FingerMotion, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS - 1 - Table of Contents FINGERMOTION, INC. (fka Property Management Corporation of America) CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the nine months ended November 30, 2020 (Unaudited - Expressed in U.S. Dollars) - 2 - Table of Contents FingerMotion, Inc. fka Property Management Corp of America Condensed Consolidated Balance Sheets November 30, February 29, 2020 2020 ASSETS Current Assets Cash and cash equivalents $ 989,103 $ 102,919 Accounts receivable 4,044,124 2,661,983 Inventories 1,380 — Equipment (net of $21,921 and $9,618 depreciation) 111,595 21,339 Intangible assets (net of $248,578 and $200,000 depreciation) 169,492 — Prepayment and deposit 2,097,210 2,483,411 Other receivables 1,879,232 600,455 Right-of-use asset 125,108 6,671 TOTAL ASSETS $ 9,417,244 $ 5,876,778 LIABILITIES AND SHAREHOLDER'S DEFICIT Current Liabilities Accounts payable $ 3,090,261 $ 2,703,754 Accrual and other payables 976,979 1,043,681 Loan payable, current portion 544,900 — Due to related parties 663,592 1,351,107 Stock subscription payables 2,226,000 — Convertible notes payable 1,000,000 1,000,000 Note payable 66,000 66,000 Lease liability, current portion 45,874 6,671 8,613,606 6,171,213 Non-current Liabilities Loan payable, non-current portion 1,109,307 — Lease liability, non-current portion 79,907 — 1,189,214 — TOTAL LIABILITIES $ 9,802,820 $ 6,171,213 SHAREHOLDERS' EQUITY Preferred stock, par value $.0001 per share; Authorized 1,000,000 shares; issued and outstanding -0- shares. — — Common Stock, par value $.0001 per share; Authorized 200,000,000 shares; issued and outstanding 36,200,557 shares and 25,847,953 issued and outstanding at November 30, 2020 and February 29, 2020 respectively 3,620 2,585 Additional paid-in capital 9,567,378 7,521,587 Accumulated deficit (10,074,007 ) (7,826,754 ) Accumulated other comprehensive income 110,410 3,964 Stockholders’ deficit before non-controlling interests (392,599 ) (298,618 ) Non-controlling interests 7,023 4,183 TOTAL SHAREHOLDERS' EQUITY (DEFICIT ) (385,576 ) (294,435 ) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 9,417,244 $ 5,876,778 - 3 - Table of Contents FingerMotion, Inc. fka Property Management Corp of America Condensed Consolidated Statements of Operations Three Months Ended Nine Months Ended November 30, November 30, November 30, November 30, 2020 2019 2020 2019 Revenue $ 4,881,601 $ 2,692,734 $ 11,245,589 $ 5,665,479 Cost of revenue (4,261,058 ) (2,255,274 ) (10,072,216 ) (4,939,664 ) Gross profit (loss) 620,543 437,460 1,173,373 725,815 Amortization & depreciation (45,734 ) (11,855 ) (53,351 ) (34,200 ) General & administrative expenses (793,550 ) (665,949 ) (2,378,566 ) (1,876,798 ) Marketing Cost (136,960 ) — (268,216 ) — Research & Development - Big Data (124,723 ) (96,627 ) (351,867 ) (280,615 ) Stock compensation expenses (201,007 ) (227,799 ) (272,717 ) (889,287 ) Total operating expenses (1,301,974 ) (1,002,230 ) (3,324,717 ) (3,080,900 ) Net loss from operations (681,431 ) (564,770 ) (2,151,344 ) (2,355,085 ) Other income (expense): Interest income 1,009 334 1,415 1,106 Interest expense (90,864 ) (145 ) (184,413 ) (4,798 ) Exchange rate gain (loss) 171 91 1,200 (1,640 ) Written off of goodwill — — — (8,838 ) Other income 65,469 67,797 88,729 93,387 Total other income (expense) (24,215 ) 68,077 (93,069 ) 79,217 Net Loss $ (705,646 ) $ (496,693 ) $ (2,244,413 ) $ (2,275,868 ) Less: Net profit attributable to the non-controlling interest 2,507 — 2,840 — Net loss attributable to the Company’s shareholders $ (708,153 ) $ (496,693 ) $ (2,247,253 ) $ (2,275,868 ) Other comprehensive income: Foreign currency translation adjustments 94,707 18,003 106,446 22,737 Comprehensive loss $ (613,446 ) $ (478,690 ) $ (2,140,807 ) $ (2,253,131 ) Less: comprehensive income (loss) attributable to non-controlling interest 315 — 411 — Comprehensive loss attributable to the Company $ (613,761 ) $ (478,690 ) $ (2,141,218 ) $ (2,253,131 ) NET LOSS PER SHARE Loss Per Share - Basic $ (0.02 ) $ (0.02 ) $ (0.07 ) $ (0.09 ) Loss Per Share - Diluted $ (0.02 ) $ (0.02 ) $ (0.07 ) $ (0.09 ) NET LOSS PER SHARE ATTRIBUTABLE TO THE COMPANY Loss Per Share - Basic $ (0.02 ) $ (0.02 ) $ (0.07 ) $ (0.09 ) Loss Per Share - Diluted $ (0.02 ) $ (0.02 ) $ (0.07 ) $ (0.09 ) Wgt Ave Common Shares Outstanding - Basic 35,032,380 25,847,953 32,424,218 25,847,953 Wgt Ave Common Shares Outstanding - Diluted 35,032,380 25,834,766 32,424,218 25,532,997 - 4 - Table of Contents FingerMotion, Inc. fka Property Management Corp of America Condensed Consolidated Statement of Shareholders’ Equity Accumulated Capital Paid Other Common Stock in Excess Shares to be Deficit Comprehensive Stockholders’ Non-controlling Shares Amount of Par Value Issued Accumulated Income deficit interest Total Balance at March 1, 2020 25,847,953 2,585 7,521,587 — (7,826,754 ) 3,964 (298,618 ) 4,183 (294,435 ) Common stock issued for professional service 8,045,000 804 282,771 — — — 283,575 — 283,575 Accumulated other comprehensive income — — — — — (15,874 ) (15,874 ) — (15,874 ) Net (Loss) — — — — (578,077 ) — (578,077 ) 26 (578,051 ) Balance at May 31, 2020 33,892,953 3,389 7,804,358 — (8,404,831 ) (11,910 ) (608,994 ) 4,209 (604,785 ) Stock subscribed / (cancelled) (150,000 ) (15 ) (14,985 ) — — — (15,000 ) — (15,000 ) Accumulated other comprehensive income — — — — — 27,613 27,613 — 27,613 Net (Loss) — — — — (961,023 ) — (961,023 ) 307 (960,716 ) Balance at August 31, 2020 33,742,953 3,374 7,789,373 — (9,365,854 ) 15,703 (1,557,404 ) 4,516 (1,552,888 ) Common stock issued for cash 1,683,500 169 1,360,831 — — — 1,361,000 — 1,361,000 Common stock issued for professional service 774,104 77 417,174 — — — 417,251 — 417,251 Accumulated other comprehensive income — — — — — 94,707 94,707 — 94,707 Net (Loss) — — — — (708,153 ) — (708,153 ) 2,507 (705,646 ) Balance at November 30, 2020 36,200,557 3,620 9,567,378 — (10,074,007 ) 110,410 (392,599 ) 7,023 (385,576 ) Accumulated Capital Paid Other Common Stock in Excess Shares to be Deficit Comprehensive Stockholders’ Non-controlling Shares Amount of Par Value Issued Accumulated Income deficit interest Total Balance at March 1, 2019 24,763,753 2,476 5,414,897 — (4,822,389 ) (8,952 ) 586,032 — 586,032 Impact of Adoption of ASU 2016-02, Leases (Topic 842) — — — — (485 ) — (485 ) — (485 ) Common stock issued for cash 607,200 61 1,137,404 — — — 1,137,465 — 1,137,465 Common stock issued for professional service — — 234,834 — — — 234,834 — 234,834 Accumulated other comprehensive income — — — — — 12,726 12,726 — 12,726 Net (Loss) — — — — (1,012,626 ) — (1,012,626 ) — (1,012,626 ) Balance at May 31, 2019 25,370,953 2,537 6,787,135 — (5,835,500 ) 3,774 957,946 — 957,946 Impact of Adoption of ASU 2016-02, Leases (Topic 842) — — — — 12 — 12 — 12 Common stock issued for cash 51,000 5 127,495 — — — 127,500 — 127,500 Common stock issued for professional service 100,000 10 99,990 — — — 100,000 — 100,000 Execution of convertible notes 286,000 29 406,971 — — — 407,000 — 407,000 Accumulated other comprehensive income — — — — — (7,992 ) (7,992 ) — (7,992 ) Net (Loss) — — — — (766,549 ) — (766,549 ) — (766,549 ) Balance at August 31, 2019 25,807,953 2,581 7,421,591 — (6,602,037 ) (4,218 ) 817,917 — 817,917 Impact of Adoption of ASU 2016-02, Leases (Topic 842) — — — — 1 — 1 — 1 Common stock issued for cash 40,000 4 99,996 — — — 100,000 — 100,000 Accumulated other comprehensive income — — — — — 18,003 18,003 — 18,003 Net (Loss) — — — — (496,694 ) — (496,694 ) — (496,694 ) Balance at November 30, 2019 25,847,953 2,585 7,521,587 — (7,098,730 ) 13,785 439,227 — 439,227 - 5 - Table of Contents FingerMotion, Inc. fka Property Management Corp of America Condensed Consolidated Statements of Cash Flows Nine Months Ended November 30, November 30, 2020 2019 Net (loss) $ (2,244,413 ) $ (2,275,868 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Share based compensation expenses 272,717 817,232 Amortization and depreciation 53,351 4,851 Amortization of right of use assets 18,470 29,349 Written off of goodwill — 8,838 Change in operating assets and liabilities: (Increase) decrease in accounts receivable (1,382,141 ) (1,461,642 ) (Increase) decrease in prepayment and deposit 814,310 (821,236 ) (Increase) decrease in other receivable (1,278,777 ) (359,441 ) (Increase) decrease in inventories (1,380 ) — Increase (decrease) in accounts payable 386,507 1,342,326 Increase (decrease) in accrual and other payables (66,702 ) 1,808,777 Increase (decrease) in due to related parties (687,515 ) (674,584 ) Increase (decrease) in due to lease liability (17,797 ) 322 Net Cash provided by (used in) operating activities (4,133,370 ) (1,581,076 ) Cash flows from investing activities Purchase of equipment (102,559 ) (16,291 ) (Increase) in intangible assets (218,070 ) — Net cash provided by (used in) investing activities (320,629 ) (16,291 ) Cash flows from financing activities Repayment to notes payable — (370,000 ) Proceed from loan payable 1,654,207 — Advances from stock subscription payable 2,226,000 Common stock issued for cash 1,361,000 1,280,729 Cancellation of shares (15,000 ) — Net cash provided by (used in) financing activities 5,226,207 910,729 Effect of exchange rates on cash and cash equivalents 113,976 (7,261 ) Net change in cash 886,184 (693,899 ) Cash at beginning of period 102,919 1,337,245 Cash at end of period $ 989,103 $ 643,346 Supplemental disclosures of cash flow information: Interest paid $ — $ — Taxes paid $ — $ — - 6 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 1 – Nature of Business and basis of Presentation FingerMotion, Inc. fka Property Management Corporation of America (the “Company”) was incorporated on January 23, 2014 under the laws of the State of Delaware. The Company then offered management and consulting services to residential and commercial real estate property owners who rent or lease their property to third party tenants. The Company changed its name to FingerMotion, Inc. on July 13, 2017 after a change in control. In July 2017, the Company acquired all of the outstanding shares of Finger Motion Company Limited (“FMCL”), a Hong Kong corporation that is an information technology company which specialize in operating and publishing mobile games. Pursuant to the Share Exchange Agreement with FMCL, effective July 13, 2017 (the “Share Exchange Agreement”), the Company agreed to exchange the outstanding equity stock of FMCL held by the FMCL Shareholders for shares of common stock of the Company. At the Closing Date, the Company issued 12,000,000 shares of common stock to the FMCL shareholders. In addition, the Company issued 600,000 shares to other consultants in connection with the transactions contemplated by the Share Exchange Agreement. The transaction was accounted for as a “reverse acquisition” since, immediately following completion of the transaction, the shareholders of FMCL effectuated control of the post-combination Company. For accounting purposes, FMCL was deemed to be the accounting acquirer in the transaction and, consequently, the transaction is treated as a recapitalization of FMCL (i.e., a capital transaction involving the issuance of shares by the Company for the shares of FMCL). Accordingly, the consolidated assets, liabilities and results of operations of FMCL became the historical financial statements of FingerMotion, Inc. and its subsidiaries, and the Company’s assets, liabilities and results of operations were consolidated with FMCL beginning on the acquisition date. No step-up in basis or intangible assets or goodwill were recorded in this transaction. As a result of the Share Exchange Agreement and the other transactions contemplated thereunder, FMCL became a wholly owned subsidiary of the Company. FMCL, a Hong Kong corporation, was formed in April 6, 2016. 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 JiuGe Management’s contractually controlled affiliate. The use of VIE agreements is a common structure used to acquire PRC corporations, particularly in certain industries in which foreign investment is restricted or forbidden by the PRC government. 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. On March 7, 2019, JiuGe Technology also acquired 99% of equity interest of Beijing XunLian (“BX”), a subsidiary that provides bulk distribution of SMS messages for JiuGe customers at discounted rates. Suzhou BuGuNiao, a 99% owned subsidiary of JiuGe Technology, was set up in July 2020 with the key objective to continuing embarking with our research and development strategy with our focus to strengthen our ongoing effort in the online space. This Studio will be based in Suzhou, China. We will be tabling a full plan in the next few months for board approvals. Finger Motion Financial Group Limited was organized on December 10, 2019 and is 100% owned by FingerMotion, Inc. This company is currently dormant and was organized as a holding company for Finger Motion Financial Company Limited, which was organized on January 24, 2020, which is 100% owned by Finger Motion Financial Group Limited. Finger Motion Financial Company Limited is currently dormant and was organized to operate the insurtech business once it is fully commercialized. - 7 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 2 - Summary of Principal Accounting Policies Principles of Consolidation and Presentation The condensed 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. Variable interest entity Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Section 810, “Consolidation” (“ASC 810”), the Company is required to include in its consolidated financial statements, the financial statements of its variable interest entities (“VIEs”). ASC 810 requires a VIE to be consolidated if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual returns. VIEs are those entities in which a company, through contractual arrangements, bears the risk of, and enjoys the rewards normally associated with ownership of the entity, and therefore the company is the primary beneficiary of the entity. Under ASC 810, a reporting entity has a controlling financial interest in a VIE, and must consolidate that VIE, if the reporting entity has both of the following characteristics: (a) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance; and (b) the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. The reporting entity’s determination of whether it has this power is not affected by the existence of kick-out rights or participating rights, unless a single enterprise, including its related parties and de - facto agents, have the unilateral ability to exercise those rights. JiuGe Technology’s actual stockholders do not hold any kick-out rights that affect the consolidation determination. Through the VIE agreements disclosed in Note 1, the Company is deemed the primary beneficiary of JiuGe Technology. Accordingly, the results of JiuGe Technology have been included in the accompanying consolidated financial statements. JiuGe Technology has no assets that are collateral for or restricted solely to settle their obligations. The creditors of JiuGe Technology do not have recourse to the Company’s general credit. The following assets and liabilities of the VIE & VIE Subsidiary are included in the accompanying consolidated financial statements of the Company as of November 30, 2020 and February 29, 2020: - 8 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 2 - Summary of Principal Accounting Policies (Continued) Assets and liabilities of the VIE November 30, 2020 February 29, 2020 (unaudited) Current assets $ 2,366,453 $ 1,966,067 Non-current assets 71,681 143,362 Total assets 2,438,134 2,109,429 Current liabilities 4,404,059 3,138,721 Non-current liabilities — — Total liabilities $ 4,404,059 $ 3,138,721 Assets and liabilities of the VIE Subsidiary November 30, 2020 February 29, 2020 (unaudited) Current assets $ 4,920,207 $ 3,068,108 Non-current assets — — Total assets 4,920,207 3,068,108 Current liabilities 4,179,965 2,652,928 Non-current liabilities — — Total liabilities $ 4,179,965 $ 2,652,928 Operating Result of VIE For the Nine Months Ended November 30, 2020 For the Nine Months Ended November 30, 2019 (unaudited) (unaudited) Revenue $ 1,583,461 $ 1,754,793 Cost of revenue (928,451 ) (1,513,799 ) Gross profit (loss) 655,010 240,994 Amortization and depreciation (5,216 ) (33,384 ) General and administrative expenses (1,393,511 ) (879,167 ) Research & Development (100,083 ) (76,073 ) Total operating expenses (1,498,810 ) (988,624 ) Profit (loss) from operations (843,800 ) (747,630 ) Interest income 1,344 894 Interest expense — (616 ) Other income 14,263 441,840 Total other income (expense) 15,607 442,118 Tax expense — — Net profit (loss) $ (828,193 ) $ (305,512 ) - 9 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 2 - Summary of Principal Accounting Policies (Continued) Operating Result of VIE Subsidiary For the Nine Months Ended November 30, 2020 For the Nine Months Ended November 30, 2019 (unaudited) (unaudited) Revenue $ 9,662,128 $ 3,910,686 Cost of revenue $ (9,143,765 ) $ (3,425,864 ) Gross profit (loss) $ 518,363 $ 484,822 Amortization and depreciation $ (491 ) $ — General and administrative expenses $ (244,731 ) $ (130,852 ) Research & Development $ (44,984 ) $ — Share compensation expenses $ — $ — Total operating expenses $ (290,206 ) $ (130,852 ) Profit (loss) from operations $ 228,157 $ 353,970 Interest income $ 38 $ 182 Interest expense $ — $ — Other income $ 56,370 $ 9,842 Total other income (expense) $ 56,408 $ 10,024 Tax expense $ (579 ) $ — Net profit (loss) $ 283,986 $ 363,994 Use of Estimates The preparation of the Company’s financial statements in conformity with generally accepted accounting principles of the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Actual results could differ from those estimates. Certain Risks and Uncertainties The Company relies on cloud-based hosting through a global accredited hosting provider. Management believes that alternate sources are available; however, disruption or termination of this relationship could adversely affect our operating results in the near-term. Identifiable Intangible Assets Identifiable intangible assets are recorded at cost and are amortized over 3-10 years. 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. - 10 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 2 - Summary of Principal Accounting Policies (Continued) 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. Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technology, economy or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, relief from royalty income approach, quoted market values and third-party independent appraisals, as considered necessary. The Company makes various assumptions and estimates regarding estimated future cash flows and other factors in determining the fair values of the respective assets. The assumptions and estimates used to determine future values and remaining useful lives of long-lived assets are complex and subjective. They can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as the Company’s business strategy and its forecasts for specific market expansion. Accounts Receivable and Concentration of Risk Accounts receivable, net is stated at the amount the Company expects to collect, or the net realizable value. The Company provides a provision for allowances that includes returns, allowances and doubtful accounts equal to the estimated uncollectible amounts. The Company estimates its provision for allowances based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company’s estimate of the provision for allowances will change. Lease Operating and finance lease right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the future lease payments over the lease term. When the rate implicit to the lease cannot be readily determined, the Company utilizes its incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is derived from information available at the lease commencement date and represents the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. The right-of-use asset includes any lease payments made and lease incentives received prior to the commencement date. Operating lease right-of-use assets also include any cumulative prepaid or accrued rent when the lease payments are uneven throughout the lease term. The right-of-use assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Cash and Cash Equivalents Cash and cash equivalents represent cash on hand, demand deposits, and other short-term highly liquid investments placed with banks, which have original maturities of three months or less and are readily convertible to known amounts of cash. - 11 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 2 - Summary of Principal Accounting Policies (Continued) Property and Equipment Property and equipment are stated at cost. Depreciation of property and equipment is provided using the straight-line method for financial reporting purposes at rates based on the estimated useful lives of the assets. Estimated useful lives range from three to seven years. Land is classified as held for sale when management has the ability and intent to sell, in accordance with ASC Topic 360-45. 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. 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. Diluted earnings per share should be based on the actual number of options or shares granted and not yet forfeited, unless doing so would be anti-dilutive. The Company uses the “treasury stock” method for equity instruments granted in share-based payment transactions provided in ASC 260 to determine diluted earnings per share. Antidilutive securities represent potentially dilutive securities which are excluded from the computation of diluted earnings or loss per share as their impact was antidilutive. Revenue Recognition The Company adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”) beginning on January 1, 2018 using the modified retrospective approach. ASC 606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. The Company has assessed the impact of the guidance by reviewing its existing customer contracts and current accounting policies and practices to identify differences that will result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control and principal versus agent considerations. Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of ASC 606 and therefore there was no material changes to the Company's consolidated financial statements upon adoption of ASC 606. The Company recognizes revenue from providing hosting and integration services and licensing the use of its technology platform to its customers. The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer (for licensing, revenue is recognized when the Company’s technology is used to provide hosting and integration services); (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of fees is probable. We account for our multi-element arrangements, such as instances where we design a custom website and separately offer other services such as hosting, which are recognized over the period for when services are performed. - 12 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 2 - Summary of Principal Accounting Policies (Continued) Income Taxes The Company uses the asset and liability method of accounting for income taxes in accordance with Accounting Standards Codification (“ASC”) 740, “Income Taxes” (“ASC 740”). Under this method, income tax expense is recognized as the amount of: (i) taxes payable or refundable for the current year and (ii) future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of available evidence it is more likely than not that some portion or all of the deferred tax assets will not be realized. Non-controlling interest Non-controlling interests held 1% shares of one of subsidiary is recorded as a component of our equity, separate from the Company’s equity. Purchase or sales of equity interests that do not result in a change of control are accounted for as equity transactions. Results of operations attributable to the non-controlling interest are included in our consolidated results of operations and, upon loss of control, the interest sold, as well as interest retained, if any, will be reported at fair value with any gain or loss recognized in earnings. Recently Issued Accounting Pronouncements The Company does not believe recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows. Note 3 - Going Concern The accompanying unaudited financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $10,074,007 and $7,826,754 as at November 30, 2020 and February 29, 2020 respectively, and had a net loss of $2,244,413 and $2,275,868 for the nine months ended November 30, 2020 and 2019, respectively. The Company’s continuation as a going concern is dependent on its ability to obtain additional financing to fund operations, implement its business model, and ultimately, attain profitable operations. The Company will need to secure additional funds through various means, including equity and debt financing or any similar financing. There can be no assurance that the Company will be able to obtain additional equity or debt financing, if and when needed, on terms acceptable to the Company, or at all. Any additional equity or debt financing may involve substantial dilution to the Company’s stockholders, restrictive covenants or high interest costs. The Company’s long-term liquidity also depends upon its ability to generate revenues and achieve profitability. - 13 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 4 - Revenue We recorded $11,245,589 and $5,665,479 in revenue, respectively, for the nine months ended November 30, 2020 and 2019. The increase of $5,580,110 resulted from the consolidation of businesses of VIE entities & its subsidiary. For the Nine Months Ended November 30, 2020 November 30, 2019 (unaudited) (unaudited) Telecommunication Products & Services $ 1,583,461 $ 1,754,793 SMS & MMS Business 9,662,128 3,910,686 $ 11,245,589 $ 5,665,479 Note 5 – Equipment At November 30, 2020 and February 29, 2020, the company has the following amounts related to tangible assets: November 30, 2020 February 29, 2020 (unaudited) Equipment $ 133,516 $ 30,957 Less: accumulated depreciation (21,921 ) (9,618 ) Net equipment $ 111,595 $ 21,339 No significant residual value is estimated for the equipment. Depreciation expense for the nine months ended November 30, 2020 and 2019 totaled $7,524 and $4,851, respectively. Note 6 – Intangible Assets At November 30, 2020 and February 29, 2020, the company has the following amounts related to intangible assets: November 30, 2020 February 29, 2020 (unaudited) Licenses $ 200,000 $ 200,000 Mobile applications 218,070 418,070 Less: accumulated amortization (248,578 ) (200,000 ) Net intangible assets $ 169,492 $ -0- No significant residual value is estimated for these intangible assets. Amortization expense for the nine periods ended November 30, 2020 and 2019 totaled $45,827 and $nil, respectively. - 14 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 7 – Prepaid Expenses Prepaid expenses consist of the deposit pledge to the vendor for stocks credits for resale. The significant movement was mainly due to inception of Finger Motion (CN) Limited and its China entities on October 16, 2018. Our current vendors are China Unicom and China Mobile for Telecommunication Products & Services and China Mobile for SMS & MMS business. November 30, 2020 February 29, 2020 Telecommunication Products & Services (unaudited) Deposit Paid / Prepayment $ 1,393,506 $ 997,864 Deposit received — (11,783 ) Net Prepaid expenses for Mobile recharge $ 1,393,506 $ 986,081 Other prepayment 422,913 916,242 Prepayment and deposit $ 1,816,419 $ 1,902,323 November 30, 2020 February 29, 2020 SMS & MMS Business (unaudited) Deposit Paid / Prepayment $ 280,791 $ 581,088 Deposit received — Net Prepaid expenses for SMS $ 280,791 $ 581,088 Other prepayment — — Prepayment and deposit $ 280,791 $ 581,088 - 15 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 8 – Right-of-use Asset and Lease Liability The Company has entered into lease agreements with various third parties. The terms of operating leases are one to two years. These operating leases are included in "Right-of-use Asset" on the Company's Consolidated Balance Sheet and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligation to make lease payments are included in "Lease liability" on the Company's Consolidated Balance Sheet. Additionally, the Company has entered into various short-term operating leases with an initial term of twelve months or less. These leases are not recorded on the Company's balance sheet. All operating lease expense is recognized on a straight-line basis over the lease term in the nine months ended November 30, 2020. Information related to the Company's right-of-use assets and related lease liabilities were as follows: November 30, 2020 February 29, 2020 Right-of-use asset (unaudited) Right-of-use asset, net $ 125,108 $ 6,671 Lease liability Current lease liability $ 45,874 $ 6,671 Non-current lease liability 79,907 — Total lease liability $ 125,781 $ — November 30, 2020 Remaining lease term and discount rate (unaudited) Weighted-average remaining lease term 3 years Weighted-average discount rate 2.48 % Commitments The following table summarizes the future minimum lease payments due under the Company's operating leases as of November 30, 2020: 2021 $ 48,479 Thereafter 81,606 Less: imputed interest (4,304) $ 125,781 Note 9 - Convertible Note Payable A note payable having a principal amount of $1,000,000 at November 30, 2020 and accruing interest at 5% per annum, which was due and payable on October 9, 2020, was extended by the parties for an additional three months until January 9, 2021. The note is convertible at anytime from the date of issuance at the option of the holder into shares of common stock par value $0.0001 par value of the Company at a price of $2.00 per share. We estimate that the fair value of this convertible debt is approximately the principal amount, so no value has been assigned to the beneficial conversion feature. Any gain or loss will be recognized at conversion. - 16 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 10 - Note Payable A note payable having a principal amount of $66,000 at November 30, 2020 and accruing interest at 0% per annum is due and payable on May 21, 2021. Note 11 - Loan Payable The following table summarizes loan principal due by the Company as of November 30, 2020: Lender Term November 30, 2020 (unaudited) Liew Yow Ming From Apr 8, 2020 to Apr 7, 2022 $ 758,063 Liew Yow Ming From Apr 16, 2020 to Apr 15, 2022 351,244 Liew Yow Ming From Jul 29, 2020 to Jan 28, 2021 544,900 $ 1,654,207 Liew Yow Ming is a non-controlling stockholder of the Company. Loans from Mr. Liew Yow Ming bear interest at a fixed rate of 20% per annum. Interest expenses incurred on loans payable for the nine months ended November 30, 2020 was $153,577. Note 12 - Common Stock On June 21, 2017, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware effecting a 1 for 4 reverse stock split of the Company's outstanding shares of common stock and increase in the authorized shares of common stock to 200,000,000 and a name change of the Company from Property Management Corporation of America to FingerMotion, Inc. (the "Corporate Actions"). The Corporate Actions and the amendment to the Certificate of Incorporation became effective on June 21, 2017. Effective July 13, 2017 (the “Closing Date”), the Company entered into that certain Share Exchange Agreement (the “Share Exchange Agreement”) by and among the Company, Finger Motion Company Limited, a Hong Kong corporation (“FMCL”) and certain shareholders of FMCL (the “FMCL Shareholders”). Pursuant to the Share Exchange Agreement, the Company agreed to exchange the outstanding equity stock of FMCL held by the FMCL Shareholders for shares of common stock of the Company. At the Closing Date, the Company issued approximately 12,000,000 shares of common stock to the FMCL shareholders. In addition, the Company issued 600,000 shares to consultants in connection with the transactions contemplated by the Share Exchange Agreement, and up to 2,562,500 additional shares to accredited investors. The Company issued approximately 2,856,000 shares of common stock during the fiscal year ended February 28, 2018, of which 1,350,000 were issued to consultants at $0.035 per share. 400,000, 470,000 and 636,000 shares were issued to investors at a per share purchase price of $0.50, $1.00 and $1.50, respectively. The Company issued approximately 7,331,000 shares of common stock during the year ended February 28, 2019 for cash of $3,760,500. The Company issued 798,200 shares of common stock for the year ended February 29, 2020 for consideration of $1,699,799, including 200,000 shares of common stock to consultants. The Company issued an aggregate 242,000 shares of common stock at a deemed price of $1.00 per share during the fiscal year ended February 29, 2020 pursuant to the conversion of promissory notes in the aggregate amount of $220,000 plus interest of $22,000. - 17 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 12 - Common Stock (Continued) The Company issued an aggregate of 44,000 shares of common stock at a deemed price of $2.50 per share during the fiscal year ended February 29, 2020 pursuant to the conversion of promissory notes in the aggregate amount of $100,000 plus interest of $4,000. On May 1, 2020, the Company issued an aggregate of 7,645,000 shares of common stock at a deemed price of $0.20 per share to 24 individuals and two entities pursuant to consulting agreements, management agreements and to employees. On May 8, 2020, the Company issued an aggregate of 150,000 shares of common stock at a deemed price of $0.40 per share to three individuals pursuant to a financial advisory services agreement. On May 15, 2020, the Company issued 250,000 shares of common stock at a deemed price of $0.25 per share to one entity pursuant to a management consulting agreement. On July 22, 2020, the Company cancelled 150,000 shares of common stock which it issued to three individuals pursuant to a financial advisory services agreement on May 8, 2020. On September 24, 2020, the Company issued 40,000 shares of common stock to one entity pursuant to a settlement agreement with respect to a business development consulting agreement at a deemed price of $3.40 per share. On September 25, 2020, the Company issued 34,104 shares of common stock to a consultant pursuant to a marketing services agreement at a deemed price of $3.90 per share. On October 2, 2020, the Company issued 700,000 shares of common stock to four individuals and one entity pursuant to consulting agreements and management agreements at a deemed price of $0.21 per share. On October 19, 2020, the Company issued 830,000 shares of common stock to five individuals due to the closing of its private placement at $0.50 per share for gross proceeds of $415,000. On October 19, the Company issued 438,500 units (each, a “Unit”) to 12 individuals and three entities due to a closing of its private placement at $1.00 per Unit for gross proceeds of $438,500. Each Unit consists of one share of common stock and one common stock purchase warrant (each, a “Warrant”) with each Warrant entitling the holder thereof to purchase one additional share of common stock (each, a “Warrant Share”) at an exercise price of $2.00 per Warrant Share having an expiry date of two years from the date of issuance of the Warrants. On October 19, 2020, the Company issued 100,000 shares of common stock to one individual due to the closing of its private placement at $1.00 per share for gross proceeds of $100,000. On October 19, 2020, the Company issued 265,000 shares of common stock to four individuals due to the closing of its private placement at $1.50 per share for gross proceeds of $397,500. On October 19, 2020, the Company issued 50,000 units (each, a “Unit”) to one individual due to a closing of its private placement at $1.50 per Unit for gross proceeds of $75,000. Each Unit consists of one share of common stock and one common stock purchase warrant (each, a “Warrant”) with each Warrant entitling the holder thereof to purchase one additional share of common stock (each, a “Warrant Share”) at an exercise price of $3.00 per Warrant Share having an expiry date of two years from the date of issuance of the Warrants. - 18 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 12 - Common Stock (Continued) During the quarter ended November 30, 2020, the Company received $1,345,999.50 from subscriptions for the purchase of 897,333 units (each a “Unit”) of the Company at a price of $1.50 per Unit from 17 individuals and 4 entities, which securities have not been issued as of November 30, 2020. Each Unit consists of one share of common stock and one common stock purchase warrant (each, a “Warrant”) with each Warrant entitling the holder thereof to purchase one additional share of common stock (each, a “Warrant Share”) at an exercise price of $3.00 per Warrant Share having an expiry date of two years form the date of issuance of the Warrants. In addition, during the quarter ended November 30, 2020, the Company received $880,000 from subscriptions for the purchase of 440,000 shares of common stock of the Company at a price of $2.00 per share from 12 individuals, which securities have not been issued as of November 30, 2020. Note 13 - Earnings Per Share The following table sets forth the computation of basic and diluted earnings per common share: For the Nine Months Ended November 30, 2020 November 30, 2019 (unaudited) (unaudited) Numerator - basic and diluted Net Loss $ (2,244,413 ) $ (2,275,868 ) Denominator Weighted average number of common shares outstanding —basic 32,424,218 25,847,953 Weighted average number of common shares outstanding —diluted 32,424,218 25,532,997 Loss per common share — basic $ (0.07 ) $ (0.09 ) Loss per common share — diluted $ (0.07 ) $ (0.09 ) Note 14 - Income Taxes The Company and its subsidiaries file separate income tax returns. The United States of America FingerMotion, Inc. is incorporated in the State of Delaware in the U.S. and is subject to a U.S. federal corporate income tax of 21%. The Company generated a taxable loss for the nine months ended November 30, 2020 and 2019. Hong Kong Finger Motion Company Limited and Finger Motion (CN) Limited are incorporated in Hong Kong and are subject to Hong Kong’s profits tax rate of 16.5%. Both the companies generated a taxable loss for the nine months ended November 30, 2020 and 2019. Finger Motion Financial Company Limited is incorporated in Hong Kong and does not currently have any operations. The People’s Republic of China (PRC) JiuGe Management, JiuGe Technology, Beijing XunLian and Suzhou BuGuNiao are incorporated in the People’s Republic of China and are subject to PRC income tax at 25%. - 19 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 14 - Income Taxes (Continued) Income tax mainly consists of foreign income tax at statutory rates and the effects of permanent and temporary differences. The Company’s effective income tax rates for the nine months ended November 30, 2020 and 2019 are as follows: For the Nine Months Ended November 30, 2020 November 30, 2019 (unaudited) (unaudited) U.S. statutory tax rate 21.0 % 21.0 % Foreign income not registered in the U.S. (21.0 % ) (21.0 % ) PRC profit tax rate 25.0 % 25.0 % Changes in valuation allowance and others (25.0 % ) (25.0 % ) Effective tax rate 0.0 % 0.0 % At November 30, 2020 and February 29, 2020, the Company has a deferred tax asset of $561,813 and $750,024, resulting from certain net operating losses in U.S., respectively. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those net operating losses are available. The Company considers projected future taxable income and tax planning strategies in making its assessment. At present, the Company concludes that it is more-likely-than-not that the Company will be able to realize all of its tax benefits in the near future and therefore a valuation allowance has been provided for the full value of the deferred tax asset. A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of any portion or all of the valuation allowance. At November 30, 2020 and February 29, 2020, the valuation allowance was $561,813 and $750,024, respectively. November 30, 2020 February 29, 2020 (unaudited) Deferred tax asset from operating losses carry-forwards $ 561,813 $ 750,024 Valuation allowance (561,813 ) (750,024 ) Deferred tax asset, net $ — $ — - 20 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 15 – Acquisition On March 7, 2019, JiuGe Technology also acquired 99% of equity interest of Beijing XunLian, a subsidiary that provides bulk distribution of SMS messages for JiuGe customers at discounted rates. The following table summarizes the consideration paid for Beijing XunLian and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date. Consideration $ -0- Recognized amounts of identifiable assets acquired and liabilities assumed: Cash and cash equivalents $ 270 Deposits, prepayments and other receivables 863 Other payables (9,882 ) Net liabilities $ (8,749 ) Goodwill $ 8,749 Note 16 – Related Parties Transaction a) Related parties: Name of related parties Relationship with the Company Ms. Li Li Non-controlling Stockholder, Legal Representative of Shanghai JiuGe Technology Information Co Ltd Mr. Liew Yow Ming Non-controlling Stockholder b) The Company had the following related party balances at November 30, 2020 and February 29, 2020: November 30, 2020 February 29, 2020 (unaudited) Due to related parties: Ms. Li Li $ (663,592 ) $ (1,351,107 ) The amount due to related party is without interest and due on demand. November 30, 2020 February 29, 2020 (unaudited) Loan payables Mr. Liew Yow Ming $ 1,654,207 $ — Loans from Mr. Liew Yow Ming are fixed at an interest rate of 20% per annum with a fixed repayment term. Interest expenses were $153,577 and $nil for the nine months ended November 30, 2020 and 2019, respectively. - 21 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2020 and 2019 Notes to the Condensed Consolidated Financial Statements Note 17 - Commitments and Contingencies Legal proceedings The Company is not aware of any material outstanding claim and litigation against it or its subsidiaries. Note 18 - Subsequent Events The impact of Coronavirus (COVID-19) The Company has analyzed its operations subsequent to November 30, 2020 to the date these unaudited condensed consolidated financial statements were issued, finding that the impact of COVID-19 on the Company is minimal. As the Country have been slowly reopening with more businesses and the enforcing on strict controls by the Government on the containment of the spread of this virus since March, the Company business will likely be seen to be continually improves for the fiscal year 2020. However, there will be a possibility that the outbreak may worsen at a later point in time where it may impact the growth of the business, all of which are uncertain and cannot be predicted at this point. Subsequent to November 30, 2020, the Company issued 1,604,334 units (each, a “Unit”) to 28 individuals and five entities due to the closing of its private placement at $1.50 per Unit for gross proceeds of $2,406,501. Each Unit consists of one share of our common stock and one common stock purchase warrant (each, a “Warrant”) with each Warrant entitling the holder thereof to purchase one additional share of our common stock (each, a “Warrant Share”) at an exercise price of $3.00 per Warrant Share having an expiry date of two years from the date of issuance of the Warrants. Subsequent to November 30, 2020, the Company issued 534,500 shares of common stock to 16 individuals due to the closing of its private placement at $2.00 per share for gross proceeds of $1,069,000. Subsequent to November 30, 2020, the Company issued 500,000 shares of common stock to one individual pursuant to the conversion of the outstanding convertible note at a price of $2.00 per share. Subsequent to November 30, 2020, the Company issued 34,103 shares of common stock to one entity pursuant to a marketing services agreement at a deemed price of $3.90 per share. Subsequent to November 30, 2020, the Company issued 5,000 shares of common stock to one individual pursuant to a consulting agreement at a deemed price of $2.00 per share. Except for the above, the Company has determined that it does not have any material subsequent events to disclose in these unaudited condensed consolidated financial statements. - 22 - Table of Contents ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The terms the “Registrant”, “we”, “us”, “our”, “FingerMotion” and the “Company” mean FingerMotion, Inc. or as the context requires, collectively with its consolidated subsidiaries and contractually controlled companies. Cautionary Note Regarding Forward-Looking Statements The following management’s discussion and analysis of the Company’s financial condition and results of operations (the “MD&A”) contains forward-looking statements that involve risks, uncertainties and assumptions including, among others, statements regarding our capital needs, business plans and expectations. 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 Quarterly Report on Form 10-Q for the nine months ended November 30, 2020, and our Annual Report on Form 10-K for the fiscal year ended February 29, 2020, including the consolidated financial statements and related notes contained therein. These factors, or any one of them, may cause our actual results or actions in the future to differ materially from any forward-looking statement made in this document. Refer to “Cautionary Note Regarding Forward-looking Statements” as disclosed in our Annual Report on Form 10-K for the fiscal year ended February 29, 2020, and Item 1A, Risk Factors, under Part II - Other Information of this Quarterly Report. Introduction This MD&A is focused on material changes in our financial condition from February 29, 2020, our most recently completed year end, to November 30, 2020, and our results of operations for the three and nine months ended November 30, 2020, and should be read in conjunction with Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations as contained in our Annual Report on Form 10-K for the fiscal year ended February 29, 2020. Corporate Information The Company was initially incorporated as Property Management Corporation of America on January 23, 2014 in the State of Delaware. 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 ”). The Corporate Actions and the amended certificate of incorporation became effective on June 21, 2017. Effective July 13, 2017, the Company entered into that certain Share Exchange Agreement (the “ Share Exchange Agreement ”) by and among the Company, Finger Motion Company Limited, a Hong Kong corporation (“ FMCL ”) and certain shareholders of FMCL (the “ FMCL Shareholders ”). Pursuant to the Share Exchange Agreement, the Company agreed to exchange the outstanding equity stock of FMCL held by the FMCL Shareholders for shares of common stock of the Company. On the closing date of the Share Exchange Agreement, the Company issued 12,000,000 shares of common stock to the FMCL shareholders. 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. - 23 - 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. FMCL, a Hong Kong corporation, was formed on April 6, 2016 and is an information technology company that specializes in operating and publishing mobile games. We operate our video game division through FMCL. 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. The use of VIE agreements is a common structure used to acquire PRC corporations, particularly in certain industries in which foreign investment is restricted or forbidden by the PRC government. 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. 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. All of our subsidiaries are directly or indirectly owned or controlled by us: Name of Entity Place of Incorporation/Formation Ownership Interest Finger Motion Company Limited (1) Hong Kong 100% Finger Motion (CN) Global Limited (2) Samoa 100% Finger Motion (CN) Limited (3) Hong Kong 100% Finger Motion Financial Group Limited (4) Samoa 100% Finger Motion Financial Company Limited (5) Hong Kong 100% Shanghai JiuGe Business Management Co., Ltd. (6) PRC 100% Shanghai JiuGe Information Technology Co., Ltd. (7) PRC Contractually controlled (7) Beijing XunLian TianXia Technology Co., Ltd. (8) PRC 99% Suzhou BuGuNiao Digital Technology Co., Ltd. (9) PRC 99% Notes: (1) Finger Motion Company Limited is a wholly-owned subsidiary of FingerMotion, Inc. (2) Finger Motion (CN) Global Limited is a wholly-owned subsidiary of FingerMotion, Inc. (3) Finger Motion (CN) Limited is a wholly-owned subsidiary of Finger Motion (CN) Global Limited. (4) Finger Motion Financial Group Limited is a wholly-owned subsidiary of FingerMotion, Inc. (5) Finger Motion Financial Company Limited is a wholly-owned subsidiary of Finger Motion Financial Group Limited. (6) Shanghai JiuGe Business Management Co., Ltd. is a wholly-owned subsidiary of Finger Motion (CN) Limited. (7) Shanghai JiuGe Information Technology Co., Ltd. is a variable interest entity that is contractually controlled by Shanghai JiuGe Business Management Co., Ltd. (8) Beijing XunLian TianXia Technology Co., Ltd. is a 99% owned subsidiary of Shanghai JiuGe Information Ttechnology Co., Ltd. (9) Suzhou BuGuNiao Digital Technology Co., Ltd. is a 99% owned subsidiary of Shanghai JiuGe Information Technology Co., Ltd. Overview We operate three principal lines of business, a video game division, a mobile payment platform and a mass SMS text message service. We operate our video game platform through FMCL. - 24 - Table of Contents The video game industry covers multiple sectors and is currently experiencing a move away from physical games towards digital software. Advances in technology and streaming now allow users to download games rather than visiting retailers. Video game publishers are expanding their direct-to-consumer channels, with mobile gaming current growth leader, and eSports and virtual reality gaining momentum as the next big sectors. This is the business focus for FMCL. In June 2018, FMCL temporarily paused its publishing and operating plans for existing games and other projects. The Company’s board of directors decided to re-focus the Company’s resources into the new business opportunities in China, particularly the mobile data business. We conduct our mobile payment and recharge business through JiuGe Technology, our contractually controlled affiliate. In the first half of 2018, JiuGe Technology secured contracts with China United Network Communications Group Co., Ltd. (“ China Unicom ”) and China Mobile Communications Corporation (“ China Mobile ”) to distribute mobile data for businesses and corporations in nine 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. 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. 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. 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. Recent Developments In March 2019, JiuGe Technology acquired Beijing XunLian TianXia Technology Co., Ltd. (“ Beijing Technology ”) and, through Beijing Technology, entered into the business of mass SMS text message service as a compliment to its mobile payment and recharge business. The mass SMS text message service offers bulk SMS services to end consumers with competitive pricing. Currently, our SMS integrated platform is scalable to process more than 150 million SMS text messages per month. Beijing Technology retains a license from the Ministry of Industry and Information Technology to operate SMS and MMS business in the PRC. 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 that will utilize Beijing Technology’s SMS integrated platform to send bulk SMS text messages monthly. Beijing Technology has the capability to manage and track the entire process, including obtaining government approval, until the SMS messages have been delivered successfully. In July 2019, JiuGe Technology entered into that certain Yunnan Unicom Electronic Sales Platform Construction and Operation Cooperation Agreement (the “ Cooperation Agreement ”) with China Unicom’s Yunnan subsidiary. 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. 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. As consideration for the services 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. The Cooperation Agreement expires three years from the date of its signature, but it may be terminated by (i) JiuGe Technology upon three months’ written notice or (ii) by China Unicom unilaterally. - 25 - Table of Contents Results of Operations Three Months Ended November 30, 2020 Compared to Three Months Ended November 30, 2019 The following table sets forth our results of operations for the periods indicated: For the Three Months Ended November 30, 2020 November 30, 2019 Revenue $ 4,881,601 $ 2,692,734 Cost of revenue $ (4,261,058 ) $ (2,255,274 ) Total operating expenses $ (1,301,974 ) $ (1,002,230 ) Total other income (expenses) $ (24,215 ) $ 68,077 Net Loss attributable to the Company’s shareholders $ (708,153 ) $ (496,693 ) Foreign currency translation adjustment $ 94,707 $ 18,003 Comprehensive loss attributable to the Company $ (613,761 ) $ (478,690 ) Basic Loss Per Share attributable to the Company $ (0.02 ) $ (0.02 ) Diluted Loss Per Share attributable to the Company $ (0.02 ) $ (0.02 ) Revenue The following table sets forth the Company’s revenue from its different lines of businesses for the periods indicated: For the Three Months Ended Change November 30, 2020 November 30, 2019 (%) Telecommunication Products & Services $ 482,575 261,748 84 % SMS & MMS Business $ 4,399,026 2,430,985 81 % Total Revenue $ 4,881,601 2,692,733 81 % We recorded $4,881,601 in revenue for the three months period ended November 30, 2020, an increase of $2,188,868 or 81%, compared to the three months period ended November 30, 2019. This increase resulted from an increase in revenue of $220,827 and $1,968,040 from our Telecommunication Products & Services and SMS & MMS businesses, respectively. The SMS & MMS business have improved and will continue to provide the solid revenue stream for the Company in the future. The Company acquired the SMS & MMS business in April 2019 and have since contributed to the total revenue. As for the Telecommunication Products & Services, we earn revenue by providing mobile payment and recharge services to customers of telecommunications companies in China. Specifically, we earn a negotiated rebate amount from the telecommunications companies for all monies paid by consumers to those companies that we process. As we continue to develop our mobile payment business, we expect that revenues will continue to grow. Cost of Revenue The following table sets forth the Company’s cost of revenue for the periods indicated: For the Three Months Ended November 30, 2020 November 30, 2019 Telecommunication Products & Services $ 159,592 $ 182,653 SMS & MMS Business $ 4,101,466 $ 2,072,620 Total Cost of Revenue $ 4,261,058 $ 2,255,273 - 26 - Table of Contents We recorded $4,261,058 in costs of revenue for the three months period ended November 30, 2020, an increase of $2,005,785 or 89%, compared to the three months period ended November 30, 2019. As previously mentioned, we principally earn revenue by providing mobile payment and recharge services to customers of telecommunications companies in China. To earn this revenue, we incur certain customer acquisition costs, including discounts to our customers and promotional expenses, which is reflected in our cost of revenue. Gross profit (loss) Our gross profit for the three months period ended November 30, 2020 was $620,543, an increase of $183,083 or 42%, compared to the three months period ended November 30, 2019. This increase in gross profit resulted from higher revenue and margin for the period. Amortization & Depreciation We recorded depreciation of $45,734 for fixed assets for the three months period ended November 30, 2020, an increase of $33,879 or 286%, compared to the three months period ended November 30, 2019. This increase resulted in purchase of equipment and investment in platforms. General & Administrative Expenses The following table sets forth the Company’s general and administrative expenses for the periods indicated: For the Three Months Ended November 30, 2020 November 30, 2019 Accounting $ 15,650 $ 14,219 Consulting $ 304,277 $ 280,323 Entertainment $ 37,602 $ 60,927 IT $ 16,826 $ — Rent $ 14,320 $ 18,775 Salaries and Wages $ 338,156 $ 270,667 Technical Fee $ — $ — Others $ 66,719 $ 21,038 Total G&A Expenses $ 793,550 $ 665,949 We recorded $793,550 in general and administrative expenses for the three months period ended November 30, 2020, an increase of $127,601 or 19%, compared to the three months period ended November 30, 2019. The increase of consulting, and staff salaries are principally the result of the building of our mobile payment and SMS businesses. Marketing Cost The following table sets forth the Company’s marketing cost for the periods indicated: For the Three Months Ended November 30, 2020 November 30, 2019 Marketing Cost $ 136,960 $ — We incurred fees of $136,960 in marketing cost in the third quarter ended November 30, 2020 for our telecommunication products and services business. - 27 - Table of Contents Research & Development The following table sets forth the Company’s research & development for the periods indicated: For the Three Months Ended November 30, 2020 November 30, 2019 Research & Development – Big Data $ 124,723 $ 96,627 We incurred fees of $124,723 in research & development for the three months period ended November 30, 2020 as compared to $96,627 for the three months period ended November 30, 2019. The increase of $28,096 or 29% was due to higher data access and usage fee charged by the telecommunications company. The Insurtech division of the Company that focuses on consumer behavioral insights extraction for the purpose of risk assessment. Insights are derived from various data sources with the primary sources being the telecommunication data. The initial phase of business application is to focus on insurance industry particularly in the area of underwriting risk rating, complementary claims adjudication and assessment, and risk segmentation & market penetration. This division comprises of experienced actuaries, data scientists and computer programmers. The expenses for research & development include associated wages and salaries, data access fees and IT infrastructure. The 1 st stage of prototyping on Phase 1 - analytical framework and business applications have been completed and target to commercialize by mid of 2021. Share Compensation Expenses The following table sets forth the Company’s share compensation expenses for the periods indicated: For the Three Months Ended November 30, 2020 November 30, 2019 Share compensation expenses $ 201,007 $ 227,799 We incurred fees of $201,007 in share issuance for consultants in consideration of the services which have been provided to the company for the three months period ended November 30, 2020 as compared to $227,799 for the three months period ended November 30, 2019. Operating Expenses We recorded $1,301,974 in operating expenses for the three months period ended November 30, 2020, as compared to $1,002,230 in operating expenses for the three months period ended November 30, 2019. The increase of $299,744 or 30%, for the three months period ended November 30, 2020 is as set forth above. Net Loss from Operations As a result of the foregoing, our net loss from operations for the three month period ended November 30, 2020 was $681,431, an increase of $116,661 or 21%, compared to the three month period ended November 30, 2019. - 28 - Table of Contents Nine Months Ended November 30, 2020 Compared to Nine Months Ended November 30, 2019 The following table sets forth our results of operations for the periods indicated: For the Nine Months Ended November 30, 2020 November 30, 2019 Revenue $ 11,245,589 $ 5,665,479 Cost of revenue $ (10,072,216 ) $ (4,939,664 ) Total operating expenses $ (3,324,717 ) $ (3,080,900 ) Total other income (expenses) $ (93,069 ) $ 79,217 Net Loss attributable to the Company’s shareholders $ (2,247,253 ) $ (2,275,868 ) Foreign currency translation adjustment $ 106,446 $ 22,737 Comprehensive loss attributable to the Company $ (2,141,218 ) $ (2,253,131 ) Basic Loss Per Share attributable to the Company $ (0.07 ) $ (0.09 ) Diluted Loss Per Share attributable to the Company $ (0.07 ) $ (0.09 ) - 29 - Table of Contents Revenue The following table sets forth the Company’s revenue from its different lines of businesses for the periods indicated: For the Nine Months Ended Change November 30, 2020 November 30, 2019 (%) Telecommunication Products & Services $ 1,583,461 1,754,793 (10 %) SMS & MMS Business $ 9,662,128 3,910,686 147 % Total Revenue $ 11,245,589 5,665,479 98 % We recorded $11,245,589 in revenue for the nine months period ended November 30, 2020, an increase of 5,580,011 or 98%, compared to the nine months period ended November 30, 2019. This increase resulted from an increase in revenue of $5,751,442 from our SMS & MMS business, offset in part by a decrease of $171,332 from our Telecommunication Products & Services business. The SMS & MMS business have improved and will continue to provide the solid revenue stream for the Company in the future. The Company acquired the SMS & MMS business in April 2019 and have since contributed to the total revenue. As for the Telecommunication Products & Services, we earn revenue by providing mobile payment and recharge services to customers of telecommunications companies in China. Specifically, we earn a negotiated rebate amount from the telecommunications companies for all monies paid by consumers to those companies that we process. As we continue to develop our mobile payment business, we expect that revenues will continue to grow. Cost of Revenue The following table sets forth the Company’s cost of revenue for the periods indicated: For the Nine Months Ended November 30, 2020 November 30, 2019 Telecommunication Products & Services $ 928,451 $ 1,513,799 SMS & MMS Business $ 9,143,765 $ 3,425,865 Total Cost of Revenue $ 10,072,216 $ 4,939,664 We recorded $10,072,216 in costs of revenue for the nine months period ended November 30, 2020, an increase of $5,132,552 or 104%, compared to the nine months period ended November 30, 2019. As previously mentioned, we principally earn revenue by providing mobile payment and recharge services to customers of telecommunications companies in China. To earn this revenue, we incur certain customer acquisition costs, including discounts to our customers and promotional expenses, which is reflected in our cost of revenue. Gross profit (loss) Our gross profit for the nine months period ended November 30, 2020 was $1,173,373, an increase of $447,558 or 62%, compared to the nine months period ended November 30, 2019. This increase in gross profit resulted from higher revenue and margin for the period. Amortization & Depreciation We recorded depreciation of $53,351 for fixed assets for the nine months period ended November 30, 2020, an increase of $19,151 or 56%, compared to the nine months period ended November 30, 2019. This increase resulted in purchase of equipment and investment in platforms. - 30 - Table of Contents General & Administrative Expenses The following table sets forth the Company’s general and administrative expenses for the periods indicated: For the Nine Months Ended November 30, 2020 November 30, 2019 Accounting $ 41,995 $ 115,368 Consulting $ 844,805 $ 702,951 Entertainment $ 98,264 $ 193,516 IT $ 62,408 $ — Rent $ 86,431 $ 58,209 Salaries and Wages $ 982,735 $ 587,990 Technical Fee $ 25,197 $ — Others $ 236,731 $ 218,764 Total G&A Expenses $ 2,378,566 $ 1,876,798 We recorded $2,378,566 in general and administrative expenses for the nine months period ended November 30, 2020, an increase of $501,768 or 27%, compared to the nine months period ended November 30, 2019. The increase of consulting, and staff salaries are principally the result of the building of our mobile payment and SMS businesses. Marketing Cost The following table sets forth the Company’s marketing cost for the periods indicated: For the Nine Months Ended November 30, 2020 November 30, 2019 Marketing Cost $ 268,216 $ — We incurred fees of $268,216 in marketing cost for the nine months period ended November 30, 2020 for our telecommunication products and services business. Research & Development The following table sets forth the Company’s research & development for the periods indicated: For the Nine Months Ended November 30, 2020 November 30, 2019 Research & Development – Big Data $ 351,867 $ 280,615 We incurred fees of $351,867 in research & development for the nine months period ended November 30, 2020 as compared to $280,615for the nine months period ended November 30, 2019. The increase of $71,252 or 25% was due to increase in headcount for the Research & Development team and higher data access and usage fee charged by the telecommunications company The Insurtech division of Finger Motion that focus on consumer behavioral insights extraction for the purpose of risk assessment. Insights are derived from various data sources with the primary sources being the telecommunication data. The initial phase of business application is to focus on insurance industry particularly in the area of underwriting risk rating, complementary claims adjudication and assessment, and risk segmentation & market penetration. - 31 - Table of Contents This division comprises of experienced actuaries, data scientists and computer programmers. The expenses for research & development include associated wages and salaries, data access fees and IT infrastructure. The 1 st stage of prototyping on Phase 1 - analytical framework and business applications have been completed and target to commercialize by mid of 2021. Share Compensation Expenses The following table sets forth the Company’s share compensation expenses for the periods indicated: For the Nine Months Ended November 30, 2020 November 30, 2019 Share compensation expenses $ 272,717 $ 889,287 We incurred fees of $272,717 in share issuance for consultants in consideration of the services which have been provided to the company for the nine months period ended November 30, 2020 as compared to $889,287 for the nine months period ended November 30, 2019. Operating Expenses We recorded $3,324,717 in operating expenses for the nine months period ended November 30, 2020, as compared to $3,080,900 in operating expenses for the nine months period ended November 30, 2019. The increase of $243,817 or 8%, for the nine months period ended November 30, 2020 is as set forth above. Net Loss from Operations As a result of the foregoing, our net loss for the nine month period ended November 30, 2020 was $2,151,344, a decrease of $203,741 or 9%, compared to the nine month period ended November 30, 2019. Liquidity and Capital Resources At November 30, 2020, we had cash and cash equivalents of $989,103 as compared to cash and cash equivalents of $102,919 at February 29, 2020. 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. Accordingly, the amount of cash we have on hand fluctuates significantly from period to period. 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. 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. However, to grow our business substantially, we will need to increase the amount of funds we have deposited with the telecommunications companies for which we process mobile recharge payments. Accordingly, we expect 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 nontraditional lenders. We cannot provide investors with any assurance that we will be able to raise additional funding from the sale of our equity or debt securities, or both, in order to increase our deposits with our telecommunications company clients, or if available, that such funding will be on terms acceptable to us. - 32 - Table of Contents During the nine month period ended November 30, 2020, we raised 1,361,000 from the sale of shares of our common stock in private placement transactions exempt from the registration requirements of the Securities Act of 1933, which included common stock purchase warrants as part of some of the private placement offerings. In addition, we raised $1,654,207 from the loans to the Company during the nine month period ended November 30, 2020. In addition, during the nine month period ended November 30, 2020, we received $1,345,999.50 from subscriptions for the purchase of 897,333 units (each, a “Unit”) of the Company at a price of $1.50 per Unit from 17 individuals and 4 entities, which securities have not been issued as of November 30, 2020. Each Unit consists of one share of common stock and one common stock purchase warrant (each, a “Warrant”) with each Warrant entitling the holder thereof to purchase one additional share of common stock (each, a “Warrant Share”) at an exercise price of $3.00 per Warrant Share having an expiry date of two years form the date of issuance of the Warrants. Furthermore, during the nine month period ended November 30, 2020, we received $880,000 from subscriptions for the purchase of 440,000 shares of our common stock at a price of $2.00 per share from 12 individuals, which securities have not been issued as of November 30, 2020. Statement of Cashflows The following table provides a summary of cash flows for the periods presented: For the Nine Months Ended November 30, 2020 November 30, 2019 Net cash used in operating activities $ (4,133,370 ) $ (1,581,076 ) Net cash used in investing activities $ (320,629 ) $ (16,291 ) Net cash provided by financing activities $ 5,226,207 $ 910,729 Effect of exchange rates on cash & cash equivalents $ 113,976 $ (7,261 ) Net (decrease) increase in cash and cash equivalents $ 886,184 $ (693,899 ) Cash Flow used in Operating Activities Net cash used in operating activities increased by $2,552,294 in the nine months ended November 30, 2020 compared to the nine months ended November 30, 2019, primarily due to increase in accounts payable of $386,507 (November 30, 2019 : $1,342,326), decrease in prepayment and deposit of $814,310 (November 30, 2019 : ($821,236)) offset by an increase in accounts receivable of ($1,382,141) (November 30, 2019: ($1,461,642)), increase in other receivable of ($1,278,777) (November 30, 2019: ($359,441)), increase in inventories of ($1,380) (November 30, 2019: $Nil), decrease in accrual and other payable of ($66,702) (November 30, 2019: $1,808,777), decrease in due to related parties of ($687,515) (November 30, 2019: ($674,584)) and decrease in lease liability of ($17,797) (November 30, 2019: $322). Cash Flow used in Investing Activities During the nine months period ended November 30, 2020, investing activities increased by $304,338 compared to the nine months period ended November 30, 2019, mainly due to the increase in the purchase of equipment and investment in platforms. Cash Flow provided by Financing Activities During the nine months period ended November 30, 2020, financing activities increased by $4,315,478 compared to the nine months period ended November 30, 2019, primarily due to loan from non-controlling stockholder and proceeds from issuance of shares of our common stock. - 33 - Table of Contents Trends and Uncertainties The impact of Coronavirus (COVID-19) The Company has analyzed its operations and has found that the impact of COVID-19 on the Company is minimal. As the PRC has been reopening with more businesses and the enforcing on strict controls by the PRC Government on the containment of the spread of this virus since March, the Company’s business is expected to continually improve for the fiscal year 2021. However, there will be a possibility that the outbreak may worsen at a later point in time where it may impact the growth of the business, all of which are uncertain and cannot be predicted at this point. 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. Subsequent Events On January 13, 2021, we issued 1,604,334 units (each, a “Unit”) to 28 individuals and five entities due to the closing of our private placement at $1.50 per Unit for gross proceeds of $2,406,501. Each Unit consists of one share of our common stock and one common stock purchase warrant (each, a “Warrant”) with each Warrant entitling the holder thereof to purchase one additional share of our common stock (each, a “Warrant Share”) at an exercise price of $3.00 per Warrant Share having an expiry date of two years from the date of issuance of the Warrants. On January 13, 2021, we issued 534,500 shares of our common stock to 16 individuals due to the closing of our private placement at $2.00 per share for gross proceeds of $1,069,000. On January 13, 2021, we issued 500,000 shares of our common stock to one individual pursuant to the conversion of the outstanding convertible note at a price of $2.00 per share. On January 13, 2021, we issued 34,103 shares of our common stock to one entity pursuant to a marketing services agreement at a deemed price of $3.90 per share. On January 14, 2021, we issued 5,000 shares of our common stock to one individual pursuant to a consulting agreement at a deemed price of $2.00 per share. Critical Accounting Policies For a complete summary of all of our significant accounting policies refer to Note 2: Summary of Principal Accounting Policies of the Notes to the Consolidated Financial Statements as presented under Item 8, Financial Statements and Supplementary Data in our Annual Report on Form 10-K for our fiscal year ended February 29, 2020. Refer to “Critical Accounting Policies” under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for our fiscal year ended February 29, 2020. Recently Issued Accounting Pronouncements The Company does not believe recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows. - 34 - Table of Contents