Type 10-Q PREAXIA HEALTH CARE PAYM For: Feb 29

Notice 4 – Associated Social gathering Transactions

Accounts Payable and Accrued Liabilities
– Associated Events

Through the 9 months ended February 29, 2020
and February 28, 2019, Tom Zapatinas, the Chief Government Officer and Director of the Firm, earned $90,000 and $90,000, respectively,
for consulting providers supplied to the Firm. Accounts payable and accrued liabilities – associated celebration resulting from Tom Zapatinas
totaled $279,121 and $239,121 at February 29, 2020 and May 31, 2019, respectively.

On October 29, 2019, the Firm issued 100,000
shares of frequent stock of the Firm to settle accounts payable and accrued liabilities– associated celebration with a carrying value
of $50,000.

Advances – Associated Social gathering

Through the 9 months ended February 29, 2020
and February 28, 2019, Tom Zapatinas, the Chief Government Officer and a Director of the Firm, superior the Firm $15,328 and
$24,471, respectively, in cash and was repaid $8,587 and $16,782, respectively. Advances payable resulting from Tom Zapatinas totaled $7,456
and $715 at February 29, 2020 and May 31, 2019, respectively.

Loans Payable – Shareholders

As of February 29, 2020 and May 31, 2019, loans
payable – shareholders are $132,902 and $132,902, respectively. Loans payable – shareholders are unsecured, non-interest
bearing and due on demand. Through the 9 months ended February 29, 2020 and February 28, 2019, there have been no advances or repayments
associated to loans payable – shareholders.

Convertible Notice Payable – Associated
Social gathering

As of February 29, 2020 and May 31, 2019, convertible
notice payable – associated celebration of $1,058,760 is because of Tom Zapatinas, the Chief Government Officer and a Director of the Firm.
The Notice is non-interest bearing, unsecured, payable on demand and convertible in entire or partially into shares of frequent stock
of the Firm at a conversion price of $0.10 per share, which equates to 10,587,600 shares.

Notice 5 – Stockholders’ Deficit

Frequent Inventory

Frequent Inventory, par value of $0.001 per share;
75,000,000 shares approved: 19,767,698 and 19,667,698 shares issued and excellent at February 29, 2020 and May 31, 2019, respectively.
Holders of Frequent Inventory have one vote per share of Frequent Inventory held.

On October 29, 2019, the Firm issued 100,000
shares of frequent stock of the Firm to settle accounts payable and accrued liabilities– associated celebration with a carrying value
of $50,000.

Notice 6 – Contingencies
and Commitments

Sometimes the Firm may be a celebration
to litigation issues involving claims towards the Firm.  Administration believes that there aren’t any present issues that may
have a cloth impact on the Firm’s monetary place or outcomes of operations. 

The Firm doesn’t have long-term commitments
for gear purchases or leases. The Firm doesn’t lease workplace house because the CEO operates the enterprise from his private residence.

Notice 7 – Subsequent Occasions

COVID-19

The current outbreak of the coronavirus COVID-19
has unfold throughout the globe and is impacting worldwide financial exercise. Circumstances surrounding the coronavirus proceed to quickly
evolve and authorities authorities have carried out emergency measures to mitigate the unfold of the virus. The outbreak and the
associated mitigation measures have had and can proceed to have a cloth adversarial affect on international financial circumstances as properly
as on the Firm’s enterprise actions. The extent to which COVID-19 may affect the Firm’s enterprise actions will rely
on future developments, similar to the last word geographic unfold of the illness, the length of the outbreak, journey restrictions,
enterprise disruptions, and the effectiveness of actions taken within the Canada, United States and different nations to comprise and deal with
the illness. These occasions are extremely unsure and, as such, the Firm can not decide their monetary affect right now.
No changes have been made to the quantities reported in these condensed consolidated monetary statements on account of this
matter.

The Firm has evaluated all subsequent occasions
via the date these monetary statements have been issued and no extra subsequent occasions occurred that required disclosure.

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

This quarterly report comprises forward-looking
statements referring to future occasions or our future monetary efficiency.  In some instances, you possibly can determine forward-looking
statements by terminology similar to “may,” “should,” “intends,” “expects,” “plans,”
“anticipates,” “believes,” “estimates,” “predicts,” “potential,” or
“continue” or the adverse of those phrases or different comparable terminology.  These statements are solely predictions
and contain recognized and unknown dangers, uncertainties and different components which may trigger our or our trade’s precise outcomes, ranges
of exercise or efficiency to be materially completely different from any future outcomes, ranges of exercise or efficiency expressed or implied
by these forward-looking statements.

Such components embody, amongst others, the next:
worldwide, nationwide and native basic financial and market circumstances; demographic modifications; the power of PreAxia to maintain,
handle or forecast its progress; the power of PreAxia to efficiently make and combine acquisitions; uncooked materials prices
and availability; new product improvement and introduction; present authorities rules and modifications in, or failure to conform
with authorities rules; adversarial publicity; competitors; the lack of vital clients or suppliers; fluctuations and problem
in forecasting working outcomes; modifications in enterprise technique or improvement plans; enterprise disruptions; the power to draw
and retain certified personnel; the power to guard expertise; and different components referenced on this and former filings.

Though we consider that the expectations mirrored
within the forward-looking statements are affordable, we can not assure future outcomes, ranges of exercise or efficiency.  Besides
as required by relevant legislation, together with the securities legal guidelines of the US, we don’t intend to replace any of the forward-looking
statements to evolve these statements to precise outcomes.

Given these uncertainties, readers of this
Type 10-Q and buyers are cautioned to not place undue reliance on such forward-looking statements.  PreAxia disclaims
any obligation to replace any such components or to publicly announce the results of any revisions to any of the forward-looking statements
contained herein to replicate future occasions or developments, besides as required by relevant legislation, together with the securities legal guidelines
of the US.

All quantities acknowledged herein are in US {dollars}
except in any other case indicated.

The administration’s dialogue and
evaluation of our monetary situation and outcomes of operations are based mostly upon our condensed consolidated monetary statements,
which have been ready in accordance with accounting rules typically accepted in the US of America
(“GAAP”).  The next dialogue of our monetary situation and outcomes of operations needs to be learn
along with our audited consolidated monetary statements for the 12 months ended May 31, 2019, along with notes
thereto.  As used on this quarterly report, the phrases “we,” “us,” “our,”
“PreAxia” and the “Company” means PreAxia Well being Care Cost Techniques Inc. and its wholly-owned
subsidiaries, except the context clearly requires in any other case.

Normal Overview

Company Overview

PreAxia Well being Care Cost Techniques
Inc. (the “Company” or “PreAxia”) was included on April 3, 2000 within the State of Nevada.

The Firm primarily undertakes its
operations via its wholly-owned subsidiary, PreAxia Well being Care Cost Restricted (“PreAxia Payment”). PreAxia Cost
was included pursuant to the legal guidelines of the Province of Alberta on November 26, 2015.

Normal Overview

PreAxia Cost is an organization which intends
to ship a complete suite of options and providers directed on the rising well being cost market, particularly the alternatives
tied to the expansion of well being spending accounts (“HSA”). There’s a fast shift in healthcare conventional cost models
to consumer-directed healthcare that’s creating vital alternatives for monetary providers and insurance coverage industries to ship
new dynamic merchandise to this rising market.

Spawned by the necessity to tackle escalating
well being care prices, modifications within the regulatory surroundings and the rising client want for better participation within the administration
of their well being advantages, the boundaries between well being care and the monetary providers industries have gotten more and more blurred.
With the development in direction of self-directed well being cost options and the rising demand for sooner, simpler and extra handy profit
providers, the insurance coverage and advantages industries are banking on HSA medical funds being their subsequent huge progress conduit. Research
recommend that HSAs within the US reached $61.7 billion in belongings and 26.Zero million shoppers in 2019, a rise of 20% of belongings over
the prior interval. The Canadian marketplace for well being advantages is estimated at greater than $30 Billion of which HSAs are estimated to
have achieve a 10% share. This coupled with the continued progress of the Canadian group insurance coverage trade illustrates the rising
alternative for progressive well being cost providers. We intend to initially launch our merchandise in Canada. We consider that Canadian
companies are embracing a brand new healthcare financing car to offer better value to staff, enhance profitability and get
extra return from their funding. We intend to offer them with providers to seize this market alternative.

Description of Well being Spending Account
(“HSA”)

An HSA is a uniquely designed account established
completely and particularly for the aim of well being care spending. An employer deposits funds right into a particular account for the
worker. These funds can be utilized to pay for eligible medical and associated well being care bills for the worker and their dependents.
HSAs present employers and staff with better management in each the quantity of funds invested and the way these funds are used.

Companies and infrastructure supplied by PreAxia
allow organizations and people to remove all paper concerned within the administration of those accounts and profit via financial savings
in money and time.

The PreAxia platform for processing and managing
accounts, together with cardholder and buyer account administration, reconciliation and monetary settlement, and buyer reporting
is absolutely operational.

Over time, the Firm will consider
alternatives for types of digital banking and PayPal-type providers. One alternative seen as notably related to the
well being care market is to supply immediate issuing providers that allow companies to difficulty and fund Pre-Paid Interac or credit score
card providers to beneficiaries in actual time. If carried out, the beneficiary will most definitely choose a private
identification quantity (“PIN”) utilizing a PIN and card activation terminal, thus gaining immediate entry to funds that
may be reloaded. This consideration would require improvement of software program techniques for the issuing of well being cost playing cards and
monetary transaction processing providers that may be absolutely managed by an information heart.

Matching of shoppers in want of well being
care services or products with suppliers is one other space PreAxia intends to judge. Customers managing their well being care {dollars}
via a web-based system will discover comfort in looking for out well being care professionals and providers via the identical system.

Distribution Strategies and Advertising
Technique

PreAxia operates on a Cloud Computing
Platform that makes it accessible to anybody with a private laptop and Web entry. The preliminary marketplace for PreAxia’s
HSA Administration Resolution is small and medium sized firms that aren’t at present properly served by the present group advantages model.
The monetary advantages of the PreAxia enterprise model, nonetheless, are additionally related to bigger employers and we consider that these
bigger employers will migrate to the PreAxia product over time.

PreAxia’s advertising technique is
to advertise its present platform direct to shoppers and companies, and to the teams that almost all want entry to it; unbiased
brokers, monetary advisors and small to medium sized companies. Brokers ought to see PreAxia as a superior technique of selling
and supporting HSAs that enable them to earn above common fee charges on invested funds. Monetary advisors ought to see PreAxia
in the same approach as brokers besides that there’s the extra good thing about tax discount. Small to medium sized companies, which
are anticipated to drive the expansion in enterprise, ought to see PreAxia as providing monetary financial savings to the corporate and to staff
by providing private well being care advantages via an HSA, together with the identical conveniences they’ve come to anticipate from different
providers they at present make the most of over the Web. It’s anticipated that the group advantages market will subsequently observe as they
too understand some great benefits of PreAxia over their present HSA choices. PreAxia has begun and can proceed to hunt alternatives
with lead clients and alliance companions to determine reference-able, high-profile implementations and market-leading, early-adopter
companies for additional creating progressive services. The Firm intends to design options focused in direction of company
monetary administration, monetary danger, audit administration and cash administration whereas focusing on product/service administration as a assist
to monetary administration.

We anticipate that the prime goal
for providers will probably be small to medium sized organizations that aren’t adequately served by the present insurance coverage and group advantages
choices. These organizations ought to understand vital advantages in each price and time financial savings by utilization of PreAxia expertise
whereas offering their staff with an elevated degree of advantages.

PreAxia intends to attain service quantity
and the related economies of scale via advertising instantly to pick out goal clients that present the required transaction
volumes, via market particular channel companions and thru an training based mostly public relations technique geared to the small
to mid-sized employers together with the brokers and monetary advisors utilized by these companies. The channel technique is supported
within the resolution design, as a number of channel companions may require customized pricing and compensation.

It’s our Firm’s intention
that brokers and monetary advisors will aggressively promote their PreAxia supported HSA choices because of the high quality of product,
larger margins and due to the non-competitive relationship with PreAxia.

PreAxia has recognized the next
“channels” via which it can goal prime finish market clients:

PreAxia intends to determine a number of key buyer
reference accounts, channel advertising companions and expertise alliances. These company relationships are related to advancing
our firm’s targets in 2020 and past for attaining a main place within the Canadian market and establishing a stable
service basis.

Aggressive Enterprise Circumstances and
our Firm’s Aggressive Place within the Trade and Strategies of Competitors

PreAxia intends to supply a mixture of merchandise
and providers in its resolution. Nevertheless, there are different suppliers of parts or variations of the Well being Spending Accounts within the
market. Our strategy is to offer a excessive value added and sturdy functionality inside particular goal markets, slightly than the
“one size fits all” and mass quantity strategy of the bigger firms within the Canadian and worldwide market. This
is in keeping with the PreAxia platform which has been designed for growth in the US and internationally. The next
are a few of the main suppliers of services which can be or may be potential rivals in PreAxia’s goal markets:

US and Worldwide Markets

Mental Property and Patent Safety

At current, PreAxia doesn’t have any pending
or registered patents or any emblems.

Plan of Operation

Over the subsequent twelve months, we plan
to:

 Liquidity and Capital Assets

As of February 29, 2020, PreAxia’s cash
steadiness was $Zero in comparison with $17,939 as of May 31, 2019.  Our Firm will probably be required to lift capital to fund our operations.  PreAxia’s
cash readily available is at present its solely supply of liquidity.  PreAxia had a working capital deficit of $1,757,217 as of February
29, 2020 in contrast with a working capital deficit of $1,674,962 as of May 31, 2019.  

Our capability to satisfy our monetary liabilities
and commitments is primarily dependent upon the continued issuance of fairness to new stockholders and our capability to attain and
keep worthwhile operations.  PreAxia’s cash and cash equivalents won’t be adequate to satisfy its working capital
necessities for the subsequent twelve-month interval.   We won’t initially have any cash stream from working actions
as we’re within the startup stage.   We undertaking that we are going to require an estimated $3,150,000 over the subsequent twelve-month
interval to fund our working capital deficit of roughly $1,700,000 plus an extra $1,450,000 to finish our marketing strategy. The
Firm plans to lift the capital required to fulfill our fast short-term wants and extra capital required to satisfy our
estimated funding necessities for the subsequent twelve months primarily via the non-public placement of our fairness securities or by
approach of loans or such different means as PreAxia may decide.  

There aren’t any assurances that we are going to give you the option
to acquire funds required for our continued operations.  There may be no assurance that extra financing will probably be obtainable
to us when wanted or, if obtainable, that it may be obtained on commercially affordable phrases.  If we’re not in a position to
receive the extra financing on a well timed foundation, we will be unable to satisfy our different obligations as they turn out to be due and we
will probably be compelled to scale down or even perhaps stop the operation of our enterprise.

There may be substantial doubt about our capability
to proceed as a going concern because the continuation of our enterprise relies upon acquiring additional long-term financing, profitable
and adequate market acceptance of our merchandise and attaining a worthwhile degree of operations.  The Firm hopes to
have the ability to entice appropriate buyers for our marketing strategy, which won’t require us to make use of our cash. There may be no assurance
that the Firm will probably be profitable on this scenario. The Firm is unable to foretell the impact, if any, that the coronavirus
COVID-19 international pandemic may have on its entry to the financing markets. The issuance of extra fairness securities by us may
end in a big dilution within the fairness pursuits of our present stockholders.  Acquiring industrial loans, assuming
these loans could be obtainable, will enhance our liabilities and future cash commitments.

Our working capital (deficit) as of February
29, 2020 in comparison with May 31, 2019 is summarized as follows:

Working Capital

The rise in our working capital deficit
of $82,255 was primarily resulting from a rise in our accounts payable – associated celebration and a rise in accounts payable and accrued
liabilities.

Off-Steadiness Sheet Preparations

We now have no off-balance sheet preparations that
have or are moderately prone to have a present or future impact on our monetary situation, modifications in monetary situation, revenues
or bills, outcomes of operations, liquidity, capital expenditures or capital assets that’s materials to stockholders.

Outcomes of Operations – Three Months
Ended February 29, 2020 and February 28, 2019

The next abstract of our outcomes of operations
needs to be learn along with our unaudited condensed consolidated monetary statements for the three months ended February
29, 2020.

For the three month durations ended February
29, 2020 and February 28, 2019

Our working outcomes for the three month interval
ended February 29, 2020 in comparison with the three month interval ended February 28, 2019 are described under:

Income

We now have not earned any revenues since our inception
and we don’t anticipate incomes revenues till such time as we’ve got accomplished the event of our Well being Card software program and
obtained new clients.

Bills

Our working loss for the three month interval
ended February 29, 2020 was $45,115 in comparison with $47,926 for the three month interval ended February 28, 2019. The lower in loss
of $2,811 for the three months interval ending February 29, 2020 is because of a rise in skilled charges of $1,524, a lower
in analysis and improvement of $4,142 and a lower of $194 in workplace and administration charges.

Consulting Charges

Through the three months ended February 29,
2020 and February 28, 2019, Tom Zapatinas, the Chief Government Officer and Director of the Firm, earned $30,000 and $30,000,
respectively, for consulting providers supplied to the Firm.

Analysis and Growth

Analysis and improvement bills through the
three month interval ended February 29, 2020 decreased by $4,142 in comparison with the three month interval ended February 28, 2019, as net
updates and platform improvement have been being accomplished within the earlier 12 months.

Wages and Advantages

There have been no wages and advantages through the
three month interval ended February 29, 2020 or February 28, 2019.

Workplace and Administration

Workplace and administration
bills decreased by $194 for the interval ended February
29, 2020 in comparison with the three month interval ended February 28, 2019, resulting from a lower in journey bills.

Skilled Charges

Skilled charges through the three months ended
February 29, 2020 elevated by $1,524 in comparison with the three months ended February 28, 2019, resulting from a rise in accounting charges.

Curiosity Expense

Curiosity expense is $Zero for the three months
ended February 29, 2020 and February 28, 2019 as a result of accounts payable and accrued liabilities – associated celebration, convertible
notice payable – associated celebration and loans payable – shareholders are non-interest bearing.

Outcomes of Operations – 9 months
Ended February 29, 2020 and February 28, 2019

The next abstract of our outcomes of operations
needs to be learn along with our unaudited condensed consolidated monetary statements for the 9 months ended February
29, 2020.

For the 9 month interval ended February
29, 2020 and February 28, 2019

Our working outcomes for the 9 month interval
ended February 29, 2020 in comparison with the 9 month interval ended February 28, 2019 are described under:

Income

We now have not earned any revenues since our inception
and we don’t anticipate incomes revenues till such time as we’ve got accomplished the event of our Well being Card software program and
obtained new clients.

Bills

Our working loss for the 9 month interval
ended February 29, 2020 was $132,255 in comparison with $151,383 for the 9 month interval ended February 28, 2019. The lower in loss
of $19,128 for the 9 month interval ending February 29, 2020 is because of a lower in consulting charges of $1,911, a rise in
skilled charges of $3,884, a lower in analysis and improvement of $12,226 and a lower of $8,875 in workplace and administration
charges.

Consulting Charges

Through the 9 months ended February 29, 2020
and February 28, 2019, Tom Zapatinas, the Chief Government Officer and Director of the Firm, earned $90,000 and $90,000, respectively,
for consulting providers supplied to the Firm.

Analysis and Growth

Analysis and improvement bills through the
9 month interval ended February 29, 2020 decreased by $12,226 in comparison with the 9 month interval ended February 28, 2019, as net
updates and platform improvement have been being accomplished within the earlier 12 months.

Wages and Advantages

There have been no wages and advantages through the
9 month durations ended February 29, 2020 or February 28, 2019.

Workplace and Administration

Workplace and administration
bills decreased by $8,875 for the interval ended
February 29, 2020 in comparison with the 9 month interval ended February 28, 2019, resulting from a lower in journey bills.

Skilled Charges

Skilled charges through the 9 months ended
February 29, 2020 elevated by $3,884 in comparison with the 9 month interval ended February 28, 2019, because of the timing of our annual
audit.

Curiosity Expense

Curiosity expense is $Zero for the 9 months
ended February 29, 2020 and February 28, 2019 as a result of accounts payable and accrued liabilities – associated celebration, convertible
notice payable – associated celebration and loans payable – shareholders are non-interest bearing.

Important Accounting Insurance policies

We now have recognized sure accounting insurance policies,
described under, which can be crucial to the portrayal of our present monetary situation and outcomes of operations.

Income recognition

In accordance with ASC 606, income is acknowledged
when a buyer obtains management of promised items or providers. The quantity of income acknowledged displays the consideration to which
we anticipate to be entitled to obtain in exchange for these items or providers. The provisions of ASC 606 embody a five-step course of
by which we decide income recognition, depicting the switch of products or providers to clients in quantities reflecting the cost
to which we anticipate to be entitled in exchange for these items or providers. ASC 606 requires us to use the next steps: (1)
determine the contract with the shopper; (2) determine the efficiency obligations within the contract; (3) decide the transaction
price; (4) allocate the transaction price to the efficiency obligations within the contract; and (5) acknowledge income when, or as,
we fulfill the efficiency obligation.

Software program Growth Prices

The Firm accounts for software program improvement
prices in accordance with a number of accounting pronouncements, together with FASB ASC 730, Analysis and Growth, FASB ASC 350-40,
Inside-Use Software program, FASB 985-20, Prices of Laptop Software program to be Bought, Leased, or Marketed and FASB ASC 350-50, Web site Growth
Prices.

Prices incurred through the interval of planning
and design, previous to the interval figuring out technological feasibility, for all software program developed to be used inner and exterior,
has been charged to operations within the interval incurred as analysis and improvement prices.  Moreover, prices incurred after
dedication of readiness for market have been expensed as analysis and improvement.

ITEM 3.  QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK

Not relevant.

ITEM 4. CONTROLS AND PROCEDURES.

Analysis of Disclosure Controls
and Procedures

Administration, evaluated the effectiveness
of our disclosure controls and procedures, as outlined beneath Alternate Act Rule 13a-15(e). Primarily based upon this analysis, the Chief
Government Officer and Chief Monetary Officer concluded that, as of February 29, 2020, the disclosure controls and procedures have been
not efficient.