PreAxia Health Care Payment Systems Inc. 2024 10-K Review

Introduction

PreAxia Health Care Payment Systems Inc. is a company that aims to provide solutions in the emerging health payment market, particularly focusing on Health Spending Accounts (HSAs). The company operates primarily through its subsidiary, PreAxia Health Care Payment Limited, and is based in Calgary, Alberta. This review will delve into the company's 2024 10-K filing, examining its business model, financial health, and potential risks.

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Business Overview

PreAxia is positioned to capitalize on the growing trend of consumer-directed healthcare, which is creating opportunities for financial services and insurance industries. The company plans to offer a comprehensive suite of solutions and services aimed at the health payment market, with a focus on HSAs. These accounts allow employers to deposit funds for employees to use on eligible medical expenses, providing greater control over healthcare spending.

The company intends to launch its products in Canada, targeting small to medium-sized businesses initially, with plans to expand to larger employers over time. PreAxia's platform is designed to eliminate paper processes, offering savings in time and money for organizations and individuals.

Financial Performance

Revenue and Expenses

For the fiscal year ending May 31, 2024, PreAxia reported no revenue, similar to the previous year. The company earns a 10% commission on reimbursed expenses, but this has not yet translated into reported revenue. Total expenses for the year were $99,449, a decrease from $156,266 in 2023. This reduction was primarily due to a decrease in consulting fees.

Cash Flow and Liquidity

PreAxia's cash balance as of May 31, 2024, was $14, up from $6 the previous year. The company has a significant working capital deficit of $2,396,179, indicating financial strain. The ability to meet financial liabilities is heavily dependent on raising additional capital through equity issuance or loans.

Balance Sheet

The balance sheet reveals total assets of $14 and total liabilities of $2,396,193, resulting in a stockholders' deficit of $2,396,179. This financial position raises substantial doubt about the company's ability to continue as a going concern.

Risk Factors

PreAxia's 10-K filing does not list specific risk factors, but the company's financial condition presents inherent risks. The lack of revenue, significant working capital deficit, and reliance on external financing are critical concerns. Additionally, the company has not filed corporate tax returns from 2008 to 2024, which could pose legal and financial risks.

Management and Governance

The company's management team is led by Tom Zapatinas, who serves as President, CEO, and Director. The board consists of two directors, both of whom are not independent. The lack of independent directors and financial expertise on the board is a governance concern.

Conclusion

PreAxia Health Care Payment Systems Inc. is in a precarious financial position, with no revenue and a significant working capital deficit. The company's business model has potential in the growing HSA market, but the lack of financial stability and governance issues are significant hurdles. Investors should approach with caution, considering the high risk associated with the company's current financial and operational state.

Investment Score

Based on the analysis of PreAxia's 10-K filing, the company receives an investment score of 2.5 out of 10. This score reflects the high risk and uncertainty surrounding the company's financial health and operational viability.