What changed in this filing

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Item 1A. Risk Factors

2022-07-15 compared with 2022-01-14 · 1123 added, 731 removed, 10 unchanged (99% of the section changed)

addition to the information contained in our Annual Report on Form 10-K for the fiscal year ended February 28, 2021, and this Quarterly

Report on Form 10-Q, we have identified the following material risks and uncertainties which reflect our outlook and conditions known

to us as of the date of this Quarterly Report.

These material risks and uncertainties should be carefully reviewed by our stockholders

and any potential investors in evaluating the Company, our business and the market value of our common stock.

Furthermore, any one of

these material risks and uncertainties has the potential to cause actual results, performance, achievements or events to be materially

different from any future results, performance, achievements or events implied, suggested or expressed by any forward-looking statements

made by us or by persons acting on our behalf.

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.

is no assurance that we will be successful in preventing the material adverse effects that any one or more of the following material

risks and uncertainties may cause on our business, prospects, financial condition and operating results, which may result in a significant

decrease in the market price of our common stock.

Furthermore, there is no assurance that these material risks and uncertainties represent

a complete list of the material risks and uncertainties facing us.

There may be additional risks and uncertainties of a material nature

that, as of the date of this Quarterly Report, we are unaware of or that we consider immaterial that may become material in the future,

any one or more of which may result in a material adverse effect on us.

You could lose all or a significant portion of your investment

due to any one of these material risks and uncertainties.

Related to the Business

have a limited operating history and, as a result, our past results may not be indicative of future operating performance.

have a limited operating history, which makes it difficult to forecast our future results.

You should not rely on our past results of

operations as indicators of future performance.

You should consider and evaluate our prospects in light of the risks and uncertainty

frequently encountered by companies like ours.

we fail to address the risks and difficulties that we face, including those described elsewhere in this Risk Factors

section, our business, financial condition and results of operations could be adversely affected.

Further, because we have limited historical

financial data and operate in an evolving market, any predictions about our future revenue and expenses may not be as accurate as they

would be if we had a longer operating history or operated in a more predictable market.

We have encountered in the past, and will encounter

in the future, risks and uncertainties frequently experienced by growing companies with limited operating histories in rapidly changing

If our assumptions regarding these risks and uncertainties are incorrect or change, or if we do not address these risks successfully,

our results of operations could differ materially from our expectations and our business, financial condition and results of operations

could be adversely affected.

have a history of net losses and we may not be able to achieve or maintain profitability in the future.

all annual periods of our operating history we have experienced net losses.

We generated a net loss of approximately $3.4 million during

the nine months period ended November 30, 2021 and net losses of approximately $4.3 million, $3.0 million and $2.9 million for the years

ended February 28, 2021, 2020 and 2019, respectively.

At November 30, 2021 and February 28, 2021, we had an accumulated deficit of approximately

$15.6 million and $12.2 million, respectively.

We have not achieved profitability, and we may not realize sufficient revenue to achieve

profitability in future periods.

Our expenses will likely increase in the future as we develop and launch new offerings and platform

features, expand in existing and new markets, increase our sales and marketing efforts and continue to invest in our platform.

efforts may be more costly than we expect and may not result in increased revenue or growth in our business.

If we are unable to generate

adequate revenue growth and manage our expenses, we may continue to incur significant losses in the future and may not be able to achieve

or maintain profitability.

we fail to effectively manage our growth, our business, financial condition and results of operations could be adversely affected.

are currently experiencing growth in our business.

This expansion increases the complexity of our business and has placed, and will continue

to place, strain on our management, personnel, operations, systems, technical performance, financial resources and internal financial

control and reporting functions.

Our ability to manage our growth effectively and to integrate new employees, technologies and acquisitions

into our existing business will require us to continue to expand our operational and financial infrastructure and to continue to retain,

attract, train, motivate and manage employees.

Continued growth could strain our ability to develop and improve our operational, financial

and management controls, enhance our reporting systems and procedures, recruit, train and retain highly skilled personnel and maintain

user satisfaction.

Additionally, if we do not effectively manage the growth of our business and operations, the quality of our offerings

could suffer, which could negatively affect our reputation and brand, business, financial condition and results of operations.

impact of the novel coronavirus (COVID-19) pandemic on the global economy, our operations and consumer demand for consumer goods and

services remains uncertain, which could have a material adverse impact on our business, results of operations and financial condition

and on the market price of our common shares.

December 2019, a strain of novel coronavirus (now commonly known as COVID-19) was reported to have surfaced in Wuhan, China.

has since spread rapidly throughout many countries, and, on March 11, 2020, the World Health Organization declared COVID-19 to be a pandemic.

In an effort to contain and mitigate the spread of COVID-19, many countries, including the United States, Canada and China, have imposed

unprecedented restrictions on travel, and there have been business closures and a substantial reduction in economic activity in countries

that have had significant outbreaks of COVID-19.

Although our operating subsidiaries and contractually controlled entity report that

is operation have not been materially affected at this point, significant uncertainty remains as to the potential impact of the COVID-19

pandemic on our operations and on the global economy as a whole.

It is currently not possible to predict how long the pandemic will last

or the time that it will take for economic activity to return to prior levels.

The COVID-19 pandemic has resulted in significant financial

market volatility and uncertainty over the last year or so.

A continuation or worsening of the levels of market disruption and volatility

seen in the recent past could have an adverse effect on our ability to access capital, on our business, results of operations and financial

condition, on the market price of our common shares, and on consumer demand for consumer services, including those offered by our Company.

depend on our key personnel and other highly skilled personnel, and if we fail to attract, retain, motivate or integrate our personnel,

In addition to the

information contained in our Annual Report on Form 10-K for the fiscal year ended February 28, 2022, and this Quarterly Report on Form

10-Q, we have identified the following material risks and uncertainties which reflect our outlook and conditions known to us as of the

date of this Quarterly Report.

These material risks and uncertainties should be carefully reviewed by our stockholders and any potential

investors in evaluating the Company, our business and the market value of our common stock.

Furthermore, any one of these material risks

and uncertainties has the potential to cause actual results, performance, achievements or events to be materially different from any future

results, performance, achievements or events implied, suggested or expressed by any forward-looking statements made by us or by persons

acting on our behalf.

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, 2022.

There is no assurance

that we will be successful in preventing the material adverse effects that any one or more of the following material risks and uncertainties

may cause on our business, prospects, financial condition and operating results, which may result in a significant decrease in the market

price of our common stock.

Furthermore, there is no assurance that these material risks and uncertainties represent a complete list of

the material risks and uncertainties facing us.

There may be additional risks and uncertainties of a material nature that, as of the date

of this Quarterly Report, we are unaware of or that we consider immaterial that may become material in the future, any one or more of

which may result in a material adverse effect on us.

You could lose all or a significant portion of your investment due to any one of

these material risks and uncertainties.

Risks Related to the Business

We have a limited operating history and, as

a result, our past results may not be indicative of future operating performance.

We have a limited operating history, which makes it

difficult to forecast our future results.

You should not rely on our past results of operations as indicators of future performance.

should consider and evaluate our prospects in light of the risks and uncertainty frequently encountered by companies like ours.

If we fail to address the risks and difficulties that

we face, including those described elsewhere in this “ Risk Factors ” section, our business, financial condition and

results of operations could be adversely affected.

Further, because we have limited historical financial data and operate in an evolving

market, any predictions about our future revenue and expenses may not be as accurate as they would be if we had a longer operating history

or operated in a more predictable market.

We have encountered in the past, and will encounter in the future, risks and uncertainties frequently

experienced by growing companies with limited operating histories in rapidly changing industries.

If our assumptions regarding these risks

and uncertainties are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially

from our expectations and our business, financial condition and results of operations could be adversely affected.

We have a history of net losses and we may not

be able to achieve or maintain profitability in the future.

For all annual periods of our operating history we

have experienced net losses.

We generated a net loss of approximately $1.44 million during the three-month period ended May 31, 2022 and

net losses of approximately $4.9 million, $4.3 million and $3.0 million for the years ended February 28, 2022, 2021 and 2020, respectively.

At May 31, 2022 and February 28, 2022, we had an accumulated deficit of approximately $18.6 million and $17.1 million, respectively.

have not achieved profitability, and we may not realize sufficient revenue to achieve profitability in future periods.

Our expenses will

likely increase in the future as we develop and launch new offerings and platform features, expand in existing and new markets, increase

our sales and marketing efforts and continue to invest in our platform.

These efforts may be more costly than we expect and may not result

in increased revenue or growth in our business.

If we are unable to generate adequate revenue growth and manage our expenses, we may continue

to incur significant losses in the future and may not be able to achieve or maintain profitability.

If we fail to effectively manage our growth,

our business, financial condition and results of operations could be adversely affected.

success depends in part on the continued service of our founders, senior management team, key technical employees and other highly skilled

personnel and on our ability to identify, hire, develop, motivate, retain and integrate highly qualified personnel for all areas of our

organization.

We may not be successful in attracting and retaining qualified personnel to fulfill our current or future needs.

Our competitors

may be successful in recruiting and hiring members of our management team or other key employees, and it may be difficult for us to find

suitable replacements on a timely basis, on competitive terms or at all.

If we are unable to attract and retain the necessary personnel,

particularly in critical areas of our business, we may not achieve our strategic goals.

concentration of earnings from two telecommunications companies may have a material adverse affect on our financial condition and results

of operations.

currently derive a substantial amount of our total revenue through contracts secured with China Unicom and China Mobile.

If we were to

lose the business of one or both of these mobile telecommunications companies, if either were to fail to fulfill its obligations to us,

if either were to experience difficulty in paying rebates to us on a timely basis, if either negotiated lower pricing terms, or if either

increased the number of licensed payment portals it permits to process its payments, it could have a material adverse effect on our competitive

position, business, financial condition, results of operations and cash flows.

Additionally, we cannot guarantee that the volume of revenue

we earn from China Unicom and China Mobile will remain consistent going forward.

Any substantial change in our relationships with either

China Unicom or China Mobile, or both, whether due to actions by our competitors, regulatory authorities, industry factors or otherwise,

could have a material adverse effect on our business, financial condition and results of operations.

actual or perceived security or privacy breach could interrupt our operations, harm our brand and adversely affect our reputation, brand,

business, financial condition and results of operations.

business involves the processing and transmission of our users personal and other sensitive data.

Because techniques used to obtain

unauthorized access to or to sabotage information systems change frequently and may not be known until launched against us, we may be

unable to anticipate or prevent these attacks.

Unauthorized parties may in the future gain access to our systems or facilities through

various means, including gaining unauthorized access into our systems or facilities or those of our service providers, partners or users

on our platform, or attempting to fraudulently induce our employees, service providers, partners, users or others into disclosing names,

passwords, payment information or other sensitive information, which may in turn be used to access our information technology systems,

or attempting to fraudulently induce our employees, partners or others into manipulating payment information, resulting in the fraudulent

transfer of funds to criminal actors.

In addition, users on our platform could have vulnerabilities on their own mobile devices that

are entirely unrelated to our systems and platform but could mistakenly attribute their own vulnerabilities to us.

Further, breaches

experienced by other companies may also be leveraged against us.

For example, credential stuffing attacks are becoming increasingly common

and sophisticated actors can mask their attacks, making them increasingly difficult to identify and prevent.

Certain efforts may be state-sponsored

or supported by significant financial and technological resources, making them even more difficult to detect.

we have developed systems and processes that are designed to protect our users data, prevent data loss and prevent other security

breaches, these security measures cannot guarantee security.

Our information technology and infrastructure may be vulnerable to cyberattacks

or security breaches;

also, employee error, malfeasance or other errors in the storage, use or transmission of personal information could

result in an actual or perceived privacy or security breach or other security incident.

actual or perceived breach of privacy or security could interrupt our operations, result in our platform being unavailable, result in

loss or improper disclosure of data, result in fraudulent transfer of funds, harm our reputation and brand, damage our relationships

with third-party partners, result in significant legal, regulatory and financial exposure and lead to loss of confidence in, or decreased

use of, our platform, any of which could adversely affect our business, financial condition and results of operations.

Any breach of

privacy or security impacting any entities with which we share or disclose data (including, for example, our third-party providers) could

have similar effects.

Additionally,

defending against claims or litigation based on any security breach or incident, regardless of their merit, could be costly and divert

managements attention.

We cannot be certain that our insurance coverage will be adequate for data handling or data security liabilities

actually incurred, that insurance will continue to be available to us on commercially reasonable terms, or at all, or that any insurer

will not deny coverage as to any future claim.

The successful assertion of one or more large claims against us that exceed available

insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible

or co-insurance requirements, could have an adverse effect on our reputation, brand, business, financial condition and results of operations.

failures and resulting interruptions in the availability of our platform or offerings could adversely affect our business, financial

condition and results of operations.

systems, or those of third parties upon which we rely, may experience service interruptions or degradation because of hardware and software

defects or malfunctions, distributed denial-of-service and other cyberattacks, human error, earthquakes, hurricanes, floods, fires, natural

disasters, power losses, disruptions in telecommunications services, fraud, military or political conflicts, terrorist attacks, computer

viruses, ransomware, malware or other events.

Our systems also may be subject to break-ins, sabotage, theft and intentional acts of vandalism,

including by our own employees.

Some of our systems are not fully redundant and our disaster recovery planning may not be sufficient

for all eventualities.

Our business interruption insurance may not be sufficient to cover all of our losses that may result from interruptions

in our service as a result of systems failures and similar events.

have not experienced any system failures or other events or conditions that have interrupted the availability or reduced or affected

the speed or functionality of our offerings.

These events, were they to occur in the future, could adversely affect our business, reputation,

results of operations and financial condition.

successful operation of our business depends upon the performance and reliability of Internet, mobile, and other infrastructures that

are not under our control.

business depends on the performance and reliability of Internet, mobile and other infrastructures that are not under our control.

in Internet infrastructure or the failure of telecommunications network operators to provide us with the bandwidth we need to provide

our services and offerings could interfere with the speed and availability of our platform.

If our platform is unavailable when platform

users attempt to access it, or if our platform does not load as quickly as platform users expect, platform users may not return to our

platform as often in the future, or at all, and may use our competitors products or offerings more often.

In addition, we have

no control over the costs of the services provided by national telecommunications operators.

If mobile Internet access fees or other

charges to Internet users increase, consumer traffic may decrease, which may in turn cause our revenue to significantly decrease.

business depends on the efficient and uninterrupted operation of mobile communications systems.

The occurrence of an unanticipated problem,

such as a power outage, telecommunications delay or failure, security breach or computer virus could result in delays or interruptions

to our services, offerings and platform, as well as business interruptions for us and platform users.

Furthermore, foreign governments

may leverage their ability to shut down directed services, and local governments may shut down our platform at the routing level.

of these events could damage our reputation, significantly disrupt our operations, and subject us to liability, which could adversely

affect our business, financial condition and operating results.

We have invested significant resources to develop new products to mitigate

the impact of potential interruptions to mobile communications systems, which can be used by consumers in territories where mobile communications

systems are less efficient.

However, these products may ultimately be unsuccessful.

may be subject to claims, lawsuits, government investigations and other proceedings that may adversely affect our business, financial

We are currently experiencing growth in our business.

This expansion increases the complexity of our business and has placed, and will continue to place, strain on our management, personnel,

operations, systems, technical performance, financial resources and internal financial control and reporting functions.

Our ability to

manage our growth effectively and to integrate new employees, technologies and acquisitions into our existing business will require us

to continue to expand our operational and financial infrastructure and to continue to retain, attract, train, motivate and manage employees.

Continued growth could strain our ability to develop and improve our operational, financial and management controls, enhance our reporting

systems and procedures, recruit, train and retain highly skilled personnel and maintain user satisfaction.

Additionally, if we do not

effectively manage the growth of our business and operations, the quality of our offerings could suffer, which could negatively affect

our reputation and brand, business, financial condition and results of operations.

The impact of the novel coronavirus (COVID-19)

pandemic on the global economy, our operations and consumer demand for consumer goods and services remains uncertain, which could have

a material adverse impact on our business, results of operations and financial condition and on the market price of our common shares.

In December 2019, a strain of novel coronavirus (now

commonly known as COVID-19) was reported to have surfaced in Wuhan, China.

COVID-19 has since spread rapidly throughout many countries,

and, on March 12, 2020, the World Health Organization declared COVID-19 to be a pandemic.

In an effort to contain and mitigate the spread

of COVID-19, many countries, including the United States, Canada and China, have imposed unprecedented restrictions on travel, and there

have been business closures and a substantial reduction in economic activity in countries that have had significant outbreaks of COVID-19.

Although our operating subsidiaries and contractually controlled entity report that is operation have not been materially affected at

this point, significant uncertainty remains as to the potential impact of the COVID-19 pandemic on our operations and on the global economy

It is currently not possible to predict how long the pandemic will last or the time that it will take for economic activity

to return to prior levels.

The COVID-19 pandemic has resulted in significant financial market volatility and uncertainty in recent weeks.

A continuation or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on

our ability to access capital, on our business, results of operations and financial condition, on the market price of our common shares,

and on consumer demand for consumer services, including those offered by our Company.

We depend on our key personnel and other highly

skilled personnel, and if we fail to attract, retain, motivate or integrate our personnel, our business, financial condition and results

of operations could be adversely affected.

Our success depends in part on the continued service

of our founders, senior management team, key technical employees and other highly skilled personnel and on our ability to identify, hire,

develop, motivate, retain and integrate highly qualified personnel for all areas of our organization.

We may not be successful in attracting

and retaining qualified personnel to fulfill our current or future needs.

Our competitors may be successful in recruiting and hiring members

of our management team or other key employees, and it may be difficult for us to find suitable replacements on a timely basis, on competitive

terms or at all.

If we are unable to attract and retain the necessary personnel, particularly in critical areas of our business, we may

not achieve our strategic goals.

Our concentration of earnings from two telecommunications

companies may have a material adverse affect on our financial condition and results of operations.

We currently derive a substantial amount of our total

revenue through contracts secured with China Unicom and China Mobile.

If we were to lose the business of one or both of these mobile telecommunications

companies, if either were to fail to fulfill its obligations to us, if either were to experience difficulty in paying rebates to us on

a timely basis, if either negotiated lower pricing terms, or if either increased the number of licensed payment portals it permits to

process its payments, it could have a material adverse effect on our competitive position, business, financial condition, results of operations

and cash flows.

Additionally, we cannot guarantee that the volume of revenue we earn from China Unicom and China Mobile will remain consistent

going forward.

Any substantial change in our relationships with either China Unicom or China Mobile, or both, whether due to actions by

our competitors, regulatory authorities, industry factors or otherwise, could have a material adverse effect on our business, financial

condition and results of operations.

may be subject to claims, lawsuits, arbitration proceedings, government investigations and other legal and regulatory proceedings as

our business grows and as we deploy new offerings, including proceedings related to our products or our acquisitions, securities issuances

or business practices.

The results of any such claims, lawsuits, arbitration proceedings, government investigations or other legal or

regulatory proceedings cannot be predicted with certainty.

Any claims against us, whether meritorious or not, could be time-consuming,

result in costly litigation, be harmful to our reputation, require significant management attention and divert significant resources.

Determining reserves for litigation is a complex and fact-intensive process that requires significant subjective judgment and speculation.

It is possible that such proceedings could result in substantial damages, settlement costs, fines and penalties that could adversely

affect our business, financial condition and results of operations.

These proceedings could also result in harm to our reputation and

brand, sanctions, consent decrees, injunctions or other orders requiring a change in our business practices.

Any of these consequences

could adversely affect our business, financial condition and results of operations.

Furthermore, under certain circumstances, we have

contractual and other legal obligations to indemnify and to incur legal expenses on behalf of our business and commercial partners and

current and former directors and officers.

may require additional funding to support our business.

grow our business, FingerMotion currently looks to take advantage of the immense mobile phone payment market, estimated at a monthly

gross transaction volume (GTV) is estimated at US$153 billion in 2019 and is expected to increase to US$165 billion by 2024 (source:

https://telecomstechnews.com/news/2019/nov/21/total-mobile-service-revenue-china-hit-165bn-end-2024-reveals-globaldata/ ).

the Company to continue to grow, the deposit with the Telecoms needs to increase, as the GTV we process is dependent on the size of the

deposit we have with each Telecom.

We will likely need to raise additional capital to materially increase the amounts of these deposits.

If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences

or privileges senior to those of our common stock, and our existing stockholders may experience dilution.

Any debt financing secured

by us in the future could involve restrictive covenants relating to our capital-raising activities and other financial and operational

matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities.

We cannot be certain

that additional funding will be available to us on favorable terms, or at all.

If we are unable to obtain adequate funding or funding

on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges

could be significantly limited, and our business, financial condition and results of operations could be adversely affected.

by others that we infringed their proprietary technology or other intellectual property rights could harm our business.

in the Internet and technology industries are frequently subject to litigation based on allegations of infringement or other violations

of intellectual property rights.

In addition, certain companies and rights holders seek to enforce and monetize patents or other intellectual

property rights they own, have purchased or otherwise obtained.

As we gain a public profile and the number of competitors in our market

increases, the possibility of intellectual property rights claims against us grows.

From time to time, third parties may assert claims

of infringement of intellectual property rights against us.

Many potential litigants, including some of our competitors and patent-holding

companies, have the ability to dedicate substantial resources to assert their intellectual property rights.

Any claim of infringement

by a third party, even those without merit, could cause us to incur substantial costs defending against the claim, could distract our

management from our business and could require us to cease use of such intellectual property.

Furthermore, because of the substantial

amount of discovery required in connection with intellectual property litigation, we risk compromising our confidential information during

this type of litigation.

We may be required to pay substantial damages, royalties or other fees in connection with a claimant securing

a judgment against us, we may be subject to an injunction or other restrictions that prevent us from using or distributing our intellectual

property, or we may agree to a settlement that prevents us from distributing our offerings or a portion thereof, which could adversely

affect our business, financial condition and results of operations.

respect to any intellectual property rights claim, we may have to seek out a license to continue operations found to be in violation

of such rights, which may not be available on favorable or commercially reasonable terms and may significantly increase our operating

Some licenses may be non-exclusive, and therefore our competitors may have access to the same technology licensed to us.

a third party does not offer us a license to its intellectual property on reasonable terms, or at all, we may be required to develop

alternative, non-infringing technology, which could require significant time (during which we would be unable to continue to offer our

affected offerings), effort and expense and may ultimately not be successful.

Any of these events could adversely affect our business,

Any actual or perceived security or privacy

breach could interrupt our operations, harm our brand and adversely affect our reputation, brand, business, financial condition and results

of operations.

Our business involves the processing and transmission

of our users’ personal and other sensitive data.

Because techniques used to obtain unauthorized access to or to sabotage information

systems change frequently and may not be known until launched against us, we may be unable to anticipate or prevent these attacks.

parties may in the future gain access to our systems or facilities through various means, including gaining unauthorized access into our

systems or facilities or those of our service providers, partners or users on our platform, or attempting to fraudulently induce our employees,

service providers, partners, users or others into disclosing names, passwords, payment information or other sensitive information, which

may in turn be used to access our information technology systems, or attempting to fraudulently induce our employees, partners or others

into manipulating payment information, resulting in the fraudulent transfer of funds to criminal actors.

In addition, users on our platform

could have vulnerabilities on their own mobile devices that are entirely unrelated to our systems and platform but could mistakenly attribute

their own vulnerabilities to us.

Further, breaches experienced by other companies may also be leveraged against us.

For example, credential

stuffing attacks are becoming increasingly common and sophisticated actors can mask their attacks, making them increasingly difficult

to identify and prevent.

Certain efforts may be state-sponsored or supported by significant financial and technological resources, making

them even more difficult to detect.

Although we have developed systems and processes that

are designed to protect our users’ data, prevent data loss and prevent other security breaches, these security measures cannot guarantee

Our information technology and infrastructure may be vulnerable to cyberattacks or security breaches;

also, employee error,

malfeasance or other errors in the storage, use or transmission of personal information could result in an actual or perceived privacy

or security breach or other security incident.

Any actual or perceived breach of privacy or security

could interrupt our operations, result in our platform being unavailable, result in loss or improper disclosure of data, result in fraudulent

transfer of funds, harm our reputation and brand, damage our relationships with third-party partners, result in significant legal, regulatory

and financial exposure and lead to loss of confidence in, or decreased use of, our platform, any of which could adversely affect our business,

financial condition and results of operations.

Related to Our Securities

stock has limited liquidity.

common stock began trading on the Nasdaq Capital Market on December 28, 2021, and before that it traded on the OTCQX operated by OTC

Markets Group Inc.

Trading volume in our shares may be sporadic and the price could experience volatility.

If adverse market conditions

exist, you may have difficulty selling your shares.

market price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, including

the following:

or anticipated fluctuations in our operating results;

in financial estimates by securities analysts or our failure to perform in line with such estimates;

in market valuations of other companies, particularly those that market services such as ours;

● announcements

by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures or capital commitments;

● introduction

of product enhancements that reduce the need for our products;

of key personnel.

do not intend to pay dividends for the foreseeable future.

have never declared nor paid cash dividends on our capital stock.

We currently intend to retain any future earnings to finance the operation

and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future.

As a result, stockholders

must rely on sales of their common stock after price appreciation as the only way to realize any future gains on their investment.

securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market

price and trading volume of our common stock could decline.

trading market for our common stock may depend in part on the research and reports that securities or industry analysts publish about

us, our business, our market or our competition.

The analysts estimates are based upon their own opinions and are often different

from our estimates or expectations.

If one or more of the analysts who cover us downgrade our common stock, provide a more favorable

recommendation about our competitors or publish inaccurate or unfavorable research about our business, the price of our securities would

likely decline.

If few securities analysts commence coverage of us, or if one or more of these analysts cease coverage of us or fail

to publish reports on us regularly, demand for our securities could decrease, which might cause the price and trading volume of our common

stock to decline.

continued sale of our equity securities will dilute the ownership percentage of our existing shareholders and may decrease the market

price for our common shares.

Certificate of Incorporation, as amended, authorize the issuance of up to 200,000,000 shares of common stock and up to 1,000,000 shares

of preferred stock.

Our Board of Directors has the authority to issue additional shares of our capital stock to provide additional financing

in the future and designate the rights of the preferred shares, which may include voting, dividend, distribution or other rights that

are preferential to those held by the common stockholders.

The issuance of any such common or preferred shares may result in a reduction

of the book value or market price of our outstanding common shares.

To grow our business substantially, we will likely have to issue

additional equity securities to obtain working capital to deposit with the telecommunications companies for which we process mobile recharge

Our efforts to fund our intended business plans will therefore result in dilution to our existing stockholders.

If we do issue

any such additional common shares, such issuance also will cause a reduction in the proportionate ownership and voting power of all other

stockholders.

As a result of such dilution, if you acquire common shares your proportionate ownership interest and voting power could

be decreased.

Furthermore, any such issuances could result in a change of control or a reduction in the market price for our common shares.

we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce

timely and accurate financial statements or comply with applicable regulations could be impaired.

a public company, we are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002.

The Sarbanes-Oxley

Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.

We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required

to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods

specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated

to our principal executive and financial officers.

Any breach of privacy or security impacting any entities with which we share or disclose

data (including, for example, our third-party providers) could have similar effects.

Additionally, defending against claims or litigation

based on any security breach or incident, regardless of their merit, could be costly and divert management’s attention.

be certain that our insurance coverage will be adequate for data handling or data security liabilities actually incurred, that insurance

will continue to be available to us on commercially reasonable terms, or at all, or that any insurer will not deny coverage as to any

future claim.

The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence

of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements,

could have an adverse effect on our reputation, brand, business, financial condition and results of operations.

Systems failures and resulting interruptions in the availability

of our platform or offerings could adversely affect our business, financial condition and results of operations.

Our systems, or those of third parties upon which

we rely, may experience service interruptions or degradation because of hardware and software defects or malfunctions, distributed denial-of-service

and other cyberattacks, human error, earthquakes, hurricanes, floods, fires, natural disasters, power losses, disruptions in telecommunications

services, fraud, military or political conflicts, terrorist attacks, computer viruses, ransomware, malware or other events.

also may be subject to break-ins, sabotage, theft and intentional acts of vandalism, including by our own employees.

Some of our systems

are not fully redundant and our disaster recovery planning may not be sufficient for all eventualities.

Our business interruption insurance

may not be sufficient to cover all of our losses that may result from interruptions in our service as a result of systems failures and

similar events.

We have not experienced any system failures or other

events or conditions that have interrupted the availability or reduced or affected the speed or functionality of our offerings.

events, were they to occur in the future, could adversely affect our business, reputation, results of operations and financial condition.

The successful operation of our business depends

upon the performance and reliability of Internet, mobile, and other infrastructures that are not under our control.

Our business depends on the performance and reliability

of Internet, mobile and other infrastructures that are not under our control.

Disruptions in Internet infrastructure or the failure of

telecommunications network operators to provide us with the bandwidth we need to provide our services and offerings could interfere with

the speed and availability of our platform.

If our platform is unavailable when platform users attempt to access it, or if our platform

does not load as quickly as platform users expect, platform users may not return to our platform as often in the future, or at all, and

may use our competitors’ products or offerings more often.

In addition, we have no control over the costs of the services provided

by national telecommunications operators.

If mobile Internet access fees or other charges to Internet users increase, consumer traffic

may decrease, which may in turn cause our revenue to significantly decrease.

Our business depends on the efficient and uninterrupted

operation of mobile communications systems.

The occurrence of an unanticipated problem, such as a power outage, telecommunications delay

or failure, security breach or computer virus could result in delays or interruptions to our services, offerings and platform, as well

as business interruptions for us and platform users.

Furthermore, foreign governments may leverage their ability to shut down directed

services, and local governments may shut down our platform at the routing level.

Any of these events could damage our reputation, significantly

disrupt our operations, and subject us to liability, which could adversely affect our business, financial condition and operating results.

We have invested significant resources to develop new products to mitigate the impact of potential interruptions to mobile communications

systems, which can be used by consumers in territories where mobile communications systems are less efficient.

However, these products

may ultimately be unsuccessful.

We may be subject to claims, lawsuits, government

investigations and other proceedings that may adversely affect our business, financial condition and results of operations .

We may be subject to claims, lawsuits, arbitration

proceedings, government investigations and other legal and regulatory proceedings as our business grows and as we deploy new offerings,

including proceedings related to our products or our acquisitions, securities issuances or business practices.

The results of any such

claims, lawsuits, arbitration proceedings, government investigations or other legal or regulatory proceedings cannot be predicted with

Any claims against us, whether meritorious or not, could be time-consuming, result in costly litigation, be harmful to our

reputation, require significant management attention and divert significant resources.

Determining reserves for litigation is a complex

and fact-intensive process that requires significant subjective judgment and speculation.

It is possible that such proceedings could result

in substantial damages, settlement costs, fines and penalties that could adversely affect our business, financial condition and results

of operations.

These proceedings could also result in harm to our reputation and brand, sanctions, consent decrees, injunctions or other

orders requiring a change in our business practices.

Any of these consequences could adversely affect our business, financial condition

and results of operations.

Furthermore, under certain circumstances, we have contractual and other legal obligations to indemnify and

to incur legal expenses on behalf of our business and commercial partners and current and former directors and officers.

We may require additional funding to support

our business.

To grow our business, FingerMotion currently looks

to take advantage of the immense growth in the telecommunication industry in China.

The combined business revenue in the telecom sector

rose 8% year on year to about USD232.43 billion in 2021, with the growth rate up 4.1 percentage point from 2020.

https://english.news.cn/20220201/da5fa2c2aa614d948e960e7776f84c76/c.html).

For the Company to continue to grow, the deposit with the Telecoms needs to increase, as most of the revenue we process is dependent on

the size of the deposit we have with each Telecom.

We will likely need to raise additional capital to materially increase the amounts

of these deposits.

If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may

have rights, preferences or privileges senior to those of our common stock, and our existing stockholders may experience dilution.

debt financing secured by us in the future could involve restrictive covenants relating to our capital-raising activities and other financial

and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities.

cannot be certain that additional funding will be available to us on favorable terms, or at all.

If we are unable to obtain adequate funding

or funding on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business

challenges could be significantly limited, and our business, financial condition and results of operations could be adversely affected.

Claims by others that we infringed their proprietary

technology or other intellectual property rights could harm our business.

Companies in the Internet and technology industries

are frequently subject to litigation based on allegations of infringement or other violations of intellectual property rights.

certain companies and rights holders seek to enforce and monetize patents or other intellectual property rights they own, have purchased

or otherwise obtained.

As we gain a public profile and the number of competitors in our market increases, the possibility of intellectual

property rights claims against us grows.

From time to time, third parties may assert claims of infringement of intellectual property rights

Many potential litigants, including some of our competitors and patent-holding companies, have the ability to dedicate substantial

resources to assert their intellectual property rights.

Any claim of infringement by a third party, even those without merit, could cause

us to incur substantial costs defending against the claim, could distract our management from our business and could require us to cease

use of such intellectual property.

Furthermore, because of the substantial amount of discovery required in connection with intellectual

property litigation, we risk compromising our confidential information during this type of litigation.

We may be required to pay substantial

damages, royalties or other fees in connection with a claimant securing a judgment against us, we may be subject to an injunction or other

restrictions that prevent us from using or distributing our intellectual property, or we may agree to a settlement that prevents us from

distributing our offerings or a portion thereof, which could adversely affect our business, financial condition and results of operations.

With respect to any intellectual property rights claim,

we may have to seek out a license to continue operations found to be in violation of such rights, which may not be available on favorable

or commercially reasonable terms and may significantly increase our operating expenses.

Some licenses may be non-exclusive, and therefore

our competitors may have access to the same technology licensed to us.

If a third party does not offer us a license to its intellectual

property on reasonable terms, or at all, we may be required to develop alternative, non-infringing technology, which could require significant

time (during which we would be unable to continue to offer our affected offerings), effort and expense and may ultimately not be successful.

Any of these events could adversely affect our business, financial condition and results of operations.

Risks Related to Our Securities

Our stock has limited liquidity.

Our common stock began trading on the Nasdaq Capital

Market on December 28, 2021, and before that it traded on the OTCQX operated by OTC Markets Group Inc.

Trading volume in our shares may

be sporadic and the price could experience volatility.

If adverse market conditions exist, you may have difficulty selling your shares.

The market price of our common stock may fluctuate

significantly in response to numerous factors, some of which are beyond our control, including the following:

actual or anticipated fluctuations in our operating results;

changes in financial estimates by securities analysts or our failure to perform in line with such estimates;

changes in market valuations of other companies, particularly those that market services such as ours;

announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures or capital commitments;

introduction of product enhancements that reduce the need for our products;

departure of key personnel;

changes in overall global market sentiments and economy trends

We do not intend to pay dividends for the foreseeable

We have never declared nor paid cash dividends on

our capital stock.

We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do

not expect to declare or pay any dividends in the foreseeable future.

As a result, stockholders must rely on sales of their common stock

after price appreciation as the only way to realize any future gains on their investment.

If securities or industry analysts do not publish

research or publish inaccurate or unfavorable research about our business, the market price and trading volume of our common stock could

The trading market for our common stock may depend

in part on the research and reports that securities or industry analysts publish about us, our business, our market or our competition.

The analysts’ estimates are based upon their own opinions and are often different from our estimates or expectations.

more of the analysts who cover us downgrade our common stock, provide a more favorable recommendation about our competitors or publish

inaccurate or unfavorable research about our business, the price of our securities would likely decline.

If few securities analysts commence

coverage of us, or if one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our securities

could decrease, which might cause the price and trading volume of our common stock to decline.

The continued

sale of our equity securities will dilute the ownership percentage of our existing shareholders and may decrease the market price for

our common shares.

Our Certificate

of Incorporation, as amended, authorize the issuance of up to 200,000,000 shares of common stock and up to 1,000,000 shares of preferred

Our Board of Directors has the authority to issue additional shares of our capital stock to provide additional financing in the

future and designate the rights of the preferred shares, which may include voting, dividend, distribution or other rights that are preferential

to those held by the common stockholders.

The issuance of any such common or preferred shares may result in a reduction of the book value

or market price of our outstanding common shares.

To grow our business substantially, we will likely have to issue additional equity securities

to obtain working capital to deposit with the telecommunications companies for which we process mobile recharge payments.

to fund our intended business plans will therefore result in dilution to our existing stockholders.

If we do issue any such additional

common shares, such issuance also will cause a reduction in the proportionate ownership and voting power of all other stockholders.

a result of such dilution, if you acquire common shares your proportionate ownership interest and voting power could be decreased.

any such issuances could result in a change of control or a reduction in the market price for our common shares.

If we fail to maintain an effective system

of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements

or comply with applicable regulations could be impaired.

As a public company, we are subject to the reporting

requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002.

The Sarbanes-Oxley Act requires, among other things, that we maintain

effective disclosure controls and procedures and internal control over financial reporting.

We are continuing to develop and refine our

disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that

we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and

that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive

and financial officers.

We are also continuing to improve our internal control over financial reporting.

have expended, and anticipate that we will continue to expend, significant resources in order to maintain and improve the effectiveness

of our disclosure controls and procedures and internal control over financial reporting.

current controls and any new controls that we develop may become inadequate because of changes in the conditions in our business.

weaknesses in our disclosure controls or our internal control over financial reporting may be discovered in the future.

Any failure to

develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our results

of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior

Any failure to implement and maintain effective internal control over financial reporting could also adversely affect the results

of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness

of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be

filed with the SEC.

Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors

to lose confidence in our reported financial and other information, which would likely adversely affect the market price of our common

Industry Regulatory Authority (FINRA) sales practice requirements may also limit a stockholders ability to buy and

sell our shares of common stock, which could depress the price of our shares of common stock.

rules require broker-dealers to have reasonable grounds for believing that the investment is suitable for a customer before recommending

that investment to the customer.

Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers

must make reasonable efforts to obtain information about the customers financial status, tax status, investment objectives, and

other information.

Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced

securities will not be suitable for at least some customers.

Thus, if our shares of common stock become speculative low-priced securities,

the FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our shares of common stock, which

may limit your ability to buy and sell our shares of common stock, have an adverse effect on the market for our shares of common stock,

and thereby depress our price per share of common stock.

shares of common stock have been thinly traded, and you may be unable to sell at or near ask prices or at all if you need to sell your

shares of common stock to raise money or otherwise desire to liquidate your shares.

December 28, 2021, our shares of common stock were quoted on the OTCQB/QX where they were thinly-traded, meaning that the

number of persons interested in purchasing our shares of common stock at or near bid prices at any given time was relatively small or

non-existent.

Since we listed on the Nasdaq Capital Market on December 28, 2021, the volume of our shares of common stock traded has

increased, but that volume could decrease until we are thinly-traded again.

That could occur due to a number of factors, including that

we are relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate

or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and might be reluctant

to follow an unproven company such as ours or purchase or recommend the purchase of our shares of common stock until such time as we

became more seasoned.

As a consequence, there may be periods of several days or more when trading activity in our shares of common stock

is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally

support continuous sales without an adverse effect on share price.

Broad or active public trading market for our shares of common stock

may not develop or be sustained.

Related to the VIE Agreements

PRC government may determine that the VIE Agreements are not in compliance with applicable PRC laws, rules and regulations

Management manages and operates the mobile data business through JiuGe Technology pursuant to the rights its holds under the VIE Agreements.

Almost all economic benefits and risks arising from JiuGe Technologys operations are transferred to JiuGe Management under these

are risks involved with the operation of our business in reliance on the VIE Agreements, including the risk that the VIE Agreements may

be determined by PRC regulators or courts to be unenforceable.

Our PRC counsel has provided a legal opinion that the VIE Agreements are

binding and enforceable under PRC law, but has further advised that if the VIE Agreements were for any reason determined to be in breach

of any existing or future PRC laws or regulations, the relevant regulatory authorities would have broad discretion in dealing with such

breach, including:

economic penalties;

● discontinuing

or restricting the operations of JiuGe Technology or JiuGe Management;

conditions or requirements in respect of the VIE Agreements with which JiuGe Technology or JiuGe Management may not be able to comply;

our company to restructure the relevant ownership structure or operations;

other regulatory or enforcement actions that could adversely affect our companys business;

the business licenses and/or the licenses or certificates of JiuGe Management, and/or voiding the VIE Agreements.

of these actions could adversely affect our ability to manage, operate and gain the financial benefits of JiuGe Technology, which would

have a material adverse impact on our business, financial condition and results of operations.

ability to manage and operate JiuGe Technology under the VIE Agreements may not be as effective as direct ownership.

conduct our mobile data business in the PRC and generate virtually all of our revenues through the VIE Agreements.

Our plans for future

growth are based substantially on growing the operations of JiuGe Technology.

However, the VIE Agreements may not be as effective in

providing us with control over JiuGe Technology as direct ownership.

Under the current VIE arrangements, as a legal matter, if JiuGe

Technology fails to perform its obligations under these contractual arrangements, we may have to (i) incur substantial costs and resources

to enforce such arrangements, and (ii) rely on legal remedies under PRC law, which we cannot be sure would be effective.

Therefore, if

we are unable to effectively control JiuGe Technology, it may have an adverse effect on our ability to achieve our business objectives

and grow our revenues.

the VIE Agreements are governed by PRC law, we would be required to rely on PRC law to enforce our rights and remedies under them;

law may not provide us with the same rights and remedies as are available in contractual disputes governed by the law of other jurisdictions.

VIE Agreements are governed by the PRC law and provide for the resolution of disputes through arbitral proceedings pursuant to PRC law.

If JiuGe Technology or its shareholders fail to perform the obligations under the VIE Agreements, we would be required to resort to legal

remedies available under PRC law, including seeking specific performance or injunctive relief, or claiming damages.

We cannot be sure

that such remedies would provide us with effective means of causing JiuGe Technology to meet its obligations or recovering any losses

or damages as a result of non-performance.

Further, the legal environment in China is not as developed as in other jurisdictions.

Uncertainties

in the application of various laws, rules, regulations or policies in PRC legal system could limit our liability to enforce the VIE Agreements

and protect our interests.

payment arrangement under the VIE Agreements may be challenged by the PRC tax authorities.

generate our revenues through the payments we receive pursuant to the VIE Agreements.

We could face adverse tax consequences if the PRC

tax authorities determine that the VIE Agreements were not entered into based on arms length negotiations.

For example, PRC tax

authorities may adjust our income and expenses for PRC tax purposes which could result in our being subject to higher tax liability or

cause other adverse financial consequences.

of JiuGe Technology have potential conflicts of interest with our company which may adversely affect our business.

Li is the legal representative and general manager, and also a shareholder of JiuGe Technology.

There could be conflicts that arise from

time to time between our interests and the interests of Ms.

There could also be conflicts that arise between us and JiuGe Technology

that would require our shareholders and JiuGe Technologys shareholders to vote on corporate actions necessary to resolve the conflict.

There can be no assurance in any such circumstances that Ms.

Li will vote her shares in our best interest or otherwise act in the best

interests of our company.

Li fails to act in our best interests, our operating performance and future growth could be adversely

rely on the approval certificates and business license held by JiuGe Management and any deterioration of the relationship between JiuGe

Management and JiuGe Technology could materially and adversely affect our business operations.

operate our mobile data business in China on the basis of the approval certificates, business license and other requisite licenses held

by JiuGe Management and JiuGe Technology.

There is no assurance that JiuGe Management and JiuGe Technology will be able to renew their

licenses or certificates when their terms expire with substantially similar terms as the ones they currently hold.

our relationship with JiuGe Technology is governed by the VIE Agreements that are intended to provide us with effective control over

the business operations of JiuGe Technology.

However, the VIE Agreements may not be effective in providing control over the application

for and maintenance of the licenses required for our business operations.

JiuGe Technology could violate the VIE Agreements, go bankrupt,

suffer from difficulties in its business or otherwise become unable to perform its obligations under the VIE Agreements and, as a result,

our operations, reputations and business could be severely harmed.

JiuGe Management exercises the purchase option it holds over JiuGe Technologys share capital pursuant to the VIE Agreements, the

payment of the purchase price could materially and adversely affect our financial position.

the VIE Agreements, JiuGe Technologys shareholders have granted JiuGe Management an option for the maximum period of time permitted

by law to purchase all of the equity interest in JiuGe Technology at a price equal to one dollar or the lowest applicable price allowable

by PRC laws and regulations.

As JiuGe Technology is already our contractually controlled affiliate, JiuGe Managements exercising

of the option would not bring immediate benefits to our company, and payment of the purchase prices could adversely affect our financial

Related to Doing Business in China

in Chinas political or economic situation could harm us and our operating results.

reforms adopted by the Chinese government have had a positive effect on the economic development of the country, but the government could

change these economic reforms or any of the legal systems at any time.

We have expended, and anticipate

that we will continue to expend, significant resources in order to maintain and improve the effectiveness of our disclosure controls and

procedures and internal control over financial reporting.

Our current controls and any new controls that we

develop may become inadequate because of changes in the conditions in our business.

Further, weaknesses in our disclosure controls or

our internal control over financial reporting may be discovered in the future.

Any failure to develop or maintain effective controls,

or any difficulties encountered in their implementation or improvement, could harm our results of operations or cause us to fail to meet

our reporting obligations and may result in a restatement of our financial statements for prior periods.

Any failure to implement and

maintain effective internal control over financial reporting could also adversely affect the results of periodic management evaluations

and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over

financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.

disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our

reported financial and other information, which would likely adversely affect the market price of our common stock

Financial Industry Regulatory Authority (“FINRA”)

sales practice requirements may also limit a stockholder’s ability to buy and sell our shares of common stock, which could depress

the price of our shares of common stock.

FINRA rules require broker-dealers to have reasonable

grounds for believing that the investment is suitable for a customer before recommending that investment to the customer.

Prior to recommending

speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information

about the customer’s financial status, tax status, investment objectives, and other information.

Under interpretations of these

rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers.

Thus, if our shares of common stock become speculative low-priced securities, the FINRA requirements make it more difficult for broker-dealers

to recommend that their customers buy our shares of common stock, which may limit your ability to buy and sell our shares of common stock,

have an adverse effect on the market for our shares of common stock, and thereby depress our price per share of common stock.

Our shares of common

stock have been thinly traded, and you may be unable to sell at or near ask prices or at all if you need to sell your shares of common

stock to raise money or otherwise desire to liquidate your shares.

Until December 28, 2021,

our shares of common stock were quoted on the OTCQB/QX where they were “thinly-traded”, meaning that the number of persons

interested in purchasing our shares of common stock at or near bid prices at any given time was relatively small or non-existent.

we listed on the Nasdaq Capital Market on December 28, 2021, the volume of our shares of common stock traded has increased, but that volume

could decrease until we are thinly-traded again.

That could occur due to a number of factors, including that we are relatively unknown

to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume,

and that even if we came to the attention of such persons, they tend to be risk-averse and might be reluctant to follow an unproven company

such as ours or purchase or recommend the purchase of our shares of common stock until such time as we became more seasoned.

As a consequence,

there may be periods of several days or more when trading activity in our shares of common stock is minimal or non-existent, as compared

to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse

effect on share price.

Broad or active public trading market for our shares of common stock may not develop or be sustained.

Risks Related to the VIE Agreements

The PRC government may determine that the VIE

Agreements are not in compliance with applicable PRC laws, rules and regulations

JiuGe Management manages and operates the mobile data

business through JiuGe Technology pursuant to the rights its holds under the VIE Agreements.

Almost all economic benefits and risks arising

from JiuGe Technology’s operations are transferred to JiuGe Management under these agreements.

There are risks involved with the operation of our

business in reliance on the VIE Agreements, including the risk that the VIE Agreements may be determined by PRC regulators or courts to

be unenforceable.

Our PRC counsel has provided a legal opinion that the VIE Agreements are binding and enforceable under PRC law, but

has further advised that if the VIE Agreements were for any reason determined to be in breach of any existing or future PRC laws or regulations,

the relevant regulatory authorities would have broad discretion in dealing with such breach, including:

imposing economic penalties;

discontinuing or restricting the operations of JiuGe Technology or JiuGe Management;

imposing conditions or requirements in respect of the VIE Agreements with which JiuGe Technology or JiuGe Management may not be able to comply;

requiring our company to restructure the relevant ownership structure or operations;

taking other regulatory or enforcement actions that could adversely affect our company’s business;

revoking the business licenses and/or the licenses or certificates of JiuGe Management, and/or voiding the VIE Agreements.

Any of these actions could adversely affect our ability

to manage, operate and gain the financial benefits of JiuGe Technology, which would have a material adverse impact on our business, financial

condition and results of operations.

Our ability to manage and operate JiuGe Technology

under the VIE Agreements may not be as effective as direct ownership.

We conduct our mobile data business in the PRC and

generate virtually all of our revenues through the VIE Agreements.

Our plans for future growth are based substantially on growing the

operations of JiuGe Technology.

However, the VIE Agreements may not be as effective in providing us with control over JiuGe Technology

as direct ownership.

Under the current VIE arrangements, as a legal matter, if JiuGe Technology fails to perform its obligations under

these contractual arrangements, we may have to (i) incur substantial costs and resources to enforce such arrangements, and (ii) rely on

legal remedies under PRC law, which we cannot be sure would be effective.

Therefore, if we are unable to effectively control JiuGe Technology,

it may have an adverse effect on our ability to achieve our business objectives and grow our revenues.

As the VIE Agreements are governed by PRC

law, we would be required to rely on PRC law to enforce our rights and remedies under them;

PRC law may not provide us with the same

rights and remedies as are available in contractual disputes governed by the law of other jurisdictions.

The VIE Agreements are governed by the PRC law and

provide for the resolution of disputes through arbitral proceedings pursuant to PRC law.

If JiuGe Technology or its shareholders fail

to perform the obligations under the VIE Agreements, we would be required to resort to legal remedies available under PRC law, including

seeking specific performance or injunctive relief, or claiming damages.

We cannot be sure that such remedies would provide us with effective

means of causing JiuGe Technology to meet its obligations or recovering any losses or damages as a result of non-performance.

the legal environment in China is not as developed as in other jurisdictions.

Uncertainties in the application of various laws, rules,

regulations or policies in PRC legal system could limit our liability to enforce the VIE Agreements and protect our interests.

The payment arrangement under the VIE Agreements

may be challenged by the PRC tax authorities.

We generate our revenues through the payments we receive

pursuant to the VIE Agreements.

We could face adverse tax consequences if the PRC tax authorities determine that the VIE Agreements were

not entered into based on arm’s length negotiations.

For example, PRC tax authorities may adjust our income and expenses for PRC

tax purposes which could result in our being subject to higher tax liability or cause other adverse financial consequences.

Shareholders of JiuGe Technology have potential

conflicts of interest with our company which may adversely affect our business.

Li Li is the legal representative and general manager,

and also a shareholder of JiuGe Technology.

There could be conflicts that arise from time to time between our interests and the interests

There could also be conflicts that arise between us and JiuGe Technology that would require our shareholders and JiuGe Technology’s

shareholders to vote on corporate actions necessary to resolve the conflict.

There can be no assurance in any such circumstances that

Li will vote her shares in our best interest or otherwise act in the best interests of our company.

Li fails to act in our

best interests, our operating performance and future growth could be adversely affected.

We rely on the approval certificates and business

license held by JiuGe Management and any deterioration of the relationship between JiuGe Management and JiuGe Technology could materially

and adversely affect our business operations.

We operate our mobile data business in China on the

basis of the approval certificates, business license and other requisite licenses held by JiuGe Management and JiuGe Technology.

is no assurance that JiuGe Management and JiuGe Technology will be able to renew their licenses or certificates when their terms expire

with substantially similar terms as the ones they currently hold.

Further, our relationship with JiuGe Technology is

governed by the VIE Agreements that are intended to provide us with effective control over the business operations of JiuGe Technology.

However, the VIE Agreements may not be effective in providing control over the application for and maintenance of the licenses required

for our business operations.

JiuGe Technology could violate the VIE Agreements, go bankrupt, suffer from difficulties in its business

or otherwise become unable to perform its obligations under the VIE Agreements and, as a result, our operations, reputations and business

could be severely harmed.

If JiuGe Management exercises the purchase option

it holds over JiuGe Technology’s share capital pursuant to the VIE Agreements, the payment of the purchase price could materially

and adversely affect our financial position.

Under the VIE Agreements, JiuGe Technology’s

shareholders have granted JiuGe Management an option for the maximum period of time permitted by law to purchase all of the equity interest

in JiuGe Technology at a price equal to one dollar or the lowest applicable price allowable by PRC laws and regulations.

As JiuGe Technology

is already our contractually controlled affiliate, JiuGe Management’s exercising of the option would not bring immediate benefits

to our company, and payment of the purchase prices could adversely affect our financial position.

Risks Related to Doing Business in China

Changes in China’s political or economic

situation could harm us and our operating results.

Economic reforms adopted by the Chinese government

have had a positive effect on the economic development of the country, but the government could change these economic reforms or any of

the legal systems at any time.

This could either benefit or damage our operations and profitability.

Some of the things that could have this effect are:

of government involvement in the economy;

of foreign exchange;

of allocating resources;

of payments position;

● International

trade restrictions;

● International

Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development,

or OECD, in many ways.

For example, state-owned enterprises still constitute a large portion of the Chinese economy and weak corporate

governance and a lack of flexible currency exchange policy still prevail in China.

As a result of these differences, we may not develop

in the same way or at the same rate as might be expected if the Chinese economy was similar to those of the OECD member countries.

Uncertainties

with respect to the PRC legal system could limit the legal protections available to you and us.

conduct substantially all of our business through our operating subsidiary and affiliate in the PRC.

Our principal operating subsidiary

and affiliate, JiuGe Management and JiuGe Technology, are subject to laws and regulations applicable to foreign investments in China

and, in particular, laws applicable to foreign-invested enterprises.

The PRC legal system is based on written statutes, and prior court

decisions may be cited for reference but have limited precedential value.

Since 1979, a series of new PRC laws and regulations have significantly

enhanced the protections afforded to various forms of foreign investments in China.

However, since the PRC legal system continues to

evolve rapidly, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations

and rules involves uncertainties, which may limit legal protections available to you and us.

In addition, any litigation in China may

be protracted and result in substantial costs and diversion of resources and management attention.

In addition, most of our executive

officers and all of our directors are not residents of the United States, and substantially all the assets of these persons are located

outside the United States.

As a result, it could be difficult for investors to effect service of process in the United States or to enforce

a judgment obtained in the United States against our Chinese operations, subsidiary and affiliate.

current tensions in international trade and rising political tensions, particularly between the United States and China, may adversely

impact our business, financial condition, and results of operations.

there have been heightened tensions in international economic relations, such as the one between the United States and China.

tensions between the United States and China have escalated due to, among other things, trade disputes, the COVID-19 outbreak, sanctions

imposed by the U.S.

Department of Treasury on certain officials of the Hong Kong Special Administrative Region and the PRC central government

and the executive orders issued by the U.S.

government in August 2020 that prohibit certain transactions with certain China-based companies

and their respective subsidiaries.

Rising political tensions could reduce levels of trade, investments, technological exchanges, and

other economic activities between the two major economies.

Such tensions between the United States and China, and any escalation thereof,

may have a negative impact on the general, economic, political, and social conditions in China and, in turn, adversely impacting our

Some of the things that could have

this effect are:

Level of government involvement in the economy;

Control of foreign exchange;

Methods of allocating resources;

Balance of payments position;

International trade restrictions;

International conflict.

The Chinese economy differs from the economies of

most countries belonging to the Organization for Economic Cooperation and Development, or OECD, in many ways.

For example, state-owned

enterprises still constitute a large portion of the Chinese economy and weak corporate governance and a lack of flexible currency exchange

policy still prevail in China.

As a result of these differences, we may not develop in the same way or at the same rate as might be expected

if the Chinese economy was similar to those of the OECD member countries.

Uncertainties with respect to the PRC legal

system could limit the legal protections available to you and us.

We conduct substantially all of our business through

our operating subsidiary and affiliate in the PRC.

Our principal operating subsidiary and affiliate, JiuGe Management and JiuGe Technology,

are subject to laws and regulations applicable to foreign investments in China and, in particular, laws applicable to foreign-invested

The PRC legal system is based on written statutes, and prior court decisions may be cited for reference but have limited

precedential value.

Since 1979, a series of new PRC laws and regulations have significantly enhanced the protections afforded to various

forms of foreign investments in China.

However, since the PRC legal system continues to evolve rapidly, the interpretations of many laws,

regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which may limit

legal protections available to you and us.

In addition, any litigation in China may be protracted and result in substantial costs and

diversion of resources and management attention.

In addition, most of our executive officers and all of our directors are not residents

of the United States, and substantially all the assets of these persons are located outside the United States.

As a result, it could be

difficult for investors to effect service of process in the United States or to enforce a judgment obtained in the United States against

our Chinese operations, subsidiary and affiliate.

The current tensions

in international trade and rising political tensions, particularly between the United States and China, may adversely impact our business,

financial condition, and results of operations.

Recently there have been heightened tensions in international

economic relations, such as the one between the United States and China.

Political tensions between the United States and China have escalated

due to, among other things, trade disputes, the COVID-19 outbreak, sanctions imposed by the U.S.

Department of Treasury on certain officials

of the Hong Kong Special Administrative Region and the PRC central government and the executive orders issued by the U.S.

government in

August 2020 that prohibit certain transactions with certain China-based companies and their respective subsidiaries.

Rising political

tensions could reduce levels of trade, investments, technological exchanges, and other economic activities between the two major economies.

Such tensions between the United States and China, and any escalation thereof, may have a negative impact on the general, economic, political,

and social conditions in China and, in turn, adversely impacting our business, financial condition, and results of operations.

were introduced which includes but not limited to Article 177 of the PRC Securities Law which states that overseas securities regulatory

authorities shall not carry out an investigation and evidence collection activities directly in China without the consent of the securities

regulatory authority of the State Council and the relevant State Council department(s).

It further defines that no organization or individual

shall provide the documents and materials relating to securities business activities to overseas parties arbitrarily.

With this regulation

in force, it may result in delays by the Company to fulfill any request to provide relevant documents or materials by the regulatory authorities

or in the worst-case scenario that the Company would not be able to fulfill the request if the approval from the regulatory authority

of the State Council and the relevant State Council department(s) were rejected.

You may have difficulty enforcing judgments

We are a Delaware holding company, but Finger Motion

(CN) Limited is a Hong Kong company, and our principal operating affiliate and subsidiary, JiuGe Technology and JiuGe Management, are

located in the PRC.

Most of our assets are located outside the United States and most of our current operations are conducted in the PRC.

In addition, most of our directors and officers are nationals and residents of countries other than the United States.

A substantial portion

of the assets of these persons is located outside the United States.

As a result, it may be difficult for you to effect service of process

within the United States upon these persons.

It may also be difficult for you to enforce in U.S.

courts judgments predicated on the civil

liability provisions of the U.S.

federal securities laws against us and our officers and directors, most of whom are not residents in

the United States and the substantial majority of whose assets are located outside the United States.

In addition, there is uncertainty

as to whether the courts of the PRC would recognize or enforce judgments of U.S.

The recognition and enforcement of foreign judgments

are provided for under the PRC Civil Procedures Law.

Courts in China may recognize and enforce foreign judgments in accordance with the

requirements of the PRC Civil Procedures Law based on treaties between China and the country where the judgment is made or on reciprocity

between jurisdictions.

China does not have any treaties or other arrangements that provide for the reciprocal recognition and enforcement

of foreign judgments with the United States.

In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce

a foreign judgment against us or our directors and officers if they decide that the judgment violates basic principles of PRC law or national

sovereignty, security or the public interest.

Therefore, it is uncertain whether a PRC court would enforce a judgment rendered by a court

in the United States.

The PRC government exerts substantial influence

over the manner in which we must conduct our business activities.

The PRC government has exercised and continues to

exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership.

Our ability to

operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs,

environmental regulations, land use rights, property and other matters.

We believe that our operations in China are in material compliance

with all applicable legal and regulatory requirements.

However, the central or local governments of the jurisdictions in which we operate

may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts

on our part to ensure our compliance with such regulations or interpretations.

Accordingly, government actions in the future, including

any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local

variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions

thereof and could require us to divest ourselves of any interest we then hold in Chinese properties or joint ventures.

Future inflation in China may inhibit our ability

to conduct business in China.

In recent years, the Chinese economy has experienced

periods of rapid expansion and highly fluctuating rates of inflation.

During the past ten years, the rate of inflation in China has been

as high as 20.7% and as low as -2.2%.

These factors have led to the adoption by the Chinese government, from time to time, of various

corrective measures designed to restrict the availability of credit or regulate growth and contain inflation.

High inflation may in the

future cause the Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic

activity in China, and thereby harm the market for our products and our company.

Capital outflow policies in the PRC may hamper

our ability to remit income to the United States.

The PRC has adopted currency and capital transfer

These regulations may require that we comply with complex regulations for the movement of capital and as a result we may

not be able to remit all income earned and proceeds received in connection with our operations or from the sale of one of our operating

subsidiaries to the U.S.

or to our shareholders.

Adverse regulatory developments in China may

subject us to additional regulatory review, and additional disclosure requirements and regulatory scrutiny to be adopted by the SEC in

response to risks related to recent regulatory developments in China may impose additional compliance requirements for companies like

us with significant China-based operations, all of which could increase our compliance costs, subject us to additional disclosure requirements.

The recent regulatory developments in China, in particular

with respect to restrictions on China-based companies raising capital offshore, may lead to additional regulatory review in China over

our financing and capital raising activities in the United States.

In addition, we may be subject to industry-wide regulations that may

be adopted by the relevant PRC authorities, which may have the effect of limiting our service offerings, restricting the scope of our

operations in China, or causing the suspension or termination of our business operations in China entirely, all of which will materially

and adversely affect our business, financial condition and results of operations.

We may have to adjust, modify, or completely change

our business operations in response to adverse regulatory changes or policy developments, and we cannot assure you that any remedial action

adopted by us can be completed in a timely, cost-efficient, or liability-free manner or at all.

On July 30, 2021, in response to the recent regulatory

developments in China and actions adopted by the PRC government, the Chairman of the SEC issued a statement asking the SEC staff to seek

additional disclosures from offshore issuers associated with China-based operating companies before their registration statements will

be declared effective.

On August 1, 2021, the China Securities Regulatory Commission stated in a statement that it had taken note of the

new disclosure requirements announced by the SEC regarding the listings of Chinese companies and the recent regulatory development in

China, and that both countries should strengthen communications on regulating China-related issuers.

We cannot guarantee that we will

not be subject to tightened regulatory review and we could be exposed to government interference in China.

Compliance with China’s new Data Security

Law, Measures on Cybersecurity Review (revised draft for public consultation), Personal Information Protection Law (second draft for consultation),

regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations may entail significant

expenses and could materially affect our business.

China has implemented or will implement rules and

is considering a number of additional proposals relating to data protection.

China’s new Data Security Law promulgated by the Standing

Committee of the National People’s Congress of China in June 2021, or the Data Security Law, took effect in September 2021.

Data Security Law provides that the data processing activities must be conducted based on “data classification and hierarchical

protection system” for the purpose of data protection and prohibits entities in China from transferring data stored in China to

foreign law enforcement agencies or judicial authorities without prior approval by the Chinese government.

As a result of the new Data

Security Law, we may need to make adjustments to our data processing practices to comply with this law.

Additionally, China’s Cyber Security Law, requires

companies to take certain organizational, technical and administrative measures and other necessary measures to ensure the security of

their networks and data stored on their networks.

Specifically, the Cyber Security Law provides that China adopt a multi-level protection

scheme (MLPS), under which network operators are required to perform obligations of security protection to ensure that the network is

free from interference, disruption or unauthorized access, and prevent network data from being disclosed, stolen or tampered.

MLPS, entities operating information systems must have a thorough assessment of the risks and the conditions of their information and

network systems to determine the level to which the entity’s information and network systems belong-from the lowest Level 1 to the

highest Level 5 pursuant to the Measures for the Graded Protection and the Guidelines for Grading of Classified Protection of Cyber Security.

The grading result will determine the set of security protection obligations that entities must comply with.

Entities classified as Level

2 or above should report the grade to the relevant government authority for examination and approval.

Recently, the Cyberspace Administration of China has

taken action against several Chinese internet companies in connection with their initial public offerings on U.S.

securities exchanges,

for alleged national security risks and improper collection and use of the personal information of Chinese data subjects.

the official announcement, the action was initiated based on the National Security Law, the Cyber Security Law and the Measures on Cybersecurity

Review, which are aimed at “preventing national data security risks, maintaining national security and safeguarding public interests.”

On July 10, 2021, the Cyberspace Administration of China published a revised draft of the Measures on Cybersecurity Review, expanding

the cybersecurity review to data processing operators in possession of personal information of over 1 million users if the operators intend

to list their securities in a foreign country.

It is unclear at the present time how widespread the

cybersecurity review requirement and the enforcement action will be and what effect they will have on the telecommunications sector generally

and the Company in particular.

China’s regulators may impose penalties for non-compliance ranging from fines or suspension of operations,

and this could lead to us delisting from the U.S.

stock market.

Also, on August 20, 2021, the National People’s

Congress passed the Personal Information Protection Law, which was implemented on November 1, 2021.

The law creates a comprehensive set

of data privacy and protection requirements that apply to the processing of personal information and expands data protection compliance

obligations to cover the processing of personal information of persons by organizations and individuals in China, and the processing of

personal information of persons in China outside of China if such processing is for purposes of providing products and services to, or

analyzing and evaluating the behavior of, persons in China.

The law also proposes that critical information infrastructure operators and

personal information processing entities who process personal information meeting a volume threshold to-be-set by Chinese cyberspace regulators

are also required to store in China personal information generated or collected in China, and to pass a security assessment administered

by Chinese cyberspace regulators for any export of such personal information.

Lastly, the draft contains proposals for significant fines

for serious violations of up to RMB 50 million or 5% of annual revenues from the prior year.

Interpretation, application and enforcement of these

laws, rules and regulations evolve from time to time and their scope may continually change, through new legislation, amendments to existing

legislation and changes in enforcement.

Compliance with the Cyber Security Law and the Data Security Law could significantly increase

the cost to us of providing our service offerings, require significant changes to our operations or even prevent us from providing certain

service offerings in jurisdictions in which we currently operate or in which we may operate in the future.

Despite our efforts to comply

with applicable laws, regulations and other obligations relating to privacy, data protection and information security, it is possible

that our practices, offerings or platform could fail to meet all of the requirements imposed on us by the Cyber Security Law, the Data

Security Law and/or related implementing regulations.

Any failure on our part to comply with such law or regulations or any other obligations

relating to privacy, data protection or information security, or any compromise of security that results in unauthorized access, use or

release of personally identifiable information or other data, or the perception or allegation that any of the foregoing types of failure

or compromise has occurred, could damage our reputation, discourage new and existing counterparties from contracting with us or result

in investigations, fines, suspension or other penalties by Chinese government authorities and private claims or litigation, any of which

could materially adversely affect our business, financial condition and results of operations.

Even if our practices are not subject to

legal challenge, the perception of privacy concerns, whether or not valid, may harm our reputation and brand and adversely affect our

business, financial condition and results of operations.

Regulations were introduced which includes but not limited to Article 177 of

the PRC Securities Law which states that overseas securities regulatory authorities shall not carry out an investigation and evidence

collection activities directly in China without the consent of the securities regulatory authority of the State Council and the relevant

State Council department(s).

It further defines that no organization or individual shall provide the documents and materials relating

to securities business activities to overseas parties arbitrarily.

this regulation in force, it may result in delays by the Company to fulfill any request to provide relevant documents or materials by

the regulatory authorities or in the worst-case scenario that the Company would not be able to fulfill the request if the approval from

the regulatory authority of the State Council and the relevant State Council department(s) were rejected.

may have difficulty enforcing judgments against us.

are a Delaware holding company, but Finger Motion (CN) Limited is a Hong Kong company, and our principal operating affiliate and subsidiary,

JiuGe Technology and JiuGe Management, are located in the PRC.

Most of our assets are located outside the United States and most of our

current operations are conducted in the PRC.

In addition, most of our directors and officers are nationals and residents of countries

other than the United States.

A substantial portion of the assets of these persons is located outside the United States.

it may be difficult for you to effect service of process within the United States upon these persons.

It may also be difficult for you

to enforce in U.S.

courts judgments predicated on the civil liability provisions of the U.S.

federal securities laws against us and our

officers and directors, most of whom are not residents in the United States and the substantial majority of whose assets are located

outside the United States.

In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments

The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law.

Courts in China

may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based on treaties between

China and the country where the judgment is made or on reciprocity between jurisdictions.

China does not have any treaties or other arrangements

that provide for the reciprocal recognition and enforcement of foreign judgments with the United States.

In addition, according to the

PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide

that the judgment violates basic principles of PRC law or national sovereignty, security or the public interest.

Therefore, it is uncertain

whether a PRC court would enforce a judgment rendered by a court in the United States.

PRC government exerts substantial influence over the manner in which we must conduct our business activities.

PRC government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through

regulation and state ownership.

Our ability to operate in China may be harmed by changes in its laws and regulations, including those

relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters.

We believe that

our operations in China are in material compliance with all applicable legal and regulatory requirements.

However, the central or local

governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations

that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally

planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic

conditions in China or particular regions thereof and could require us to divest ourselves of any interest we then hold in Chinese properties

or joint ventures.

inflation in China may inhibit our ability to conduct business in China.

recent years, the Chinese economy has experienced periods of rapid expansion and highly fluctuating rates of inflation.

During the past

ten years, the rate of inflation in China has been as high as 20.7% and as low as -2.2%.

These factors have led to the adoption by the

Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth

and contain inflation.

High inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to

take other action, which could inhibit economic activity in China, and thereby harm the market for our products and our company.

on currency exchange may limit our ability to receive and use our revenues effectively.

majority of our revenues will be settled in Chinese Renminbi (RMB), and any future restrictions on currency exchanges may limit our ability

to use revenue generated in RMB to fund any future business activities outside China or to make dividend or other payments in U.S.

Although the Chinese government introduced regulations in 1996 to allow greater convertibility of the RMB for current account transactions,

significant restrictions still remain, including primarily the restriction that foreign-invested enterprises may only buy, sell or remit

foreign currencies after providing valid commercial documents, at those banks in China authorized to conduct foreign exchange business.

In addition, conversion of RMB for capital account items, including direct investment and loans, is subject to governmental approval

in China, and companies are required to open and maintain separate foreign exchange accounts for capital account items.

certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB.

in exchange rates could adversely affect our business and the value of our securities.

value of our common stock will be indirectly affected by the foreign exchange rate between U.S.

dollars and RMB and between those currencies

and other currencies in which our sales may be denominated.

Moreover, the legal uncertainty created by the Data Security Law and the recent

Chinese government actions could materially adversely affect our ability, on favorable terms, to raise capital, including engaging in

follow-on offerings of our securities in the U.S.

Restrictions on currency exchange may limit

our ability to receive and use our revenues effectively.

The majority of our revenues will be settled in Chinese

Renminbi (RMB), and any future restrictions on currency exchanges may limit our ability to use revenue generated in RMB to fund any future

business activities outside China or to make dividend or other payments in U.S.

Although the Chinese government introduced regulations

in 1996 to allow greater convertibility of the RMB for current account transactions, significant restrictions still remain, including

primarily the restriction that foreign-invested enterprises may only buy, sell or remit foreign currencies after providing valid commercial

documents, at those banks in China authorized to conduct foreign exchange business.

In addition, conversion of RMB for capital account

items, including direct investment and loans, is subject to governmental approval in China, and companies are required to open and maintain

separate foreign exchange accounts for capital account items.

We cannot be certain that the Chinese regulatory authorities will not impose

more stringent restrictions on the convertibility of the RMB.

Fluctuations in exchange rates could adversely affect our business

and the value of our securities.

The value of our common stock will be indirectly affected

by the foreign exchange rate between U.S.

dollars and RMB and between those currencies and other currencies in which our sales may be

Appreciation or depreciation in the value of the RMB relative to the U.S.

dollar would affect our financial results reported in U.S.

dollar terms without giving effect to any underlying change in our business

or results of operations.

Fluctuations in the exchange rate will also affect the relative value of any dividend we issue that will be

exchanged into U.S.

dollars as well as earnings from, and the value of, any U.S.

dollar would affect our financial results reported

dollar terms without giving effect to any underlying change in our business or results of operations.

Fluctuations in the exchange

rate will also affect the relative value of any dividend we issue that will be exchanged into U.S.

dollars as well as earnings from, and

the value of, any U.S.

dollar-denominated investments we make in the future.

July 2005, the RMB is no longer pegged to the U.S.

Although the Peoples Bank of China regularly intervenes in the foreign

exchange market to prevent significant short-term fluctuations in the exchange rate, the RMB may appreciate or depreciate significantly

in value against the U.S.

dollar in the medium to long term.

Moreover, it is possible that in the future PRC authorities may lift restrictions

on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market.

limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations.

To date, we have not entered

into any hedging transactions.

While we may enter into hedging transactions in the future, the availability and effectiveness of these

transactions may be limited, and we may not be able to successfully hedge our exposure at all.

In addition, our foreign currency exchange

losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currencies.

under PRC law on our PRC subsidiarys ability to make dividends and other distributions could materially and adversely affect our

ability to grow, make investments or acquisitions that could benefit our business, pay dividends to our shareholders, and otherwise fund

and conduct our businesses.

Substantially

all of our revenue is earned by JiuGe Management, our PRC subsidiary.

PRC regulations restrict the ability of our PRC subsidiary to make

dividends and other payments to its offshore parent company.

PRC legal restrictions permit payments of dividends by our PRC subsidiary

only out of its accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations.

subsidiary is also required under PRC laws and regulations to allocate at least 10% of our annual after-tax profits determined in accordance

with PRC GAAP to a statutory general reserve fund until the amounts in said fund reaches 50% of our registered capital.

Allocations to

these statutory reserve funds can only be used for specific purposes and are not transferable to us in the form of loans, advances or

cash dividends.

Any limitations on the ability of our PRC subsidiary to transfer funds to us could materially and adversely limit our

ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct

our business.

to comply with PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC

resident shareholders to personal liability, limit our ability to acquire PRC companies or to inject capital into our PRC subsidiary

or affiliate, limit our PRC subsidiarys and affiliates ability to distribute profits to us or otherwise materially adversely

October 2005, the Chinese State Administration of Foreign Exchange ( SAFE ), issued the Notice on Relevant Issues

in the Foreign Exchange Control over Financing and Return Investment Through Special Purpose Companies by Residents Inside China, generally

referred to as Circular 75, which required PRC residents to register with the competent local SAFE branch before establishing or acquiring

control over an offshore special purpose company, or SPV, for the purpose of engaging in an equity financing outside of China on the

strength of domestic PRC assets originally held by those residents.

Internal implementing guidelines issued by SAFE, which became public

in June 2007 (known as Notice 106), expanded the reach of Circular 75 by (1) purporting to cover the establishment or acquisition of

control by PRC residents of offshore entities which merely acquire control over domestic companies or assets, even in the

absence of legal ownership;

(2) adding requirements relating to the source of the PRC residents funds used to establish or acquire

the offshore entity;

covering the use of existing offshore entities for offshore financings;

(3) purporting to cover situations in which

an offshore SPV establishes a new subsidiary in China or acquires an unrelated company or unrelated assets in China;

and (4) making the

domestic affiliate of the SPV responsible for the accuracy of certain documents which must be filed in connection with any such registration,

notably, the business plan which describes the overseas financing and the use of proceeds.

Amendments to registrations made under Circular

75 are required in connection with any increase or decrease of capital, transfer of shares, mergers and acquisitions, equity investment

or creation of any security interest in any assets located in China to guarantee offshore obligations and Notice 106 makes the offshore

SPV jointly responsible for these filings.

In the case of an SPV which was established, and which acquired a related domestic company

or assets, before the implementation date of Circular 75, a retroactive SAFE registration was required to have been completed before

March 31, 2006;

this date was subsequently extended indefinitely by Notice 106, which also required that the registrant establish that

all foreign exchange transactions undertaken by the SPV and its affiliates were in compliance with applicable laws and regulations.

to comply with the requirements of Circular 75, as applied by SAFE in accordance with Notice 106, may result in fines and other penalties

under PRC laws for evasion of applicable foreign exchange restrictions.

Any such failure could also result in the SPVs affiliates

being impeded or prevented from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation

to the SPV, or from engaging in other transfers of funds into or out of China.

have advised our shareholders who are PRC residents, as defined in Circular 75, to register with the relevant branch of SAFE, as currently

required, in connection with their equity interests in us and our acquisitions of equity interests in our PRC subsidiary and affiliate.

However, we cannot provide any assurances that their existing registrations have fully complied with, and they have made all necessary

amendments to their registration to fully comply with, all applicable registrations or approvals required by Circular 75.

Moreover, because

of uncertainty over how Circular 75 will be interpreted and implemented, and how or whether SAFE will apply it to us, we cannot predict

how it will affect our business operations or future strategies.

For example, our present and prospective PRC subsidiarys and

affiliates ability to conduct foreign exchange activities, such as the remittance of dividends and foreign currency-denominated

borrowings, may be subject to compliance with Circular 75 by our PRC resident beneficial holders.

In addition, such PRC residents may

not always be able to complete the necessary registration procedures required by Circular 75.

We also have little control over either

our present or prospective direct or indirect shareholders or the outcome of such registration procedures.

A failure by our PRC resident

beneficial holders or future PRC resident shareholders to comply with Circular 75, if SAFE requires it, could subject these PRC resident

beneficial holders to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiarys

and affiliates ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect

our business and prospects.

the New EIT Law, we may be classified as a resident enterprise of China.

Such classification will likely result in unfavorable

tax consequences to us and our non-PRC shareholders.

the New EIT Law effective on January 1, 2008, an enterprise established outside China with de facto management bodies within

China is considered a resident enterprise, meaning that it can be treated in a manner similar to a Chinese enterprise for

enterprise income tax purposes.

The implementing rules of the New EIT Law define de facto management as substantial and overall

management and control over the production and operations, personnel, accounting, and properties of the enterprise.

April 22, 2009, the State Administration of Taxation issued the Notice Concerning Relevant Issues Regarding Cognizance of Chinese Investment

Controlled Enterprises Incorporated Offshore as Resident Enterprises pursuant to Criteria of de facto Management Bodies, or the Notice,

further interpreting the application of the New EIT Law and its implementation non-Chinese enterprise or group controlled offshore entities.

Pursuant to the Notice, an enterprise incorporated in an offshore jurisdiction and controlled by a Chinese enterprise or group will be

classified as a non-domestically incorporated resident enterprise if (i) its senior management in charge of daily operations

reside or perform their duties mainly in China;

(ii) its financial or personnel decisions are made or approved by bodies or persons in

(iii) its substantial assets and properties, accounting books, corporate chops, board and shareholder minutes are kept in China;

and (iv) at least half of its directors with voting rights or senior management often resident in China.

A resident enterprise would

be subject to an enterprise income tax rate of 25% on its worldwide income and must pay a withholding tax at a rate of 10% when paying

dividends to its non-PRC shareholders.

However, it remains unclear as to whether the Notice is applicable to an offshore enterprise incorporated

by a Chinese natural person.

Nor are detailed measures on imposition of tax from non-domestically incorporated resident enterprises are

Therefore, it is unclear how tax authorities will determine tax residency based on the facts of each case.

the above conditions, although unlikely, we may be deemed to be a resident enterprise by Chinese tax authorities.

If the PRC tax authorities

determine that we are a resident enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences

could follow.

First, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise

income tax reporting obligations.

In our case, this would mean that income such as interest on financing proceeds and non-China source

income would be subject to PRC enterprise income tax at a rate of 25%.

Second, although under the New EIT Law and its implementing rules

dividends paid to us from our PRC subsidiary would qualify as tax-exempt income, we cannot guarantee that such dividends

will not be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax, have

not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for

PRC enterprise income tax purposes.

Finally, it is possible that future guidance issued with respect to the new resident enterprise

classification could result in a situation in which a 10% withholding tax is imposed on dividends we pay to our non-PRC shareholders

and with respect to gains derived by our non-PRC shareholders from transferring our shares.

We are actively monitoring the possibility

of resident enterprise treatment.

we were treated as a resident enterprise by PRC tax authorities, we would be subject to taxation in both the U.S.

and our PRC tax may not be creditable against our U.S.

may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption laws, and any determination that we

violated these laws could have a material adverse effect on our business.

are subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that prohibit improper payments or offers of payments to foreign

governments and their officials and political parties by U.S.

persons and issuers as defined by the statute, for the purpose of obtaining

or retaining business.

We have operations, agreements with third parties and we earn the majority of our revenue in China.

PRC also strictly

prohibits bribery of government officials.

Our activities in China create the risk of unauthorized payments or offers of payments by

our executive officers, employees, consultants, sales agents or other representatives of our Company, even though they may not always

be subject to our control.

It is our policy to implement safeguards to discourage these practices by our employees.

However, our existing

safeguards and any future improvements may prove to be less than effective, and the executive officers, employees, consultants, sales

agents or other representatives of our Company may engage in conduct for which we might be held responsible.

Violations of the FCPA or

Chinese anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could

negatively affect our business, operating results and financial condition.

Since July 2005, the RMB is no longer pegged to the

Although the People’s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term

fluctuations in the exchange rate, the RMB may appreciate or depreciate significantly in value against the U.S.

dollar in the medium to

Moreover, it is possible that in the future PRC authorities may lift restrictions on fluctuations in the RMB exchange rate

and lessen intervention in the foreign exchange market.

Very limited hedging transactions are available in

China to reduce our exposure to exchange rate fluctuations.

To date, we have not entered into any hedging transactions.

While we may enter

into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able

to successfully hedge our exposure at all.

In addition, our foreign currency exchange losses may be magnified by PRC exchange control

regulations that restrict our ability to convert RMB into foreign currencies.

Restrictions under PRC law on our PRC subsidiary’s

ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or acquisitions

that could benefit our business, pay dividends to our shareholders, and otherwise fund and conduct our businesses.

Substantially all of our revenue is earned by JiuGe

Management, our PRC subsidiary.

PRC regulations restrict the ability of our PRC subsidiary to make dividends and other payments to its

offshore parent company.

PRC legal restrictions permit payments of dividends by our PRC subsidiary only out of its accumulated after-tax

profits, if any, determined in accordance with PRC accounting standards and regulations.

Our PRC subsidiary is also required under PRC

laws and regulations to allocate at least 10% of our annual after-tax profits determined in accordance with PRC GAAP to a statutory general

reserve fund until the amounts in said fund reaches 50% of our registered capital.

Allocations to these statutory reserve funds can only

be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends.

Any limitations on the

ability of our PRC subsidiary to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions

that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.

PRC regulation of loans and direct investment

by offshore holding companies to PRC entities may delay or prevent us from making loans or additional capital contributions to our PRC

subsidiary and affiliated entities, which could harm our liquidity and our ability to fund and expand our business.

As an offshore holding company of our PRC subsidiary,

we may (i) make loans to our PRC subsidiary and affiliated entities, (ii) make additional capital contributions to our PRC subsidiary,

(iii) establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, and (iv) acquire offshore entities

with business operations in China in an offshore transaction.

However, most of these uses are subject to PRC regulations and approvals.

loans by us to our wholly-owned subsidiary in China, which is a foreign-invested enterprise, cannot exceed statutory limits and must be registered with the State Administration of Foreign Exchange of the PRC (the “SAFE”) or its local counterparts;

loans by us to our affiliated entities, which are domestic PRC entities, over a certain threshold must be approved by the relevant government authorities and must also be registered with SAFE or its local counterparts;

capital contributions to our wholly-owned subsidiary must file a record with the PRC Ministry of Commerce (“MOFCOM”) or its local counterparts and shall also be limited to the difference between the registered capital and the total investment amount.

We cannot assure you that we will be able to obtain

these government registrations or filings on a timely basis, or at all.

If we fail to finish such registrations or filings, our ability

to capitalize our PRC subsidiary’s operations may be adversely affected, which could adversely affect our liquidity and our ability

to fund and expand our business.

On March 30, 2015, the SAFE promulgated a notice relating

to the administration of foreign invested company of its capital contribution in foreign currency into Renminbi (Hui Fa [2015]19) (or

“Circular 19”).

Although Circular 19 has fastened the administration relating to the settlement of exchange of foreign-investment,

allows the foreign-invested company to settle the exchange on a voluntary basis, it still requires that the bank review the authenticity

and compliance of a foreign-invested company’s settlement of exchange in previous time, and the settled in Renminbi converted from

foreign currencies shall deposit on the foreign exchange settlement account, and shall not be used for several purposes as listed in the

“negative list”.

As a result, the notice may limit our ability to transfer funds to our operations in China through our PRC

subsidiary, which may affect our ability to expand our business.

Meanwhile, the foreign exchange policy is unpredictable in China, it

shall be various with the nationwide economic pattern, the strict foreign exchange policy may have an adverse impact in our capital cash

and may limit our business expansion.

Failure to comply with PRC regulations relating

to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident shareholders to personal liability,

limit our ability to acquire PRC companies or to inject capital into our PRC subsidiary or affiliate, limit our PRC subsidiary’s

and affiliate’s ability to distribute profits to us or otherwise materially adversely affect us.

In October 2005, the Chinese State Administration

of Foreign Exchange (“ SAFE ”), issued the Notice on Relevant Issues in the Foreign Exchange Control over Financing and

Return Investment Through Special Purpose Companies by Residents Inside China, generally referred to as Circular 75, which required PRC

residents to register with the competent local SAFE branch before establishing or acquiring control over an offshore special purpose company,

or SPV, for the purpose of engaging in an equity financing outside of China on the strength of domestic PRC assets originally held by

those residents.

Internal implementing guidelines issued by SAFE, which became public in June 2007 (known as Notice 106), expanded the

reach of Circular 75 by (1) purporting to cover the establishment or acquisition of control by PRC residents of offshore entities which

merely acquire “control” over domestic companies or assets, even in the absence of legal ownership;

(2) adding requirements

relating to the source of the PRC resident’s funds used to establish or acquire the offshore entity;

covering the use of existing

offshore entities for offshore financings;

(3) purporting to cover situations in which an offshore SPV establishes a new subsidiary in

China or acquires an unrelated company or unrelated assets in China;

and (4) making the domestic affiliate of the SPV responsible for

the accuracy of certain documents which must be filed in connection with any such registration, notably, the business plan which describes

the overseas financing and the use of proceeds.

Amendments to registrations made under Circular 75 are required in connection with any

increase or decrease of capital, transfer of shares, mergers and acquisitions, equity investment or creation of any security interest

in any assets located in China to guarantee offshore obligations and Notice 106 makes the offshore SPV jointly responsible for these filings.

In the case of an SPV which was established, and which acquired a related domestic company or assets, before the implementation date of

Circular 75, a retroactive SAFE registration was required to have been completed before March 31, 2006;

this date was subsequently extended

indefinitely by Notice 106, which also required that the registrant establish that all foreign exchange transactions undertaken by the

SPV and its affiliates were in compliance with applicable laws and regulations.

Failure to comply with the requirements of Circular 75,

as applied by SAFE in accordance with Notice 106, may result in fines and other penalties under PRC laws for evasion of applicable foreign

exchange restrictions.

Any such failure could also result in the SPV’s affiliates being impeded or prevented from distributing their

profits and the proceeds from any reduction in capital, share transfer or liquidation to the SPV, or from engaging in other transfers

of funds into or out of China.

We have advised our shareholders who are PRC residents,

as defined in Circular 75, to register with the relevant branch of SAFE, as currently required, in connection with their equity interests

in us and our acquisitions of equity interests in our PRC subsidiary and affiliate.

However, we cannot provide any assurances that their

existing registrations have fully complied with, and they have made all necessary amendments to their registration to fully comply with,

all applicable registrations or approvals required by Circular 75.

Moreover, because of uncertainty over how Circular 75 will be interpreted

and implemented, and how or whether SAFE will apply it to us, we cannot predict how it will affect our business operations or future strategies.

For example, our present and prospective PRC subsidiary’s and affiliate’s ability to conduct foreign exchange activities,

such as the remittance of dividends and foreign currency-denominated borrowings, may be subject to compliance with Circular 75 by our

PRC resident beneficial holders.

In addition, such PRC residents may not always be able to complete the necessary registration procedures

required by Circular 75.

We also have little control over either our present or prospective direct or indirect shareholders or the outcome

of such registration procedures.

A failure by our PRC resident beneficial holders or future PRC resident shareholders to comply with Circular

75, if SAFE requires it, could subject these PRC resident beneficial holders to fines or legal sanctions, restrict our overseas or cross-border

investment activities, limit our subsidiary’s and affiliate’s ability to make distributions or pay dividends or affect our

ownership structure, which could adversely affect our business and prospects.

We may be subject to fines and legal sanctions

by SAFE or other PRC government authorities if we or our employees who are PRC citizens fail to comply with PRC regulations relating to

employee stock options granted by offshore listed companies to PRC citizens.

On March 28, 2007, SAFE promulgated the Operating

Procedures for Foreign Exchange Administration of Domestic Individuals Participating in Employee Stock Ownership Plans and Stock Option

Plans of Offshore Listed Companies, or Circular 78.

Under Circular 78, Chinese citizens who are granted share options by an offshore listed

company are required, through a Chinese agent or Chinese subsidiary of the offshore listed company, to register with SAFE and complete

certain other procedures, including applications for foreign exchange purchase quotas and opening special bank accounts.

We and our Chinese

employees who have been granted share options are subject to Circular 78.

Failure to comply with these regulations may subject us or our

Chinese employees to fines and legal sanctions imposed by SAFE or other PRC government authorities and may prevent us from further granting

options under our share incentive plans to our employees.

Such events could adversely affect our business operations.

Under the New EIT Law, we may be classified

as a “resident enterprise” of China.

Such classification will likely result in unfavorable tax consequences to us and our

non-PRC shareholders.

Under the New EIT Law effective on January 1, 2008,

an enterprise established outside China with “de facto management bodies” within China is considered a “resident enterprise,”

meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes.

The implementing rules

of the New EIT Law define de facto management as “substantial and overall management and control over the production and operations,

personnel, accounting, and properties” of the enterprise.

On April 22, 2009, the State Administration of Taxation

issued the Notice Concerning Relevant Issues Regarding Cognizance of Chinese Investment Controlled Enterprises Incorporated Offshore as

Resident Enterprises pursuant to Criteria of de facto Management Bodies, or the Notice, further interpreting the application of the New

EIT Law and its implementation non-Chinese enterprise or group controlled offshore entities.

Pursuant to the Notice, an enterprise incorporated

in an offshore jurisdiction and controlled by a Chinese enterprise or group will be classified as a “non-domestically incorporated

resident enterprise” if (i) its senior management in charge of daily operations reside or perform their duties mainly in China;

(ii) its financial or personnel decisions are made or approved by bodies or persons in China;

(iii) its substantial assets and properties,

accounting books, corporate chops, board and shareholder minutes are kept in China;

and (iv) at least half of its directors with voting

rights or senior management often resident in China.

A resident enterprise would be subject to an enterprise income tax rate of 25% on

its worldwide income and must pay a withholding tax at a rate of 10% when paying dividends to its non-PRC shareholders.

However, it remains

unclear as to whether the Notice is applicable to an offshore enterprise incorporated by a Chinese natural person.

Nor are detailed measures

on imposition of tax from non-domestically incorporated resident enterprises are available.

Therefore, it is unclear how tax authorities

will determine tax residency based on the facts of each case.

Given the above conditions, although unlikely,

we may be deemed to be a resident enterprise by Chinese tax authorities.

If the PRC tax authorities determine that we are a “resident

enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow.

First, we may be

subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income tax reporting

In our case, this would mean that income such as interest on financing proceeds and non-China source income would be subject

to PRC enterprise income tax at a rate of 25%.

Second, although under the New EIT Law and its implementing rules dividends paid to us

from our PRC subsidiary would qualify as “tax-exempt income,” we cannot guarantee that such dividends will not be subject

to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax, have not yet issued guidance

with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income

tax purposes.

Finally, it is possible that future guidance issued with respect to the new “resident enterprise” classification

could result in a situation in which a 10% withholding tax is imposed on dividends we pay to our non-PRC shareholders and with respect

to gains derived by our non-PRC shareholders from transferring our shares.

We are actively monitoring the possibility of “resident

enterprise” treatment.

If we were treated as a “resident enterprise”

by PRC tax authorities, we would be subject to taxation in both the U.S.

and China, and our PRC tax may not be creditable against our

We may be exposed to liabilities under the Foreign

Corrupt Practices Act and Chinese anti-corruption laws, and any determination that we violated these laws could have a material adverse

effect on our business.

We are subject to the Foreign Corrupt Practice Act,

or FCPA, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political

parties by U.S.

persons and issuers as defined by the statute, for the purpose of obtaining or retaining business.

We have operations,

agreements with third parties and we earn the majority of our revenue in China.

PRC also strictly prohibits bribery of government officials.

Our activities in China create the risk of unauthorized payments or offers of payments by our executive officers, employees, consultants,

sales agents or other representatives of our Company, even though they may not always be subject to our control.

It is our policy to implement

safeguards to discourage these practices by our employees.

However, our existing safeguards and any future improvements may prove to be

less than effective, and the executive officers, employees, consultants, sales agents or other representatives of our Company may engage

in conduct for which we might be held responsible.

Violations of the FCPA or Chinese anti-corruption laws may result in severe criminal

or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial

In addition, the U.S.

government may seek to hold our Company

liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

our business is located in the PRC, we may have difficulty establishing adequate management, legal and financial controls, which we are

required to do in order to comply with U.S.

government may seek to hold our Company liable for successor liability FCPA violations committed by companies

in which we invest or that we acquire.

Because our business is located in the PRC,

we may have difficulty establishing adequate management, legal and financial controls, which we are required to do in order to comply

securities laws.

companies have historically not adopted a Western style of management and financial reporting concepts and practices, which includes

strong corporate governance, internal controls and, computer, financial and other control systems.

Some of our staff is not educated

and trained in the Western system, and we may have difficulty hiring new employees in the PRC with such training.

As a result of these

factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing

financial statements, books of account and corporate records and instituting business practices that meet Western standards.

we may, in turn, experience difficulties in implementing and maintaining adequate internal controls as required under Section 404 of

the Sarbanes-Oxley Act of 2002.

This may result in significant deficiencies or material weaknesses in our internal controls, which could

impact the reliability of our financial statements and prevent us from complying with Commission rules and regulations and the requirements

of the Sarbanes-Oxley Act of 2002.

Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on

our business.

PRC companies have historically not adopted a Western

style of management and financial reporting concepts and practices, which includes strong corporate governance, internal controls and,

computer, financial and other control systems.

Some of our staff is not educated and trained in the Western system, and we may have difficulty

hiring new employees in the PRC with such training.

As a result of these factors, we may experience difficulty in establishing management,

legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and

instituting business practices that meet Western standards.

Therefore, we may, in turn, experience difficulties in implementing and maintaining

adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act of 2002.

This may result in significant deficiencies

or material weaknesses in our internal controls, which could impact the reliability of our financial statements and prevent us from complying

with Commission rules and regulations and the requirements of the Sarbanes-Oxley Act of 2002.

Any such deficiencies, weaknesses or lack

of compliance could have a materially adverse effect on our business.

The disclosures in our reports and other filings with the SEC

and our other public announcements are not subject to the scrutiny of any regulatory bodies in the PRC.

Accordingly, our public disclosure

should be reviewed in light of the fact that no governmental agency that is located in the PRC, where part of our operations and business

are located, has conducted any due diligence on our operations or reviewed or cleared any of our disclosure.

We are regulated by the SEC and our reports and other

filings with the SEC are subject to SEC review in accordance with the rules and regulations promulgated by the SEC under the Securities

Act and the Exchange Act.

Unlike public reporting companies whose operations are located primarily in the United States, however, substantially

all of our operations are located in the PRC and Hong Kong.

Since substantially all of our operations and business takes place outside

of United States, it may be more difficult for the staff of the SEC to overcome the geographic and cultural obstacles that are present

when reviewing our disclosure.

These same obstacles are not present for similar companies whose operations or business take place entirely

or primarily in the United States.

Furthermore, our SEC reports and other disclosure and public announcements are not subject to the review

or scrutiny of any PRC regulatory authority.

For example, the disclosure in our SEC reports and other filings are not subject to the review

Accordingly, you should review our SEC reports, filings and our other public announcements with the understanding that no

local regulator has done any due diligence on our Company and with the understanding that none of our SEC reports, other filings or any

of our other public announcements has been reviewed or otherwise been scrutinized by any local regulator.

Certain PRC regulations, including those relating

to mergers and acquisitions and national security, may require a complicated review and approval process which could make it more difficult

for us to pursue growth through acquisitions in China.

The Regulations on Mergers and Acquisitions of Domestic

Enterprises by Foreign Investors (the “M&A Rules”), which became effective in September 2006 and were further amended

in June 2009, requires that if an overseas company is established or controlled by PRC domestic companies or citizens intends to acquire

equity interests or assets of any other PRC domestic company affiliated with the PRC domestic companies or citizens, such acquisition

must be submitted to the MOFCOM, rather than local regulators, for approval.

In addition, the M&A Rules requires that an overseas

company controlled directly or indirectly by PRC companies or citizens and holding equity interests of PRC domestic companies needs to

obtain the approval of the China Securities Regulatory Commission, or CSRC, prior to listing its securities on an overseas stock exchange.

On September 21, 2006, the CSRC published a notice on its official website specifying the documents and materials required to be submitted

by overseas special purpose companies seeking CSRC’s approval of their overseas listings.

The M&A Rules established additional procedures

and requirements that could make merger and acquisition activities in China by foreign investors more time-consuming and complex.

example, the MOFCOM must be notified in the event a foreign investor takes control of a PRC domestic enterprise.

In addition, certain

acquisitions of domestic companies by offshore companies that are related to or affiliated with the same entities or individuals of the

domestic companies, are subject to approval by the MOFCOM.

In addition, the Implementing Rules Concerning Security Review on Mergers and

Acquisitions by Foreign Investors of Domestic Enterprises, issued by the MOFCOM in August 2011, require that mergers and acquisitions

by foreign investors in “any industry with national security concerns” be subject to national security review by the MOFCOM.

In addition, any activities attempting to circumvent such review process, including structuring the transaction through a proxy or contractual

control arrangement, are strictly prohibited.

There is significant uncertainty regarding the interpretation

and implementation of these regulations relating to merger and acquisition activities in China.

In addition, complying with these requirements

could be time-consuming, and the required notification, review or approval process may materially delay or affect our ability to complete

merger and acquisition transactions in China.

As a result, our ability to seek growth through acquisitions may be materially and adversely

In addition, if the MOFCOM determines that we should have obtained its approval for our entry into contractual arrangements

with our affiliated entities, we may be required to file for remedial approvals.

There is no assurance that we would be able to obtain

such approval from the MOFCOM.

If the MOFCOM, the CSRC and/or other PRC regulatory

agencies subsequently determine that the approvals from the MOFCOM and/or CSRC and/or other PRC regulatory agencies were required, our

PRC business could be challenged, and we may need to apply for a remedial approval and may be subject to certain administrative punishments

or other sanctions from PRC regulatory agencies.

The regulatory agencies may impose fines and penalties on our operations in the PRC,

limit our operating privileges in the PRC, delay or restrict the conversion and remittance of our funds in foreign currencies into the

PRC, or take other actions that could materially and adversely affect our business, financial condition, results of operations, reputation

and prospects, as well as the trading price of our common stock.

The audit report included in our Annual Report

is prepared by an auditor who is not inspected by the Public Company Accounting Oversight Board and as such, our investors are deprived

of the benefits of such inspection.

We could be delisted if we are unable to timely meet the PCAOB inspection requirements established

by the Holding Foreign Companies Accountable Act.

As a public company with

securities listed on Nasdaq Capital Market, we are required to have our financial statements audited by an independent registered public

accounting firm registered with the PCAOB.

A requirement of being registered with the PCAOB is that if requested by the SEC or PCAOB,

such accounting firm is required to make its audits and related audit work papers be subject to regular inspections to assess its compliance

with the applicable professional standards.

Since our auditor is located in Hong Kong and PRC, a jurisdiction where the PCAOB has been

unable to conduct inspections without the approval of the PRC authorities due to various state secrecy laws and the revised Securities

Law, the PCAOB currently does not have free access to inspect the work of our auditor.

This lack of access to the PCAOB inspection in

the PRC prevents the PCAOB from fully evaluating audits and quality control procedures of our auditor based in the PRC.

As a result, the

investors may be deprived of the benefits of such PCAOB inspections.

The inability of the PCAOB to conduct inspections of auditors in

the PRC makes it more difficult to evaluate the effectiveness of these accounting firms’ audit procedures or quality control procedures

as compared to auditors outside of the PRC that are subject to the PCAOB inspections.

On December 18, 2020, the

Holding Foreign Companies Accountable Act, or HFCAA, was enacted.

In essence, the act requires the SEC to prohibit securities of any foreign

companies from being listed on U.S.

securities exchanges or traded “over-the-counter” if a company retains a foreign accounting

firm that cannot be inspected by the PCAOB for three consecutive years, beginning in 2021.

Our independent registered public accounting

firm is located in and organized under the laws of Hong Kong and the PRC, a jurisdiction where the PCAOB is currently unable to conduct

inspections without the approval of the PRC authorities, and therefore our auditors are not currently inspected by the PCAOB.

On March 24, 2021, the SEC

adopted interim final amendments, which will become effective 30 days after publication in the Federal Register, relating to the implementation

of certain disclosure and documentation requirements of the HFCAA.

The interim final amendments will apply to registrants that the SEC

identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign

jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority

in that jurisdiction.

Before any registrant will be required to comply with the interim final amendments, the SEC must implement a process

for identifying such registrants.

As of the date of this Annual Report, the SEC is seeking public comment on this identification process.

Consistent with the HFCAA, the amendments will require any identified registrant to submit documentation to the SEC establishing that

the registrant is not owned or controlled by a government entity in that jurisdiction, and will also require, among other things, disclosure

in the registrant’s annual report regarding the audit arrangements of, and government influence on, such registrant.

On June 22, 2021, the U.S.

Senate passed the Accelerating Holding Foreign Companies Accountable Act which, if enacted, would decrease the number of non-inspection

years from three years to two, thus reducing the time period before the Company’s securities may be delisted or prohibited from

On November 5, 2021, the

SEC approved PCAOB Rule 6100, Board Determination Under the Holding Foreign Companies Accountability Act, effective immediately.

establishes “a framework for the PCAOB’s determinations under the HFCAA that the PCAOB is unable to inspect or investigate

completely registered public accounting firms located in a foreign jurisdiction because of a position taken by an authority in that jurisdiction.”

On December 2, 2021, SEC

has announced the adoption of amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA.

apply to registrants the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting

firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate (Commission-Identified Issuers).

The final amendments require Commission-Identified Issuers to submit documentation to the SEC establishing that, if true, it is not owned

or controlled by a governmental entity in the public accounting firm’s foreign jurisdiction.

The amendments also require that a

Commission-Identified Issuer that is a “foreign issuer,” as defined in Exchange Act Rule 3b-4, provide certain additional

disclosures in its annual report for itself and any of its consolidated foreign operating entities.

Further, the adopting release provides

notice regarding the procedures the SEC has established to identify issuers and to impose trading prohibitions on the securities of certain

Commission-Identified Issuers, as required by the HFCAA.

The SEC will identify Commission-Identified Issuers for fiscal years beginning

after December 18, 2020.

A Commission-Identified Issuer will be required to comply with the submission and disclosure requirements in

the annual report for each year in which it was identified.

If a registrant is identified as a Commission-Identified Issuer based on its

annual report for the fiscal year ended December 31, 2021, the registrant will be required to comply with the submission or disclosure

requirements in its annual report filing covering the fiscal year ended December 31, 2022.

On December 16, 2021, PCAOB

issued a report on its determinations that PCAOB is unable to inspect or investigate completely PCAOB-registered public accounting firms

headquartered in mainland China and in Hong Kong, a Special Administrative Region of the PRC, because of positions taken by PRC authorities

in those jurisdictions.

The PCAOB made these determinations pursuant to PCAOB Rule 6100, which provides a framework for how the PCAOB

fulfills its responsibilities under the HFCAA.

The report further listed in its Appendix A and Appendix B, Registered Public Accounting

Firms Subject to the Mainland China Determination and Registered Public Accounting Firms Subject to the Hong Kong Determination, respectively.

The audit report included in this Annual Report on Form 10-K for the years ended February 28, 2022 and 2021, was issued by Centurion ZD

(“ CZD CPA ”), an audit firm headquartered in Hong Kong, a jurisdiction that the PCAOB has determined that

the PCAOB is unable to conduct inspections or investigate auditors.

Our auditors CZD CPA is among those listed by the PCAOB Hong Kong

Determination, a determination announced by the PCAOB on December 16, 2021 that the PCAOB is unable to inspect or investigate completely

registered public accounting firms headquartered in Hong Kong, a Special Administrative Region and dependency of the PRC, because of a

position taken by one or more authorities in Hong Kong.

The lack of access to the PCAOB inspection in PRC prevents the PCAOB from fully

evaluating audits and quality control procedures of the auditors based in PRC.

As a result, the investors may be deprived of the benefits

of such PCAOB inspections.

The inability of the PCAOB to conduct inspections of auditors in PRC makes it more difficult to evaluate the

effectiveness of these accounting firms’ audit procedures or quality control procedures as compared to auditors outside of the PRC

that are subject to the PCAOB inspections.

In addition, under the HFCAA, our securities may be prohibited from trading on the U.S.

exchanges or in the over the counter trading market in the U.S.

if our auditor is not inspected by the PCAOB for three consecutive years,

and this ultimately could result in our common stock being delisted.

Furthermore, on June 22, 2021, the U.S.

Senate passed the Accelerating

Holding Foreign Companies Accountable Act (“AHFCAA”), which, if enacted, would amend the HFCAA and require the SEC to prohibit

an issuer’s securities from trading on any U.S.

stock exchanges or in the over the counter trading market in the U.S.

if its auditor

is not subject to PCAOB inspections for two consecutive years instead of three.

In the future, if we do not engage an auditor that is

subject to regular inspection by the PCAOB, our common stocks may be delisted.

The SEC may propose additional

rules or guidance that could impact us if our auditor is not subject to PCAOB inspection.

For example, on August 6, 2020, the President’s

Working Group on Financial Markets, or the PWG, issued the Report on Protecting United States Investors from Significant Risks from Chinese

Companies to the then President of the United States.

This report recommended that the SEC implement five recommendations to address companies

from jurisdictions that do not provide the PCAOB with sufficient access to fulfil its statutory mandate.

Some of the concepts of these

recommendations were implemented with the enactment of the HFCAA.

However, some of the recommendations were more stringent than the HFCAA.

For example, if a company was not subject to PCAOB inspection, the report recommended that the transition period before a company would

be delisted would end on January 1, 2022.

The enactment of the HFCAA

and the implications of any additional rulemaking efforts to increase U.S.

regulatory access to audit information in PRC could cause investor

uncertainty for affected SEC registrants, including us, and the market price of our common stock could be materially adversely affected.

Additionally, whether the PCAOB will be able to conduct inspections of our auditor in the next three years, or at all, is subject to substantial

uncertainty and depends on a number of factors out of our control.

If we are unable to meet the PCAOB inspection requirement in time,

our stock will not be permitted for trading on Nasdaq Capital Market either.

Such a delisting would substantially impair your ability

to sell or purchase our stock when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact

on the price of our stock.

Also, such a delisting would significantly affect our ability to raise capital on terms acceptable to us, or

at all, which would have a material adverse impact on our business, financial condition and prospects.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors