer contends that she got terminated on August 10, 2020; however, the Company argues that the Chief Financial Officer resigned on August 11, 2020.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Except as discussed above, we conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ PLS CPA

PLS CPA,

A Professional Corp.

We have served as the Company’s auditor since 2016.

October 19, 2020

San Diego, CA. 92111

F-1

NETPAY INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

See notes to the consolidated financial statements.

F-2

NETPAY INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

See notes to the consolidated financial statements.

F-3

NETPAY INTERNATIONAL, INC.

STATEMENT OF STOCKHOLDERS’ EQUITY (RETAINED DEFICIT)

See notes to the consolidated financial statements.

F-4

NETPAY INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

See notes to the consolidated financial statements.

F-5

NETPAY INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Organization - NetPay International, Inc. (formerly known as Allegro Beauty Products, Inc.) (“Company”) was incorporated under the laws of the State of Nevada on March 31, 2016. The Company issued 5,500,000 shares of its common stock to its founder at inception in exchange for organizational services.

On August 29, 2018, the Company experienced a change in control (“Change in Control”). With the Change in Control certain liabilities of the Company were forgiven and/or paid for by our founder and former president and chief executive officer. Total liabilities at the time approximated $225,000. The board of directors nominated Mr. Alon Elbaz to the board on August 29, 2018. Concurrently our founder and former president and chief executive officer resigned from the board of directors and from all executive positions within the Company.

On August 29, 2018, Mr. Elbaz was appointed as Chief Executive Officer to the Company. Mr. Elbaz serves in the same capacity for the Company’s majority shareholder, Compunet Holdings AA Ltd., an international Israeli-based business. On September 17, 2018, the board of directors and a majority of our shareholders approved the name change from Allegro Beauty Products, Inc. to NetPay International, Inc. The effective date of the name change was November 7, 2018.

On December 5, 2018, the Company launched its Delaware subsidiary, NetPay (USA), Inc., to act as an independent sales organization (ISO) to seek opportunities related to the provision to merchants of merchant's credit card acquiring clearing, and other value-added services. The services provided by NetPay (USA), Inc. will be different than the payment facilitation business, which will be the core business of the Company. The Company owns ninety percent (90%) of NetPay (USA), with the remaining ten percent (10%) owned by two experienced executives in the credit card services industry.

Plan of Operations – The Company plans to build a payment facilitator model for streamlining merchant services within the U.S. as well as partnering with Netpay Europe’s well-established international business. As a payment facilitator, the Company will eliminate the need for individual merchants to establish a traditional merchant account. In the payment facilitator model, a software provider registers with an acquirer to provide payment services to sub-merchants that utilize its software. By registering as a payment facilitator with an acquirer, the software provider acts as a “master” merchant account provider, including the onboarding of sub-merchants under its own account in order to facilitate payment transactions for the sub-merchants.

Risks and Uncertainties – The Company has not yet obtained a license to operate in the United States as a payment facilitator and has not yet commercially launched the offering of the Company’s services. There can be no assurance that the Company will obtain a payment facilitator license or that the Company’s services will gain broad acceptance among prospective customers or users. In addition, one of the greatest challenges to the Company’s payment facilitator model is the level of responsibility the Company will be required to assume with the acquirer. This includes greater liability for fraud, chargebacks, and data breaches, and the ability to meet compliance mandates and ever-changing regulatory rules.

Basis of Presentation – The financial statements are prepared using the accrual method of accounting. The Company elected a March 31^st, year-end. The consolidated financial statements include the accounts of the Company and its majority-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) set forth in Article 8 of Regulation S-X.

The accompanying consolidated financial statements include the accounts of NetPay International, Inc. and its majority-owned subsidiary, after elimination of intercompany accounts and transactions. The Company consolidates its majority-owned subsidiary and investments in entities in which the Company has a controlling interest. For the consolidated majority-owned subsidiary in which the Company owns less than 100%, the Company recognizes a non-controlling interest for the ownership of the non-controlling owners. Non-controlling interests are immaterial for all the periods presented. Any amount would be included in interest and other, net in the consolidated statement of operations, of which there are none for each of the periods presented.

F-6

NETPAY INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

The Company in the future may have certain non-majority-owned equity investments in non-publicly traded companies that are generally accounted for using the equity method of accounting. The equity method of accounting generally will be used when the Company has the ability to significantly influence the operating decisions of the business entity, or if the Company has a voting percentage of the corporation equal to or generally greater than 20% but less than 50%, and for non-majority-owned investments in partnerships where ownership is generally greater than 5%. The equity in earnings (losses) of equity method investees which are considered immaterial for periods presented, will be included in interest and other, net in the consolidated statements of operations of which there are none for the periods presented.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Cash Equivalents - For purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. The Company during the twelve months ended March 31, 2020 purchased a 12-month certificate of deposit with the same financial institution that provided the Standby Letter of Credit. The certificate of deposit earns interest at 1.5% per annum. Total certificates of deposit amount were $501,000. The Company recognized interest income of $3,608 for the twelve months ended March 31, 2020. The Company maintains cash and cash equivalent balances with a financial institution in the United States in excess of amounts insured by the Federal Deposit Insurance Corporation. 

b.Stock-based Compensation - The Company follows ASC 718-10, Stock Compensation, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company has not adopted a stock option plan and has not granted any stock options.  

c.Use of Estimates and Assumptions - Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The Company adopted the provisions of ASC 260.  

d. Earnings (Loss) per Share - The basic earnings (loss) per share is calculated by dividing the Company’s net income available to common shareholders by the weighted average number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company. 

e.Property and Equipment Capitalization Policies - Property and equipment is stated at cost and depreciated over the estimated useful life of the asset using the straight-line method. Amortization of leasehold improvements is computed on the straight-line method over the shorter of the lease term or estimated useful life of the asset. Maintenance and repairs are charged to operations as incurred. When assets are sold, or otherwise disposed of, cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. 

f.Income Taxes - Income taxes are provided in accordance with ASC 740, Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. 

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. No provision was made for Federal income tax.

g.Revenue Recognition - The Company will recognize revenue when products are fully delivered, or services have been provided and collection is reasonably assured. 

F-7

NETPAY INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

h.Impairment of Long-Lived Assets - The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. 

i.Advertising - Advertising is expensed in the period in which it is incurred. There has been no advertising expense in the reporting period presented. 

j.Intangible Assets - Intangible assets with finite lives are amortized over their estimated useful life. The Company monitors conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization period. The Company tests its intangible assets with finite lives for potential impairment whenever management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable. The original estimate of an asset's useful life and the impact of an event or circumstance on either an asset's useful life or carrying value involve significant judgment. 

k.Recently Issued Accounting Pronouncements - The Company reviewed recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial statements. 

l. Concentration of credit risk - Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consists primarily of cash and cash equivalents. The Company maintains cash and cash equivalent balances with financial institution in the United States in excess of amounts insured by the Federal Deposit Insurance Corporation. 

m. Going Concern Alleviation - The accompanying financial statements have been prepared assuming that the Company no longer has a going concern issue. As of March 31, 2020, the Company still has not generated any revenue and has no committed sources of capital or financing besides the $840,000 in funding from the Company’s majority shareholder (see Note 4 – Loans – Related Party). The Company’s majority shareholder and its verbal commitment to fund the execution of the Company’s business plan, however, make the going concern issue no longer relevant.  

Management believes the actions recently taken by the Company to implement its business plan and the entering into a payment facilitator merchant agreement provides the basis for long term revenue production. Company’s management believes that with the continued and substantial financial support of and the backing from its majority shareholder, financing will become available to support its expansion plan. Company’s management believes that with the assistance and guidance of the majority shareholder, the Company will be in a position to thrive.

NOTE 3 - SHARE CAPITAL

The Company has 100,000,000 shares of common stock authorized; par value $0.001 per share. The Company has 10,000,000 shares of blank check preferred stock authorized; par value $0.001 per share. The blank check preferred stock may be designated into one or more series, from time to time, by the Company's Board of Directors by filing a certificate pursuant to NRS Chapter 78.

The Company issued 5,500,000 shares of its common stock to its founder for organizational services, which were valued at $5,500. The Company filed a registration statement declared effective by the Securities and Exchange Commission on June 27, 2017. The Company solicited investors for a total investment of $55,000. The Company sold 2,750,000 shares of its common stock to 30 investors who paid $0.02 per share. 225,000 shares were returned to treasury by certain shareholders for no consideration during March 2018. The Company recognized a reduction in common stock of $225 and an increase of $225 to additional paid in capital.

F-8

NETPAY INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

NOTE 4 - LOANS - RELATED PARTY AND RELATED PARTY TRANSACTIONS

With the Change in Control (see Note 1 – Organization and Basis of Presentation) the Company’s founder and former officer and director, settled certain outstanding debts of the Company resulting in forgiveness of that debt; the Company recognized a one-time increase to additional paid in capital of $1,200 for this related party transaction. This occurred on or about August 29, 2018.

At March 31, 2020, there are 8,025,000 shares of common stock issued and outstanding. There are no shares of blank check preferred stock issued or outstanding.

During the twelve months ended March 31, 2020, the Company received approximately $798,000 from its majority shareholder to pay for working capital and operating expenses. As of March 31, 2020, loans from related party was $837,373 ($39,373 as of March 31, 2019). Approximately $57,000 of that short-term funding is unsecured and bears no interest or repayment terms.

On October 10, 2019, the Company and its majority shareholder, Compunet, entered into a formal note payable agreement in the amount $780,000. The related party loan bears interest at the Israel Bank Prime Rate plus 2.45% per annum, compounded annually. Interest shall accrue at a rate of 4.20% per annum until repayment. The loan is due and payable on December 31, 2020. The Company recorded related party interest expense of $15,847 for the twelve months ended March 31, 2020 and includes the related party interest payable in its account payable, with a balance due as of March 31, 2020 of $15,847.

The Company had entered into a verbal month-to-month consulting arrangement with its former Chief Financial Officer. Services were rendered through a corporate entity owned 50% by our former Chief Financial Officer. That corporate entity was located in Israel and services were settled in USD as determined as the functional currency for payment. The total services fee due for the fiscal year ending March 31, 2020 was $54,423. The Company as of March 31, 2020 included a related party payable for these services of $13,876; this amount is included its accounts payable balance.

With the Change in Control (see Note 1 – Organization and Basis of Presentation), the Company’s founder settled certain outstanding debts of the Company resulting in forgiveness of that debt; the Company recognized a one-time increase to additional paid in capital of $1,200 for this related party transaction. This transaction was completed during the twelve months ended March 31, 2019.

NOTE 5 - LOANS - NONRELATED PARTIES

Prior to the fiscal year ending March 31, 2019, the Company had loans from non-related parties of which none were outstanding as of March 31, 2019 or March 31, 2020. Prior loans were unsecured and carried no interest rate or specific repayment terms.

With the Change in Control (see Note 1 – Organization and Basis of Presentation), the Company’s founder guaranteed the settlement of certain outstanding debts resulting in forgiveness of that debt; the Company recognized debt forgiveness of $63,300 related to the non-related party loans. This occurred on or about August 29, 2018. This transaction was completed during the twelve months ended March 31, 2019.

NOTE 6 – DEBT FORGIVENESS AND GAIN ON SALE OF ASSETS

With the Change in Control (see Note 1 – Organization and Basis of Presentation), the Company’s founder guaranteed the settlement of certain outstanding debts resulting in forgiveness of that debt; the Company recognized total debt forgiveness of $211,100. This occurred on or about August 29, 2018. In total the Company recognized a reduction in vendor accounts payable of $147,800 and non-related party loans of $63,300. No consideration was paid by the Company for this debt forgiveness.

In connection with the Change in Control (see Note 1 – Organization and Basis of Presentation) the Company’s founder guaranteed the settlement of certain debts resulting in the sale of certain assets in exchange for an account payable of $10,000. This resulted in the Company recognizing a gain on sale of assets of $9,700. These assets consisted of certain intellectual property of the Company and any fixed assets that had been fully depreciated on the date of sale. This transaction completed during the twelve months ended March 31, 2019.

F-9

NETPAY INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

NOTE 7 - INCOME TAXES

As of March 31, 2020, and March 31, 2019, the Company had a net operating loss (“NOL”) carry-forward of $285,217 and $59,850, respectively. The NOL carryforwards may be available to reduce future years’ taxable income.

The realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a valuation allowance equal to the deferred tax asset.

Reconciliation between statutory rate and effective tax rate for both periods presented and as of March 31, 2020 was:

Effective income tax rate and the new tax law - Our effective income tax rate was (0.0%) for the periods presented. The effective income tax rate for the periods was based upon the estimated rate applicable for the fiscal year adjusted to reflect any significant items related specifically to an interim period. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted, which, among other changes, reduced the federal statutory corporate tax rate from 35% to 21%. Based on the provisions of the Act, we re-measured our deferred tax liabilities and adjusted our estimated annual federal income tax rate to incorporate the lower corporate tax rate into our tax provision for the current quarter as any change represents a discrete item for purposes of income tax accounting. The re-measurement of deferred tax liabilities at the lower corporate tax rate resulted in no difference in income tax expense.

NOTE 8 – SIGNIFICANT AGREEMENTS AND PREPAID EXPENSE – SBLC FEE

On October 11, 2019, the Company entered into an agreement with a commercial bank to issue a standby letter of credit on behalf of the Company to WorldPay, LLC (“WorldPay”) for $500,000 allowing the Company to provide payment facilitator merchant services in the continental United States through WorldPay. The standby letter of credit is valid until cancelled or maturity and is collateralized by a revolving credit facility with the bank. The terms of the letter of credit are extended for a term of one year at a time. The Company intends to renew the standby letter of credit for as long as the Company continues to do business with WorldPay in the USA. No amounts have been drawn under the standby letter of credit. The Company funded the initial $500,000 with Bank Leumi, its commercial bank of record. The Company incurred a fee of approximately $12,600 in connection with the standby letter of credit. The Company amortizes the fee associated with the standby letter of credit over 12 months. The Company had a remaining balance associated with that fee at March 31, 2020 of $6,662. This amount is included in prepaid expense and other. The Company recognizes approximately $1,040 per month until maturity.

F-10

NETPAY INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

NOTE 8 – SIGNIFICANT AGREEMENTS AND PREPAID EXPENSE – SBLC FEE (CONTINUED)

On October 16, 2019, the Company entered into a long-term Payment Facilitator Merchant Agreement with WorldPay, LLC, pursuant to which the Company may process an unlimited amount of credit card transactions, subject to the terms of the agreement on fees, chargebacks, and other costs associated with the business and the agreement. According to the agreement, WorldPay will provide sponsorship services to the Company, and the Company will be registered through WorldPay as a Visa third-party agent and a MasterCard service provider. The sponsorship services allow the Company to route transactions under WorldPay’s membership in order to clear card transactions through MasterCard, Visa and other networks.

On March 26, 2020 the Company entered into an Affiliate Partner Agreement with Network Merchants LLC (“NMI”). The Company may access and use NMI’s FACe Platform for payment facilitation and processing. The FACe platform is a sophisticated unified commerce platform that operates on a sub-merchant basis such that each merchant is not required to obtain its own Merchant Identification Number (MID).

On March 24, 2020 the Company entered into a PROFAC Agreement with ProPay, Inc. (“ProPay”). This agreement allows the Company to (a) refer clients to ProPay and for them to participate in ProPay’s transaction processing program in relation to financial services cards issued by MasterCard International Incorporated, Visa U.S.A. Inc., American Express Travel Related Services Company, Inc., and DFS Services LLC, and as well (b) incorporate ProPay’s transaction processing program into the Company’s own service offerings. ProPay deducts its fees from proceeds received from referred clients and remits the residual amount to the Company. This agreement allows the Company to provide its clients the ability to clear card transactions through MasterCard, Visa and other international financial networks.

NOTE 9 - DEFERRED OFFERING COSTS

Deferred offering costs consisted primarily of accounting fees, legal fees and other fees incurred that were directly related to our public offering. Deferred offering costs were netted against the proceeds of the public offering. Deferred offering costs of $30,474 were offset against additional paid in capital upon the closing of the public offering. For both periods presented ending March 31, 2020 and March 31, 2019 deferred offering costs were none and none.

NOTE 10 - SUBSEQUENT EVENTS

In accordance with ASC 855, Subsequent Events, the Company evaluated subsequent events occurring after March 31, 2020 through the date that these financial statements were issued. No events were determined to be reportable.

F-11

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 

We have had no disagreements with accountants on accounting and financial disclosure.

ITEM 9A. CONTROLS AND PROCEDURES 

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e). The Company's disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching the Company's desired disclosure control objectives. In designing periods specified in the SEC's rules and forms, and that such information is accumulated and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company's certifying officers, its Principal Executive Officer, its Principal Financial Officer and Principal Accounting Officer, has concluded that the Company's disclosure controls and procedures are effective in reaching that level of assurance.

Our Chief Executive Officer, Principal Executive Officer, and Principal Financial Officer, Alon Elbaz, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on the evaluation, Mr. Elbaz concluded that our disclosure controls and procedures are effective in timely alerting him to material information relating to us required to be included in our periodic SEC filings. The Company hired a financial expert with the experience in creating and managing internal control systems as well as to continue to improve the effectiveness of our internal controls and financial disclosure controls.

Management's Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in the Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). Based on this evaluation, management has concluded that our internal control over financial reporting was effective as of March 31, 2020.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. As we are a non-accelerated filer, management's report is not subject to attestation by our registered public accounting firm.

This report shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section , and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Limitations on the Effectiveness of Controls

Management has confidence in its internal controls and procedures. The Company’s management believes that a control system, no matter how well designed and operated can provide only reasonable assurance and cannot provide absolute assurance that the objectives of the internal control system are met, and no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitation in all internal control systems, no evaluation of controls can provide absolute assurance that all control issuers and instances of fraud, if any, within the Company have been detected.

Changes in Internal Controls

There were no changes in the Company’s internal controls over financial reporting that occurred during the quarter ended March 31, 2020 that have materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

31

Internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.

ITEM 9B. OTHER INFORMATION 

None.

32

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 

Directors and Executive Officers

The following table sets forth certain information regarding the executive officer and director of Netpay International, Inc. as of August 14, 2020.

All directors of the Company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. Officers of the Company are appointed by our Board and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:

Our management consists of:

Alon Elbaz. Mr. Alon Elbaz was appointed Chief Executive Officer of the Company on August 29, 2018. Since 2003, Mr. Elbaz has served as Chief Executive Officer of the Compunet Holdings AA Ltd. group of companies, which includes Netpay EUR Limited (“Netpay Europe”). Netpay Europe is a payment services provider that has been providing secure and safe credit card clearing services since 1997. Mr. Elbaz does not receive any compensation from the Company as a Director or as the Chief Executive Officer.

Term of Office

Each director is elected by the Board and serves until his or her successor is elected and qualified, unless he or she resigns or is removed earlier. Each of our officers is elected by the Board to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is earlier removed from office or resigns.

Family Relationships

There are no family relationships between or among any of our directors, executive officers and incoming directors or executive officers.

Involvement in Certain Legal Proceedings

No director, executive officer, significant employee or control person of the Company has been involved in any legal proceedings listed in Item 401(f) of Regulation S-K in the past 10 years.

Committees of the Board of Directors

The Company does not currently have any committees of the Board of Directors. Concurrent with having sufficient members and resources, the Company’s board of directors plans to establish an audit committee and a compensation committee. We believe that a minimum of five directors is needed to have effective committee systems. The audit committee will review the results and scope of annual audits and other services provided by independent auditors and will review and evaluate the system of internal controls. The compensation committee will manage any stock option plan we may establish and review and recommend compensation arrangements for officers. No final determination has yet been made as to the membership requirements of these committees or when we may have sufficient members to establish such committees. See “Executive Compensation” hereinafter.

All directors will be reimbursed by NetPay International for any expenses incurred in attending directors' meetings provided that NetPay International has the resources to pay these fees. NetPay International will consider applying for officers’ and directors’ liability insurance at such time that it has the resources to do so.

Code of Ethics

We adopted a Code of Ethics (the “Code”) that applies to directors, officers and employees, including our chief executive officer and chief financial officer. A written copy of the Code has been filed with the SEC and is available upon written request to the Company.

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Nominations to the Board of Directors

Our directors take a critical role in guiding our strategic direction and oversee the management of the Company. Board candidates are considered based upon various criteria, such as their broad-based business and professional skills and experiences, a global business and social perspective, concern for the long-term interests of the stockholders, diversity, and personal integrity and judgment.

In addition, directors must have time available to devote to Board activities and to enhance their knowledge in the growing business. Accordingly, we seek to attract and retain highly qualified directors who have sufficient time to attend to their substantial duties and responsibilities to the Company.

Director Nominations

As of March 31, 2020, we did not make any material changes to the procedures by which our shareholders may recommend nominees to our Board.

Employment Arrangements

None of our officers, directors, or employees are party to employment agreements with the Company. The Company has no pension, health, annuity, bonus, insurance profit sharing or similar benefit plans; however, the Company may adopt such plans in the future. There are no personal benefits available for directors, officers or employees of the Company.

ITEM 11. EXECUTIVE COMPENSATION 

General Philosophy

Our Board is solely responsible for establishing and administering our executive and director compensation plans, if any.

Executive Compensation

The following table shows, for the twelve months ended March 31, 2020 and 2019, compensation awarded or paid to, or earned by, our Chief Executive Officer and Chief Financial Officer (the “Named Executive Officers”).

⁽¹⁾There is no formal employment arrangement with Mr. Elbaz at this time.  

⁽²⁾Ms. Mamon resigned from her position as CFO of the Company on August 11, 2020. Ms. Mamon provided her services through an Israeli corporation that billed the Company approximately 50,000 shekels per month for her efforts. To date, Ms. Mamon has received approximately $40,500 of the $54,423 that has been billed for her services as a consultant and Chief Financial Officer to the Company. The Company pays for these services in US Dollars, its functional currency.  

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Potential Payments upon Termination or Change-in-Control

SEC regulations state that we must disclose information regarding agreements, plans or arrangements that provide for payments or benefits to our executive officers in connection with any termination of employment or change in control of the company. We currently have no employment agreements with any of our executive officers, nor any compensatory plans or arrangements resulting from the resignation, retirement or any other termination of any of our executive officers, from a change-in-control, or from a change in any executive officer’s responsibilities following a change-in-control. As a result, we have omitted this table.

Compensation of Directors

We have no standard arrangement to compensate directors for their services in their capacity as directors. Directors are not paid for meetings attended. However, we intend to review and consider future proposals regarding board compensation. All travel and lodging expenses associated with corporate matters are reimbursed by us, if and when incurred.

The following table sets forth compensation paid to our non-executive (and executive) directors for the fiscal year ended March 31, 2020.

⁽¹⁾Mr. Elbaz provides his services to the Company for no compensation. 

⁽²⁾Ms. Mamon resigned from the Board on August 11, 2020. She had provided her services as a director to the Company for no compensation. 

Pension Table

None.

Retirement Plans

We do not offer any annuity, pension, or retirement benefits to be paid to any of our officers, directors, or employees in the event of retirement. There are also no compensatory plans or arrangements with respect to any individual named above which results or will result from the resignation, retirement, or any other termination of employment with our company, or from a change in the control of our Company.

Compensation Committee

We do not have a separate compensation committee. Instead, our Board reviews and approves executive compensation policies and practices, reviews salaries and bonuses for other officers, administers our stock option plans and other benefit plans, if any, and considers other matters that may be brought forth to it.

Risk Management Considerations

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 

Long-Term Incentive Plans and Awards

We do not have any long-term incentive plans that provide compensation intended to serve as an incentive for performance. No individual grants or agreements regarding future payouts under non-stock price-based plans have been made to any executive officer or any director or any employee or consultant since our inception; accordingly, no future payouts under non-stock price-based plans or agreement s have been granted or entered into or exercised by our officer or director or employees or consultants since we were founded.

Grants of Plan-Based Awards Table

None of our named executive officers received any grants of stock, option awards or other plan-based awards during the fiscal period ended March 31, 2020. The Company has no activity with respect to these awards.

Options Exercised and Stock Vested Table

None of our named executive officers exercised any stock options, and no restricted stock units if any, held by our named executive officers vested during the fiscal period ended March 31, 2020. The Company has no activity with respect to these awards.

Outstanding Equity Awards at Fiscal Year-End Table

None of our named executive officers had any outstanding stock or option awards as of March 31, 2020. The Company has not issued any awards to its named executive officers. The Company and its board may grant awards as it sees fit to its employees as well as key consultants and other outside professionals.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of August 14, 2020 we had 8,025,000 shares of common stock outstanding which are held by 6 shareholders of record. The chart below sets forth the ownership, or claimed ownership, of certain individuals and entities. This chart discloses those persons known by the board of directors to have, or claim to have, beneficial ownership of more than 5% of the outstanding shares of our common stock as of August 14, 2020; of all directors and executive officers of NetPay International; and of our directors and officers as a group.

⁽¹⁾The address for purposes of this table is the Company’s address which is 2 Hamanofim Street, Herzliya Pituach 46722562 Israel.  

⁽²⁾Unless otherwise indicated, NetPay International believes that all persons named in the table have sole voting and investment power with respect to all shares of the common stock beneficially owned by them. A person is deemed to be the beneficial owner of securities which may be acquired by such person within 60 days from the date indicated above upon the exercise of options, warrants or convertible securities. Each beneficial owner’s percentage ownership is determined by assuming that options, warrants or convertible securities that are held by such person (but not held by any other person) and which are exercisable within 60 days of the date indicated above, have been exercised. 

⁽³⁾Includes 5,577,082 shares of common stock owned directly by Compunet Holdings AA Ltd. and for which Mr. Elbaz claims beneficial ownership as the owner of Compunet Holdings, and 401,250 shares of common stock owned directly by Mr. Elbaz. 

Securities Authorized for Issuance under Equity Compensation Plans

None

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Non-Cumulative Voting

The holders of our shares of common stock do not have cumulative voting rights, which means that the holders of more than 50% of such outstanding shares, voting for the election of Directors, can elect all of the Directors to be elected, if they so choose. In such event, the holders of the remaining shares will not be able to elect any of our Directors.

Introduction

We were incorporated under the laws of the State of Nevada on March 31, 2016. NetPay International is authorized to issue 100,000,000 shares of common stock and 10,000,000 shares of preferred stock.

Preferred Stock

Our Articles of Incorporation authorize the issuance of 10,000,000 shares of preferred stock with designations, rights and preferences determined from time to time by our board of directors. No shares of preferred stock have been designated, issued or are outstanding. Accordingly, our board of directors is empowered, without stockholder approval, to issue up to 10,000,000 shares of preferred stock with voting, liquidation, conversion, and other rights that could adversely affect the rights of the holders of the common stock. Although we have no present intention to issue any shares of preferred stock, there can be no assurance that we will not do so in the future.

Among other rights, our board of directors may determine, without further vote or action by our stockholders:

·The number of shares and the designation of the series; 

·Whether to pay dividends on the series and, if so, the dividend rate, the dividend payment date, whether dividends will be cumulative and, if so, from which date or dates, and the relative rights of priority of payment of dividends on shares of the series;  

·Whether the series will have voting rights in addition to the voting rights provided by law and, if so, the terms of the voting rights; 

·Whether the series will be convertible into or exchangeable for shares of any other class or series of stock and, if so, the terms and conditions of conversion or exchange; 

·Whether or not the shares of the series will be redeemable and, if so, the dates, terms and conditions of redemption and whether there will be a sinking fund for the redemption of that series and, if so, the terms and amount of the sinking fund; and 

·The rights of the shares of series in the event of our voluntary or involuntary liquidation, dissolution or winding up and the relative rights or priority, if any, of payment of shares of the series. 

We presently do not have plans to issue any shares of preferred stock. However, preferred stock could be used to dilute a potential hostile acquirer. Accordingly, any future issuance of preferred stock or any rights to purchase preferred shares may have the effect of making it more difficult for a third party to acquire control of us. This may delay, defer or prevent a change of control in our Company or an unsolicited acquisition proposal. The issuance of preferred stock also could decrease the amount of earnings attributable to, and assets available for distribution to, the holders of our common stock and could adversely affect the rights and powers, including voting rights, of the holders of our common stock.

Common Stock

Our Articles of Incorporation authorize the issuance of 100,000,000 shares of common stock. There are 8,025,000 shares of our common stock issued and outstanding as of March 31, 2020 held by six shareholders of record:

·Have equal ratable rights to dividends from funds legally available for payment of dividends when, as and if declared by the board of directors;  

·Are entitled to share ratably in all of the assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs;  

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·

·Do not have preemptive, subscription or conversion rights, or redemption or access to any sinking fund; and  

·Are entitled to one non-cumulative vote per share on all matters submitted to stockholders for a vote at any meeting of stockholders.  

Authorized but Un-issued Capital Stock

Nevada law does not require stockholder approval for any issuance of authorized shares. These shares may be used for a variety of corporate purposes, including future public offerings to raise additional capital or to facilitate corporate acquisitions.

One of the effects of un-issued and unreserved common stock (and/or preferred stock) may be to enable our board of directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of our board by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive stockholders of opportunities to sell their shares of our common stock at prices higher than prevailing market prices.

Shareholder Matters

As an issuer of “penny stock”, the protection provided by the federal securities laws relating to forward-looking statements does not apply to us; our shares will probably be considered penny stocks for the foreseeable future. Although the federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we will not have the benefit of this safe harbor protection in the event of any claim that the material provided by us, including this prospectus, contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading.

Directors' Duties. Section 78.138 of the Nevada law allows our directors and officers, in exercising their powers to further our interests, to consider the interests of our employees, suppliers, creditors and customers. They can also consider: (a) the economy of the state and the nation; (b) the interests of the community and of society; and (c) our long-term and short-term interests and that of our shareholders, including the possibility that these interests may be best served by our continued independence. Our directors may resist a change or potential change in control if they, by a majority vote of a quorum, determine that the change or potential change is opposed to or not in our best interest. Our board of directors may consider these interests or have reasonable grounds to believe that, within a reasonable time, any debt which might be created as a result of the change in control would cause our assets to be less than our liabilities, render us insolvent, or cause us to file for bankruptcy protection.

A shareholder does not have the right to dissent with respect to any plan of merger or exchange, if the shares held by the shareholder are part of a class of shares which are:

·Listed on a national securities exchange; 

·Issued by an open-end management investment company registered with the SEC and which may be redeemed at the option of the shareholder at net asset value; or  

·Traded in an organized market and has at least 2,000 holders and a market value of at least $20,000,000, exclusive of the value of shares held by the company’s senior executives, directors, and beneficial stockholders owning more than 10% of such shares.  

This exception notwithstanding, a shareholder will still have a right of dissent if it is provided for in the articles of incorporation, if the board of directors resolution approving the plan of merger or exchange provides otherwise, or if the shareholders are required under the plan of merger or exchange to accept anything but cash or owner's interests, or a combination of the two, in the surviving or acquiring entity, or in any other entity falling in any of the three categories described above in this paragraph.

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i.The articles of incorporation and all amendments thereto;  

ii.Bylaws and all amendments thereto; and  

iii.A stock ledger or a duplicate stock ledger, revised annually, containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, if known, and the number of shares held by them, respectively.  

Control Share Acquisitions. Sections 78.378 to 78.3793 of Nevada law contain provisions that may prevent a person acquiring a controlling interest in a Nevada-registered company from exercising voting rights. To the extent that these rights support the voting power of minority shareholders, these rights may be deemed material. These provisions will be applicable to us as soon as we have 200 shareholders of record with at least 100 of these shareholders having addresses in Nevada as reflected on our stock ledger. While we do not yet have the required number of shareholders in Nevada or elsewhere, it is possible that at some future point we will reach these numbers and, accordingly, these provisions will become applicable. We do not intend to notify shareholders when we have reached the number of shareholders specified under these provisions of Nevada law. Shareholders can learn this information pursuant to the inspection rights described above and can see the approximate number of our shareholders by checking under Item 5 of our annual reports on Form 10-K. This form is filed with the SEC within 90 days after the close of each fiscal year hereafter. You can view these and our other filings at www.sec.gov in the “EDGAR” database.

Under NRS Sections 78.378 to 78.3793, an acquiring person who acquires a controlling interest in a company may not obtain voting rights on any of these shares unless these voting rights are granted by a majority vote of our disinterested shareholders at a special shareholders' meeting held upon the request and at the expense of the acquiring person. If the acquiring person's shares are accorded full voting rights and the acquiring person acquires control shares with a majority or more of all the voting power, any shareholder, other than the acquiring person, who does not vote for authorizing voting rights for the control shares, is entitled to exercise dissenting rights and demand payment for the fair value of their shares, and we must comply with the demand. An “acquiring person” means any person who, individually or acting with others, acquires or offers to acquire, directly or indirectly, a controlling interest in our shares. “Controlling interest” means the ownership of our outstanding voting shares sufficient to enable the acquiring person, individually or acting with others, directly or indirectly, to exercise one-fifth or more but less than one-third, one-third or more but less than a majority, or a majority or more of all the voting power of the company in the election of our directors. Voting rights must be given by a majority of our disinterested shareholders as each threshold is reached or exceeded. “Control shares” means the company's outstanding voting shares that an acquiring person: (a) acquires or offers to acquire in an acquisition; and (b) acquires within 90 days immediately preceding the date when the acquiring person becomes an acquiring person.

These Nevada statutes do not apply if a company's articles of incorporation or bylaws in effect on the tenth day following the acquisition of a controlling interest by an acquiring person provide that these provisions do not apply to the company or to an acquisition of a controlling interest.

According to NRS 78.378, the provisions referred to above do not restrict our directors from taking action to protect the interests of our Company and its shareholders, including but not limited to, adopting or executing plans, arrangements or instruments that grant or deny rights, privileges, power or authority to a holder of a specified number of shares or percentage of share ownership or voting power. Likewise, these provisions do not prevent directors or shareholders from imposing stricter requirements in our Articles of Incorporation, bylaws, or a board resolution relating to the acquisition of a controlling interest in the Company.

Our Articles of Incorporation and bylaws do not exclude us from the restrictions imposed by NRS 78.378 to 78.3793, nor do they impose any more stringent requirements.

Certain Business Combinations. Sections 78.411 to 78.444 of the Nevada law may restrict our ability to engage in a wide variety of transactions with an “interested shareholder.” As was discussed above in connection with NRS 78.378 to 78.3793, these provisions could be considered material to our shareholders, particularly to minority shareholders. They might also have the effect of delaying or making more difficult acquisitions of our stock or changes in our control. These sections of NRS are applicable to any Nevada company with 200 or more stockholders of record and that has a class of securities registered under Section 12 of the 1934 Securities Exchange Act, unless the company's articles of incorporation provide otherwise.

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These provisions of Nevada law prohibit us from engaging in any “combination” with an interested stockholder for two years after the date the interested stockholder acquired the shares that cause him/her to become an interested shareholder, unless the combination meets all the requirements of our Articles of Incorporation; and the combination was either approved (1) by our board of directors before the person became an interested shareholder; or (2) by the board of directors and disinterested shareholders representing at least 60% of the Company’s voting power. The term “combination” is described in NRS 78.416 and includes, among other things, mergers, sales or purchases of assets, and issuances or reclassifications of securities. If the combination did not have prior approval, the interested shareholder may proceed after the two-year period only if the shareholder receives approval from a majority of our disinterested shareholders or the combination meets the requirements for adequate consideration that are specified in NRS 78.441-42. For the above provisions, “resident domestic-corporation” means a Nevada corporation that has 200 or more shareholders of record. An “interested stockholder” is defined in NRS 78.423 as someone who is either:

·The beneficial owner, directly or indirectly, of 10% or more of the voting power of our outstanding voting shares; or 

·Our affiliate or associate and who within two years immediately before the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our outstanding shares at that time. 

Transfer Agent

Our transfer agent is Action Stock Transfer Corporation, 2469 E. Fort Union Blvd, Suite 214, Salt Lake City, UT 84121. Its telephone number is 801-274-1088.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. 

Our office and mailing address is 2 Hamanofim Street, Herzliya Pituach 46722562 Israel. The space is provided to us by our majority shareholder Compunet Holdings AA Ltd. at no cost. The space is located in Netpay Europe’s business location. Netpay Europe incurs no incremental costs as a result of us using this space. There is currently no written or oral agreement between Compunet Holdings AA Ltd. and the Company for utilizing this space.

As of March 31, 2020, we owe $837,373 in connection with an interest-free demand loan (approximately $57,000) and an interest accruing note (approximately $780,000) that is due and payable on December 31, 2020 from our majority shareholder, Compunet Holdings AA Ltd. The proceeds were used for basic working capital purposes. No written or oral agreement exists between Compunet Holdings AA Ltd., Mr. Elbaz the Chief Executive Officer of Compunet Holdings AA Ltd. and the Company concerning this loan. The Company does not intend to repay this loan for the foreseeable future.

Review, Approval or Ratification of Transactions with Related Persons

Although we adopted a Code of Ethics, we still rely on our Board to review related party transactions on an ongoing basis to prevent conflicts of interest. Our Board reviews a transaction in light of the affiliations of the director, officer or employee and the affiliations of such person’s immediate family. Transactions are presented to our Board for approval before they are entered into or, if this is not possible, for ratification after the transaction has occurred. If our Board finds that a conflict of interest exists, then it will determine the appropriate remedial action, if any. Our Board approves or ratifies a transaction if it determines that the transaction is consistent with the best interests of the Company.

Director Independence

For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTCQB as maintained by OTC Markets Group, Inc. does not have director independence requirements. The NASDAQ definition of “Independent Officer” means a person other than an Executive Officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company's Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

According to the NASDAQ definition, Mr. Alon Elbaz is not an independent director because Mr. Elbaz currently serves as an officer of the Company.

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES  

The following table presents the fees for professional audit services rendered by PLS CPA, a professional corporation (“PLS”) for the audit of the Company’s annual financial statements for the fiscal years ended March 31, 2020 and March 31, 2019 and fees billed for other services rendered by PLS during those periods. All services reflected in the following fee table were pre-approved, respectively, in accordance with the policy of the Board.

Notes:

(1)Audit fees consist of audit and review services, consent and review of documents filed with the SEC. For fiscal years ended March 31, 2020 and March 31, 2019.  

In its capacity, the Board pre-approves all audit (including audit-related) and permitted non-audit services to be performed by the independent auditors. The Board will annually approve the scope and fee estimates for the year-end audit to be performed by the Company’s independent auditors for the fiscal year. With respect to other permitted services, the Board pre-approves specific engagements, projects and categories of services on a fiscal year basis, subject to individual project and annual maximums. To date, the Company has not engaged its auditors to perform any non-audit related services except for tax return services.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 

The following documents are filed as part of this Annual Report on Form 10-K

(a)Financial Statements 

(b)Exhibits  

NetPay International, Inc. includes by reference the following exhibits:

*Filed herewith. 

†Certain information has been excluded from the exhibit because it both (i) is not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed. 

#The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document. 

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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.

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