Executive Summary / Key Takeaways

• PreAxia Health Care Payment Systems Inc. (PAXH), now operating as PreAxia-Zane Financial, is executing an ambitious strategic pivot towards an AI-powered "super-app" designed for Generation Z, aiming to automate personal financial management and optimize user funds.
• The company's foundational Health Spending Account (HSA) platform is fully operational, targeting the burgeoning consumer-directed healthcare market, which saw US HSA assets reach $123.30 billion in 2023, representing an 18% increase over the prior year.
• Despite its innovative technological roadmap, PreAxia-Zane operates without revenue and faces significant financial challenges, including a $2.34 million working capital deficit as of May 31, 2025, and a "going concern" doubt, underscoring an urgent need for substantial capital infusion.
• PreAxia-Zane's competitive strategy positions it as a "new category" in fintech, seeking to partner with existing institutions rather than directly compete, leveraging AI-driven differentiators such as a High-Interest Super Account (HISA) offering a 10% APY average.
• Investors should closely monitor the company's ability to secure an estimated $1.50 million in capital over the next twelve months, achieve critical market acceptance for its new platforms, and remediate identified material weaknesses in its internal financial controls.

The Fintech Frontier and PreAxia-Zane's Vision

The healthcare and financial services industries are experiencing a profound convergence, driven by escalating healthcare costs, evolving regulatory landscapes, and a growing consumer demand for greater control over their health benefits. This shift towards consumer-directed healthcare has created a significant market for innovative health payment solutions, particularly Health Spending Accounts (HSAs). The US HSA market alone reached $123.30 billion in assets and served 37.40 million consumers in 2023, marking an 18% increase in assets over the prior year. This robust growth underscores the fertile ground for companies offering streamlined health payment services.

PreAxia Health Care Payment Systems Inc., incorporated in 2000, has evolved its strategy to capitalize on this trend. Initially focused on its PreAxia Payment subsidiary, which offers a comprehensive suite of solutions for HSA management, the company has recently embarked on a transformative pivot. In May 2025, it established Zane Inc. CA, followed by Zane Inc. US in September 2025, to develop and market personal financial management tools. This strategic shift culminated in the Board of Directors' decision in September 2025 to operate as PreAxia-Zane Financial, signaling a dual focus on healthcare payments and an ambitious foray into AI-powered personal finance.

Technological Differentiators: The AI-Powered "Personal Banker"

At the heart of PreAxia-Zane's strategy is its commitment to technological innovation, particularly through its new Zane platform. The company aims to transcend traditional financial services by building an "AI-powered super-app" for Generation Z, effectively creating a "personal AI-banker in your pocket" that not only tracks money but actively and automatically manages it. This vision is underpinned by three breakthrough innovations designed to eliminate the need for conventional budgeting:

• High-Interest Super Account (HISA): This innovation seeks to remove the traditional boundaries between checking, savings, and investment accounts. It allows every dollar to grow at a compelling 10% APY average while remaining instantly accessible to the user. This offers a tangible and quantifiable benefit by maximizing passive income for users, a significant draw for a generation seeking optimized financial returns.
• Smart Debit Card: Designed to prevent overspending, the Smart Debit Card enforces daily spending limits based on predictive budgeting algorithms. This feature makes overspending "physically impossible" while simultaneously building credit automatically. The quantifiable benefit here is direct financial discipline and automated credit score improvement, addressing common financial pain points for younger consumers.
• MoneyNet: This distributed financial network monitors all user accounts across various institutions, automatically orchestrating fund movements. Its stated goals are to prevent overdrafts, maximize returns, and minimize fees, providing a seamless and optimized financial experience. The impact for investors is the potential for strong user retention and network effects as users consolidate their financial lives within the Zane ecosystem, leading to higher lifetime value.

The company's technology development is centered in Calgary, Canada, with regulatory operations managed from major financial centers in the United States and Canada. The appointment of Pavel Bondarev to the Board of Directors in June 2025, with his 15 years of global experience in AI, data science, and digital strategy, underscores PreAxia-Zane's commitment to leveraging advanced technology to achieve its ambitious goals. These technological differentiators are crucial to PreAxia-Zane's competitive moat, aiming to drive user adoption, enhance financial performance through service fees, and establish a unique market position for long-term growth.

Competitive Landscape: A New Category, Not Just a Competitor

PreAxia-Zane asserts that it occupies a "unique position in the fintech ecosystem," aiming to be understood as a "new category entirely" rather than a direct competitor to existing players. This strategic positioning is critical, as the healthcare payment and personal finance markets are highly competitive and fragmented.

In the traditional Health Spending Account (HSA) market, PreAxia faces established providers such as Benecaid and Olympia Benefits, both leading providers in Canada. QuickCard also offers HSAs, differentiating itself with a credit-type card for qualified health products and services. While these competitors offer various versions of HSAs, PreAxia's approach is to provide "a high value added and robust capability within specific target markets," contrasting with the "one size fits all" approach of larger companies.

In the broader fintech space, particularly concerning mobile internet money management, companies like Zelle represent indirect competition. However, PreAxia-Zane's AI-powered super-app aims to transcend these offerings. Management states, "Were not building a better budgeting app - were eliminating the need for budgeting by giving users a personal AI banker that handles it automatically." This suggests a qualitative advantage in user experience and automation over conventional budgeting tools. Furthermore, by "making traditional banking boundaries irrelevant through an AI advisor that orchestrates across all institutions," PreAxia-Zane seeks to differentiate itself from digital banks.

Compared to larger, more diversified financial technology providers like Fidelity National Information Services (FIS), or healthcare technology giants such as Change Healthcare (part of UnitedHealth Group (UNH)) and Optum (also part of UnitedHealth Group), PreAxia-Zane's niche focus on AI-driven personal finance for Generation Z and specialized HSA management provides a distinct value proposition. While these larger entities benefit from immense scale, established networks, and robust financial health, PreAxia-Zane's agility and specialized technological innovation could allow it to capture specific market segments more effectively. For instance, PAXH's offerings in online health spending accounts and card processing may provide notably easier implementation for smaller-scale clients compared to Optum's more complex, enterprise-level solutions.

This positioning is designed to foster partnerships rather than direct competition. PreAxia-Zane envisions universities using its platform to improve student retention, employers offering it as an employee benefit, and even traditional banks seeing it as a way to remain relevant to younger customers. The long-term vision extends to aggregating transaction-level data across millions of users to offer predictive analytics to retailers and service providers, creating a virtuous cycle where B2B revenue subsidizes free consumer services. This strategy aims to build a competitive moat through network effects and data insights, potentially enhancing future revenue streams and market share.

Financial Performance and Liquidity: A Development Stage Enterprise

PreAxia-Zane's financial statements for the fiscal years ended May 31, 2025, and 2024, reflect a company in its development stage, characterized by significant investment in product development and a lack of revenue generation. The company reported $0 in revenue for both periods.

Operating expenses, however, saw an increase. Total expenses for the year ended May 31, 2025, were $152,124, up from $99,449 in the prior year. This increase was primarily driven by higher consulting fees, which rose from $60,000 in 2024 to $100,000 in 2025, and professional fees, which increased by $28,824 to $47,478. Notably, research and development expenses decreased to $0 in 2025 from $5,632 in 2024, attributed to a reduction in software lease expenses. The company did record a $70,114 gain on the settlement of old accounts payable in 2025, which partially offset its operating losses. Consequently, the net loss for the year ended May 31, 2025, was $80,654, compared to $99,449 in the previous year.

Liquidity remains a critical concern. As of May 31, 2025, PreAxia-Zane had a cash balance of $0 and a working capital deficit of $2.34 million. The company explicitly states that its cash and cash equivalents "will not be sufficient to meet its working capital requirements for the next twelve-month period." Management projects a need for an estimated $1.50 million over the next twelve months to cover arms-length creditors and complete its business plan. The ability to meet financial liabilities is "primarily dependent upon the continued issuance of equity to new stockholders and our ability to achieve and maintain profitable operations."

Recent capital activities include the CEO converting $1.53 million in convertible debt to common stock at $0.10 per share in June 2025. In August 2025, the company raised an additional $200,000 through a private placement of 800,000 shares and issued 400,000 shares for debt and services valued at $100,000. These efforts highlight the ongoing need for external financing to sustain operations and execute its strategic vision. It is important to note that the company's financial statements for the fiscal years ended May 31, 2025, and 2024, have not been audited or reviewed by a PCAOB Registered Accounting firm.

Outlook and Strategic Initiatives: Building for the Future

PreAxia-Zane's forward-looking strategy for the next twelve months is ambitious and multi-faceted, focusing on critical areas to transition from a development-stage company to a revenue-generating enterprise. The company plans to:

• Raise additional capital to execute its business plans.
• Develop a comprehensive suite of personal financial management applications and websites.
• Penetrate the United States and Canadian markets by continuing to develop innovative financial processing products and services.
• Build a network of strategic alliances with banking and insurance companies, governments, and other partners across various vertical markets.
• Fill key senior management, sales, administrative, and engineering positions.

The company anticipates hiring additional key staff in 2025 and beyond across administration/accounting, business development, operations, sales/marketing, and research/development to support these initiatives. Operationally, PreAxia-Zane is establishing dual headquarters, with technology development centered in Calgary, Canada, and regulatory operations managed from major financial centers in both the United States and Canada. This structure is designed to navigate the complex regulatory landscape while maintaining agility for rapid innovation. The company intends to achieve service volume and economies of scale through direct marketing to target customers, market-specific channel partners, and an education-based public relations strategy.

Risks and Challenges: A High-Stakes Transformation

Investing in PreAxia-Zane presents a high-risk, high-reward proposition, primarily due to its early stage of development and significant financial uncertainties. The most pressing risk is the "substantial doubt about our ability to continue as a going concern." The company's continuation is contingent upon securing further long-term financing, achieving successful market acceptance of its products, and reaching a profitable level of operations. There are no assurances that the necessary funds will be obtained on commercially reasonable terms, or at all, which could force the company to scale down or cease operations.

Beyond funding, market acceptance of the new AI-powered Zane platform is paramount. While the concept of an AI-driven "personal banker" is compelling, successful execution and widespread adoption in a competitive fintech landscape are not guaranteed. The company also faces risks from product development or other initiatives by competitors, which could impact its market positioning.

Furthermore, PreAxia-Zane has identified material weaknesses in its internal control over financial reporting as of May 31, 2025. These include a lack of accounting staff with sufficient technical knowledge for U.S. income taxes and complex US GAAP matters, and a failure to file corporate tax returns from 2008 through 2025. While the company intends to hire staff with US GAAP expertise and professionals to prepare and file tax returns, these issues highlight operational and compliance challenges that could hinder its growth and investor confidence.

Conclusion

PreAxia-Zane Financial (PAXH) stands at a critical juncture, attempting a bold transformation from a nascent healthcare payment processor to an innovative AI-powered fintech player. The company's vision for an AI-driven "super-app" for Generation Z, coupled with its operational HSA platform, targets significant growth opportunities in consumer-directed healthcare and personal finance. Its technological differentiators, such as the 10% APY HISA and Smart Debit Card, offer compelling value propositions that could carve out a unique market niche.

However, this ambitious narrative is shadowed by substantial financial challenges, including a lack of revenue, a significant working capital deficit, and a "going concern" doubt. The company's ability to secure the estimated $1.50 million in capital required for its next twelve months of operations and to successfully execute its strategic initiatives will be paramount. For discerning investors, PreAxia-Zane represents a high-risk, high-reward opportunity. Its future hinges on successful capital raises, robust market adoption of its innovative AI platforms, and diligent remediation of its internal control weaknesses, all within a rapidly evolving and competitive fintech landscape.