FingerMotion, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS - 3 - Table of Contents FINGERMOTION, INC. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the nine months ended November 30, 2021 (Unaudited - Expressed in U.S. Dollars) - 4 - Table of Contents FingerMotion, Inc. Condensed Consolidated Balance Sheets November 30, February 28, 2021 2021 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 1,116,448 $ 850,717 Accounts receivable 3,339,192 4,099,312 Inventories 15,909 1,401 Prepayment and deposit 3,145,675 646,377 Other receivables 2,153,249 1,506,720 Current Assets 9,770,473 7,104,527 Non-current Assets Equipment 29,441 26,453 Intangible assets 136,158 161,210 Right-of-use asset 12,526 49,314 Non-current Assets 178,125 236,977 TOTAL ASSETS $ 9,948,598 $ 7,341,504 LIABILITIES AND SHAREHOLDER’S DEFICIT Current Liabilities Accounts payable $ 1,675,465 $ 2,473,636 Accrual and other payables 2,202,827 1,046,190 Stock subscription payables 390,000 — Loan payable, current portion — 544,900 Lease liability, current portion 12,526 47,569 Current Liabilities 4,280,818 4,112,295 Non-current Liabilities Loan payable, non-current portion — 1,109,307 Lease liability, non-current portion — 4,936 Non-current Liabilities — 1,114,243 TOTAL LIABILITIES $ 4,280,818 $ 5,226,538 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 42,482,260 shares and 38,903,494 issued and outstanding at November 30, 2021 and February 28, 2021 respectively 4,248 3,890 Additional paid-in capital 21,065,955 14,170,815 Accumulated deficit ( 15,613,001 ) ( 12,208,728 ) Accumulated other comprehensive income 199,517 140,906 Stockholders’ equity before non-controlling interests 5,656,719 2,106,883 Non-controlling interests 11,061 8,083 TOTAL SHAREHOLDERS’ EQUITY 5,667,780 2,114,966 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 9,948,598 $ 7,341,504 - 5 - Table of Contents FingerMotion, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended Nine Months Ended November 30, November 30, November 30, November 30, 2021 2020 2021 2020 Revenue $ 5,901,899 $ 4,881,601 $ 17,285,302 $ 11,245,589 Cost of revenue ( 4,934,824 ) ( 4,261,058 ) ( 15,001,674 ) ( 10,072,216 ) Gross profit 967,075 620,543 2,283,628 1,173,373 Amortization & depreciation ( 14,721 ) ( 45,734 ) ( 43,544 ) ( 53,351 ) General & administrative expenses ( 1,521,114 ) ( 793,550 ) ( 4,145,775 ) ( 2,378,566 ) Marketing Cost ( 240,299 ) ( 136,960 ) ( 384,381 ) ( 268,216 ) Research & Development ( 158,055 ) ( 124,723 ) ( 438,033 ) ( 351,867 ) Stock compensation expenses ( 96,891 ) ( 201,007 ) ( 579,437 ) ( 272,717 ) Total operating expenses ( 2,031,080 ) ( 1,301,974 ) ( 5,591,170 ) ( 3,324,717 ) Net loss from operations ( 1,064,005 ) ( 681,431 ) ( 3,307,542 ) ( 2,151,344 ) Other income (expense): Interest income 955 1,009 2,672 1,415 Interest expense — ( 90,864 ) ( 172,813 ) ( 184,413 ) Exchange gain (loss) ( 619 ) 171 ( 2,298 ) 1,200 Other income 26,497 65,469 78,686 88,729 Total other income (expense) 26,833 ( 24,215 ) ( 93,753 ) ( 93,069 ) Net loss before income tax $ ( 1,037,172 ) $ ( 705,646 ) $ ( 3,401,295 ) $ ( 2,244,413 ) Income tax expenses — — — — Net Loss $ ( 1,037,172 ) $ ( 705,646 ) $ ( 3,401,295 ) $ ( 2,244,413 ) Less: Net profit attributable to the non-controlling interest ( 553 ) 2,507 2,978 2,840 Net loss attributable to the Company’s shareholders $ ( 1,036,619 ) $ ( 708,153 ) $ ( 3,404,273 ) $ ( 2,247,253 ) Other comprehensive income: Foreign currency translation adjustments 85,965 94,707 58,611 106,446 Comprehensive loss $ ( 950,654 ) $ ( 613,446 ) $ ( 3,345,662 ) $ ( 2,140,807 ) Less: comprehensive income (loss) attributable to non-controlling interest 171 315 168 411 Comprehensive loss attributable to the Company $ ( 950,825 ) $ ( 613,761 ) $ ( 3,345,830 ) $ ( 2,141,218 ) NET LOSS PER SHARE Loss Per Share - Basic $ ( 0.02 ) $ ( 0.02 ) $ ( 0.08 ) $ ( 0.07 ) Loss Per Share - Diluted $ ( 0.02 ) $ ( 0.02 ) $ ( 0.08 ) $ ( 0.07 ) NET LOSS PER SHARE ATTRIBUTABLE TO THE COMPANY Loss Per Share - Basic $ ( 0.02 ) $ ( 0.02 ) $ ( 0.08 ) $ ( 0.07 ) Loss Per Share - Diluted $ ( 0.02 ) $ ( 0.02 ) $ ( 0.08 ) $ ( 0.07 ) Weighted Average Common Shares Outstanding - Basic 42,281,985 35,032,380 40,280,409 32,424,218 Weighted Average Common Shares Outstanding - Diluted 42,281,985 35,032,380 40,280,409 32,424,218 - 6 - Table of Contents FingerMotion, Inc. Condensed Consolidated Statement of Shareholders’ Equity (Unaudited) Capital Paid Other Common Stock in Excess Shares to be Accumulated Comprehensive Stockholders’ Non-controlling Shares Amount of Par Value Issued Deficit Income equity interest Total Balance at March 1, 2021 38,903,494 3,890 14,170,815 — ( 12,208,728 ) 140,906 2,106,883 8,083 2,114,966 Common stock issued for cash 86,666 9 179,990 — — — 179,999 — 179,999 Common stock issued for professional service 5,000 1 9,999 — — — 10,000 — 10,000 Accumulated other comprehensive income — — — — — 60,184 60,184 — 60,184 Net (Loss) — — — — ( 911,890 ) — ( 911,890 ) 2,384 ( 909,506 ) Balance at May 31, 2021 38,995,160 3,900 14,360,804 — ( 13,120,618 ) 201,090 1,445,176 10,467 1,455,643 Common stock issued for cash 673,900 67 3,114,432 — — — 3,114,499 — 3,114,499 Common stock issued for professional service 55,000 5 259,995 — — — 260,000 — 260,000 Execution of convertible notes 2,477,200 248 1,940,752 — — — 1,941,000 — 1,941,000 Accumulated other comprehensive income — — — — — ( 87,538 ) ( 87,538 ) — ( 87,538 ) Net (Loss) — — — — ( 1,455,764 ) — ( 1,455,764 ) 1,147 ( 1,454,617 ) Balance at August 31, 2021 42,201,260 4,220 19,675,983 — ( 14,576,382 ) 113,552 5,217,373 11,614 5,228,987 Common stock issued for cash 276,000 28 1,379,972 — — — 1,380,000 — 1,380,000 Common stock issued for professional service 5,000 — 10,000 — — — 10,000 — 10,000 Accumulated other comprehensive income — — — — — 85,965 85,965 — 85,965 Net (Loss) — — — — ( 1,036,619 ) — ( 1,036,619 ) ( 553 ) ( 1,037,172 ) Balance at November 30, 2021 42,482,260 4,248 21,065,955 — ( 15,613,001 ) 199,517 5,656,719 11,061 5,667,780 Accumulated Capital Paid Other Common Stock in Excess Shares to be Accumulated Comprehensive Stockholders’ Non-controlling Shares Amount of Par Value Issued Deficit Income equity 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) ( 15,000 ) ( 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 ) - 7 - Table of Contents FingerMotion, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended November 30, November 30, 2021 2020 Net (loss) $ ( 3,401,295 ) $ ( 2,244,413 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Share based compensation expenses 579,437 272,717 Amortization and depreciation 43,544 53,351 Amortization of right of use assets — 18,470 Change in operating assets and liabilities: (Increase) decrease in accounts receivable 760,120 ( 1,382,141 ) (Increase) decrease in prepayment and deposit ( 2,798,735 ) 814,310 (Increase) decrease in others receivable ( 646,529 ) ( 1,278,777 ) (Increase) decrease in inventories ( 14,508 ) ( 1,380 ) Increase (decrease) in accounts payable ( 798,171 ) 386,507 Increase (decrease) in accrual and other payables 1,156,637 ( 66,702 ) Increase (decrease) in due to related parties — ( 687,515 ) Increase (decrease) in due to lease liability ( 3,191 ) ( 17,797 ) Net Cash provided by (used in) operating activities ( 5,122,691 ) ( 4,133,370 ) Cash flows from investing activities Purchase of equipment ( 13,776 ) ( 102,559 ) Purchase of intangible assets — ( 218,070 ) Net cash provided by (used in) investing activities ( 13,776 ) ( 320,629 ) Cash flows from financing activities Proceed from loan payable 299,695 1,654,207 Advances from stock subscription payables 390,000 2,226,000 Common stock issued for cash 4,674,498 1,361,000 Cancellation of shares — ( 15,000 ) Net cash provided by (used in) financing activities 5,364,193 5,226,207 Effect of exchange rates on cash and cash equivalents 38,005 113,976 Net change in cash 265,731 886,184 Cash at beginning of period 850,717 102,919 Cash at end of period $ 1,116,448 $ 989,103 Major non-cash transactions: Conversion of loan payables to shares 1,941,000 — Supplemental disclosures of cash flow information: Interest paid — — Taxes paid $ — $ — - 8 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2021 and 2020 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. Finger Motion Financial Company Limited was incorporated on January 24, 2020 and is 100% owned by FingerMotion, Inc. The company has been activated for the insurtech business during the last quarter of the fiscal year where the Big Data division secured its first contract and recorded revenue. Shanghai TengLian JiuJiu Information Communication Technology Co., Ltd. was incorporated on December 23, 2020 for the purpose of venturing into the mobile phone sales in China. It is 99% owned by JiuGe Technology. On February 5, 2021, JiuGe Technology has disposed of its 99% owned subsidiary, Suzhou BuGuNiao Digital Technology Co., Ltd which was established to venture into R&D projects. - 9 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2021 and 2020 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. - 10 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2021 and 2020 Notes to the Condensed Consolidated Financial Statements Note 2 – Summary of Principal Accounting Policies (Continued) The following assets and liabilities of the VIE and VIE’s subsidiaries are included in the accompanying condensed consolidated financial statements of the Company as of November 30, 2021 and February 28, 2021: Schedule of Variable Interest Entities Assets and liabilities of the VIE November 30, 2021 February 28, 2021 (unaudited) Current assets $ 5,181,655 $ 2,251,100 Non-current assets 30,118 45,503 Total assets $ 5,211,773 $ 2,296,603 Current liabilities $ 8,647,515 $ 4,906,955 Non-current liabilities — — Total liabilities $ 8,647,515 $ 4,906,955 Assets and liabilities of the VIE’s Subsidiaries November 30, 2021 February 28, 2021 (unaudited) Current assets $ 3,941,377 $ 4,177,156 Non-current assets 9,314 — Total assets $ 3,950,691 $ 4,177,156 Current liabilities $ 2,774,236 $ 3,318,450 Non-current liabilities — — Total liabilities $ 2,774,236 $ 3,318,450 - 11 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2021 and 2020 Notes to the Condensed Consolidated Financial Statements Note 2 – Summary of Principal Accounting Policies (Continued) Operating Result of VIE For the nine months ended November 30, 2021 For the nine months ended November 30, 2020 (unaudited) (unaudited) Revenue $ 2,412,523 $ 1,583,461 Cost of revenue ( 727,879 ) ( 928,451 ) Gross profit (loss) $ 1,684,644 $ 655,010 Amortization and depreciation ( 5,961 ) ( 5,216 ) General and administrative expenses ( 2,024,130 ) ( 1,393,511 ) Research & Development ( 438,033 ) ( 100,083 ) Total operating expenses $ ( 2,468,124 ) $ ( 1,498,810 ) Profit (loss) from operations $ ( 783,480 ) $ ( 843,800 ) Interest income 2,569 1,344 Other income 13,996 14,263 Total other income (expense) $ 16,565 $ 15,607 Tax expense — — Net profit (loss) $ ( 766,915 ) $ ( 828,193 ) Operating Result of VIE’s Subsidiaries For the nine months ended November 30, 2021 For the nine months ended November 30, 2020 (unaudited) (unaudited) Revenue $ 14,741,361 $ 9,662,128 Cost of revenue ( 14,003,795 ) ( 9,143,765 ) Gross profit (loss) $ 737,566 $ 518,363 Amortization and depreciation ( 719 ) ( 491 ) General and administrative expenses ( 503,737 ) ( 244,731 ) Research & Development — ( 44,984 ) Total operating expenses $ ( 504,456 ) $ ( 290,206 ) Profit (loss) from operations $ 233,110 $ 228,157 Interest income 41 38 Other income 64,690 56,370 Total other income (expense) $ 64,731 $ 56,408 Tax expense — ( 579 ) Net profit (loss) $ 297,841 $ 283,986 - 12 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2021 and 2020 Notes to the Condensed Consolidated Financial Statements Note 2 – Summary of Principal Accounting Policies (Continued) 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. 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. - 13 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2021 and 2020 Notes to the Condensed Consolidated Financial Statements Note 2 – Summary of Principal Accounting Policies (Continued) 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. 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. - 14 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2021 and 2020 Notes to the Condensed Consolidated Financial Statements Note 2 – Summary of Principal Accounting Policies (Continued) 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. 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% of the shares of two of our subsidiaries are 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. - 15 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2021 and 2020 Notes to the Condensed Consolidated Financial Statements Note 3 – Going Concern The accompanying condensed consolidated 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 $ 15,613,001 and $ 12,208,728 as at November 30, 2021 and February 28, 2021 respectively, and had a net loss of $ 3,401,295 and $ 2,244,413 for the nine months ended November 30, 2021 and 2020, 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. Note 4 – Revenue We recorded $17,285,302 and $11,245,589 in revenue, respectively, for the nine months ended November 30, 2021 and 2020. Schedule of Revenue For the nine months ended November 30, 2021 November 30, 2020 (unaudited) (unaudited) Telecommunication Products & Services $ 6,730,108 $ 1,583,461 SMS & MMS Business 10,423,776 9,662,128 Big Data 131,418 — Revenues $ 17,285,302 $ 11,245,589 Note 5 – Equipment At November 30, 2021 and February 28, 2021, the company has the following amounts related to tangible assets : November 30, 2021 February 28, 2021 (unaudited) Equipment $ 61,729 $ 47,953 Less: accumulated depreciation ( 32,288 ) ( 21,500 ) Net equipment $ 29,441 $ 26,453 No significant residual value is estimated for the equipment. Depreciation expense for the nine months ended November 30, 2021 and 2020 totaled $ 10,618 and $ 7,524 , respectively. - 16 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2021 and 2020 Notes to the Condensed Consolidated Financial Statements Note 6 – Intangible Assets At November 30, 2021 and February 28, 2021, the company has the following amounts related to intangible assets : November 30, 2021 February 28, 2021 (unaudited) Licenses $ 200,000 $ 200,000 Mobile applications 231,166 221,489 Gross Intangible Assets 431,166 421,489 Less: accumulated amortization ( 253,963 ) ( 219,234 ) Impairment of intangible assets ( 41,045 ) ( 41,045 ) Net intangible assets $ 136,158 $ 161,210 No significant residual value is estimated for these intangible assets. Amortization expense for the nine months ended November 30, 2021 and 2020 totaled $32,926 and $45,827, respectively. Note 7 – Prepayment and Deposit Prepaid expenses consist of the deposit pledge to the vendor for stocks credits for resale. Our current vendors are China Unicom and China Mobile for our Telecommunication Products & Services business and our SMS & MMS business. Deposits also includes payments placed into the e-commerce platforms where we offer our products and services. The platforms are PinDuoDuo, Tmall and JD.com. Schedule of Prepayment and Deposit November 30, 2021 February 28, 2021 (unaudited) Telecommunication Products & Services Deposit Paid / Prepayment $ 2,555,334 $ 333,646 Deposit received — — Net Prepaid expenses for Telecommunication Products & Services $ 2,555,334 $ 333,646 Others prepayment 123,460 143,288 Prepayment and deposit $ 2,678,794 $ 476,934 November 30, 2021 February 28, 2021 (unaudited) SMS & MMS Business Deposit Paid / Prepayment $ 466,881 $ 169,443 Deposit received — Net Prepaid expenses for SMS $ 466,881 $ 169,443 Others prepayment — — Prepayment and deposit $ 466,881 $ 169,443 - 17 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2021 and 2020 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, 2021. I nformation related to the Company’s right-of-use assets and related lease liabilities were as follows: November 30, 2021 February 28, 2021 (unaudited) Right-of-use asset Right-of-use asset, net $ 12,526 $ 49,314 Lease liability Current lease liability $ 12,526 $ 47,569 Non-current lease liability — 4,936 Total lease liability $ 12,526 $ 52,505 February 28, 2021 (unaudited) Remaining lease term and discount rate Weighted-average remaining lease term 1.4 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, 2021: 2021 $ 12,604 Thereafter — Less: imputed interest ( 78 ) Total lease liability $ 12,526 - 18 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2021 and 2020 Notes to the Condensed Consolidated Financial Statements Note 9 – Loan Payable The following table summarizes loan principal due by the Company as of November 30, 2021: Lender Term November 30, 2021 February 28, 2021 Liew Yow Ming From April 8, 2020 to April 7, 2022 $ — $ 758,063 Liew Yow Ming From April 16, 2020 to April 15, 2022 — 351,244 Liew Yow Ming From July 29, 2020 to July 28, 2021 — 544,900 Liew Yow Ming From August 1, 2021 to January 31, 2022 — — Due to Related Parties $ — $ 1,654,207 Due to Related Parties, Current Current portion $ — $ 544,900 Due to Related Parties, Non-Current Non-current portion $ — $ 1,109,307 Liew Yow Ming is a non-controlling stockholder of the Company. Loans from Mr. Liew Yow Ming were fixed at rate of 20% per annum. Interest expenses incurred on loans payable for nine months ended November 30, 2021 and 2020 was $ 172,813 and $ 153,577 , respectively. On July 28, 2021, the Company has received a conversion notice from Liew Yow Ming for the conversion of the note to convert all US$ 545,000 for shares of common stock of the Company, which was converted on August 16, 2021 into 218,000 shares of our common stock at a price of $2.50 per share. On July 29, 2021, the Company has received a conversion notice from Liew Yow Ming for the conversion of the note to convert all US$ 350,000 for shares of common stock of the Company, which was converted on August 16, 2021 into 700,000 shares of our common stock at a price of $0.50 per share. On August 27, 2021, the Company has received a conversion notice from Liew Yow Ming for the conversion of the note to convert all US$ 750,000 for shares of common stock of the Company, which was converted on August 27, 2021 into 1,500,000 shares of our common stock at a price of $0.50 per share. On August 27, 2021, the Company has received a conversion notice from Liew Yow Ming for the conversion of the note to convert all US$ 296,000 for shares of common stock of the Company, which was converted on August 17, 2021 into 59,200 shares of our common stock at a price of $5.00 per share. Note 10 – Common Stock 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 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. 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. The Company issued approximately 8,045,000 shares of common stock to consultants for the three months ended May 31, 2020 for consideration of $283,575. 7,645,000 of 8,045,000 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. 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 and 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 our common stock which issued to three individuals pursuant to a financial advisory services agreement. - 19 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2021 and 2020 Notes to the Condensed Consolidated Financial Statements Note 10 – Common Stock (Continued) On September 14, 2020, the Company issued 40,000 shares of our common stock to a consultant for consideration of $34,000 pursuant to settlement and release agreement. 34,103 shares of our common stock were issued to a consultant for consideration of $33,251 pursuant to marketing services agreement on September 25, 2020. On October 2, 2020, the Company issued 700,000 shares of our common stock for consideration of $350,000 to four individuals and one entity pursuant to consulting agreements and management agreements. On October 19, 2020, the Company issued (i) 830,000 shares of our common stock at a price of $0.50 per share to five individuals, (ii) 100,000 shares of our common stock at a price of $1.00 per share to one individual, (iii) 438,500 shares of our common stock at a price of $1.00 per share to twelve individuals and three entities, whereby each unit is comprised of one share of our common stock and one common stock purchase warrant with each warrant entitling the holder to purchase one additional share of common stock at an exercise price of $2.00 per share and having an expiry date of two years from the date of issuance, (iv) 265,000 shares of our common stock at a price of $1.50 per share to four individuals and (v) 50,000 shares of our common stock at a price of $1.50 per share to one individual, whereby each unit is comprised of one share of our common stock and one common stock purchase warrant with each warrant entitling the holder to purchase one additional share of common stock at an exercise price of $3.00 per share and having an expiry date of two years from the date of issuance. On January 13, 2021, the Company issued (i) 1,604,334 shares of our common stock at price of $1.50 per share to 28 individuals and 4 entities, whereby each unit is comprised of one share of our common stock and one common stock purchase warrant with each warrant entitling the holder to purchase one additional share of common stock at an exercise price of $3.00 per share and having an expiry date of two years from the date of issuance, (ii) 534,500 shares of our common stock at a price of $2.00 per share to 15 individuals, (iii) 500,000 shares of our common stock at price of $2.00 to one individual pursuant to the conversion of promissory note, (iv) 34,103 shares of our common stock at a deemed price of $3.90 per share to one entity pursuant to a marketing services agreement, and (v) 5,000 shares of our common stock at price of $2.00 per share to one individual pursuant to a consulting agreement. On January 21, 2021, the Company issued 25,000 shares of our common stock at $2.00 per share to one individual pursuant to the exercise of warrants. On March 29, 2021, the Company issued 10,000 shares of our common stock at $2.00 per share to one individual pursuant to the exercise of warrants. On April 14, 2021, the Company issued 5,000 shares of our common stock at price of $2.00 per share to one individual pursuant to a consulting agreement. On May 7, 2021, the Company issued (i) 70,000 shares of our common stock at $2.00 per share to 2 individuals and one entity pursuant to the exercise of warrants, and (ii) 6,666 shares of our common stock at $3.00 to one entity pursuant to the exercise of warrants. On June 1, 2021, the Company issued 25,000 shares of our common stock at a deemed price of $5.00 per shares to one individual pursuant to a consulting agreement. On July 13, 2021, the Company issued (i) 568,900 shares of our common stock at price of $5.00 per share to 17 individuals and 2 entities (ii) 45,000 shares of our common stock at $2.00 per share to 2 individuals pursuant to the exercise of warrants, (iii) 60,000 shares of our common stock at $3.00 per share to one individual pursuant to the exercise of warrants, (iv) 5,000 shares of our common stock at deemed price of $2.00 per share to one individual pursuant to a consulting agreement, and (v) 25,000 shares of our common stock at a deemed price of $5.00 per share to one individual pursuant to a consulting agreement. On August 16, 2021, the Company issued 218,000 shares of common stock at $2.50 per share and 700,000 shares of common stock at $0.50 per share to one individual pursuant to the conversion of promissory notes. On August 27, 2021, the Company issued 1,500,000 shares of common stock at $0.50 per share and 59,200 shares of common stock at $5.00 per share to one individual pursuant to the conversion of promissory notes. - 20 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2021 and 2020 Notes to the Condensed Consolidated Financial Statements Note 10 – Common Stock (Continued) On October 28, 2021, the Company issued 5,000 shares of our common stock at price of $2.00 per share to one individual pursuant to a consulting agreement. On November 5, 2021, the Company issued 276,000 shares of our common stock at price of $5.00 per share to 4 individuals. During the quarter ended November 30, 2021, the Company received $90,000 from exercise of warrants for the purchase of 30,000 shares of common stock of the Company at a price of $3.00 per shares from 2 individuals, which securities have not been issued as of November 30, 2021. In addition, during the quarter ended November 30, 2021, the Company received $300,000 from subscriptions for the purchase of 60,000 shares of common stock of the Company at a price of $5.00 per share from 3 individuals, which securities have not been issued as of November 30, 2021. Note 11 – 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, 2021 November 30, 2020 Numerator - basic and diluted Net Loss $ ( 3,401,295 ) $ ( 2,244,413 ) Denominator Weighted average number of common shares outstanding — basic 40,280,409 32,424,218 Weighted average number of common shares outstanding — diluted 40,280,409 32,424,218 Loss per common share — basic $ ( 0.08 ) $ ( 0.07 ) Loss per common share — diluted $ ( 0.08 ) $ ( 0.07 ) Note 12 – 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, 2021 and 2020. Hong Kong Finger Motion Company Limited is incorporated in Hong Kong and Hong Kong’s profits tax rate is 16.5 % . Finger Motion Company Limited did not earn any income that was derived in Hong Kong for the nine months ended November 30, 2021 and 2020. The People’s Republic of China (PRC) JiuGe Management, JiuGe Technology, Beijing XunLian and Shanghai TengLian JiuJiu were incorporated in the People’s Republic of China and subject to PRC income tax at 25 % . - 21 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2021 and 2020 Notes to the Condensed Consolidated Financial Statements Note 12 – 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, 2021 and 2020 are as follows: For the nine months ended November 30, 2021 November 30, 2020 (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, 2021 and February 28, 2021, the Company has a deferred tax asset of $851,068 and $1,095,494, 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, 2021 and February 28, 2021, the valuation allowance was $851,068 and $1,095,494, respectively. Schedule of Deferred Tax Assets and Liabilities November 30, 2021 February 28, 2021 (unaudited) Deferred tax asset from operating losses carry-forwards $ 851,068 $ 1,095,494 Valuation allowance ( 851,068 ) ( 1,095,494 ) Deferred tax asset, net $ — $ — Note 13 – Disposal of a subsidiary Disposal of Suzhou BuGuNiao On January 28, 2021, JiuGe Technology disposed its 99% owned subsidiary, Suzhou BuGuNiao Digital Technology Co., Ltd which was set up to venture into R&D projects. The following table summarizes the gain on disposal for Suzhou BuGuNiao at the disposal date . Consideration $ — Net Asset 8,382 NCI ( 84 ) Gain on Disposal $ 8,298 - 22 - Table of Contents FINGERMOTION, INC. Nine months ended November 30, 2021 and 2020 Notes to the Condensed Consolidated Financial Statements Note 14 – Related Parties Transaction a) Related parties: Name of related parties Relationship with the Company Mr Liew Yow Ming Non-controlling Stockholder b) The Company had the following related party balances at November 30, 2021 and February 28, 2021: The amount due to related party is without interest and due on demand. November 30, 2021 February 28, 2021 Loan payables Mr. Liew Yow Ming $ — $ 1,654,207 Note 15 – Commitments and Contingencies Legal proceedings The Company is not aware of any material outstanding claim and litigation against them. Note 16 – Subsequent Events Except for the above and the following, the Company has determined that it does not have any other material subsequent events to disclose in these unaudited condensed consolidated interim financial statements. On December 28, 2021, the Company’s board of directors approved and granted in aggregate 4,545,500 stock options, of which 1,169,500 stock options were granted to certain directors and officers of the Company, having an exercise price of $8.00 per share and an expiry date of five years from the date of grant. The stock options have 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. On December 28, 2021, the Company shares of common stock were listed for trading on the Nasdaq Capital Market under the current trading symbol of “FNGR”. - 23 - 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, 2021, and our Annual Report on Form 10-K for the fiscal year ended February 28, 2021, 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 28, 2021, 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 28, 2021, our most recently completed year end, to November 30, 2021, and our results of operations for the three months and nine months ended November 30, 2021, 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 28, 2021. 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. Our principal executive offices are located at 1460 Broadway, New York, New York 10036, and our telephone number at that address is (347) 349-5339. Share Exchange Agreement 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 ”). 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. 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. 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. 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. 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. - 24 - Table of Contents 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. 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. The VIE Agreements included: ● a consulting services agreement through which JiuGe Management is mainly engaged in data marketing, technical services, technical consulting and business consultancy to JiuGe Technology (the “ JiuGe Technology Consulting Services Agreement ”); ● a loan agreement through which JiuGe Management grants a loan to the Legal Representative of JiuGe Technology for the purpose of capital contribution (the “ JiuGe Technology Loan Agreement ”); ● 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 ”); ● a call option agreement under which the owner of JiuGe Technology has granted to JiuGe Management the irrevocable and unconditional right and option to acquire all of their equity interests in JiuGe Technology or transfer these rights to a third party (the “ JiuGe Technology Call Option Agreement ”); and ● a share pledge agreement under which the owner of JiuGe Technology has pledged all of their rights, titles and interests in JiuGe Technology to JiuGe Management to guarantee JiuGe Technology’s performance of its obligations under the JiuGe Technology Consulting Services Agreement (the “ JiuGe Technology Share Pledge Agreement ”). 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. 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 negotiated rebate amount from each of China Unicom and China Mobile for all monies paid by consumers to China Unicom and China Mobile that 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 the telecommunications companies, reduced by the amounts by which we discount the mobile data and talk time sold through our platform. In October 2018, China Unicom and China Mobile awarded JiuGe Technology with contracts that established partnerships for data analysis, that could unlock potential value-added services. This description of the VIE Agreements discussed above do not purport to be complete and are qualified in their entirety by reference to the terms of the VIE Agreements, which were filed as exhibits to our Current Report on Form 8-K filed with the SEC on December 27, 2018 and are incorporated by reference herein. Acquisition of Beijing Technology On March 7, 2019, the Company through JiuGe Technology acquired Beijing XunLian TianXia Technology Co., Ltd. (“ 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. Through Beijing Technology, the Company 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, the Company’s SMS integrated platform is processing 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 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 to assist the Company’s clients to fulfill the government guidelines, until the SMS messages have been delivered successfully. - 25 - Table of Contents China Unicom Cooperation Agreement On July 7, 2019, JiuGe Technology entered into that certain Yunnan Unicom Electronic Sales Platform Construction and Operation Cooperation Agreement (the “ Cooperation Agreement ”) with China United Network Communications Limited Yunnan Branch (“ China Unicom Yunnan ”). Under the Cooperation Agreement, JiuGe Technology is responsible for constructing and operating China Unicom Yunnan’s electronic sales platform through which consumers can purchase various goods and services from China Unicom Yunnan, 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 Yunnan’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 Yunnan 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 Yunnan unilaterally. The Cooperation Agreement contains customary representations from each party regarding such party’s authority to enter into and perform under the Cooperation Agreement, and provides customary events of default, including for various types of failure to perform. Any disputes arising between the parties under the Cooperation Agreement will be adjudicated in Chinese courts. This description of the Cooperation Agreement does not purport to be complete and is qualified in its entirety by reference to the terms of the Cooperation Agreement, which was filed as an exhibit to our Current Report on Form 8-K filed with the SEC on August 9, 2019 and is incorporated by reference herein. China Mobile Cooperation Agreement In December 2020, JiuGe Technology entered into a strategic cooperation agreement (the “ China Mobile Cooperation Agreement ”) with China Mobile’s subsidiary, China Mobile Financial Technology Co., Ltd. (“ China Mobile Financial ”) to explore and create a new forward-leaning business model that combines the traditional loyalty point redemption business with an e-commerce platform designed to create a higher evolution of brand loyalty. From the beginning of 2020, JiuGe Technology began actively seeking cooperation with China Mobile Financial, given China Mobile’s years of experience in the financial services industry. Currently, of China Mobile’s estimated 900 million subscribers, only an estimated 600 million currently participate and accumulate points within the loyalty reward program, often referred to as “Points Mall”, meaning there is still plenty of room for growth. These estimated 600 million subscribers have accumulated an aggregate of points worth an estimated 20 billion yuan (approximately US$2.86 billion) (Source: China Securities Journal, “China Mobile will open “points” ecological stock, customer points worth over 20 billion yuan”, Yang Jie, November 15, 2019). The “Points Mall” business is the US equivalent of a loyalty rewards program. The program uses “points” as a form of currency that allows users to exchange them for products and services. The loyalty program strives to keep its content fresh and is on the lookout for partnerships with other unique brands to expand the universe of redemption products and services offered. 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 entity. 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% Shanghai JiuGe Business Management Co., Ltd. (4) PRC 100% Shanghai JiuGe Information Technology Co., Ltd. (5) PRC Contractually controlled (5) Beijing XunLian TianXia Technology Co., Ltd. (6) PRC Contractually controlled Finger Motion Financial Group Limited (7) Samoa 100% Finger Motion Financial Company Limited (8) Hong Kong 100% Shanghai TengLian JiuJiu Information Communication Technology Co., Ltd. (9) PRC Contractually controlled - 26 - Table of Contents 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) Shanghai JiuGe Business Management Co., Ltd. is a wholly-owned subsidiary of Finger Motion (CN) Limited. (5) Shanghai JiuGe Information Technology Co., Ltd. is a variable interest entity that is contractually controlled by Shanghai JiuGe Business Management Co., Ltd. (6) Beijing XunLian TianXia Technology Co., Ltd. is a 99% owned subsidiary of Shanghai JiuGe Information Technology Co., Ltd. (7) Finger Motion Financial Group Limited is a wholly-owned subsidiary of FingerMotion, Inc. (8) Finger Motion Financial Company Limited is a wholly-owned subsidiary of Finger Motion Financial Group Limited. (9) Shanghai TengLian JiuJiu Information Communication Technology Co., Ltd. is a 99% owned subsidiary of Shanghai JiuGe Information Technology Co., Ltd. Overview The Company operates the following lines of business: (i) telecommunications products and services; (ii) SMS and MMS service; (iii) a rich communication services (RCS) platform; (iv) big data insights; and (v) a video game division (inactive). 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. 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. 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. (“ 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. (“ JiuGe Techology ”), our contractually controlled affiliate through the entry into a series of agreements known as variable interest agreements (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 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. 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. 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. 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 ”). The Company is planning to further expand its universal exchange platform by setting up B2C stores on several other major e-commerce platforms in China. 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. - 27 - 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. 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 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. 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. 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 secure a contract with both China Mobile and China Unicom to acquire new users to take up the respective subscription plans. On December 2, 2020, our contractually controlled subsidiary, Shanghai JiuGe Information Technology Co., Ltd., and China Mobile Financial Technology Co., Ltd., a subsidiary of China Mobile, signed a strategic cooperation agreement to explore and create a new forward-leaning business model that combines the traditional loyalty point redemption business with an e-commerce platform designed to create a higher evolution of brand loyalty. Recently, 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. SMS and MMS Services On March 7, 2019, the Company through JiuGe Technology acquired Beijing XunLian TianXia Technology Co., Ltd. ( “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. With this acquisition, the Company expanded into a second partnership with the telecom companies by acquiring bulk Short Message Service (“SMS ”) and Multimedia Messaging Service ( “MMS” ) bundles at reduced prices and offering bulk SMS services to end consumers with competitive pricing. 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. 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. 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 development of an RCS platform, also known as MaaP (Messaging as a Platform). This RCS platform will be a proprietary business messaging platform that enables businesses and brands to communicate and service their customers on the 5G infrastructure, delivering a better and more efficient user experience at a lower cost. For example, with the new 5G RCS message service, consumers will have the ability to list available flights by sending a message regarding a holiday and will also be able to book and buy flights by sending messages. 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. 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. The Company applies its vast experience in the insurance and financial services industry and capabilities in technology and data analytics to develop revolutionary solutions targeted towards insurance and financial consumers. Integrating diverse publicly available information, insurance and financial based data with technology and finally registering them into the FingerMotion telecommunications and insurance ecosystem, the Company would be able to provide functional insights and facilitate the transformation of key components of the insurance value chain, including driving more effective and efficient underwriting, enabling fraud evaluation and management, empowering channel expansion and market penetration through novel product innovation, and more. The ultimate objective is to promote, enhance and deliver better value to our partners and customers. - 28 - Table of Contents The Company’s proprietary risk assessment engine offers standard and customized scoring and appraisal services based on multi-dimensional factors. The Company has the ability to provide potential customers and partners with insights-driven and technology-enabled solutions and applications including preferred risk selection, precision marketing, product customization, and claims management (e.g., fraud detection). 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. 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. Our Video Game Division 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, the current growth leader, and eSports and virtual reality gaining momentum as the next big sectors. 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. Results of Operations Three Months Ended November 30, 2021 Compared to Three Months Ended November 30, 2020 The following table sets forth our results of operations for the periods indicated: For the three months ended November 30, 2021 November 30, 2020 Revenue $ 5,901,899 $ 4,881,601 Cost of revenue $ (4,934,824 ) $ (4,261,058 ) Total operating expenses $ (2,031,080 ) $ (1,301,974 ) Total other income (expenses) $ 26,833 $ (24,215 ) Net Loss attributable to the Company’s shareholders $ (1,036,619 ) $ (708,153 ) Foreign currency translation adjustment $ 85,965 $ 94,707 Comprehensive loss attributable to the Company $ (950,825 ) $ (613,761 ) Basic Loss Per Share attributable to the Company $ (0.02 ) $ (0.02 ) Diluted Loss Per Share attributable to the Company $ (0.02 ) $ (0.02 ) - 29 - Table of Contents Revenue The following table sets forth the Company’s revenue from its three lines of business for the periods indicated: For the three months ended November 30, 2021 November 30, 2020 Change (%) Telecommunication Products & Services $ 3,281,733 $ 482,575 580 % SMS & MMS Business $ 2,620,166 $ 4,399,026 -40 % Big Data $ — $ — — % Total Revenue $ 5,901,899 $ 4,881,601 21 % We recorded $5,901,899 in revenue for the three months ended November 30, 2021, an increase of $1,020,298 or 21%, compared to the three months ended November 30, 2020. This increase resulted from an increase in revenue of $2,799,158 from our Telecommunication Products & Services, offset in part by a decrease of $1,778,860 from our SMS & MMS business. We principally 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 recharge business, we expect that revenues will continue to grow especially on the new collaboration with China Mobile on Fujian province. Our SMS texting service saw a drop in the comparative quarter last year as we are redistributing our resources to expand the Telecommunication Products & Services as opportunity arises. This trend will continue to better manage our resources to enable a healthier overall profit margin. We also earned revenue during the most recently completed fiscal year from our new venture on subscription plan acquisition and mobile phone sales. The Company expects and hopes that these new product offerings will continue to provide additional revenue for the Company in the future. During the last quarter of the fiscal year, our Big Data division secured a contract with Pacific Life Re, a global life reinsurance serving the insurance industry with 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 FingerMotion’s predictive model to the traditional insurance industry. This division has since recorded revenue and we expect additional revenue from this division in the future. 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, 2021 November 30, 2020 Telecommunication Products & Services $ 2,315,308 $ 159,592 SMS & MMS Business $ 2,529,516 $ 4,101,466 Big Data $ 90,000 $ — Total Cost of Revenue $ 4,934,824 $ 4,261,058 We recorded $4,934,824 in costs of revenue for the three months ended November 30, 2021, an increase of $673,766 or 16%, compared to the three months ended November 30, 2020. As previously mentioned, we principally earn revenue by providing mobile payment and recharge services to customers of telecommunications companies, subscription plans and mobile phone sales in China. To earn this revenue, we incur cost of the product, certain customer acquisition costs, including discounts to our customers and promotional expenses, which is reflected in our cost of revenue. Gross profit Our gross profit for the three months ended November 30, 2021 was $967,075, an increase of $346,532 or 56%, compared to the three months ended November 30, 2020. This increase in gross profit resulted from higher revenue for the period. Amortization & Depreciation We recorded depreciation of $14,721 for fixed assets for the three months ended November 30, 2021, a decrease of $31,013 or 68%, compared to the three months ended November 30, 2020. This decrease resulted as a portion of our intangible assets have been fully amortized. - 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 three months ended November 30, 2021 November 30, 2020 Accounting $ 47,041 $ 15,650 Consulting $ 556,071 $ 304,277 Entertainment $ 53,091 $ 37,602 IT $ 38,005 $ 16,826 Rent $ 27,915 $ 14,320 Salaries & Wages $ 655,589 $ 338,156 Technical Fee $ 41,328 $ — Travelling $ 18,712 $ 29,436 Others $ 83,362 $ 37,283 Total G&A Expenses $ 1,521,114 $ 793,550 We recorded $1,521,114 in general and administrative expenses for the three months ended November 30, 2021, an increase of $727,564 or 92%, compared to the three months ended November 30, 2020. The increased consulting and staff salaries are principally the result of the building of our three lines of businesses. Marketing Cost The following table sets forth the Company’s marketing cost for the periods indicated: For the three months ended November 30, 2021 November 30, 2020 Marketing Cost $ 240,299 $ 136,960 We recorded $240,299 in marketing cost for the three months ended November 30, 2021 for our telecommunication products and services business. Marketing costs represent the costs of promoting our product offerings through all our platforms including other digital marketing expenses. Research & Development The following table sets forth the Company’s research & development for the periods indicated: For the three months ended November 30, 2021 November 30, 2020 Research & Development $ 158,055 $ 124,723 We incurred fees of $158,055 in research & development for the three months ended November 30, 2021 as compared to $124,723 for the three months ended November 30, 2020. The increase of $33,332 or 27% was due to higher data access and usage fees charged by telecommunications companies. The Insurtech division of FingerMotion 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 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 the middle of calendar 2022. - 31 - Table of Contents 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, 2021 November 30, 2020 Share compensation expenses $ 96,891 $ 201,007 We incurred fees of $96,891 in share issuance for consultants in consideration of the services which have been provided to the company for the three months ended November 30, 2021, a decrease of $104,116 or 52% as compared to $201,007 for the three months ended November 30, 2020. The decrease was due to some of the expired advisory and consultation services. Operating Expenses We recorded $2,031,080 in operating expenses for the three months ended November 30, 2021, as compared to $1,301,974 in operating expenses for the three months ended November 30, 2020. The increase of $729,106 or 56% for the three months ended November 30, 2021 is as set forth above. Net Loss attributable to the Company’s shareholders The net loss attributable to the Company’s shareholders was $1,036,619 for the three months ended November 30, 2021 and $708,153 for the three months ended November 30, 2020. The increase in net loss attributable to the Company’s shareholders of $328,466 or 46% resulted primarily from the increase in total operating expenses as discussed above. Nine Months Ended November 30, 2021 Compared to Nine Months Ended November 30, 2020 The following table sets forth our results of operations for the periods indicated: For the nine months ended November 30, 2021 November 30, 2020 Revenue $ 17,285,302 $ 11,245,589 Cost of revenue $ (15,001,674 ) $ (10,072,216 ) Total operating expenses $ (5,591,170 ) $ (3,324,717 ) Total other income (expenses) $ (93,753 ) $ (93,069 ) Net Loss attributable to the Company’s shareholders $ (3,404,273 ) $ (2,247,253 ) Foreign currency translation adjustment $ 58,611 $ 106,446 Comprehensive loss attributable to the Company $ (3,345,830 ) $ (2,141,218 ) Basic Loss Per Share attributable to the Company $ (0.08 ) $ (0.07 ) Diluted Loss Per Share attributable to the Company $ (0.08 ) $ (0.07 ) Revenue The following table sets forth the Company’s revenue from its three lines of business for the periods indicated: For the nine months ended November 30, 2021 November 30 2020 Change (%) Telecommunication Products & Services $ 6,730,108 $ 1,583,461 325 % SMS & MMS Business $ 10,423,776 $ 9,662,128 8 % Big Data $ 131,418 $ — 100 % Total Revenue $ 17,285,302 $ 11,245,589 54 % We recorded $17,285,302 in revenue for the nine months ended November 30, 2021, an increase of $6,039,713 or 54%, compared to the nine months ended November 30, 2020. This increase resulted from an increase in revenue of $5,146,647, $761,648 and $131,418 from our Telecommunication Products & Services, 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. 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 recharge business, we expect that revenues will continue to grow. Our SMS texting service has experienced a small growth only compared to last year. We are redistributing our resources to our other products when the opportunity arises to secure a better overall gross margin mix for the Company. We also earned revenue during the most recently completed fiscal year from our new venture on subscription plan acquisition and mobile phone sales. The Company expects and hopes that these new product offerings will continue to provide additional revenue for the Company in the future. During the last quarter of the fiscal year, our Big Data division secured a contract with Pacific Life Re, a global life reinsurance serving the insurance industry with 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 FingerMotion’s predictive model to the traditional insurance industry. This division has since recorded revenue and we expect additional revenue from this division in the future. - 32 - Table of Contents 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, 2021 November 30, 2020 Telecommunication Products & Services $ 5,005,278 $ 928,451 SMS & MMS Business $ 9,726,396 $ 9,143,765 Big Data $ 270,000 $ — Total Cost of Revenue $ 15,001,674 $ 10,072,216 We recorded $15,001,674 in costs of revenue for the nine months ended November 30, 2021, an increase of $4,929,458 or 49%, compared to the nine months ended November 30, 2020. As previously mentioned, we principally earn revenue by providing mobile payment and recharge services to customers of telecommunications companies, subscription plans and mobile phone sales in China. To earn this revenue, we incur cost of the product, certain customer acquisition costs, including discounts to our customers and promotional expenses, which is reflected in our cost of revenue. Gross profit Our gross profit for the nine months ended November 30, 2021 was $2,283,628, an increase of $1,110,255 or 95%, compared to the nine months ended November 30, 2020. This increase in gross profit resulted from higher revenue for the period. Amortization & Depreciation We recorded depreciation of $43,544 for fixed assets for the nine months ended November 30, 2021, a decrease of $9,807 or 18%, compared to the nine months ended November 30, 2020. The decrease was due to some fully depreciated assets. 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, 2021 November 30, 2020 Accounting $ 143,918 $ 41,995 Consulting $ 1,469,484 $ 844,805 Entertainment $ 134,159 $ 98,264 IT $ 74,684 $ 62,408 Rent $ 80,060 $ 86,431 Salaries & Wages $ 1,870,805 $ 982,735 Technical Fee $ 96,964 $ 25,197 Travelling $ 69,604 $ 57,538 Others $ 206,097 $ 179,193 Total G&A Expenses $ 4,145,775 $ 2,378,566 We recorded $4,145,775 in general and administrative expenses for the nine months ended November 30, 2021, an increase of $1,767,209 or 74%, compared to the nine months ended November 30, 2020. The increased consulting and staff salaries are principally the result of the building of our three lines of businesses. - 33 - Table of Contents Marketing Cost The following table sets forth the Company’s marketing cost for the periods indicated: For the nine months ended November 30, 2021 November 30, 2020 Marketing Cost $ 384,381 $ 268,216 We recorded $384,381 in marketing cost for the nine months ended November 30, 2021 for our telecommunication products and services business. Marketing costs represent the costs of promoting our product offerings through all our platforms including other digital marketing expenses. Research & Development The following table sets forth the Company’s research & development for the periods indicated: For the nine months ended November 30, 2021 November 30, 2020 Research & Development $ 438,033 $ 351,867 We incurred fees of $438,033 in research & development for the nine months ended November 30, 2021 as compared to $351,867 for the nine months ended November 30, 2020. The increase of $86,166 or 24% was due to higher data access and usage fees charged by telecommunications companies. The Insurtech division of FingerMotion 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 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 the middle of calendar 2022. 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, 2021 November 30, 2020 Share compensation expenses $ 579,437 $ 272,717 We incurred fees of $579,437 in share issuance for consultants in consideration of the services which have been provided to the company for the nine months ended November 30, 2021 as compared to $272,717 for the nine months ended November 30, 2020. The increase of $306,720 or 112% was due to more consultants being compensated with shares of the Company. Operating Expenses We recorded $5,591,170 in operating expenses for the nine months ended November 30, 2021, as compared to $3,324,717 in operating expenses for the nine months ended November 30, 2020. The increase of $2,266,453 or 68%, for the nine months ended November 30, 2021 is as set forth above. Net Loss attributable to the Company’s shareholders The net loss attributable to the Company’s shareholders was $3,404,273 for the nine months ended November 30, 2021 and $2,247,253 for the nine months ended November 30, 2020. The increase in net loss attributable to the Company’s shareholders of $1,157,020 or 51% resulted primarily from the increase in total operating expenses as discussed above. - 34 - Table of Contents Liquidity and Capital Resources The following table sets out our cash and working capital as of November 30, 2021 and February 28, 2021: As at November 30, 2021 As at February 28, 2021 Cash reserves $ 1,116,448 $ 850,717 Working capital (deficiency) $ 5,489,655 $ 2,992,232 At November 30, 2021, we had cash and cash equivalents of $1,116,448 as compared to cash and cash equivalents of $850,717 at February 28, 2021. 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 non-traditional 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. We did, however, raise $4,674,498 through the sale of shares of our common stock in private placement transactions exempt from the registration requirements of the United States Securities Act of 1933, as amended, during the nine months ended November 30, 2021. Statement of Cashflows The following table provides a summary of cash flows for the periods presented: For the nine months ended November 30, 2021 November 30, 2020 Net cash used in operating activities $ (5,122,691 ) $ (4,133,370 ) Net cash used in investing activities $ (13,776 ) $ (320,629 ) Net cash provided by financing activities $ 5,364,193 $ 5,226,207 Effect of exchange rates on cash & cash equivalents $ 38,005 $ 113,976 Net increase (decrease) in cash and cash equivalents $ 265,731 $ 886,184 Cash Flow used in Operating Activities Net cash used in operating activities increased by $989,321 in the nine months ended November 30, 2021 compared to the nine months ended November 30, 2020, primarily due to an increase in prepayment and deposit of ($2,798,735) (November 30, 2020: $814,310), increase in other receivable of ($646,529) (November 30, 2020: ($1,278,777)), increase in inventories of ($14,508) (November 30, 2020: ($1,380)), decrease in accounts payable of ($798,171) (November 30, 2020: $386,507), decrease in lease liability of ($3,191) (November 30, 2020: ($17,797)); offset by a decrease in account receivable of $760,120 (November 30, 2020: ($1,382,141)), and an increase in accrual and other payable of $1,156,637 (November 30, 2020: ($66,702)). Cash Flow used in Investing Activities During the nine months period ended November 30, 2021, investing activities decreased by $306,853 compared to nine months period ended November 30, 2020. Cash Flow provided by Financing Activities During the nine months period ended November 30, 2021, financing activities increased by $137,986 compared to the nine months period ended November 30, 2020, which was primarily due to the proceeds from issuance of shares of our common stock. - 35 - 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. Subsequent Events On December 28, 2021, the Company’s board of directors approved and granted in aggregate 4,545,500 stock options, of which 1,169,500 stock options were granted to certain directors and officers of the Company, having an exercise price of $8.00 per share and an expiry date of five years from the date of grant. The stock options have 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. On December 28, 2021, the Company shares of common stock were listed for trading on the Nasdaq Capital Market under the current trading symbol of “FNGR”. On January 7, 2022, the Company issued an aggregate of 55,000 shares of our common stock to two entities pursuant to consulting agreements. 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 Condensed 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 28, 2021. 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 28, 2021. 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. ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company as defined in Rule 12b-2 under the United States Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), the Company is not required to provide the information required by this item.