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What changed in FingerMotion, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of FingerMotion, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+248 added−264 removedSource: 10-K (2024-05-29) vs 10-K (2023-05-30)

Top changes in FingerMotion, Inc.'s 2024 10-K

248 paragraphs added · 264 removed · 197 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

73 edited+10 added−8 removed132 unchanged
Biggest changeIn addition, developing customized product solutions with reinsurers will augment value proposition, offering more personalized and efficient coverage based on the latent risks of individuals. Precision marketing enhances product take-up rates, while preferred risk selection is expected to attract profitable business and improve portfolio results.
Biggest changeChannel expansion could be achieved by cross-selling through the Company’s affiliated company and reinsurance brokerage firm partner, supported by leads generation for niche marketing and further upselling. In addition, developing customized product solutions with reinsurers will augment value proposition, offering more personalized and efficient coverage based on the latent risks of individuals.
As consideration for the service it provides under the Cooperation Agreement, JiuGe Technology receives a percentage of the revenue received from all sales it processes for China Unicom on the platform.
As consideration for the service JiuGe Technology provides under the Cooperation Agreement, it receives a percentage of the revenue received from all sales it processes for China Unicom on the platform.
Our subsidiaries and the VIE are currently not required to obtain permission from the Chinese authorities including the China Securities Regulatory Commission (the “ CSRC ”), or Cybersecurity Administration Committee (the “ CAC ”), to operate or to issue securities to foreign investors.
Our subsidiaries and the VIE are currently not required to obtain permission from the Chinese authorities including the China Securities Regulatory Commission (the “ CSRC ”), or Cybersecurity Administration Committee (the “ CAC ”), to operate or to issue securities to foreign investors.
The VIE Agreements include a Consulting Services Agreement, a Loan Agreement, a Power of Attorney Agreement, a Call Option Agreement, and a Share Pledge Agreement in order to secure the connection and commitments of the JiuGe Technology. We operate our mobile payment platform business through JiuGe Technology.
The VIE Agreements include a Consulting Services Agreement, a Loan Agreement, a Power of Attorney Agreement, a Call Option Agreement, and a Share Pledge Agreement in order to secure the connection and commitments of JiuGe Technology. We operate our mobile payment platform business through JiuGe Technology.
Ltd Shanghai JiuGe Information Technology Co. Ltd Obtained 2020SR0809253 China JiuGe Risk Assessment System Software V1.0.0 (5) Shanghai JiuGe Information Technology Co. Ltd Shanghai JiuGe Information Technology Co. Ltd Obtained 2020SR0860695 China JiuGe Internet Big Data Software V1.0.0 (6) Shanghai JiuGe Information Technology Co. Ltd Shanghai JiuGe Information Technology Co.
Ltd Obtained 2020SR0809253 China JiuGe Risk Assessment System Software V1.0.0 (5) Shanghai JiuGe Information Technology Co. Ltd Shanghai JiuGe Information Technology Co. Ltd Obtained 2020SR0860695 China JiuGe Internet Big Data Software V1.0.0 (6) Shanghai JiuGe Information Technology Co. Ltd Shanghai JiuGe Information Technology Co.
Worldwide, the GSM Association (GSMA) indicates 90 operators have launched RCS in 60 countries, attracting approximately 421 million users and projecting an estimated value of $15.78 billion by 2027, growing at a CAGR of 18.5%. 3 On April 8, 2020, China’s three major telecommunication operators, namely China Mobile, China Telecom and China Unicom, released a 5G messaging white paper outlining their commitment to mandate all compatible handsets sold in the country support RCS. 4 5G messaging service or RCS can support not only Person-to-Person (P2P) messaging, but also Application-to-Person (A2P) messaging.
Worldwide, the GSM Association (GSMA) indicates 90 operators have launched RCS in 60 countries, attracting approximately 421 million users and projecting an estimated value of $15.78 billion by 2027, growing at a CAGR of 18.5%. 4 On April 8, 2020, China’s three major telecommunication operators, namely China Mobile, China Telecom and China Unicom, released a 5G messaging white paper outlining their commitment to mandate all compatible handsets sold in the country support RCS. 5 5G messaging service or RCS can support not only Person-to-Person (P2P) messaging, but also Application-to-Person (A2P) messaging.
The Company intends to also continue to build its core values to enhance and differentiate its support and services to ensure it is able to stand out from its competitors. -14- Table of Contents Sales and Marketing ■ The Company’s sales and marketing efforts are focused on promoting brand awareness of its JiuGe telecommunication stores currently operating on most major e-commerce and social media platforms in China. ■ The Company is continuously planning, in cooperation with its telco partners, seasonal and targeted marketing events in different provinces and cities. ■ Since the inception of JiuGe Technology in 2018, the Company has secured contracts and agreements to work with nine (9) online stores and twenty (20) business partners.
The Company intends to also continue to build its core values to enhance and differentiate its support and services to ensure it is able to stand out from its competitors. -16- Table of Contents Sales and Marketing ■ The Company’s sales and marketing efforts are focused on promoting brand awareness of its JiuGe telecommunication stores currently operating on most major e-commerce and social media platforms in China. ■ The Company is continuously planning, in cooperation with its telco partners, seasonal and targeted marketing events in different provinces and cities. ■ Since the inception of JiuGe Technology in 2018, the Company has secured contracts and agreements to work with nine (9) online stores and twenty (20) business partners.
As a result of our use of the VIE structure, you may never directly hold equity interests the VIE. Any securities that we offer will be securities of the Company, the Delaware holding company, not of the VIE. We fund the registered capital and operating expenses of the VIE by extending loans to the shareholders of the VIE.
As a result of our use of the VIE structure, you may never directly hold equity interests in the VIE. Any securities that we offer will be securities of the Company, the Delaware holding company, not of the VIE. We fund the registered capital and operating expenses of the VIE by extending loans to the shareholders of the VIE.
The Power of Attorney Agrement was duly issued by Ms. LI Li to the WFOE. Under the the JiuGe Technology Power of Attorney Agreement, the WFOE is the exclusive agent who may exercise, at WFOE’s sole discretion, all the rights and powers in respect of all the 100% equity interests held by Ms. Li Li in the VIE on Ms.
The Power of Attorney Agreement was duly issued by Ms. Li Li to the WFOE. Under the JiuGe Technology Power of Attorney Agreement, the WFOE is the exclusive agent who may exercise, at WFOE’s sole discretion, all the rights and powers in respect of all the 100% equity interests held by Ms. Li Li in the VIE on Ms.
The Company operates the following lines of business: (i) Telecommunications Products and Services; (ii) Value Added Products and Services (iii) Short Message Services (“ SMS ”) and Multimedia Messaging Services (“ MMS ”); (iv) a Rich Communication Services (“ RCS ”) platform; (v) Big Data Insights; and (vi) a Video Games Division (inactive).
The Company operates the following lines of business: (i) Telecommunications Products and Services; (ii) Value Added Products and Services (iii) Short Message Services (“ SMS ”) and Multimedia Messaging Services (“ MMS ”); (iv) a Rich Communication Services (“ RCS ”) platform; (v) Big Data Insights; and (vi) a Video Games Division (inactive).
Value Added Products and Services New product lines and services will be brought in by the Company to offer to the existing user base through the delivery channels of the Telecommunication partners and the platform partners. -8- Table of Contents Up-Stream Partners The Company partners with all three major telecommunication operators in China, namely China Mobile, China Unicom and China Telecom, to offer its products and services: Telecommunication Operator Products and Services China Mobile Recharge Service Data Plan Subscription Plans Mobile Protection Plans China Unicom Recharge Service Data Plan Subscription Plan Mobile Protection Plans China Telecom Recharge Service Data Plan Notes: In 2020, the Company entered into arrangements with two third party smartphone distributors (VSens and ZhengZhouXinSiWei) to extend their product offerings across online stores on various platforms.
Value Added Products and Services New product lines and services will be brought in by the Company to offer to the existing user base through the delivery channels of the Telecommunication partners and the platform partners. -10- Table of Contents Up-Stream Partners The Company partners with all three major telecommunication operators in China, namely China Mobile, China Unicom and China Telecom, to offer its products and services: Telecommunication Operator Products and Services China Mobile Recharge Service Data Plan Subscription Plans Mobile Protection Plans China Unicom Recharge Service Data Plan Subscription Plan Mobile Protection Plans China Telecom Recharge Service Data Plan Notes: In 2020, the Company entered into arrangements with two third party smartphone distributors (VSens and ZhengZhouXinSiWei) to extend their product offerings across online stores on various platforms.
Nevertheless, Chinese regulatory authorities may in the future promulgate laws, regulations or implement rules that require us, our subsidiaries or the VIEs to obtain permissions from such regulatory authorities to approve the operations of the VIE or any securities listing. -7- Table of Contents Products and Services Telecommunications Products and Services Historically, telecommunication operators focused their efforts on expanding their retail presence; however, consumer behaviors and demands have shifted from offline to online.
Nevertheless, Chinese regulatory authorities may in the future promulgate laws, regulations or implement rules that require us, our subsidiaries or the VIEs to obtain permissions from such regulatory authorities to approve the operations of the VIE or any securities listing. -9- Table of Contents Products and Services Telecommunications Products and Services Historically, telecommunication operators focused their efforts on expanding their retail presence; however, consumer behaviors and demands have shifted from offline to online.
In June 2018, we temporarily paused its publishing and operating plans for existing games, and the Company’s Board of Directors decided to re-focus the company’s resources into new business opportunities in China, particularly the mobile phone payment and data business. -3- Table of Contents Corporate Information The Company was initially incorporated as Property Management Corporation of America on January 23, 2014 in the State of Delaware.
In June 2018, we temporarily paused its publishing and operating plans for existing games, and the Company’s Board of Directors decided to re-focus the Company’s resources into new business opportunities in China, particularly the mobile phone payment and data business. -3- Table of Contents Corporate Information The Company was initially incorporated as Property Management Corporation of America on January 23, 2014 in the State of Delaware.
(“ TengLian ”) (a 99% owned subsidiary of Shanghai JiuGe Information Technology Co., Ltd.) signed a co-operation agreement with China Unicom to launch the Device Protection program for mobile phones and the new 5G phones. -6- Table of Contents Intercorporate Relationships The following is a list of all of our subsidiaries and the corresponding date of jurisdiction of incorporation or organization and the ownership interest of each.
(“ TengLian ”) (a 99% owned subsidiary of Shanghai JiuGe Information Technology Co., Ltd.) signed a co-operation agreement with China Unicom to launch the Device Protection program for mobile phones and the new 5G phones. -8- Table of Contents Intercorporate Relationships The following is a list of all of our subsidiaries and the corresponding date of jurisdiction of incorporation or organization and the ownership interest of each.
To address challenges resulting from laws, policies and practices that may disfavor foreign-owned entities that operate within industries deemed sensitive by the Chinese government, we use the VIE structure to provide contractual exposure to foreign investment in the PRC-based companies. We own 100% of the equity of a WFOE, Shanghai JiuGe Business Management Co., Ltd.
To address challenges resulting from laws, policies and practices that may disfavors foreign-owned entities that operate within industries deemed sensitive by the Chinese government, we use the VIE structure to provide contractual exposure to foreign investment in the PRC-based companies. We own 100% of the equity of a WFOE, Shanghai JiuGe Business Management Co., Ltd.
Name of Online Stores Partners / Platform Details JiuGe TongXin Store TMall.com Telco Products & Services HeNan China Mobile Store TMall.com China Mobile Flagship Store JiuGe Mobile Data Store PingDuoDuo.com Telco Products & Services JiuGe Mobile Data Store Tbao Telco Products & Services -9- Table of Contents SMS and MMS Services Short Message Service (SMS) remains the only secure and reliable communication medium that connects all telecommunication operators globally.
Name of Online Stores Partners / Platform Details JiuGe TongXin Store TMall.com Telco Products & Services HeNan China Mobile Store TMall.com China Mobile Flagship Store JiuGe Mobile Data Store PingDuoDuo.com Telco Products & Services JiuGe Mobile Data Store Tbao Telco Products & Services -11- Table of Contents SMS and MMS Services Short Message Service (SMS) remains the only secure and reliable communication medium that connects all telecommunication operators globally.
Ltd Obtained 2023SR0092476 China JiuGe Insurance Client Financial Rating System V1.0.0 (11) Shanghai JiuGe Information Technology Co. Ltd Shanghai JiuGe Information Technology Co. Ltd Obtained -16- Table of Contents Notes: (1) PigeonHoles Integration System is the Company’s proprietary universal exchange platform which provides seamless integration between telecommunication operators and online stores servicing PRC’s customers.
Ltd Obtained 2023SR0092476 China JiuGe Insurance Client Financial Rating System V1.0.0 (11) Shanghai JiuGe Information Technology Co. Ltd Shanghai JiuGe Information Technology Co. Ltd Obtained -18- Table of Contents Notes: (1) PigeonHoles Integration System is the Company’s proprietary universal exchange platform which provides seamless integration between telecommunication operators and online stores servicing PRC’s customers.
Similar to the mobile payment and recharge business, Beijing Technology is required to make a deposit or bulk purchase in advance and has secured business customers, including premium car manufacturers, hotel chains, airlines and e-commerce companies, that utilize Beijing Technology’s SMS integrated platform to send bulk SMS text messages monthly.
Similar to the mobile payment and recharge business, Beijing Technology is required to make a deposit or bulk purchase in advance and has secured business customers, including premium car manufacturers, hotel chains, airlines and e-commerce companies, that utilize Beijing Technology’s SMS integrated platform to send bulk SMS text messages monthly.
Any AML and sanctions compliance program we put in place will need to involve policies, procedures and internal controls designed to address these legal and regulatory requirements and assist in managing money laundering and terrorist financing risks. -17- Table of Contents Data Protection and Information Security.
Any AML and sanctions compliance program we put in place will need to involve policies, procedures and internal controls designed to address these legal and regulatory requirements and assist in managing money laundering and terrorist financing risks. -19- Table of Contents Data Protection and Information Security.
The Corporate Actions and the amended certificate of incorporation became effective on June 21, 2017. Our principal executive offices are located at 111 Somerset Road, Level 3, Singapore 238164, and our telephone number at that address is (347) 349-5339.
The Corporate Actions and the amended certificate of incorporation became effective on June 21, 2017. Our principal executive offices are located at 111 Somerset Road, Level 3, Singapore 238164, and our telephone number is (347) 349-5339.
In connection with our previous issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this Annual Report on Form 10-K, we, our PRC subsidiaries and the VIE, (i) are not required to obtain permissions from the CSRC except that as of March 31, 2023 we may have to file with the CSRC with respect to a new offering of our securities, (ii) are not required to go through cybersecurity review by the CAC, and (iii) have received or were not denied such requisite permissions by any PRC authority.
In connection with our previous issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this periodic report on Form 10-Q, we, our PRC subsidiaries and the VIE, (i) are not required to obtain permissions from the CSRC except that as of March 31, 2023 we may have to file with the CSRC with respect to a new offering of our securities, (ii) are not required to go through cybersecurity review by the CAC, and (iii) have received or were not denied such requisite permissions by any PRC authority.
We look to take advantage of the position that we have been afforded. -15- Table of Contents Intellectual Property The Company has sufficient intellectual property rights to operate its mobile payment and recharge platform system. Specifically, the Company has registered patents for its mobile payment and recharge platform system.
We look to take advantage of the position that we have been afforded. -17- Table of Contents Intellectual Property The Company has sufficient intellectual property rights to operate its mobile payment and recharge platform system. Specifically, the Company has registered patents for its mobile payment and recharge platform system.
It is currently working and negotiating with one of the largest phone distributors in China to be among the first partners launching services on the platform. 3 Source: https://www.gsma.com/futurenetworks/rcs/ & https://www.marketresearch.com/Infogence-Marketing-Advisory-Services-v4010/Global-Rich-Communication-Services-RCS-30323369/ 4 Source: https://www.gsma.com/futurenetworks/wp-content/uploads/2020/04/5G-Messaging-White-Paper-EN.pdf -11- Table of Contents Big Data Insights The Company launched its proprietary platform “Sapientus” in July 2020 as its big data insights arm to deliver data-driven solutions and insights for businesses within the insurance and financial services industries.
It is currently working and negotiating with one of the largest phone distributors in China to be among the first partners launching services on the platform. 4 https://www.gsma.com/futurenetworks/rcs/ & https://www.marketresearch.com/Infogence-Marketing-Advisory-Services-v4010/Global-Rich-Communication-Services-RCS-30323369/ 5 https://www.gsma.com/futurenetworks/wp-content/uploads/2020/04/5G-Messaging-White-Paper-EN.pdf -13- Table of Contents Big Data Insights The Company launched its proprietary platform “Sapientus” in July 2020 as its big data insights arm to deliver data-driven solutions and insights for businesses within the insurance and financial services industries.
Li Li to cooperate with WFOE’s instructions and avoid damaging the rights and interests of the WFOE and investors; ● a power of attorney agreement under which the owner of JiuGe Technology has vested their collective voting control over JiuGe Technology to JiuGe Management and will only transfer their equity interests in JiuGe Technology to JiuGe Management or its designee(s) (the “ JiuGe Technology Power of Attorney Agreement ”).
Li Li to cooperate with WFOE’s instructions and avoid damaging the rights and interests of the WFOE and investors; -6- Table of Contents ● a power of attorney agreement under which the owner of JiuGe Technology has vested their collective voting control over JiuGe Technology to JiuGe Management and will only transfer their equity interests in JiuGe Technology to JiuGe Management or its designee(s) (the “ JiuGe Technology Power of Attorney Agreement ”).
Growth Strategy The Company’s growth strategy is a multi-pronged approach, continually asking “What’s next?” and consisting of the following: ■ Enhancing PigeonHoles Integration System and the SMS Integrated System . Maintaining a stable and robust platform is expected to give the Company the flexibility to manage new product offering and packages in order to increase revenue.
Growth Strategy The Company’s growth strategy is a multi-pronged approach, continually asking “What’s next?” and consisting of the following: ■ Enhancing PigeonHoles Integration System and the DaGe Platform . Maintaining a stable and robust platform is expected to give the Company the flexibility to manage new product offering and packages in order to increase revenue.
Telecommunications Products and Services The Company’s current product mix consisting of payment and recharge services, data plans, subscription plans, mobile phones, loyalty points redemption and other products bundles (i.e. mobile protection plans). Chinese mobile phone consumers often utilize third-party e-marketing websites to pay their phone bills.
Telecommunications Products and Services The Company’s current product mix consisting of payment and recharge services, data plans, subscription plans, mobile phones, loyalty points redemption and other products bundles (i.e. mobile protection plans). Chinese mobile phone consumers often utilize third-party e-marketing websites to pay their phone bills.
Beijing Technology has the capability to manage and track the entire process, including to assist the Company’s clients to fulfill the government guidelines, until the SMS messages have been delivered successfully.
Beijing Technology has the capability to manage and track the entire process, including to assist the Company’s clients to fulfil the government guidelines, until the SMS messages have been delivered successfully.
To encourage consumers to utilize our portal instead of using our competitors’ platforms or paying China Unicom or China Mobile directly, we offer mobile data and talk time at a rate discounted from these companies’ stated rates, which are also the rates we must pay to them to purchase the mobile data and talk time provided to consumers through the use of our platform.
To encourage consumers to utilize our portal instead of using our competitors’ platforms or paying China Unicom or China Mobile directly, we offer mobile data and talk time at a rate discounted from these companies’ stated rates, which are also the rates we must pay to them to purchase the mobile data and talk time provided to consumers through the use of our platform.
The Company’s mission is to deliver the next generation of data-driven solutions in the financial services, healthcare, and insurance industries that result in more accurate risk assessments, more efficient processes, and a more delightful user experience.
The Company’s mission is to deliver the next generation of data-driven solutions in the financial services, healthcare, and insurance industries that result in more accurate risk assessments, more efficient processes, and a more delightful user experience.
In the first half of 2018, JiuGe Technology secured contracts with China Unicom and China Mobile to distribute mobile data for businesses and corporations in 9 provinces/municipalities, namely Chengdu, Jiangxi, Jiangsu, Chongqing, Shanghai, Zhuhai, Zhejiang, Shaanxi and Inner Mongolia. In September 2018, JiuGe Technology launched and commercialized mobile payment and recharge services to businesses for China Unicom.
In the first half of 2018, JiuGe Technology secured contracts with China Unicom and China Mobile to distribute mobile data for businesses and corporations in nine provinces/municipalities, namely Chengdu, Jiangxi, Jiangsu, Chongqing, Shanghai, Zhuhai, Zhejiang, Shaanxi, Inner Mongolia, Henan and Fujian. In September 2018, JiuGe Technology launched and commercialized mobile payment and recharge services to businesses for China Unicom.
The ultimate objective is to promote, enhance and deliver better value to our partners and customers. The Company’s proprietary risk assessment engine offers standard and customized scoring and appraisal services based on multi-dimensional factors.
The ultimate objective is to promote, enhance and deliver better value to our partners and customers. The Company’s proprietary risk assessment engine offers standard and customized scoring and appraisal services based on multi-dimensional factors.
Beijing Technology retains a license from the Ministry of Industry and Information Technology to operate SMS and MMS business in the PRC.
Beijing Technology retains a license from the Ministry of Industry and Information Technology (“ MIIT ”) to operate SMS and MMS business in the PRC.
The following diagram depicts our corporate structure: Our holding company structure presents unique risks as our investors may never directly hold equity interests in our subsidiaries or the VIE, and will be dependent upon contributions from our subsidiaries and the VIE to finance our cash flow needs.
The following diagram depicts our corporate structure: -4- Table of Contents Our holding company structure presents unique risks as our investors may never directly hold equity interests in our subsidiaries or the VIE, and will be dependent upon contributions from our subsidiaries and the VIE to finance our cash flow needs.
In severe circumstances, the business of our PRC subsidiary may be ordered to suspend and its business qualifications and licences may be revoked.
In severe circumstances, the business of our PRC subsidiary may be ordered to suspend and its business qualifications and licenses may be revoked.
Beijing Technology has the capability to manage and track the entire process, including guiding the Company’s customer to meet MIIT’s guidelines on messages composed, until the SMS messages have been delivered successfully. Rich Communication Services In March 2020, the Company began the development of an RCS platform, also known as Messaging as a Platform (“ MaaP ”).
Beijing Technology has the capability to manage and track the entire process, including guiding the Company’s customer to meet MIIT’s guidelines on messages composed, until the SMS messages have been delivered successfully. Rich Communication Services In March 2020, the Company began the development of an RCS platform, also known as Messaging as a Platform (“ MaaP ”).
We are a holding company incorporated in Delaware and not an operating company incorporated in the People’s Republic of China (the “PRC” or “China”). As a holding company, we conduct a significant part of our operations through our subsidiaries and through the VIE Agreements with the VIE based in China.
We are a holding company incorporated in Delaware and not an operating company incorporated in the People’s Republic of China (the “ PRC ” or “ China ”). As a holding company, we conduct a significant part of our operations through our subsidiaries and through the VIE Agreements with the VIE based in China.
In the first quarter of 2019 FingerMotion expanded its business by commercializing its first “Business to Consumer” (“ B2C ”) model, offering the telecommunication providers’ products and services, including data plans, subscription plans, mobile phones, and loyalty points redemption, directly to subscribers or customers of the e-commerce companies, such as PinDuoDuo (“ PDD ”), TMall (“ TMALL ”) and JD.Com.
In the first quarter of 2019 FingerMotion expanded its business by commercializing its first “Business to Consumer” (“ B2C ”) model, offering the telecommunication providers’ products and services, including data plans, subscription plans, mobile phones, and loyalty points redemption, directly to subscribers or customers of the e-commerce companies, such as PinDuoDuo (“ PDD ”), TMall (“ TMALL ”) and JD.Com.
If the consumer connected directly to the telecommunications provider to pay his or her bill, the consumer would miss out on any benefits or marketing discounts that e-marketers provide. Thus, consumers log on to these e-marketer’s websites, click into their respective phone provider’s store, and “top up,” or pay, their telecommunications provider for additional mobile data and talk time.
If the consumer connected directly to the telecommunications provider to pay his or her bill, the consumer would miss out on any benefits or marketing discounts that e-marketers provide. Thus, consumers log on to these e-marketer’s websites, click into their respective phone provider’s store, and “top up,” or pay, their telecommunications provider for additional mobile data and talk time.
FingerMotion started and commercialized its “Business to Business” (“ B2B ”) model by integrating with various e-commerce platforms to provide its mobile payment and recharge services to subscribers or end consumers.
FingerMotion started and commercialized its “Business to Business” (“ B2B ”) model by integrating with various e-commerce platforms to provide its mobile payment and recharge services to subscribers or end consumers.
On or around January 25, 2021, the Company’s wholly owned subsidiary, Finger Motion Financial Company Limited’s, big data analytic arm branded “Sapientus,” entered into a services agreement with Pacific Life Re, a global life reinsurer serving the insurance industry with a comprehensive suite of products and services.
On or around January 25, 2021, the Company’s wholly owned subsidiary, Finger Motion Financial Company Limited’s, big data analytic arm branded “Sapientus,” entered into a services agreement with Pacific Life Re, a global life reinsurer serving the insurance industry with a comprehensive suite of products and services.
The Cooperation Agreement provides that JiuGe Technology is required to construct and operate the platform’s webpage in accordance with China Unicom’s specifications and policies, and applicable law, and bear all expenses in connection therewith.
The Cooperation Agreement provides that JiuGe Technology is required to construct and operate the platform’s webpage in accordance with China Unicom’s specifications and policies, and applicable law, and bear all expenses in connection therewith.
However, in June 2018, the Company decided to pause the operation of the game division as it saw the opportunity in the telecommunication business and have since refocused into this business.
The Company operates its video game division through FMCL. However, in June 2018, the Company decided to pause the operation of the game division as it saw the opportunity in the telecommunication business and have since refocused into this business.
The Cooperation Agreement expires three years from the date of its signature with a yearly auto-renewal clause, but it may be terminated by (i) JiuGe Technology upon three months’ written notice or (ii) by China Unicom Yunnan unilaterally.
The Cooperation Agreement expires three years from the date of its signature with a yearly auto-renewal clause, which is currently in an auto-renewal period, but it may be terminated by (i) JiuGe Technology upon three months’ written notice or (ii) by China Unicom unilaterally.
Having accumulated more diverse data and insights enriches the Company’s rating perspective, enabling it to offer a universal rating platform that can be commonly adopted across the industry. The Company’s platform can be readily integrated with other systems, helping the Company extend reach beyond insurance applications.
Behavioral dynamics can prove to be very versatile in supporting many possibilities beyond insurance. Having accumulated more diverse data and insights enriches the Company’s rating perspective, enabling it to offer a universal rating platform that can be commonly adopted across the industry. The Company’s platform can be readily integrated with other systems, helping the Company extend reach beyond insurance applications.
On June 21, 2017, the Company amended its certificate of incorporation to effect a 1-for-4 reverse stock split of the Company’s outstanding common stock, to increase the authorized shares of common stock to 200,000,000 shares and to change the name of the Company from “Property Management Corporation of America” to “FingerMotion, Inc.” (the “ Corporate Actions ”).
On June 21, 2017, the Company amended its certificate of incorporation to effect a 1-for-4 reverse stock split of the Company’s outstanding common stock, to increase the authorized shares of common stock to 200,000,000 shares and to change the name of the Company from “Property Management Corporation of America” to “FingerMotion, Inc.” (the “ Corporate Actions ”).
This agreement was duly signed between the WFOE and Ms. Li Li. Under this agreement, the WFOE loaned RMB 10,000,000 to Ms. Li Li, as the sole shareholder of the VIE, solely for the purpose of the capital contribution of the subscribed capital of the VIE.
This agreement was duly signed between the WFOE and Ms. Li Li. Under this agreement, the WFOE loaned RMB 10,000,000 to Ms. Li Li, as the sole shareholder of the VIE, solely for the purpose of the capital contribution of the subscribed capital of the VIE. The loan amount has now been increased to RMB50,000,000.
Ltd Obtained 2020SR0741902 Shanghai, China SMS Integrated System (2) Shanghai JiuGe Information Technology Co. Ltd Shanghai JiuGe Information Technology Co. Ltd Obtained 2020SR0792227 China JiuGe Customer Profiling Software V1.0.0 (3) Shanghai JiuGe Information Technology Co. Ltd Shanghai JiuGe Information Technology Co. Ltd Obtained 2020SR0772385 China JiuGe TELCO Big Data Software V1.0.0 (4) Shanghai JiuGe Information Technology Co.
Ltd Shanghai JiuGe Information Technology Co. Ltd Obtained 2020SR0792227 China JiuGe Customer Profiling Software V1.0.0 (3) Shanghai JiuGe Information Technology Co. Ltd Shanghai JiuGe Information Technology Co. Ltd Obtained 2020SR0772385 China JiuGe TELCO Big Data Software V1.0.0 (4) Shanghai JiuGe Information Technology Co. Ltd Shanghai JiuGe Information Technology Co.
Revenue during this time will be sourced mainly from offering proprietary rating system and related services that are customized to fit the Company’s reinsurer partners’ specific needs. Furthermore, establishing collaborative facilities with reinsurers allows the Company to integrate posterior information (claims, underwriting experience, and campaign feedback) for improving its scoring / measurement system.
Revenue during this time has been sourced mainly from offering proprietary rating system and related services that are customized to fit the Company’s reinsurer partners’ specific needs. Furthermore, establishing collaborative facilities with reinsurers has allowed the Company to integrate posterior information (claims and underwriting experience, for example) and further improve its scoring/measurement system.
Employees As of February 28, 2023, we had 59 total employees, of whom all were full time. We have approximately 49 employees in China, 4 employees in Malaysia, 2 employees in Hong Kong, 1 employee in Taiwan, 2 employees in USA and 1 employee in Canada. We believe that we enjoy good relations with our employees.
Employees As of February 29, 2024, we had 64 total employees, of whom all were full time. We have approximately 55 employees in China, 3 employees in Malaysia, 2 employees in Hong Kong, 1 employee in Taiwan, 2 employees in USA and 1 employee in Canada. We believe that we enjoy good relations with our employees.
( “Beijing Technology” ), a company in the business of providing mass SMS text services to businesses looking to communicate with large numbers of their customers and prospective customers.
Acquisition of Beijing Technology On March 7, 2019, the Company through JiuGe Technology acquired Beijing Technology, a company in the business of providing mass SMS text services to businesses looking to communicate with large numbers of their customers and prospective customers.
In addition, the Company issued 600,000 shares to consultants in connection with the transactions contemplated by the Share Exchange Agreement, and 2,562,500 additional shares to accredited investors, which was a concurrent financing but not a condition of closing the Share Exchange Agreement.
In addition, the Company issued 600,000 shares to consultants in connection with the transactions contemplated by the Share Exchange Agreement, and 2,562,500 additional shares to accredited investors, which was a concurrent financing but not a condition of closing the Share Exchange Agreement. -5- Table of Contents As a result of the Share Exchange Agreement and the other transactions contemplated thereunder, FMCL became a wholly owned subsidiary of the Company.
With this acquisition, the Company expanded into a second partnership with the telecom companies by acquiring bulk SMS and MMS bundles at reduced prices and offering bulk SMS services to end consumers with competitive pricing.
With this acquisition, the Company expanded into a second partnership with the telecom companies by acquiring bulk SMS and MMS bundles at reduced prices and offering bulk SMS services to end consumers with competitive pricing. Beijing Technology retains a license from MIIT to operate the SMS and MMS business in the PRC.
(“ China Unicom ”) and China Mobile Communications Corporation (“ China Mobile ”), each of which is a major telecommunications provider in China. We principally earn revenue by providing mobile payment and recharge services to customers of China Unicom and China Mobile. We conduct our mobile payment business through Shanghai JiuGe Technology Co., Ltd.
(“ China Unicom ”) and China Mobile Communications Corporation (“ China Mobile ”), each of which is a major telecommunications provider in China. We principally earn revenue by providing mobile payment and recharge services to customers of China Unicom and China Mobile.
(“ JiuGe Management ”), entered into a series of agreements known as variable interest agreements (the “ VIE Agreements ”) pursuant to which Shanghai JiuGe Information Technology Co., Ltd. (“ JiuGe Technology ”) became our contractually controlled affiliate.
VIE Agreements On October 16, 2018, the Company, through its indirect wholly owned subsidiary, Shanghai JiuGe Business Management Co., Ltd. (“ JiuGe Management ”), entered into a series of agreements known as variable interest agreements (the “ VIE Agreements ”) pursuant to which Shanghai JiuGe Information Technology Co., Ltd. (“ JiuGe Technology ”) became our contractually controlled affiliate.
To accomplish this, the Company will be partnering with reinsurers to increase its visibility as well as assimilate its data analytics into the reinsurers’ value chain. Potential engagements include underwriting enhancement, market segmentation, product design as well as facilitation of claims review and adjudication.
To accomplish this, the Company is partnering with reinsurers to increase its visibility as well as assimilate its data analytics into the reinsurers’ value chain. Engagements include, among various other initiatives, underwriting enhancement, market segmentation and product design..
This will allow telecommunication providers like China Unicom and China Mobile to retain users on their systems, without having to utilize third party apps or log onto the Internet, which will increase their user retention.
This will allow telecommunication providers like China Unicom and China Mobile to retain users on their systems without having to utilize third-party apps or log onto the Internet, which will increase their user retention. We expect this to open up a new marketing channel for the Company’s current and prospective business partners.
This description of the Share Exchange Agreement does not purport to be complete and is qualified in its entirety by reference to the terms of the Share Exchange Agreement, which was filed as an exhibit to our Current Report on Form 8-K filed with the SEC on July 20, 2017 and incorporated by reference herein. -4- Table of Contents VIE Agreements On October 16, 2018, the Company, through its indirect wholly owned subsidiary, Shanghai JiuGe Business Management Co., Ltd.
This description of the Share Exchange Agreement does not purport to be complete and is qualified in its entirety by reference to the terms of the Share Exchange Agreement, which was filed as an exhibit to our Current Report on Form 8-K filed with the SEC on July 20, 2017 and incorporated by reference herein.
In September 2018, JiuGe Technology launched and commercialized mobile payment and recharge services to businesses for China Unicom. In May 2021, JiuGe Technology signed a volume-based agreement with China Mobile Fujian to offer recharge services to the Fujian province which we have launched and commercialized in November 2021.
In May 2021, JiuGe Technology signed a volume-based agreement with China Mobile Fujian to offer recharge services to the Fujian province which we have launched and commercialized in November 2021. The JiuGe Technology mobile payment and recharge platform enables the seamless delivery of real-time payment and recharge services to third-party channels and businesses.
This business will continue to contribute to the overall revenue for the group as part of our offering to our customers. Value Added Product and Services These are new product and services that the Company expects to secure and work with the telecommunication provider and all our e-commerce platform partners to market.
Value Added Product and Services These are new product and services that the Company expects to secure and work with the telecommunication provider and all our e-commerce platform partners to market.
In addition to that, we have been assigned as one of China’s Mobile’s loyalty redemption partner where we will be providing the services for their customers via our platform. -1- Table of Contents Additionally, as previously disclosed, on July 7, 2019, JiuGe Technology, our contractually controlled affiliate, entered into that certain Yunnan Unicom Electronic Sales Platform Construction and Operation Cooperation Agreement (the “ Cooperation Agreement ”) with China Unicom’s Yunnan subsidiary.
In addition to that, we have been assigned as one of China’s Mobile’s loyalty redemption partner where we will be providing the services for their customers via our platform. -1- Table of Contents Additionally, as previously disclosed, on July 7, 2019, JiuGe Technology, our contractually controlled affiliate, entered into that certain Cooperation Agreement with China Unicom Yunnan, whereby JiuGe Technology is responsible for constructing and operating China Unicom’s electronic sales platform through which consumers can purchase various goods and services from China Unicom, including mobile telephones, mobile telephone service, broadband data services, terminals, “smart” devices and related financial insurance.
Beijing Technology has the capability to manage and track the entire process, including guiding the Company’s customer to meet government’s guidelines on messages composed, until the SMS messages have been delivered successfully. 1 Source: http://data.chinabaogao.com/dianxin/2020/0364R5222020.html 2 Source: https://jxca.miit.gov.cn/cms_files/filemanager/oldfile/jxca/upload/202003/202003111516300286.pdf -10- Table of Contents The Company’s SMS Integrated System performs more than 150 million SMS transactions monthly.
Beijing Technology has the capability to manage and track the entire process, including guiding the Company’s customer to meet government’s guidelines on messages composed, until the SMS messages have been delivered successfully. 1 https://www.chinabaogao.com/data/202402/691933.html 2 https://wap.miit.gov.cn/jgsj/yxj/xxfb/art/2024/art_8e331aa8abeb4870a7446a3be26d3ce1.html 3 https://www.miit.gov.cn/gxsj/tjfx/txy/art/2024/art_76b8ecef28c34a508f32bdbaa31b0ed2.html -12- Table of Contents The Company’s SMS Integrated System performs more than 150 million SMS transactions monthly.
The Company has also implemented strict controls to ensure the safe and secure keeping of any source codes. 5 The Company has registered the following patents: Patent Registration Number Region Title Inventors Applicant Status as of the date of this Annual Report 2019SR0439119 Shanghai, China PigeonHoles Integration System (1) Shanghai JiuGe Business Management Co. Ltd Shanghai JiuGe Business Management Co.
The Company has registered the following patents: Patent Registration Number Region Title Inventors Applicant Status as of the date of this Annual Report 2019SR0439119 Shanghai, China PigeonHoles Integration System (1) Shanghai JiuGe Business Management Co. Ltd Shanghai JiuGe Business Management Co. Ltd Obtained 2020SR0741902 Shanghai, China SMS Integrated System (2) Shanghai JiuGe Information Technology Co.
The English translation version of the JiuGe Technology Share Pledge Agreement was filed as Exhibit 10.6 to our Form S-1/A (Amendment No. 1) filed with the SEC on January 5, 2023, and is incorporated by reference herein. -5- Table of Contents Acquisition of Beijing Technology On March 7, 2019, the Company through JiuGe Technology acquired Beijing Technology, a company in the business of providing mass SMS text services to businesses looking to communicate with large numbers of their customers and prospective customers.
The English translation version of the JiuGe Technology Share Pledge Agreement was filed as Exhibit 10.6 to our Form S-1/A (Amendment No. 1) filed with the SEC on January 5, 2023, and is incorporated by reference herein.
(“ JiuGe Techology ”), our contractually controlled affiliate through the entry into the VIE Agreements in October 2018. In the first half of 2018, JiuGe Technology secured contracts with China Unicom and China Mobile to distribute mobile data for businesses and corporations in nine provinces/municipalities, namely Chengdu, Jiangxi, Jiangsu, Chongqing, Shanghai, Zhuhai, Zhejiang, Shaanxi, Inner Mongolia, Henan and Fujian.
In the first half of 2018, JiuGe Technology established contracts with China Unicom and China Mobile, initiating the provision of mobile data services to businesses and corporations in key provinces/municipalities including Chengdu, Jiangxi, Jiangsu, Chongqing, Shanghai, Zhuhai, Zhejiang, Shaanxi and Inner Mongolia.
In 2019, the telecommunications industry in China sent a total of around 1,506 billion SMS, 1 equivalent to a market size of RMB 39.2 billion (~$5.85 billion), a year-on-year increase of 37.5% compared to 2018. 2 The Company was responsible for 1.2 billion, or 0.08% of market share.
In 2023, the telecommunications industry in China sent a total of around 1,869 billion SMS 1 , equivalent to a market size of RMB 45 billion 2 (~$6.31 billion), a year-on-year decrease of 0.3% 3 compared to 2022The Company was responsible for 697 million, or 0.037% of the market share for the fiscal year ended February 29, 2024.
The Cooperation Agreement expires three years from the date of its signature with a yearly auto-renewal clause, but it may be terminated by (i) JiuGe Technology upon three months’ written notice or (ii) by China Unicom unilaterally. During the recent fiscal year, the Company expanded its offering under their telecommunication product and services by increasing their product line revenue streams.
The Cooperation Agreement expires three years from the date of its signature, subject to a yearly auto-renewal clause, which is currently in an auto-renewal period, but it may be terminated by (i) JiuGe Technology upon three months’ written notice or (ii) by China Unicom Yunnan unilaterally.
We expect this to open up a new marketing channel for the Company’s current and prospective business partners. -2- Table of Contents Big Data Insights In July 2020, the Company launched its proprietary technology platform “Sapientus” as its big data insights arm to deliver data-driven solutions and insights for businesses within the insurance, healthcare, and financial services industries.
Once these issues are resolved and the necessary approval is obtained, we anticipate a substantial enhancement in our service offerings and an expansion of our market reach. -2- Table of Contents Big Data Insights In July 2020, the Company launched its proprietary technology platform “Sapientus” as its big data insights arm to deliver data-driven solutions and insights for businesses within the insurance, healthcare, and financial services industries.
Stage 2: Expansion The expansion stage shifts the Company’s revenue focus from offering rating system alone to earning commissions and profit shares through channel expansion and innovative product designs enabled by more granular customer segmentation. Channel expansion could be achieved by cross-selling through the Company’s affiliated company and brokerage arm, supported by leads generation for niche marketing and further upselling.
Furthermore, the Company will also expand its revenue focus from offering rating system alone to potential earning of commissions and profit shares through channel expansion and innovative product designs enabled by more granular customer segmentation.
The Company will continue to enhance the system to meet market and consumer demands and requirements.
The Company will continue to enhance the system to meet market and consumer demands and requirements. The Company has also implemented strict controls to ensure the safe and secure keeping of any source codes.
The JiuGe Technology mobile payment and recharge platform enables the seamless delivery of real-time payment and recharge services to third-party channels and businesses. We earn a rebate from each telecommunications company on the funds paid by consumers to the telecommunications companies we process.
We earn a rebate from each telecommunications company on the funds paid by consumers to the telecommunications companies we process.
As such, added value can be generated and shared among Sapientus and its (re)insurer and distribution partners. -13- Table of Contents Stage 3: Integration As Sapientus matures, the Company enters the integration stage. Behavioral dynamics can prove to be very versatile in supporting many possibilities beyond insurance.
Precision marketing enhances product take-up rates, while preferred risk selection is expected to attract profitable business and improve portfolio results. As such, added value can be generated and shared among Sapientus and its (re)insurer and distribution partners. -15- Table of Contents Stage 3: Integration As Sapientus matures, the Company enters the integration stage.
In March 2020, FingerMotion secured a contract with both China Mobile and China Unicom to acquire new users to take up the respective subscription plans. In February 2021, we increased the mobile phones sales to end users using all of our platforms.
During the recent fiscal year, the Company expanded its offering under their telecommunication product and services by increasing their product line revenue streams. In March 2020, FingerMotion secured a contract with both China Mobile and China Unicom to acquire new users to take up the respective subscription plans.
In mid-July 2022, we launched the roll out of the Mobile Device protection product with the roll out of the new mobile phones and 5G phones. SMS and MMS Services On March 7, 2019, the Company through JiuGe Technology acquired Beijing XunLian TianXia Technology Co., Ltd.
SMS and MMS Services On March 7, 2019, the Company through JiuGe Technology acquired Beijing Technology Co, a company in the business of providing mass SMS text services to businesses looking to communicate with large numbers of their customers and prospective customers.
Removed
Under the Cooperation Agreement, JiuGe Technology is responsible for constructing and operating China Unicom’s electronic sales platform through which consumers can purchase various goods and services from China Unicom, including mobile telephones, mobile telephone service, broadband data services, terminals, “smart” devices and related financial insurance.
Added
We conduct our mobile payment business through JiuGe Technology, our contractually controlled affiliate through the entry into the VIE Agreements in October 2018.
Removed
The current and upcoming value-added product is the Mobile Protection programs which we plan to launch soon.
Added
In February 2021, we increased the mobile phones sales to end users using all of our platforms. This business will continue to contribute to the overall revenue for the group as part of our offering to our customers.
Removed
FingerMotion’s subsidiary, Beijing Technology, retains a license from the Ministry of Industry and Information Technology (“MIIT”) to operate the SMS and MMS business in the PRC.
Added
In mid-July 2022, we launched the roll out of the Mobile Device protection product with the roll out of the new mobile phones and 5G phones. Complementing our hardware protection services, we have introduced cloud services designed to offer corporate customers robust data storage, processing capabilities, and databases accessible via the internet.
Removed
As a result of the Share Exchange Agreement and the other transactions contemplated thereunder, FMCL became a wholly owned subsidiary of the Company. The Company operates its video game division through FMCL.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

70 edited+10 added−14 removed256 unchanged
Biggest changeThese regulations may require that we comply with complex regulations for the movement of capital and as a result we may not be able to remit all income earned and proceeds received in connection with our operations or from the sale of one of our operating subsidiaries to the U.S. or to our shareholders. -28- Table of Contents Adverse regulatory developments in China may subject us to additional regulatory review, and additional disclosure requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in China may impose additional compliance requirements for companies like us with significant China-based operations, all of which could increase our compliance costs, subject us to additional disclosure requirements.
Biggest changeThese regulations may require that we comply with complex regulations for the movement of capital and as a result we may not be able to remit all income earned and proceeds received in connection with our operations or from the sale of one of our operating subsidiaries to the U.S. or to our shareholders.
We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future.
We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any cash dividends in the foreseeable future.
According to the Overseas Listing Trial Measures, if the issuer meets both the following conditions, the overseas securities offering and listing conducted by such issuer will be determined as indirect overseas offering, which shall subject to the filing procedure set forth under the Overseas Listing Trial Measures: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main places of business are located in mainland China, or the senior managers in charge of its business operations and management are mostly Chinese citizens or domiciled in mainland China.
According to the Overseas Listing Trial Measures, if the issuer meets both the following conditions, the overseas securities offering and listing conducted by such issuer will be determined as indirect overseas offering, which shall be subject to the filing procedure set forth under the Overseas Listing Trial Measures: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main places of business are located in mainland China, or the senior managers in charge of its business operations and management are mostly Chinese citizens or domiciled in mainland China.
The Overseas Listing Trial Measures regulate both direct and indirect overseas offering and listing of PRC domestic companies’ securities by adopting a filing-based regulatory regime.
The Overseas Listing Trial Measures regulate both direct and indirect overseas offering and listing of PRC domestic companies’ securities by adopting a filing-based regulatory regime.
According to the Overseas Listing Trial Measures, if the issuer meets both the following conditions, the overseas securities offering and listing conducted by such issuer will be determined as indirect overseas offering, which shall subject to the filing procedure set forth under the Overseas Listing Trial Measures: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main places of business are located in mainland China, or the senior managers in charge of its business operations and management are mostly Chinese citizens or domiciled in mainland China.
According to the Overseas Listing Trial Measures, if the issuer meets both the following conditions, the overseas securities offering and listing conducted by such issuer will be determined as indirect overseas offering, which shall be subject to the filing procedure set forth under the Overseas Listing Trial Measures: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main places of business are located in mainland China, or the senior managers in charge of its business operations and management are mostly Chinese citizens or domiciled in mainland China.
Where an abovementioned issuer submits an application for an initial public offering to competent overseas regulators, such issuer shall file with the CSRC within three business days after such application is submitted.
Where an abovementioned issuer submits an application for an initial public offering to competent overseas regulators, such issuer shall file with the CSRC within three business days after such application is submitted.
Where a domestic company fails to fulfill filing procedure or in violation of the provisions as stipulated above, in respect of its overseas offering and listing, the CSRC shall order rectification, issue warnings to such domestic company, and impose a fine ranging from RMB1,000,000 to RMB10,000,000.
Where a domestic company fails to fulfill filing procedure or in violation of the provisions as stipulated above, in respect of its overseas offering and listing, the CSRC shall order rectification, issue warnings to such domestic company, and impose a fine ranging from RMB1,000,000 to RMB10,000,000.
Also the directly liable persons and actual controllers of the domestic company that organize or instruct the aforementioned violations shall be warned and/or imposed fines.
Also the directly liable persons and actual controllers of the domestic company that organize or instruct the aforementioned violations shall be warned and/or imposed fines.
Also on February 17, 2023, the CSRC also held a press conference for the release of the Overseas Listing Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that the domestic companies that have already been listed overseas on or before the effective date of the Overseas Listing Trial Measures (March 31, 2023) shall be deemed as “stock enterprises”.
Also on February 17, 2023, the CSRC also held a press conference for the release of the Overseas Listing Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that the domestic companies that have already been listed overseas on or before the effective date of the Overseas Listing Trial Measures (March 31, 2023) shall be deemed as “stock enterprises”.
The market price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, including the following: ● actual or anticipated fluctuations in our operating results; ● changes in financial estimates by securities analysts or our failure to perform in line with such estimates; ● changes in market valuations of other companies, particularly those that market services such as ours; ● announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; ● introduction of product enhancements that reduce the need for our products; ● departure of key personnel; and ● changes in overall global market sentiments and economy trends We do not intend to pay dividends for the foreseeable future.
The market price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, including the following: ● actual or anticipated fluctuations in our operating results; ● changes in financial estimates by securities analysts or our failure to perform in line with such estimates; ● changes in market valuations of other companies, particularly those that market services such as ours; ● announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; ● introduction of product enhancements that reduce the need for our products; ● departure of key personnel; and ● changes in overall global market sentiments and economy trends We do not intend to pay cash dividends for the foreseeable future.
The continued sale of our equity securities will dilute the ownership percentage of our existing shareholders and may decrease the market price for our common shares. Our Certificate of Incorporation, as amended, authorize the issuance of up to 200,000,000 shares of common stock and up to 1,000,000 shares of preferred stock.
The continued sale of our equity securities will dilute the ownership percentage of our existing shareholders and may decrease the market price for our Common Shares. Our Certificate of Incorporation, as amended, authorize the issuance of up to 200,000,000 Common Shares and up to 1,000,000 shares of preferred stock (“ Preferred Shares ”).
If a registrant is identified as a Commission-Identified Issuer based on its annual report for the fiscal year ended December 31, 2021, the registrant will be required to comply with the submission or disclosure requirements in its annual report filing covering the fiscal year ended December 31, 2022. -36- Table of Contents On December 16, 2021, PCAOB issued a report on its determinations that PCAOB is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, a Special Administrative Region of the PRC, because of positions taken by PRC authorities in those jurisdictions.
If a registrant is identified as a Commission-Identified Issuer based on its annual report for the fiscal year ended December 31, 2021, the registrant will be required to comply with the submission or disclosure requirements in its annual report filing covering the fiscal year ended December 31, 2022. -39- Table of Contents On December 16, 2021, PCAOB issued a report on its determinations that PCAOB is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, a Special Administrative Region of the PRC, because of positions taken by PRC authorities in those jurisdictions.
For example, if a company was not subject to PCAOB inspection, the report recommended that the transition period before a company would be delisted would end on January 1, 2022. -37- Table of Contents The enactment of the HFCAA and the implications of any additional rulemaking efforts to increase U.S. regulatory access to audit information in PRC could cause investor uncertainty for affected SEC registrants, including us, and the market price of our common stock could be materially adversely affected.
For example, if a company was not subject to PCAOB inspection, the report recommended that the transition period before a company would be delisted would end on January 1, 2022. -40- Table of Contents The enactment of the HFCAA and the implications of any additional rulemaking efforts to increase U.S. regulatory access to audit information in PRC could cause investor uncertainty for affected SEC registrants, including us, and the market price of our common stock could be materially adversely affected.
With this regulation in force, it may result in delays by the Company to fulfill any request to provide relevant documents or materials by the regulatory authorities or in the worst-case scenario that the Company would not be able to fulfill the request if the approval from the regulatory authority of the State Council and the relevant State Council department(s) were rejected. -27- Table of Contents You may have difficulty enforcing judgments against us.
With this regulation in force, it may result in delays by the Company to fulfill any request to provide relevant documents or materials by the regulatory authorities or in the worst-case scenario that the Company would not be able to fulfill the request if the approval from the regulatory authority of the State Council and the relevant State Council department(s) were rejected. -29- Table of Contents You may have difficulty enforcing judgments against us.
We may be required to pay substantial damages, royalties or other fees in connection with a claimant securing a judgment against us, we may be subject to an injunction or other restrictions that prevent us from using or distributing our intellectual property, or we may agree to a settlement that prevents us from distributing our offerings or a portion thereof, which could adversely effect our business, financial condition and results of operations.
We may be required to pay substantial damages, royalties or other fees in connection with a claimant securing a judgment against us, we may be subject to an injunction or other restrictions that prevent us from using or distributing our intellectual property, or we may agree to a settlement that prevents us from distributing our offerings or a portion thereof, which could adversely affect our business, financial condition and results of operations.
Furthermore, any such issuances could result in a change of control or a reduction in the market price for our common shares. -23- Table of Contents If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
Furthermore, any such issuances could result in a change of control or a reduction in the market price for our common shares. -25- Table of Contents If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
The regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the conversion and remittance of our funds in foreign currencies into the PRC, or take other actions that could materially and adversely effect our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our common stock.
The regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the conversion and remittance of our funds in foreign currencies into the PRC, or take other actions that could materially and adversely affect our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our common stock.
For example: ● loans by us to our wholly-owned subsidiary in China, which is a foreign-invested enterprise, cannot exceed statutory limits and must be registered with the State Administration of Foreign Exchange of the PRC (the “ SAFE ”) or its local counterparts; ● loans by us to our affiliated entities, which are domestic PRC entities, over a certain threshold must be approved by the relevant government authorities and must also be registered with the SAFE or its local counterparts; and ● capital contributions to our wholly-owned subsidiary must file a record with the PRC Ministry of Commerce (“ MOFCOM ”) or its local counterparts and shall also be limited to the difference between the registered capital and the total investment amount.
For example: ● loans by us to our wholly-owned subsidiary in China, which is a foreign-invested enterprise, cannot exceed statutory limits and must be registered with the State Administration of Foreign Exchange of the PRC (the “ SAFE ”) or its local counterparts; -33- Table of Contents ● loans by us to our affiliated entities, which are domestic PRC entities, over a certain threshold must be approved by the relevant government authorities and must also be registered with the SAFE or its local counterparts; and ● capital contributions to our wholly-owned subsidiary must file a record with the PRC Ministry of Commerce (“ MOFCOM ”) or its local counterparts and shall also be limited to the difference between the registered capital and the total investment amount.
Due to the Overseas Listing Trial Measures, we may have to file with the CSRC with respect to an offering of new securities, which may subject us to additional compliance requirements in the future and we cannot assure you that we will be able to get the clearance from the CSRC for any offering of new securities on a timely manner.
Due to the Overseas Listing Trial Measures, we will be required to file with the CSRC with respect to an offering of new securities, which may subject us to additional compliance requirements in the future and we cannot assure you that we will be able to get the clearance from the CSRC for any offering of new securities on a timely manner.
It may also be difficult for you to enforce in U.S. courts judgments predicated on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, most of whom are not residents in the United States and the substantial majority of whose assets are located outside the United States.
It may also be difficult for you to enforce in U.S. courts judgments predicated on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, all of whom are not residents in the United States and the substantial majority of whose assets are located outside the United States.
You could lose all or a significant portion of your investment due to any one of these material risks and uncertainties. -18- Table of Contents Risks Related to the Business We have a limited operating history and, as a result, our past results may not be indicative of future operating performance.
You could lose all or a significant portion of your investment due to any one of these material risks and uncertainties. -20- Table of Contents Risks Related to the Business We have a limited operating history and, as a result, our past results may not be indicative of future operating performance.
Compliance with China’s new Data Security Law, Measures on Cybersecurity Review (revised draft for public consultation), Personal Information Protection Law (second draft for consultation), regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations may entail significant expenses and could materially effect our business.
Compliance with China’s new Data Security Law, Measures on Cybersecurity Review (revised draft for public consultation), Personal Information Protection Law (second draft for consultation), regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations may entail significant expenses and could materially affect our business.
For example, PRC tax authorities may adjust our income and expenses for PRC tax purposes which could result in our being subject to higher tax liability or cause other adverse financial consequences. Shareholders of JiuGe Technology have potential conflicts of interest with our Company which may adversely effect our business.
For example, PRC tax authorities may adjust our income and expenses for PRC tax purposes which could result in our being subject to higher tax liability or cause other adverse financial consequences. Shareholders of JiuGe Technology have potential conflicts of interest with our Company which may adversely affect our business.
In addition, most of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons is located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons.
In addition, all of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons is located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons.
If we are unable to generate adequate revenue growth and manage our expenses, we may continue to incur significant losses in the future and may not be able to achieve or maintain profitability. If we fail to effectively manage our growth, our business, financial condition and results of operations could be adversely effected.
If we are unable to generate adequate revenue growth and manage our expenses, we may continue to incur significant losses in the future and may not be able to achieve or maintain profitability. If we fail to effectively manage our growth, our business, financial condition and results of operations could be adversely affected.
Uncertainties in the application of various laws, rules, regulations or policies in PRC legal system could limit our liability to enforce the VIE Agreements and protect our interests. -25- Table of Contents The payment arrangement under the VIE Agreements may be challenged by the PRC tax authorities.
Uncertainties in the application of various laws, rules, regulations or policies in PRC legal system could limit our liability to enforce the VIE Agreements and protect our interests. -27- Table of Contents The payment arrangement under the VIE Agreements may be challenged by the PRC tax authorities.
If we are unable to obtain adequate funding or funding on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, and our business, financial condition and results of operations could be adversely effected.
If we are unable to obtain adequate funding or funding on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, and our business, financial condition and results of operations could be adversely affected.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have an adverse effect on our reputation, brand, business, financial condition and results of operations. -20- Table of Contents Systems failures and resulting interruptions in the availability of our platform or offerings could adversely effect our business, financial condition and results of operations.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have an adverse effect on our reputation, brand, business, financial condition and results of operations. -22- Table of Contents Systems failures and resulting interruptions in the availability of our platform or offerings could adversely affect our business, financial condition and results of operations.
Fluctuations in exchange rates could adversely effect our business and the value of our securities. The value of our common stock will be indirectly affected by the foreign exchange rate between U.S. dollars and RMB and between those currencies and other currencies in which our sales may be denominated.
Fluctuations in exchange rates could adversely affect our business and the value of our securities. The value of our common stock will be indirectly affected by the foreign exchange rate between U.S. dollars and RMB and between those currencies and other currencies in which our sales may be denominated.
Furthermore, under certain circumstances, we have contractual and other legal obligations to indemnify and to incur legal expenses on behalf of our business and commercial partners and current and former directors and officers. -21- Table of Contents We may require additional funding to support our business.
Furthermore, under certain circumstances, we have contractual and other legal obligations to indemnify and to incur legal expenses on behalf of our business and commercial partners and current and former directors and officers. -23- Table of Contents We may require additional funding to support our business.
These proceedings could also result in harm to our reputation and brand, sanctions, consent decrees, injunctions or other orders requiring a change in our business practices. Any of these consequences could adversely effect our business, financial condition and results of operations.
These proceedings could also result in harm to our reputation and brand, sanctions, consent decrees, injunctions or other orders requiring a change in our business practices. Any of these consequences could adversely affect our business, financial condition and results of operations.
Violations of the FCPA or Chinese anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively effect our business, operating results and financial condition.
Violations of the FCPA or Chinese anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition.
Any actual or perceived security or privacy breach could interrupt our operations, harm our brand and adversely effect our reputation, brand, business, financial condition and results of operations. Our business involves the processing and transmission of our users’ personal and other sensitive data.
Any actual or perceived security or privacy breach could interrupt our operations, harm our brand and adversely affect our reputation, brand, business, financial condition and results of operations. Our business involves the processing and transmission of our users’ personal and other sensitive data.
China’s regulators may impose penalties for non-compliance ranging from fines or suspension of operations, and this could lead to us delisting from the U.S. stock market. -29- Table of Contents Also, on November 20, 2021, the National People’s Congress passed the Personal Information Protection Law, which was implemented on November 1, 2021.
China’s regulators may impose penalties for non-compliance ranging from fines or suspension of operations, and this could lead to us delisting from the U.S. stock market. Also, on November 20, 2021, the National People’s Congress passed the Personal Information Protection Law, which was implemented on November 1, 2021.
Li will vote her shares in our best interest or otherwise act in the best interests of our company. If Ms. Li fails to act in our best interests, our operating performance and future growth could be adversely effected.
Li will vote her shares in our best interest or otherwise act in the best interests of our company. If Ms. Li fails to act in our best interests, our operating performance and future growth could be adversely affected.
If JiuGe Management exercises the purchase option it holds over JiuGe Technology’s share capital pursuant to the VIE Agreements, the payment of the purchase price could materially and adversely effect our financial position.
If JiuGe Management exercises the purchase option it holds over JiuGe Technology’s share capital pursuant to the VIE Agreements, the payment of the purchase price could materially and adversely affect our financial position.
As a result of the new Data Security Law, we may need to make adjustments to our data processing practices to comply with this law. Additionally, China’s Cyber Security Law, requires companies to take certain organizational, technical and administrative measures and other necessary measures to ensure the security of their networks and data stored on their networks.
As a result of the new Data Security Law, we may need to make adjustments to our data processing practices to comply with this law. -31- Table of Contents Additionally, China’s Cyber Security Law, requires companies to take certain organizational, technical and administrative measures and other necessary measures to ensure the security of their networks and data stored on their networks.
We rely on the approval certificates and business license held by JiuGe Management and any deterioration of the relationship between JiuGe Management and JiuGe Technology could materially and adversely effect our business operations.
We rely on the approval certificates and business license held by JiuGe Management and any deterioration of the relationship between JiuGe Management and JiuGe Technology could materially and adversely affect our business operations.
As JiuGe Technology is already our contractually controlled affiliate, JiuGe Management’s exercising of the option would not bring immediate benefits to our company, and payment of the purchase prices could adversely effect our financial position. -26- Table of Contents Risks Related to Doing Business in China Changes in China’s political or economic situation could harm us and our operating results.
As JiuGe Technology is already our contractually controlled affiliate, JiuGe Management’s exercising of the option would not bring immediate benefits to our company, and payment of the purchase prices could adversely affect our financial position. -28- Table of Contents Risks Related to Doing Business in China Changes in China’s political or economic situation could harm us and our operating results.
Any of these events could adversely effect our business, financial condition and results of operations. -22- Table of Contents Risks Related to Our Securities Our stock has limited liquidity. Our common stock began trading on the Nasdaq Capital Market on December 28, 2021, and before that it traded on the OTCQX operated by OTC Markets Group Inc.
Any of these events could adversely affect our business, financial condition and results of operations. -24- Table of Contents Risks Related to Our Securities Our stock has limited liquidity. Our common stock began trading on the Nasdaq Capital Market on December 28, 2021, and before that it traded on the OTCQX operated by OTC Markets Group Inc.
We may be subject to claims, lawsuits, government investigations and other proceedings that may adversely effect our business, financial condition and results of operations .
We may be subject to claims, lawsuits, government investigations and other proceedings that may adversely affect our business, financial condition and results of operations .
We cannot assure you that we will be able to obtain these government registrations or filings on a timely basis, or at all. If we fail to finish such registrations or filings, our ability to capitalize our PRC subsidiary’s operations may be adversely effected, which could adversely effect our liquidity and our ability to fund and expand our business.
We cannot assure you that we will be able to obtain these government registrations or filings on a timely basis, or at all. If we fail to finish such registrations or filings, our ability to capitalize our PRC subsidiary’s operations may be adversely affected, which could adversely affect our liquidity and our ability to fund and expand our business.
Since our auditor is located in Hong Kong and PRC, a jurisdiction where the PCAOB has been unable to conduct inspections without the approval of the PRC authorities due to various state secrecy laws and the revised Securities Law, the PCAOB currently does not have free access to inspect the work of our auditor.
Since our auditor is located in Hong Kong and PRC, a jurisdiction where the PCAOB has previously been unable to conduct inspections without the approval of the PRC authorities due to various state secrecy laws and the revised Securities Law, the PCAOB did not have free access to inspect the work of our auditor.
Moreover, the legal uncertainty created by the Data Security Law and the recent Chinese government actions could materially adversely effect our ability, on favorable terms, to raise capital, including engaging in follow-on offerings of our securities in the U.S. market Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.
Moreover, the legal uncertainty created by the Data Security Law and the recent Chinese government actions could materially adversely affect our ability, on favorable terms, to raise capital, including engaging in follow-on offerings of our securities in the U.S. market. -32- Table of Contents Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.
We have a history of net losses and we may not be able to achieve or maintain profitability in the future. For all annual periods of our operating history we have experienced net losses. We generated net losses of approximately $7.5 million, $4.9 million and $4.3 million for the years ended February 28, 2023, 2022 and 2021, respectively.
We have a history of net losses and we may not be able to achieve or maintain profitability in the future. For all annual periods of our operating history we have experienced net losses. We generated net losses of approximately $3.8 million, $7.5 million and $4.9 million for the years ended February 29, 2024, 2023 and 2022, respectively.
In June 2022, we were identified as a Commission-Identified Issuer on the SEC’s “Conclusive list of issuers identified under the HFCAA” (available at https://www.sec.gov/hfcaa ) and, as a result, we will be required to comply with the submission or disclosure requirements in our annual report covering the fiscal year ending February 28, 2023.
In June 2022, we were identified as a Commission-Identified Issuer on the SEC’s “Conclusive list of issuers identified under the HFCAA” (available at https://www.sec.gov/hfcaa ) and, as a result, we will be required to comply with the submission or disclosure requirements in our annual report covering the fiscal year ended February 29, 2024.
Such events could adversely effect our business operations. -32- Table of Contents Under the New EIT Law, we may be classified as a “resident enterprise” of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC shareholders.
Such events could adversely affect our business operations. Under the New EIT Law, we may be classified as a “resident enterprise” of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC shareholders.
Future inflation in China may inhibit our ability to conduct business in China. In recent years, the Chinese economy has experienced periods of rapid expansion and highly fluctuating rates of inflation. During the past ten years, the rate of inflation in China has been as high as 20.7% and as low as -2.2%.
Future inflation in China may inhibit our ability to conduct business in China. In recent years, the Chinese economy has experienced periods of rapid expansion and highly fluctuating rates of inflation. During the past ten years, the rate of inflation in China has been as high as 4.5% and as low as 0.2%.
As of February 28, 2023, we had an accumulated deficit of $24.7 million. We have not achieved profitability, and we may not realize sufficient revenue to achieve profitability in future periods.
As of February 29, 2024, we had an accumulated deficit of $28.4 million. We have not achieved profitability, and we may not realize sufficient revenue to achieve profitability in future periods.
In addition, if the MOFCOM determines that we should have obtained its approval for our entry into contractual arrangements with our affiliated entities, we may be required to file for remedial approvals.
In addition, if the MOFCOM determines that we should have obtained its approval for our entry into contractual arrangements with our affiliated entities, we may be required to file for remedial approvals. There is no assurance that we would be able to obtain such approval from the MOFCOM.
PRC legal restrictions permit payments of dividends by our PRC subsidiary only out of its accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations.
PRC regulations restrict the ability of our PRC subsidiary to make dividends and other payments to its offshore parent company. PRC legal restrictions permit payments of dividends by our PRC subsidiary only out of its accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations.
There is no assurance that we would be able to obtain such approval from the MOFCOM. -34- Table of Contents If the MOFCOM, the CSRC and/or other PRC regulatory agencies subsequently determine that the approvals from the MOFCOM and/or CSRC and/or other PRC regulatory agencies were required, our PRC business could be challenged, and we may need to apply for a remedial approval and may be subject to certain administrative punishments or other sanctions from PRC regulatory agencies.
If the MOFCOM, the CSRC and/or other PRC regulatory agencies subsequently determine that the approvals from the MOFCOM and/or CSRC and/or other PRC regulatory agencies were required, our PRC business could be challenged, and we may need to apply for a remedial approval and may be subject to certain administrative punishments or other sanctions from PRC regulatory agencies.
If we are so identified for another two consecutive years, the SEC would prohibit our securities from trading on a securities exchange or in the over-the-counter trading market in the United States the earliest in early 2024 Under the HFCAA (as amended by the Consolidated Appropriations Act, 2023), our securities may be prohibited from trading on the U.S. stock exchanges or in the over the counter trading market in the U.S. if our auditor is not inspected by the PCAOB for two consecutive years, and this ultimately could result in our common stock being delisted.
Under the HFCAA (as amended by the Consolidated Appropriations Act, 2023), our securities may be prohibited from trading on the U.S. stock exchanges or in the over the counter trading market in the U.S. if our auditor is not inspected by the PCAOB for two consecutive years, and this ultimately could result in our common stock being delisted.
However, our operations are conducted through the VIE in PRC, and our ability to pay dividends is primarily dependent on receiving distributions of funds from the VIE, if we do not obtain or maintain any of the permissions or approvals which may be required in the future by the PRC government for the operation of the VIE or the execution of VIE Agreements, our operations and financial conditions could be adversely effected, even significantly limit or completely hinder our ability to offer or continue to offer securities or dividends to investors and cause the value of our securities to significantly decline or become worthless. -35- Table of Contents The audit report included in this Annual Report is prepared by an auditor who is currently being inspected by the PCAOB.
However, our operations are conducted through the VIE in PRC, and our ability to pay dividends is primarily dependent on receiving distributions of funds from the VIE, if we do not obtain or maintain any of the permissions or approvals which may be required in the future by the PRC government for the operation of the VIE or the execution of VIE Agreements, our operations and financial conditions could be adversely effected, even significantly limit or completely hinder our ability to offer or continue to offer securities or dividends to investors and cause the value of our securities to significantly decline or become worthless. -38- Table of Contents Although the audit report included in our Annual Report for the fiscal year ended February 29, 2024 was prepared by an auditor who has been currently inspected by the PCAOB, if it is later determined that the PCAOB is unable to inspect or investigatge our auditor completely, we could be delisted if we are unable to meet the PCAOB inspection requirements established by the HFCAA.
Broad or active public trading market for our shares of common stock may not develop or be sustained. -24- Table of Contents Risks Related to the VIE Agreements The PRC government may determine that the VIE Agreements are not in compliance with applicable PRC laws, rules and regulations JiuGe Management manages and operates the mobile data business through JiuGe Technology pursuant to the rights its holds under the VIE Agreements.
Broad or active public trading market for our shares of common stock may not develop or be sustained. -26- Table of Contents Risks Related to the VIE Agreements The PRC government may determine that the VIE Agreements are not in compliance with applicable PRC laws, rules and regulations.
Almost all economic benefits and risks arising from JiuGe Technology’s operations are transferred to JiuGe Management under these agreements. There are risks involved with the operation of our business in reliance on the VIE Agreements, including the risk that the VIE Agreements may be determined by PRC regulators or courts to be unenforceable.
There are risks involved with the operation of our business in reliance on the VIE Agreements, including the risk that the VIE Agreements may be determined by PRC regulators or courts to be unenforceable.
A failure by our PRC resident beneficial holders or future PRC resident shareholders to comply with Circular 75, if the SAFE requires it, could subject these PRC resident beneficial holders to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiary’s and affiliate’s ability to make distributions or pay dividends or affect our ownership structure, which could adversely effect our business and prospects.
A failure by our PRC resident beneficial holders or future PRC resident shareholders to comply with Circular 75, if the SAFE requires it, could subject these PRC resident beneficial holders to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiary’s and affiliate’s ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects. -34- Table of Contents We may be subject to fines and legal sanctions by the SAFE or other PRC government authorities if we or our employees who are PRC citizens fail to comply with PRC regulations relating to employee stock options granted by offshore listed companies to PRC citizens.
Before any registrant will be required to comply with the interim final amendments, the SEC must implement a process for identifying such registrants. As of the date of this Annual Report, the SEC is seeking public comment on this identification process.
Before any registrant will be required to comply with the interim final amendments, the SEC must implement a process for identifying such registrants.
FINRA rules require broker-dealers to have reasonable grounds for believing that the investment is suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives, and other information.
Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives, and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers.
Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely adversely effect the market price of our common stock Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit a stockholder’s ability to buy and sell our shares of common stock, which could depress the price of our shares of common stock.
Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely adversely affect the market price of our common stock.
The Cracking Down on Illegal Securities Activities Opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision over overseas listings by China-based companies, and proposed to take measures, including promoting the construction of relevant regulatory systems to control the risks and deal with the incidents faced by China-based overseas-listed companies.
The Cracking Down on Illegal Securities Activities Opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision over overseas listings by China-based companies, and proposed to take measures, including promoting the construction of relevant regulatory systems to control the risks and deal with the incidents faced by China-based overseas-listed companies. -37- Table of Contents In addition, on December 24, 2021, the CSRC issued the draft Administration Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies (the “ Draft Administration Provisions ”) and the draft Administrative Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (the “ Draft Administrative Measures ”), for public comments.
While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all.
While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all. In addition, our foreign currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currencies.
Meanwhile, the foreign exchange policy is unpredictable in China, it shall be various with the nationwide economic pattern, the strict foreign exchange policy may have an adverse impact in our capital cash and may limit our business expansion. -31- Table of Contents Failure to comply with PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident shareholders to personal liability, limit our ability to acquire PRC companies or to inject capital into our PRC subsidiary or affiliate, limit our PRC subsidiary’s and affiliate’s ability to distribute profits to us or otherwise materially adversely effect us.
Failure to comply with PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident shareholders to personal liability, limit our ability to acquire PRC companies or to inject capital into our PRC subsidiary or affiliate, limit our PRC subsidiary’s and affiliate’s ability to distribute profits to us or otherwise materially adversely affect us.
In addition, the U.S. government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire. -33- Table of Contents Because our business is located in the PRC, we may have difficulty establishing adequate management, legal and financial controls, which we are required to do in order to comply with U.S. securities laws.
Because our business is located in the PRC, we may have difficulty establishing adequate management, legal and financial controls, which we are required to do in order to comply with U.S. securities laws.
Additionally, if we do not effectively manage the growth of our business and operations, the quality of our offerings could suffer, which could negatively affect our reputation and brand, business, financial condition and results of operations.
Additionally, if we do not effectively manage the growth of our business and operations, the quality of our offerings could suffer, which could negatively affect our reputation and brand, business, financial condition and results of operations. -21- Table of Contents We depend on our key personnel and other highly skilled personnel, and if we fail to attract, retain, motivate or integrate our personnel, our business, financial condition and results of operations could be adversely affected.
We may be exposed to liabilities under the Foreign Corrupt Practices Act (the “FCPA”) and Chinese anti-corruption laws, and any determination that we violated these laws could have a material adverse effect on our business.
If we were treated as a “resident enterprise” by PRC tax authorities, we would be subject to taxation in both the U.S. and China, and our PRC tax may not be creditable against our U.S. tax. -35- Table of Contents We may be exposed to liabilities under the Foreign Corrupt Practices Act (the “FCPA”) and Chinese anti-corruption laws, and any determination that we violated these laws could have a material adverse effect on our business.
If we offer new securities in the future, we may have to file with the CSRC, which could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of our securities to significantly decline or be worthless.
Stock enterprises are not required to complete the filling procedures immediately, and they shall be required to file with the CSRC when subsequent matters such as refinancing are involved. -30- Table of Contents If we offer new securities in the future, we will be required to file with the CSRC, which could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of our securities to significantly decline or be worthless.
In addition, our foreign currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currencies. -30- Table of Contents Restrictions under PRC law on our PRC subsidiary’s ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to our shareholders, and otherwise fund and conduct our businesses.
Restrictions under PRC law on our PRC subsidiary’s ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to our shareholders, and otherwise fund and conduct our businesses. Substantially all of our revenue is earned by JiuGe Management, our PRC subsidiary.
Accordingly, you should review our SEC reports, filings and our other public announcements with the understanding that no local regulator has done any due diligence on our Company and with the understanding that none of our SEC reports, other filings or any of our other public announcements has been reviewed or otherwise been scrutinized by any local regulator.
Accordingly, you should review our SEC reports, filings and our other public announcements with the understanding that no local regulator has done any due diligence on our Company and with the understanding that none of our SEC reports, other filings or any of our other public announcements has been reviewed or otherwise been scrutinized by any local regulator. -36- Table of Contents Certain PRC regulations, including those relating to mergers and acquisitions and national security, may require a complicated review and approval process which could make it more difficult for us to pursue growth through acquisitions in China.
To grow our business, FingerMotion currently looks to take advantage of the immense growth in the total variety of mobile services provided in China. The combined business revenue in the telecom sector rose 8% year on year to about USD232.43 billion in 2021, with the growth rate up 4.1 percentage point from 2020. (source: https://english.news.cn/20220201/da5fa2c2aa614d948e960e7776f84c76/c.html ).
On February 1, 2022, the Xinhua News Agency reported that the combined business revenue in the telecom sector rose 8% year on year to about USD232.43 billion in 2021, with the growth rate up 4.1 percentage points from 2020, according to the PRC Ministry of Industry and Information Technology.
Removed
The impact of the COVID-19 pandemic on the global economy, our operations and consumer demand for consumer goods and services remains uncertain, which could have a material adverse impact on our business, results of operations and financial condition and on the market price of our common shares.
Added
To grow our business, FingerMotion currently looks to take advantage of the immense growth in the total variety of mobile services provided in China.
Removed
In December 2019, a strain of novel coronavirus (now commonly known as COVID-19) was reported to have surfaced in Wuhan, China. COVID-19 has since spread rapidly throughout many countries, and, on March 12, 2020, the World Health Organization declared COVID-19 to be a pandemic.
Added
Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit a stockholder’s ability to buy and sell our shares of common stock, which could depress the price of our shares of common stock. FINRA rules require broker-dealers to have reasonable grounds for believing that the investment is suitable for a customer before recommending that investment to the customer.
Removed
In an effort to contain and mitigate the spread of COVID-19, many countries, including the United States, Canada and China, have imposed unprecedented restrictions on travel, and there have been business closures and a substantial reduction in economic activity in countries that have had significant outbreaks of COVID-19.
Added
JiuGe Management manages and operates the mobile data business through JiuGe Technology pursuant to the rights its holds under the VIE Agreements. Almost all economic benefits and risks arising from JiuGe Technology’s operations are transferred to JiuGe Management under these agreements.
Removed
Although our operating subsidiaries and contractually controlled entity report that is operation have not been materially affected at this point, significant uncertainty remains as to the potential impact of the COVID-19 pandemic on our operations and on the global economy as a whole.
Added
Adverse regulatory developments in China may subject us to additional regulatory review, and additional disclosure requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in China may impose additional compliance requirements for companies like us with significant China-based operations, all of which could increase our compliance costs, subject us to additional disclosure requirements.
Removed
It is currently not possible to predict how long the pandemic will last or the time that it will take for economic activity to return to prior levels. The COVID-19 pandemic has resulted in significant financial market volatility and uncertainty in recent weeks.
Added
Meanwhile, the foreign exchange policy is unpredictable in China, it shall be various with the nationwide economic pattern, the strict foreign exchange policy may have an adverse impact in our capital cash and may limit our business expansion.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeThere are no matters as of February 28, 2023 that in the opinion of management might have a material adverse effect on our results of operations, financial condition or cash flows, or that are required to be disclosed under the rules of the SEC.
Biggest changeThere are no matters as of February 29, 2024 that in the opinion of management might have a material adverse effect on our results of operations, financial condition or cash flows, or that are required to be disclosed under the rules of the SEC.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−25 removed4 unchanged
Biggest changeQuarter Ended High Bid Low Bid February 28, 2023 $4.66 $1.39 November 30, 2022 $9.79 $0.62 August 31, 2022 $2.30 $0.83 May 31, 2022 $2.99 $1.24 February 28, 2022 $9.25 $2.03 November 30, 2021 $7.24 $4.00 August 31, 2021 $8.00 $3.22 May 31, 2021 $13.80 $7.00 February 28, 2021 $12.00 $10.50 On May 22, 2023, the last reported sale price of our common stock on the Nasdaq Capital Market was $1.40 per share.
Biggest changeQuarter Ended High Bid Low Bid February 29, 2024 $4.50 $2.05 November 30, 2023 $7.97 $3.88 August 31, 2023 $7.16 $1.30 May 31, 2023 $2.50 $1.01 February 28, 2023 $4.66 $1.39 November 30, 2022 $9.79 $0.62 August 31, 2022 $2.30 $0.83 May 31, 2022 $2.99 $1.24 February 28, 2022 $9.25 $2.03 On May 23, 2024, the last reported sale price of our common stock on the Nasdaq Capital Market was $2.95 per share.
Holders of Common Shares As of May 22, 2023, there were approximately 306 holders of record of our common stock as reported by our transfer agent, VStock Transfer, LLC, which does not include shareholders whose shares are held in street or nominee names. Dividends We have never declared or paid any cash dividends on our capital stock.
Holders of Common Shares As of May 23, 2024, there were approximately 81 holders of record of our common stock as reported by our transfer agent, VStock Transfer, LLC, which does not include shareholders whose shares are held in street or nominee names. Dividends We have never declared or paid any cash dividends on our capital stock.
We currently intend to use the net proceeds from any offerings of our securities and our future earnings, if any, to finance the further development and expansion of our business and do not intend or expect to pay cash dividends in the foreseeable future.
We currently intend to grant a dividend in kind of warrants to purchase shares of our common stock to holders of our common stock as previously disclosed, however, we intend to use the net proceeds from any offerings of our securities and our future earnings, if any, to finance the further development and expansion of our business and do not intend or expect to pay cash dividends in the foreseeable future.
We relied upon the exemption from registration under the Securities Act provided by Rule 506(b) or Section 4(a)(2) of the Securities Act for the issuance of the shares to the entity that is a U.S. person.
We relied upon the exemption from registration under the Securities Act provided by Rule 506(b) or Section 4(a)(2) of the Securities Act for the issuance of the shares to the entity that is a U.S. person. -43- Table of Contents Issuer Repurchases of Equity Securities We did not repurchase any of our outstanding securities during the fiscal year ended February 29, 2024.
On February 28, 2023, we issued 7,500 shares of our common stock at a deemed price of $1.85 per share to one entity pursuant to a consulting agreement.
Subsequent to the Year Ended February 29, 2024 On March 29, 2024, we issued 17,500 shares of our common stock at a deemed price of $2.80 per share to one entity pursuant to consulting agreements, dated February 27, 2023 and February 24, 2024.
Removed
Recent Sales of Unregistered Securities Year Ended February 28, 2023 On January 19, 2023, we issued 5,000 shares of our common stock at a deemed price of $1.70 per share to one entity pursuant to a consulting agreement.
Added
Recent Sales of Unregistered Securities Year Ended February 29, 2024 All sales of unregistered securities during the fiscal year ended February 29, 2024 have been previously reported.
Removed
On January 19, 2023 , we issued an aggregate of 25,000 shares of our common stock at a deemed price of $2.85 per share to two individuals and one entity pursuant to consulting agreements.
Removed
We relied upon the exemption from registration under the Securities Act provided by Rule 506(b) or Section 4(a)(2) of the Securities Act for the issuance of the shares to the two individuals and one entity who are all U.S. persons. -39- Table of Contents On January 19, 2023, we issued 125,000 shares of our common stock at a deemed price of $1.44 per share to one entity pursuant to a consulting agreement.
Removed
We relied upon the exemption from registration under the Securities Act provided by Rule 506(b) or Section 4(a)(2) of the Securities Act for the issuance of the shares to the entity that is a U.S. person.
Removed
On January 19, 2023, we issued 16,313 shares of our common stock at a deemed price of $6.13 per share to one entity pursuant to a consulting agreement.
Removed
We relied upon the exemption from registration under the Securities Act provided by Rule 506(b) or Section 4(a)(2) of the Securities Act for the issuance of the shares to the entity that is a U.S. person.
Removed
On January 19, 2023, we issued 40,000 shares of our common stock at a deemed price of $4.13 per share to one entity pursuant to a consulting agreement.
Removed
We relied upon the exemption from registration under the Securities Act provided by Rule 506(b) or Section 4(a)(2) of the Securities Act for the issuance of the shares to the entity that is a U.S. person.
Removed
On February 7, 2023, we issued 1,721,766 shares of common stock at price of $1.75 per share to our primary lender pursuant to the cashless exercise of warrants issued to our primary lender on August 9, 2022. We relied upon the exemption from the registration requirements under the U.S. Securities Act, provided by Section 3(a)(9) of the U.S.
Removed
Securities Act with respect to the issuance of the shares. On February 7, 2023, we issued 25,000 shares of our common stock at a deemed price of $1.22 per share to one entity pursuant to a consulting agreement.
Removed
We relied upon the exemption from registration under the Securities Act provided by Rule 506(b) or Section 4(a)(2) of the Securities Act for the issuance of the shares to the entity that is a U.S. person.
Removed
On February 15, 2023, we issued 500,000 shares of common stock at price of $2.00 per share to our primary lender pursuant to the conversion of $1,000,000 of principal amount of the convertible promissory note (the “Note”) issued to our primary lender on August 9, 2022. We relied upon the exemption from the registration requirements under the U.S.
Removed
Securities Act, provided by Section 3(a)(9) of the U.S. Securities Act with respect to the issuance of the shares.
Removed
On February 22, 2023, we issued 500,000 shares of common stock at price of $2.00 per share to our primary lender pursuant to the conversion of $1,000,000 of principal amount of the Note issued to our primary lender on August 9, 2022. We relied upon the exemption from the registration requirements under the U.S.
Removed
Securities Act, provided by Section 3(a)(9) of the U.S. Securities Act with respect to the issuance of the shares. On February 28, 2023, we issued 150,000 shares of our common stock at a deemed price of $0.74 per share to one individual pursuant to a consulting agreement.
Removed
We relied upon the exemption from registration under the Securities Act provided by Rule 506(b) or Section 4(a)(2) of the Securities Act for the issuance of the shares to the individual who is a U.S. person.
Removed
We relied upon the exemption from registration under the Securities Act provided by Rule 506(b) or Section 4(a)(2) of the Securities Act for the issuance of the shares to the entity that is a U.S. person.
Removed
On February 28, 2023, we issued 125,000 common stock purchase warrants to acquire 125,000 shares of common stock at a price of $5.00 per share until October 1, 2024, to one entity pursuant to a consulting agreement.
Removed
We relied upon the exemption from registration under the Securities Act provided by Rule 506(b) or Section 4(a)(2) of the Securities Act for the issuance of the warrants to the entity which is a U.S. person. All of the other sales of unregistered securities during the fiscal year ended February 28, 2023 have been previously reported.
Removed
Subsequent to the Year Ended February 28, 2023 On March 17, 2023, we issued 2,465,816 shares of common stock at price of $0.863 per share to our primary lender pursuant to the conversion of $2,128,000 of principal amount of the Note issued to our primary lender on August 9, 2022.
Removed
We relied upon the exemption from the registration requirements under the U.S. Securities Act, provided by Section 3(a)(9) of the U.S. Securities Act with respect to the issuance of the shares. On April 18, 2023, we issued 20,000 shares of common stock at a price of $3.00 per share pursuant to the exercise of warrants.
Removed
We relied upon the exemption from registration under the Securities Act provided by Rule 903 of Regulation S promulgated under the Securities Act for the issuance of the 20,000 shares to the individual who is a non-U.S. person.
Removed
On April 24, 2023, we issued 70,000 shares of our common stock at a deemed price of $1.64 per share to one entity pursuant to a consulting agreement.
Removed
We relied upon the exemption from registration under the Securities Act provided by Rule 506(b) or Section 4(a)(2) of the Securities Act for the issuance of the shares to the entity that is a U.S. person.
Removed
Issuer Repurchases of Equity Securities We did not repurchase any of our outstanding securities during the fiscal year ended February 28, 2023. -40- Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

48 edited+30 added−20 removed66 unchanged
Biggest changeResults of Operations Year Ended February 28, 2023 Compared to Year Ended February 28, 2022 The following table sets forth our results of operations for the fiscal years ended February 28, 2023 and February 28, 2022: Year Ended February 28, 2023 Year Ended February 28, 2022 Revenue $ 34,054,205 $ 22,927,415 Cost of revenue $ (31,735,735 ) $ (20,113,294 ) Total operating expenses $ (8,984,535 ) $ (7,681,356 ) Total other income (expenses) $ (872,772 ) $ (73,313 ) Net Loss attributable to the Company’s shareholders $ (7,539,142 ) $ (4,943,444 ) Foreign currency translation adjustment $ (529,603 ) $ (2,995 ) Comprehensive loss attributable to the Company $ (8,068,212 ) $ (4,946,696 ) Basic Loss Per Share attributable to the Company (0.17 ) (0.12 ) Diluted Loss Per Share attributable to the Company (0.17 ) (0.12 ) -44- Table of Contents Revenues The following table sets forth the Company’s revenue from its three lines of business for the periods indicated: Year Ended February 28, 2023 Year Ended February 28, 2022 Change (%) Telecommunication Products & Services $ 27,006,978 $ 8,657,277 212 % SMS & MMS Business $ 6,609,727 $ 14,138,720 -53 % Big Data $ 437,500 $ 131,418 233 % Total Revenue $ 34,054,205 $ 22,927,415 49 % We recorded $34,054,205 in revenue for the year ended February 28, 2023, an increase of $11,126,790 or 49%, compared to the year ended February 28, 2022.
Biggest changeOn April 17, 2024, our contractually controlled subsidiary, JiuGe Technology, is entering into arrangements with certain electric vehicle (“EV”) charging station providers in the PRC to allow EV owners who have subscribed to the Da Ge app to locate and charge their vehicles, which is expected to significantly expand Da Ge’s usage. -47- Table of Contents Results of Operations Year Ended February 29, 2024 Compared to Year Ended February 28, 2023 The following table sets forth our results of operations for the fiscal years ended February 29, 2024 and February 28, 2023: Year Ended February 29, 2024 Year Ended February 28, 2023 Revenue $ 35,791,685 $ 34,054,205 Cost of revenue $ (31,929,967 ) $ (31,735,735 ) Total operating expenses $ (7,679,407 ) $ (8,984,535 ) Total other income (expenses) $ 5,672 $ (872,772 ) Net Loss attributable to the Company’s shareholders $ (3,757,519 ) $ (7,539,142 ) Foreign currency translation adjustment $ (390,670 ) $ (529,603 Comprehensive loss attributable to the Company $ (4,148,449 ) $ (8,068,212 ) Basic Loss Per Share attributable to the Company (0.07 ) (0.17 ) Diluted Loss Per Share attributable to the Company (0.07 ) (0.17 ) Revenues The following table sets forth the Company’s revenue from its three lines of business for the periods indicated: Year Ended February 29, 2024 Year Ended February 28, 2023 Change (%) Telecommunication Products & Services $ 32,790,946 $ 27,006,978 21 % SMS & MMS Business $ 2,672,826 $ 6,609,727 -60 % Big Data $ 327,913 $ 437,500 -25 % Total Revenue $ 35,791,685 $ 34,054,205 5 % We recorded $35,791,685 in revenue for the year ended February 29, 2024, an increase of $1,737,480 or 5%, compared to the year ended February 28, 2023.
In the first quarter of 2019 FingerMotion expanded its business by commercializing its first “Business to Consumer” (“ B2C ”) model, offering the telecommunication providers’ products and services, including data plans, subscription plans, mobile phones, and loyalty points redemption, directly to subscribers or customers of the e-commerce companies, such as PinDuoDuo (“ PDD ”), TMall (“ TMALL ”) and JD.Com (“ JD ”).
In the first quarter of 2019 FingerMotion expanded its business by commercializing its first “Business to Consumer” (“ B2C ”) model, offering the telecommunication providers’ products and services, including data plans, subscription plans, mobile phones, and loyalty points redemption, directly to subscribers or customers of the e-commerce companies, such as PinDuoDuo (“ PDD ”), TMall (“ TMALL ”) and JD.Com.
As consideration for the service it provides under the Cooperation Agreement, JiuGe Technology receives a percentage of the revenue received from all sales it processes for China Unicom on the platform.
As consideration for the service JiuGe Technology provides under the Cooperation Agreement, it receives a percentage of the revenue received from all sales it processes for China Unicom on the platform.
Earnings Per Share Basic (loss) earnings per share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per share. -50- Table of Contents FASB Accounting Standard Codification Topic 260 (“ASC 260”), “Earnings Per Share,” requires that employee equity share options, non-vested shares and similar equity instruments granted to employees be treated as potential common shares in computing diluted earnings per share.
Earnings Per Share Basic (loss) earnings per share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per share. -54- Table of Contents FASB Accounting Standard Codification Topic 260 (“ASC 260”), “Earnings Per Share,” requires that employee equity share options, non-vested shares and similar equity instruments granted to employees be treated as potential common shares in computing diluted earnings per share.
Similar to tangible property and equipment, the Company periodically evaluates identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. -49- Table of Contents Impairment of Long-Lived Assets The Company classifies its long-lived assets into: (i) computer and office equipment; (ii) furniture and fixtures, (iii) leasehold improvements, and (iv) finite–lived intangible assets.
Similar to tangible property and equipment, the Company periodically evaluates identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. -53- Table of Contents Impairment of Long-Lived Assets The Company classifies its long-lived assets into: (i) computer and office equipment; (ii) furniture and fixtures, (iii) leasehold improvements, and (iv) finite–lived intangible assets.
Beijing Technology has the capability to manage and track the entire process, including guiding the Company’s customer to meet MIIT’s guidelines on messages composed, until the SMS messages have been delivered successfully. Rich Communication Services In March 2020, the Company began the development of an RCS platform, also known as Messaging as a Platform (“MaaP”).
Beijing Technology has the capability to manage and track the entire process, including guiding the Company’s customer to meet MIIT’s guidelines on messages composed, until the SMS messages have been delivered successfully. ‘ Rich Communication Services In March 2020, the Company began the development of an RCS platform, also known as Messaging as a Platform (“ MaaP ”).
In evaluating these statements, you should consider various factors, including the risks, uncertainties and assumptions set forth in reports and other documents we have filed with or furnished to the SEC and, including, without limitation, this Annual Report on Form 10-K filing for the fiscal year ended February 28, 2023, including the consolidated financial statements and related notes contained herein.
In evaluating these statements, you should consider various factors, including the risks, uncertainties and assumptions set forth in reports and other documents we have filed with or furnished to the SEC and, including, without limitation, this Annual Report on Form 10-K filing for the fiscal year ended February 29, 2024, including the consolidated financial statements and related notes contained herein.
Introduction The following discussion summarizes the results of operations for each of our fiscal years ended February 28, 2023 and February 28, 2022 and our financial condition as at February 28, 2023 and February 28, 2022, with a particular emphasis on fiscal 2023, our most recently completed fiscal year.
Introduction The following discussion summarizes the results of operations for each of our fiscal years ended February 29, 2024 and February 28, 2023 and our financial condition as at February 29, 2024 and February 28, 2023, with a particular emphasis on fiscal 2024, our most recently completed fiscal year.
Share Compensation Expenses The following table sets forth the Company’s share compensation expenses for the periods indicated: Year Ended February 28, 2023 Year Ended February 28, 2022 Share compensation expenses $ 2,018,479 $ 777,576 We incurred fees of $2,018,479 in share issuance for consultants in consideration of the services which have been provided to the company for the year ended February 28, 2023 as compared to $777,576 for the year ended February 28, 2022.
Share Compensation Expenses The following table sets forth the Company’s share compensation expenses for the periods indicated: Year Ended February 29, 2024 Year Ended February 28, 2023 Share compensation expenses $ 185,406 $ 2,018,479 We incurred fees of $185,406 in share issuance for consultants in consideration of the services which have been provided to the Company for the year ended February 29, 2024 as compared to $2,018,479 for the year ended February 28, 2023.
The decrease of $125,838 or 14% was due to the savings from data access and usage fee charged by telecommunications company. Our Insurtech division focuses on consumer behavioral insights extraction for the purpose of risk assessment. Insights are mined from a multitude of data sources, harmonized with the objectives of our various business partners.
The decrease of $97,990 or 12% was due to the savings from data access and usage fees charged by telecommunications company. Our Insurtech division focuses on consumer behavioral insights extraction for the purpose of risk assessment. Insights are mined from a multitude of data sources, harmonized with the objectives of our various business partners.
On or about April 6, 2023, we eliminated our remaining convertible debt with our primary lender as a result of conversions by the primary lender and payment by us to the primary lender. On April 28, 2023, we repaid in full the US$730,000 convertible note that was issued in favor of Dr. Liew Yow Ming on May 1, 2022.
Recent Developments On or about April 6, 2023, we eliminated our remaining convertible debt with our primary lender as a result of conversions by the primary lender and payment by us to the primary lender. On April 28, 2023, we repaid in full the US$730,000 convertible note that was issued in favor of Dr.
We conduct our mobile payment business through JiuGe Technology, our contractually controlled affiliate through the entry into a series of agreements known as VIE Agreements in October 2018.
We conduct our mobile payment business through JiuGe Technology, our contractually controlled affiliate through the entry into the VIE Agreements in October 2018.
Research & Development The following table sets forth the Company’s research & development for the periods indicated: Year Ended February 28, 2023 Year Ended February 28, 2022 Research & Development – Big Data $ 797,549 $ 923,387 We recorded $797,549 in research & development for the year ended February 28, 2023, as compared to $923,387 for the year ended February 28, 2022.
Research & Development The following table sets forth the Company’s research & development for the periods indicated: Year Ended February 29, 2024 Year Ended February 28, 2023 Research & Development – Big Data $ 699,559 $ 797,549 We recorded $699,559 in research & development for the year ended February 29, 2024, as compared to $797,549 for the year ended February 28, 2023.
With this acquisition, the Company expanded into a second partnership with the telecom companies by acquiring bulk SMS and MMS bundles at reduced prices and offering bulk SMS services to end consumers with competitive pricing.
With this acquisition, the Company expanded into a second partnership with the telecom companies by acquiring bulk SMS and MMS bundles at reduced prices and offering bulk SMS services to end consumers with competitive pricing. Beijing Technology retains a license from MIIT to operate the SMS and MMS business in the PRC.
During the first half year of the last fiscal year, our Big Data division secured a contract with Pacific Life Re, a global life reinsurance serving the insurance industry with a comprehensive suite of products and services, to develop a holistic multi-faceted risk rating concept, leveraging the Company’s proprietary approach to analytics by drawing data from novel sources and filtering them through advance algorithms with the ultimate goal to apply new insights generated from our predictive model to the traditional insurance industry.
In shifting focus to our Big Data business in FY2021, we forged a valuable alliance with Pacific Life Re, a global life reinsurance serving the insurance industry with a comprehensive suite of products and services, to develop a holistic multi-faceted risk rating concept, leveraging the Company’s proprietary approach to analytics by drawing data from novel sources and filtering them through advance algorithms with the ultimate goal to apply new insights generated from our predictive model to the traditional insurance industry.
We have been granted one of these licenses by China Unicom and China Mobile, each of which is a major telecommunications provider in China. We principally earn revenue by providing mobile payment and recharge services to customers of China Unicom and China Mobile.
(“ China Unicom ”) and China Mobile Communications Corporation (“ China Mobile ”), each of which is a major telecommunications provider in China. We principally earn revenue by providing mobile payment and recharge services to customers of China Unicom and China Mobile.
This increase resulted from an increase in revenue of $18,349,701 and $306,082 from our Telecommunication Products & Services and Big Data business, respectively, offset in part by a decrease in revenue of $7,528,993 from our SMS & MMS business. We principally earn revenue by providing mobile payment and recharge services to customers of telecommunications companies in China.
This increase resulted from an increase in revenue of $5,783,968 from our Telecommunication Products & Services; offset in part by a decrease in revenue of $3,936,901 and $109,587 from our SMS & MMS business and Big Data business, respectively. We principally earn revenue by providing mobile payment and recharge services to customers of telecommunications companies in China.
Overview The Company is a mobile data specialist company that operates the following lines of business: (i) Telecommunications Products and Services; (ii) Value Added Product and Services; (iii) SMS and MMS; (iv) a RCS platform; (v) Big Data Insights; and (vi) a Video Game Division (inactive).
The Company operates the following lines of business: (i) Telecommunications Products and Services; (ii) Value Added Products and Services (iii) Short Message Services (“ SMS ”) and Multimedia Messaging Services (“ MMS ”); (iv) a Rich Communication Services (“ RCS ”) platform; (v) Big Data Insights; and (vi) a Video Games Division (inactive).
Cash Flow provided by Financing Activities During the year ended February 28, 2023, financing activities provided cash of $17,343,333 compared to $5,414,194 during the year ended February 28, 2022.
Cash Flow provided by Financing Activities During the year ended February 29, 2024, net cash used by financing activities was $295,333 compared to net cash provided by financing activities of $17,343,333 during the year ended February 28, 2023.
Under the Cooperation Agreement, JiuGe Technology is responsible for constructing and operating China Unicom’s electronic sales platform through which consumers can purchase various goods and services from China Unicom, including mobile telephones, mobile telephone service, broadband data services, terminals, “smart” devices and related financial insurance.
Additionally, as previously disclosed, on July 7, 2019, JiuGe Technology, our contractually controlled affiliate, entered into that certain Cooperation Agreement with China Unicom Yunnan, whereby JiuGe Technology is responsible for constructing and operating China Unicom’s electronic sales platform through which consumers can purchase various goods and services from China Unicom, including mobile telephones, mobile telephone service, broadband data services, terminals, “smart” devices and related financial insurance.
This business will continue to contribute to the overall revenue for the group as part of our offering to our customers. Value Added Product and Services These are new product and services that the Company expects to secure and work with the telecommunication provider and all our e-commerce platform partners to market.
Value Added Product and Services These are new product and services that the Company expects to secure and work with the telecommunication provider and all our e-commerce platform partners to market.
In mid-July 2022, we launched the roll out of the Mobile Device protection product with the roll out of the new mobile phones and 5G phones. -42- Table of Contents SMS and MMS Services On March 7, 2019, the Company through JiuGe Technology acquired Beijing Technology, a company in the business of providing mass SMS text services to businesses looking to communicate with large numbers of their customers and prospective customers.
SMS and MMS Services On March 7, 2019, the Company through JiuGe Technology acquired Beijing Technology Co, a company in the business of providing mass SMS text services to businesses looking to communicate with large numbers of their customers and prospective customers.
The consolidated financial statements include the financial statements of the Company, and its wholly-owned subsidiaries. All intercompany accounts, transactions, and profits have been eliminated upon consolidation.
Critical Accounting Policies The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The consolidated financial statements include the financial statements of the Company, and its wholly-owned subsidiaries. All intercompany accounts, transactions, and profits have been eliminated upon consolidation.
Statement of Cashflows The following table provides a summary of cash flows for the periods presented: Year Ended February 28, 2023 Year Ended February 28, 2022 Net cash used in operating activities $ (8,614,133 ) $ (5,847,862 ) Net cash used in investing activities $ (74,817 ) $ (26,072 ) Net cash provided by financing activities $ 17,343,333 $ 5,414,194 Effect of exchange rates on cash & cash equivalents $ 123,925 $ 70,956 Net increase (decrease) in cash and cash equivalents $ 8,778,308 $ (388,784 ) Cash Flow used in Operating Activities Net cash used in operating activities increased by $2,766,271 in the year ended February 28, 2023 compared to the year ended February 28, 2022, primarily due to increase in prepayment and deposit of ($1,074,983) (2022: ($2,684,965)), increase in other receivable of ($1,872,266) (2022: ($32,545)), decrease in accounts payable of ($3,237,152) (2022: $1,114,653), decrease in accrual and other payables of ($527,489) (2022: $639,107) and decrease in lease liability of ($2,212) (2022: ($3,191)) offset by a decrease in accounts receivable of $3,100,387 (2022: ($775,837)) and increase in inventories of $1,280 (2021:($6)).
Statement of Cashflows The following table provides a summary of cash flows for the periods presented: Year Ended February 29, 2024 Year Ended February 28, 2023 Net cash used in operating activities $ (8,203,947 ) $ (8,614,133 ) Net cash used in investing activities $ (376 ) $ (74,817 ) Net cash provided by financing activities $ (295,333 ) $ 17,343,333 Effect of exchange rates on cash & cash equivalents $ 776,647 $ 123,925 Net increase (decrease) in cash and cash equivalents $ (7,723,009 ) $ 8,778,308 Cash Flow used in Operating Activities Net cash used in operating activities decreased by $410,186 in the year ended February 29, 2024 compared to the year ended February 28, 2023, primarily due to increase in accounts receivable of ($7,855,567) (2023: $3,100,387), increase in prepayment and deposit of ($1,507,836) (2023: ($1,074,983)), increase in other receivable of ($1,444,834) (2023: ($1,872,266)) and decrease in lease liability of ($6,802) (2023: ($2,212)) offset by increase in accounts payable of $5,126,949 (2023: ($3,237,152)) and increase in accrual and other payables of $495,042 (2023: ($527,489)).
Amortization & Depreciation We recorded depreciation of $63,103 for fixed assets for the year ended February 28, 2023, an increase of $5,209 or 9%, compared to the year ended February 28, 2022.
Amortization & Depreciation We recorded depreciation of $70,909 for fixed assets for the year ended February 29, 2024, an increase of $7,806 or 12%, compared to the year ended February 28, 2023.
In June 2018, we temporarily paused its publishing and operating plans for existing games, and the Company’s Board of Directors decided to re-focus the company’s resources into new business opportunities in China, particularly the mobile phone payment and data business. -43- Table of Contents Recent Developments On or around October 2022, our contractually controlled subsidiary, JiuGe Technology signed a cooperation agreement with Suning.com to expand our reach to the China market.
In June 2018, we temporarily paused its publishing and operating plans for existing games, and the Company’s Board of Directors decided to re-focus the Company’s resources into new business opportunities in China, particularly the mobile phone payment and data business.
The Cooperation Agreement expires three years from the date of its signature with yearly auto-renewal terms, but it may be terminated by (i) JiuGe Technology upon three months’ written notice or (ii) by China Unicom unilaterally. During the recent fiscal year, the Company expanded its offering under their telecommunication product and services by increasing their product line revenue streams.
The Cooperation Agreement expires three years from the date of its signature with a yearly auto-renewal clause, which is currently in an auto-renewal period, but it may be terminated by (i) JiuGe Technology upon three months’ written notice or (ii) by China Unicom unilaterally.
Specifically, we earn a negotiated rebate amount from the telecommunications companies for all monies paid by consumers to those companies that we process. The increase in this line of business especially in the mobile recharge revenue was evident as we deployed certain funding that we had secured in the last few months to this line of business.
Specifically, we earn a negotiated rebate amount from the telecommunications companies for all monies paid by consumers to those companies that we process. The increase in this line of business primarily stemmed from the enhancement of mobile recharge services provided to the consumer base of our partnering telecommunication firms.
Big Data Insights In July 2020, the Company launched its proprietary technology platform “Sapientus” as its big data insights arm to deliver data-driven solutions and insights for businesses within the insurance, healthcare, and financial services industries.
Once these issues are resolved and the necessary approval is obtained, we anticipate a substantial enhancement in our service offerings and an expansion of our market reach. -46- Table of Contents Big Data Insights In July 2020, the Company launched its proprietary technology platform “Sapientus” as its big data insights arm to deliver data-driven solutions and insights for businesses within the insurance, healthcare, and financial services industries.
If the consumer connected directly to the telecommunications provider to pay his or her bill, the consumer would miss out on any benefits or marketing discounts that e-marketers provide.
If the consumer connected directly to the telecommunications provider to pay his or her bill, the consumer would miss out on any benefits or marketing discounts that e-marketers provide. Thus, consumers log on to these e-marketer’s websites, click into their respective phone provider’s store, and “top up,” or pay, their telecommunications provider for additional mobile data and talk time.
The increase of $11,929,139 in the year ended February 28, 2023 was primarily due to the issuance of convertible notes and the proceeds from issuance of shares of our common stock. -48- Table of Contents Off-Balance Sheet Arrangements There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Off-Balance Sheet Arrangements There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. -52- Table of Contents Subsequent Events Subsequent to February 29, 2024, we received subscriptions to purchase 310,000 shares of our common stock at $2.50 per share on a private placement basis.
Accordingly, the amount of cash we have on hand fluctuates significantly from period to period as explained above to ensure our cash is being used efficiently by our operations to generate revenues. The Company otherwise does not have any planned capital expenditures and has historically funded its operations from revenues and sales of securities, including convertible debt securities.
To manage these operational demands effectively, we have had to carefully monitor and manage our cash flows. The Company otherwise does not have any planned capital expenditures and has historically funded its operations from revenues and sales of securities, including convertible debt securities.
Cash Flow used in Investing Activities During the year ended February 28, 2023, investing activities increased by $48,745 compared to the year ended February 28, 2022. The increase resulted from the purchase of equipment.
Cash Flow used in Investing Activities During the year ended February 29, 2024, investing activities decreased by $74,441 compared to the year ended February 28, 2023.
FingerMotion started and commercialized its “Business to Business” (“ B2B ”) model by integrating with various e-commerce platforms to provide its mobile payment and recharge services to subscribers or end consumers.
Accordingly, we earn income on the rebates we receive from China Unicom and China Mobile, reduced by the amounts by which we discount the mobile data and talk time sold through our platform. -45- Table of Contents FingerMotion started and commercialized its “Business to Business” (“ B2B ”) model by integrating with various e-commerce platforms to provide its mobile payment and recharge services to subscribers or end consumers.
We did, however, raise $12,020,000 through the sale of shares of our common stock in private placement transactions exempt from the registration requirements of the Securities Act during the year ended February 28, 2023.
We did, however, raise $840,000 through the exercise of warrants to purchase shares of our common stock, which transactions were exempt from the registration requirements of the U.S. Securities Act of 1933, as amended (the “ U.S. Securities Act ”) during the year ended February 29, 2024.
This increase resulted from the purchase of equipment. -45- Table of Contents General and Administrative Expenses The following table sets forth the Company’s general and administrative expenses for the periods indicated: Year Ended February 28, 2023 Year Ended February 28, 2022 Accounting $ 124,409 $ 195,948 Consulting $ 1,997,178 $ 2,022,397 Entertainment $ 224,954 $ 212,584 IT $ 68,099 $ 101,470 Rent $ 134,742 $ 111,690 Salaries & Wages $ 1,980,125 $ 2,116,307 Technical Fee $ 97,526 $ 127,487 Travelling $ 211,734 $ 103,405 Others $ 836,346 $ 289,294 Total G&A Expenses $ 5,675,113 $ 5,280,582 We recorded $5,675,113 in general and administrative expenses for the year ended February 28, 2023, an increase of $394,531 or 7%, compared to the year ended February 28, 2022.
General and Administrative Expenses The following table sets forth the Company’s general and administrative expenses for the periods indicated: Year Ended February 29, 2024 Year Ended February 28, 2023 Accounting $ 160,402 $ 124,409 Consulting $ 1,953,170 $ 1,997,178 Entertainment $ 283,046 $ 224,954 IT $ 98,979 $ 68,099 Rent $ 142,033 $ 134,742 Salaries & Wages $ 2,044,348 $ 1,980,125 Stock Option Compensation Expenses $ 544,803 $ 342,996 Technical Fee $ 131,886 $ 97,526 Travelling $ 305,331 $ 211,734 Others $ 919,483 $ 493,350 Total G&A Expenses $ 6,583,481 $ 5,675,113 We recorded $6,583,481 in general and administrative expenses for the year ended February 29, 2024, an increase of $908,368 or 16%, compared to the year ended February 28, 2023.
Net Loss attributable to the Company’s shareholders The net loss attributable to the Company’s shareholders was $7,539,142 for the year ended February 28, 2023 and $4,943,444 for the year ended February 28, 2022.
The decrease of $1,305,128 or 15% for the year ended February 29, 2024 is as set forth above. Net Loss attributable to the Company’s shareholders The net loss attributable to the Company’s shareholders was $3,757,519 for the year ended February 29, 2024 and $7,539,142 for the year ended February 28, 2023.
Cost of Revenue The following table sets forth the Company’s cost of revenue for the periods indicated: Year Ended February 28, 2023 Year Ended February 28, 2022 Telecommunication Products & Services $ 25,327,090 $ 6,517,568 SMS & MMS Business $ 6,408,645 $ 13,235,726 Big Data $ — $ 360,000 Total Cost of Revenue $ 31,735,735 $ 20,113,294 We recorded $31,735,735 in costs of revenue for the year ended February 28, 2023, an increase of $11,622,441 or 58%, compared to the year ended February 28, 2022.
Following the successful execution of our joint initiatives with Munich Re, we are now in active discussion to develop a new partnership arrangement. -48- Table of Contents Cost of Revenue The following table sets forth the Company’s cost of revenue for the periods indicated: Year Ended February 29, 2024 Year Ended February 28, 2023 Telecommunication Products & Services $ 29,384,841 $ 25,327,090 SMS & MMS Business $ 2,545,126 $ 6,408,645 Total Cost of Revenue $ 31,929,967 $ 31,735,735 We recorded $31,929,967 in costs of revenue for the year ended February 29, 2024, an increase of $194,232 or 1%, compared to the year ended February 28, 2023.
Marketing Cost The following table sets forth the Company’s marketing cost for the periods indicated: Year Ended February 28, 2023 Year Ended February 28, 2022 Marketing Cost $ 430,291 $ 641,917 We recorded $430,291 in marketing cost for the year ended February 28, 2023, a decrease $211,626 or 33% compared to the year ended February 28, 2022.
This increase reflects our focus on strengthening governance and ensuring compliance, key to our growth and agility in the market. -49- Table of Contents Marketing Cost The following table sets forth the Company’s marketing cost for the periods indicated: Year Ended February 29, 2024 Year Ended February 28, 2023 Marketing Cost $ 140,052 $ 430,291 We recorded $140,052 in marketing cost for the year ended February 29, 2024, a decrease $290,239 or 67% compared to the year ended February 28, 2023.
Regular API upgrades and enhancements enable greater flexibility in tightening service integration and broadening commercial opportunities with our partners. ● Official patent recognition – Over the past two years, Sapientus has been granted eight patents by the National Copyright Administration of China (NCAC) for the abovementioned model algorithms and technological infrastructure as well as insurance-oriented applications, for example, Risk Rating API Design, Insurance Risk Assessment platform and Insurance Fraud Detection System (one other applications is still pending approval).
As part of our new business and partner acquisition strategy, we have been actively developing and promoting new value propositions, such as offering proprietary analytic tools and insights that facilitate more effective sales profiling and creative product innovations, capturing a wider commercial audience. ● Official patent recognition – Over the past four years, Sapientus has been granted eight patents by the National Copyright Administration of China (NCAC) for the abovementioned model algorithms and technological infrastructure as well as insurance-oriented applications, for example, Risk Rating API Design, and Insurance Risk Assessment platform and Insurance Fraud Detection System.
In March 2020, FingerMotion secured a contract with both China Mobile and China Unicom to acquire new users to take up the respective subscription plans. In February 2021, we increased the mobile phones sales to end users using all of our platforms.
During the recent fiscal year, the Company expanded its offering under their telecommunication product and services by increasing their product line revenue streams. In March 2020, FingerMotion secured a contract with both China Mobile and China Unicom to acquire new users to take up the respective subscription plans.
We might also enter into financing arrangements with commercial banks or non-traditional lenders.
In line with this, we intend to continue to seek additional capital through public or private sales of our equity or debt securities, or both. We might also enter into financing arrangements with commercial banks or non-traditional lenders.
In order for us to continue to operate our mobile payment business, we must deposit funds with our telecommunication companies from time to time in order to obtain access to the mobile data and talk time we make available to consumers on our portal.
Our mobile payment business model necessitates periodic fund deposits with our telecommunication companies to obtain access to the mobile data and talk time we make available to consumers on our portal. Additionally, our expansion into the cloud-based business, which features a longer collection cycle, has led to an increase in accounts receivable and consequently, a greater strain on our liquidity.
We believe that our cash on hand, cash equivalents, and short-term investments, along with our revenues from operations, will fund our projected operating requirements, fund our current operations and repay our outstanding indebtedness, in each case, for at least the next 12 months.
We believe that our cash on hand and cash equivalents, coupled with our operating revenues, will sufficiently cover our projected operational needs and address our outstanding liabilities for the next 12 months. For more expansive growth, further enhancing our deposits with telecommunication entities will be crucial.
The increase in net loss attributable to the Company’s shareholders of $2,595,698 or 53% resulted primarily from the lower gross profit, increase in expenses pertaining to the funding exercise, interest expenses, provision for the mandatory default amount and exercise of warrants from our primary lender on the Note issued on August 9, 2022. -47- Table of Contents Liquidity and Capital Resources The following table sets out our cash and working capital as of February 28, 2023 and February 28, 2022: As at February 28, 2023 As at February 28, 2022 Cash reserves $ 9,240,241 $ 461,933 Working capital $ 15,229,331 $ 4,930,441 At February 28, 2023, we had cash and cash equivalents of $9,240,241as compared to cash and cash equivalents of $461,933 at February 28, 2022.
Liquidity and Capital Resources The following table sets out our cash and working capital as of February 29, 2024 and February 28, 2023: As at February 29, 2024 As at February 28, 2023 Cash reserves $ 1,517,232 $ 9,240,241 Working capital $ 11,971,003 $ 15,229,331 -51- Table of Contents At February 29, 2024, we had cash and cash equivalents of $1,517,232 as compared to cash and cash equivalents of $9,240,241 at February 28, 2023.
Operating Expenses We recorded $8,984,535 in operating expenses for the year ended February 28, 2023 as compared to $7,681,356 in operating expenses for the year ended February 28, 2022. The increase of $1,303,179 or 17% for the year ended February 28, 2023 is as set forth above.
However, we will continue to employ equity compensation for consultants selectively, aligning with our strategic and financial objectives. Operating Expenses We recorded $7,679,407 in operating expenses for the year ended February 29, 2024 as compared to $8,984,535 in operating expenses for the year ended February 28, 2023.
Thus, consumers log on to these e-marketer’s websites, click into their respective phone provider’s store, and “top up,” or pay, their telecommunications provider for additional mobile data and talk time. -41- Table of Contents To connect to the respective mobile telecommunications providers, these e-marketers must utilize a portal licensed by the applicable telecommunication company that processes the payment.
To connect to the respective mobile telecommunications providers, these e-marketers must utilize a portal licensed by the applicable telecommunication company that processes the payment. We have been granted one of these licenses by China United Network Communications Group Co., Ltd.
Gross profit Our gross profit for the year ended February 28, 2023 was $2,318,470, a decrease of $495,651 or 18%, compared to the year ended February 28, 2022. This decrease in gross profit resulted from lower profit margin for the period.
Gross profit Our gross profit for the year ended February 29, 2024 was $3,861,718, an increase of $1,543,248 or 67%, compared to the year ended February 28, 2023.
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Accordingly, we earn income on the rebates we receive from China Unicom and China Mobile, reduced by the amounts by which we discount the mobile data and talk time sold through our platform.
Added
Overview The Company is a mobile data specialist company incorporated in Delaware, USA, with its head office located at 111 Somerset Road, Level 3, Singapore 238164.
Removed
Additionally, as previously disclosed, on July 7, 2019, JiuGe Technology, our contractually controlled affiliate, entered into that certain Cooperation Agreement with China Unicom’s Yunnan subsidiary.
Added
In February 2021, we increased the mobile phones sales to end users using all of our platforms. This business will continue to contribute to the overall revenue for the group as part of our offering to our customers.
Removed
The current and upcoming value-added product is the Mobile Protection programs which we plan to launch soon.
Added
In mid-July 2022, we launched the roll out of the Mobile Device protection product with the roll out of the new mobile phones and 5G phones. . Complementing our hardware protection services, we have introduced the cloud services designed to offer corporate customers robust data storage, processing capabilities, and databases accessible via the internet.
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FingerMotion’s subsidiary, Beijing Technology, retains a license from the Ministry of Industry and Information Technology (“MIIT”) to operate the SMS and MMS business in the PRC.
Added
Currently, the deployment of this RCS platform is under review, with discussion ongoing among government bodies, major service providers, and telecommunication companies. These deliberations aim to assess the potential market impacts and establish the necessary consents before the launch, considering the significant changes the platform may introduce to user interactions with existing services.
Removed
Sunning.com is a portal that primarily caters to consumers shopping for home appliances, consumer electronics, health, and beauty products. On or around December 2022, our contractually controlled subsidiary, JiuGe Technology and Munich Re, a large global reinsurer, have set the stage for extension of their ongoing behavioral research and analytic studies into commercial implementation in the China market.
Added
The discussion seeks to ensure that all stakeholders’ concerns are addressed comprehensively.
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Through a proprietary behaviour intelligence system developed by “Sapientus”, the analytic innovation development arm of FingerMotion, the companies will bring forward their jointly developed model algorithms and analytic insights for productionized applications and wider market adoption.
Added
Liew Yow Ming on May 1, 2022. On or about May 12, 2023, our contractually controlled subsidiary, JiuGe Technology signed a cooperation agreement with Migu Video Technology Co., Ltd. to start in-depth collaboration on overseas hardware and terminal business.
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We plan to continue to develop our mobile recharge business and expect that revenues would continue to grow further when we continue to deploy more funds. In contrast, our SMS texting service has shown a drop in revenue as compared to last year.
Added
On July 28, 2023, we granted an aggregate of 2,648,500 stock options pursuant to our 2023 Stock Incentive Plan, each having an exercise price of $4.62 per Common Share and an expiry date of five years from the date of grant to 22 individuals who are employees of our subsidiaries and contractually controlled affiliate.
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We are facing some challenges in this line of business due to the ongoing Covid outbreak in China.
Added
Such stock options are subject to vesting provisions of 20% on the date of grant and 20% on each of the first, second, third and fourth anniversary of the date of grant.
Removed
In August 2022, after a successful project with Pacific Life Re in Asia, we secured a further contract to advance to the next phase of collaboration which has contributed to the current revenue recorded.
Added
On September 11, 2023, we entered into an At-The-Market Issuance Sales Agreement with Univest Securities, LLC (the “ Sales Agent ”), pursuant to which we may issue and sell, from time to time, Common Shares having an aggregate offering price of not more than $25,000,000 through the Sales Agent or any of its sub-agent(s) or other designees, acting as sales agent.
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The gross profit margin for the fiscal year ended February 28, 2023 is 6.80% compared to a gross margin of 12.27% for the fiscal year ended February 28, 2022.
Added
Such Common Shares are registered pursuant to our shelf Registration Statement on Form S-3 (File No. 333-274456) filed on September 11, 2023, which was declared effective by the SEC on September 29, 2023.
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The increased in travelling and other expenses are principally due to the funding exercise and the Company’s promotional activities during the period.
Added
On or around January 10, 2024, our contractually controlled subsidiary, JiuGe Technology, launched a new consumer application called “Da Ge” introducing subscribers to services such as car washing, detailing and maintenance, linking automobile owners with full service independent service stations.
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This decrease resulted from the product mix to meet the current market scenario which incurred less promotional activities. Marketing costs represent the costs of promoting our product offerings through all our platforms.
Added
Moreover, the overall revenue increase was also supported by ancillary services, notably our cloud-based business offerings. We foresee sustained growth for this segment as we strategize to allocate more resources in the near future. Contrastingly, our SMS and MMS business has reduced substantially as compared to the previous year.
Removed
Over the past year, we have deepened the Company’s determined commitment toward working with partners in elucidating consumer insights via big data algorithms and applying behavioral analytics to the fintech sector in sparking new innovations and commercial applications.
Added
Changes in the government protocol for SMS and MMS distribution resulted in a significant decline in our revenue in this sector, compelling us to focus on our other business lines. However, it’s imperative to note that we remain optimistic about the SMS and MMS business.
Removed
The following capture the most recent accomplishments and milestones: -46- Table of Contents ● Strengthening partnership network – Signed a new agreement to advance to the next phase of collaboration with Pacific Life Re in Asia. ● Upgrade of the analytic engine – We have enriched the algorithms with more elaborative auxiliary data, which, in conjunction with the existing information system and records, will lend transformational support and capabilities to the analytics, empowering more precise and robust results that are suited for commercial applications.
Added
It continues to hold significance in our broader financial picture, and we are actively re-evaluating our approach to adapt to these changes and uncover alternative avenues for growth within this segment.
Removed
The collaborative research studies with leading industry partners have enhanced and validated our analytic framework and insurance risk rating services platform, which is now ready for deployment to the wide insurance and financial services industry. ● API rollout for market adoption – Our risk rating services platform is built on an application programming interface (API) structure that is integrated with our partners’ core system, linked to an underlying data repertoire and analytic framework that facilitates real-time rating feedback to insurance companies.
Added
Building upon the successful implementation of the initial phase, Pacific Life Re proceeded with Phase 2 in the previous fiscal year. During the last quarter of FY2022, we established a collaborative research alliance with Munich Re in extending behavioral analytics to enhance understanding of morbidity and behavioral patterns in the Chinese market.
Removed
The increase of $1,240,903 or 160% was due to more consulting services and advisor associated with the Company’s recent funding activities. The rationale for rewarding these consultants and advisors with shares is to minimize the usage of cash by the Company to allow the Company to use the cash to invest in revenue-generating activities.
Added
The objective is to create value for both insurers and the end insurance consumers through technology advancements, improved product offerings and enhanced customer experiences.

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