FINGERMOTION: DISCUSSION AND ANALYSIS BY THE MANAGEMENT OF THE FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

The terms “Holder”, “we”, “our”, “our”, “FingerMotion” and “Company” mean FingerMotion, Inc. or depending on the context, collectively with its consolidated subsidiaries and contractually controlled companies.

Caution Regarding Forward-Looking Statements



The following management's discussion and analysis of the Company's financial
condition and results of operations (the "MD&A") contains forward-looking
statements that involve risks, uncertainties and assumptions including, among
others, statements regarding our capital needs, business plans and expectations.
In evaluating these statements, you should consider various factors, including
the risks, uncertainties and assumptions set forth in reports and other
documents we have filed with or furnished to the SEC and, including, without
limitation, this Quarterly Report on Form 10-Q for the three months ended May
31, 2021, and our Annual Report on Form 10-K for the fiscal year ended February
28, 2021, including the consolidated financial statements and related notes
contained therein. These factors, or any one of them, may cause our actual
results or actions in the future to differ materially from any forward-looking
statement made in this document. Refer to "Cautionary Note Regarding
Forward-looking Statements" as disclosed in our Annual Report on Form 10-K for
the fiscal year ended February 28, 2021, and Item 1A, Risk Factors, under Part
II - Other Information of this Quarterly Report.



Introduction



This MD&A is focused on material changes in our financial condition from
February 28, 2021, our most recently completed year end, to May 31, 2021, and
our results of operations for the three months ended May 31, 2021, and should be
read in conjunction with Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations as contained in our Annual Report
on Form 10-K for the fiscal year ended February 28, 2021.



Corporate Information


The Company was originally incorporated as Property Management Company of America at January 23, 2014 in the Delaware state.



On June 21, 2017, the Company amended its certificate of incorporation to effect
a 1-for-4 reverse stock split of the Company's outstanding common stock, to
increase the authorized shares of common stock to 200,000,000 shares and to
change the name of the Company from "Property Management Corporation of America"
to "FingerMotion, Inc." (the "Corporate Actions"). The Corporate Actions and the
amended certificate of incorporation became effective on June 21, 2017.



Our main management offices are located at 1460 Broadway, New York, New York
10036, and our phone number at that address is (347) 349-5339.


Share Exchange Agreement



Effective July 13, 2017, the Company entered into that certain Share Exchange
Agreement (the "Share Exchange Agreement") by and among the Company, Finger
Motion Company Limited, a Hong Kong corporation ("FMCL") and certain
shareholders of FMCL (the "FMCL Shareholders"). FMCL, a Hong Kong corporation,
was formed on April 6, 2016 and is an information technology company that
specializes in operating and publishing mobile games. Pursuant to the Share
Exchange Agreement, the Company agreed to exchange the outstanding equity stock
of FMCL held by the FMCL Shareholders for shares of common stock of the Company.
On the closing date of the Share Exchange Agreement, the Company issued
12,000,000 shares of common stock to the FMCL shareholders. In addition, the
Company issued 600,000 shares to consultants in connection with the transactions
contemplated by the Share Exchange Agreement, and 2,562,500 additional shares to
accredited investors, which was a concurrent financing but not a condition of
closing the Share Exchange Agreement.

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As a result of the Share Exchange Agreement and the other transactions
contemplated thereunder, FMCL became a wholly owned subsidiary of the Company.
The Company operates its video game division through FMCL. However, in June
2018, the Company decided to pause the operation of the game division as it saw
the opportunity in the telecommunication business and have since refocused
into
this business.



This description of the Share Exchange Agreement does not purport to be complete
and is qualified in its entirety by reference to the terms of the Share Exchange
Agreement, which was filed as an exhibit to our Current Report on Form 8-K filed
with the SEC on July 20, 2017 and incorporated by reference herein.



VIE Agreements



On October 16, 2018, the Company, through its indirect wholly owned subsidiary,
Shanghai JiuGe Business Management Co., Ltd. ("JiuGe Management"), entered into
a series of agreements known as variable interest agreements (the "VIE
Agreements") pursuant to which Shanghai JiuGe Information Technology Co., Ltd.
("JiuGe Technology") became our contractually controlled affiliate. The use of
VIE agreements is a common structure used to acquire PRC corporations,
particularly in certain industries in which foreign investment is restricted or
forbidden by the PRC government. The VIE Agreements include a Consulting
Services Agreement, a Loan Agreement, a Power of Attorney Agreement, a Call
Option Agreement, and a Share Pledge Agreement in order to secure the connection
and commitments of the JiuGe Technology. We operate our mobile payment platform
business through JiuGe Technology.



The VIE Agreements included:



     ?    a consulting services agreement through which JiuGe Management is mainly

engaged in data marketing, technical services, technical consulting and

          business consultancy to JiuGe Technology (the "JiuGe Technology
          Consulting Services Agreement");




     ?    a loan agreement through which JiuGe Management grants a loan to the
          Legal Representative of JiuGe Technology for the purpose of capital
          contribution (the "JiuGe Technology Loan Agreement");



? a power of attorney agreement under which the owner of JiuGe Technology

          has vested their collective voting control over JiuGe Technology to
          JiuGe Management and will only transfer their equity interests in JiuGe

Technology to JiuGe Management or its delegate (s) (the “JiuGe Technology

          Power of Attorney Agreement");




     ?    a call option agreement under which the owner of JiuGe Technology has

granted JiuGe Management the irrevocable and unconditional right and

option to acquire all of their stakes in JiuGe Technology or

          transfer these rights to a third party (the "JiuGe Technology Call
          Option Agreement"); and



? a share pledge agreement under which the owner of JiuGe Technology has

have pledged all of their rights, titles and interests in JiuGe Technology to

JiuGe Management to guarantee the performance of JiuGe Technology of its

obligations under the JiuGe Technology Consulting Services Agreement

          (the "JiuGe Technology Share Pledge Agreement").




In the first half of 2018, JiuGe Technology secured contracts with China Unicom
and China Mobile to distribute mobile data for businesses and corporations in 9
provinces/municipalities, namely Chengdu, Jiangxi, Jiangsu, Chongqing, Shanghai,
Zhuhai, Zhejiang, Shaanxi and Inner Mongolia.



In September 2018, JiuGe Technology launched and commercialized mobile payment
and recharge services to businesses for China Unicom. The JiuGe Technology
mobile payment and recharge platform enables the seamless delivery of real-time
payment and recharge services to third-party channels and businesses. We earn a
negotiated rebate amount from each of China Unicom and China Mobile for all
monies paid by consumers to China Unicom and China Mobile that we process. To
encourage consumers to utilize our portal instead of using our competitors'
platforms or paying China Unicom or China Mobile directly, we offer mobile data
and talk time at a rate discounted from these companies' stated rates, which are
also the rates we must pay to them to purchase the mobile data and talk time
provided to consumers through the use of our platform. Accordingly, we earn
income on the rebates we receive from the telecommunications companies, reduced
by the amounts by which we discount the mobile data and talk time sold through
our platform.

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In October 2018, China Unicom and China Mobile awarded JiuGe Technology with
contracts that established partnerships for data analysis, that could unlock
potential value-added services.



This description of the VIE Agreements discussed above do not purport to be
complete and are qualified in their entirety by reference to the terms of the
VIE Agreements, which were filed as exhibits to our Current Report on Form 8-K
filed with the SEC on December 27, 2018 and are incorporated by reference
herein.



Beijing Technology Acquisition



On March 7, 2019, the Company through JiuGe Technology acquired Beijing XunLian
TianXia Technology Co., Ltd. ("Beijing Technology"), a company in the business
of providing mass SMS text services to businesses looking to communicate with
large numbers of their customers and prospective customers. Through Beijing
Technology, the Company entered into the business of mass SMS text message
service as a compliment to its mobile payment and recharge business. The mass
SMS text message service offers bulk SMS services to end consumers with
competitive pricing. Currently, the Company's SMS integrated platform is
processing more than 150 million SMS text messages per month. Beijing Technology
retains a license from the Ministry of Industry and Information Technology to
operate SMS and MMS business in the PRC. Similar to the mobile recharge
business, Beijing Technology is required to make a deposit or bulk purchase in
advance and has secured business customers that will utilize Beijing
Technology's SMS integrated platform to send bulk SMS text messages monthly.
Beijing Technology has the capability to manage and track the entire process,
including to assist the Company's clients to fulfill the government guidelines,
until the SMS messages have been delivered successfully.



Cooperation agreement with China Unicom



On July 7, 2019, JiuGe Technology entered into that certain Yunnan Unicom
Electronic Sales Platform Construction and Operation Cooperation Agreement (the
"Cooperation Agreement") with China United Network Communications Limited Yunnan
Branch ("China Unicom Yunnan"). Under the Cooperation Agreement, JiuGe
Technology is responsible for constructing and operating China Unicom Yunnan's
electronic sales platform through which consumers can purchase various goods and
services from China Unicom Yunnan, including mobile telephones, mobile telephone
service, broadband data services, terminals, "smart" devices and related
financial insurance. The Cooperation Agreement provides that JiuGe Technology is
required to construct and operate the platform's webpage in accordance with
China Unicom Yunnan's specifications and policies, and applicable law, and bear
all expenses in connection therewith. As consideration for the services it
provides under the Cooperation Agreement, JiuGe Technology receives a percentage
of the revenue received from all sales it processes for China Unicom Yunnan
on
the platform.



The Cooperation Agreement expires three years from the date of its signature,
but it may be terminated by (i) JiuGe Technology upon three months' written
notice or (ii) by China Unicom Yunnan unilaterally. The Cooperation Agreement
contains customary representations from each party regarding such party's
authority to enter into and perform under the Cooperation Agreement, and
provides customary events of default, including for various types of failure to
perform. Any disputes arising between the parties under the Cooperation
Agreement will be adjudicated in Chinese courts.



This description of the Cooperation Agreement does not purport to be complete
and is qualified in its entirety by reference to the terms of the Cooperation
Agreement, which was filed as an exhibit to our Current Report on Form 8-K filed
with the SEC on August 9, 2019 and is incorporated by reference herein.



Mobile cooperation agreement with China

In december 2020, JiuGe Technology has entered into a strategic cooperation agreement (the “China Mobile Cooperation Agreement”) with the subsidiary of China Mobile, China Mobile Financial Technology Co., Ltd. (“China Mobile Financial”) to explore and create a new forward-looking business model that combines the traditional business of exchanging loyalty points with an e-commerce platform designed to create a higher evolution of the brand loyalty.

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From the beginning of 2020, JiuGe Technology began actively seeking cooperation
with China Mobile Financial, given China Mobile's years of experience in the
financial services industry. Currently, of China Mobile's estimated 900 million
subscribers, only an estimated 600 million currently participate and accumulate
points within the loyalty reward program, often referred to as "Points Mall",
meaning there is still plenty of room for growth. These estimated 600 million
subscribers have accumulated an aggregate of points worth an estimated 20
billion yuan (approximately US$2.86 billion) (Source: China Securities Journal,
"China Mobile will open "points" ecological stock, customer points worth over 20
billion yuan", Yang Jie, November 15, 2019).



The "Points Mall" business is the US equivalent of a loyalty rewards program.
The program uses "points" as a form of currency that allows users to exchange
them for products and services. The loyalty program strives to keep its content
fresh and is on the lookout for partnerships with other unique brands to expand
the universe of redemption products and services offered.



Intercorporate Relationships



The following is a list of all of our subsidiaries and the corresponding date of
jurisdiction of incorporation or organization and the ownership interest of each
entity. All of our subsidiaries are directly or indirectly owned or controlled
by us:



                                       Place of Incorporation /
           Name of Entity                     Formation            Ownership Interest
Finger Motion Company Limited (1)             Hong Kong                   

100%

Finger Motion (CN) Global Limited
(2)                                             Samoa                     

100%

Finger Motion (CN) Limited (3)                Hong Kong                   

100%

Shanghai JiuGe Business Management
Co., Ltd.(4)                                     PRC                      100%
Shanghai JiuGe Information                                           Contractually
Technology Co., Ltd.(5)                          PRC                 controlled (5)
Beijing XunLian TianXia Technology                                   Contractually
Co., Ltd.(6)                                     PRC                   controlled
Finger Motion Financial Group
Limited(7)                                      Samoa                     100%
Finger Motion Financial Company
Limited(8)                                    Hong Kong                   

100%

Shanghai TengLian JiuJiu Information
Communication Technology Co.,                                        Contractually
Ltd.(9)                                          PRC                   controlled




Notes:



     (1)  Finger Motion Company Limited is a wholly-owned subsidiary of
          FingerMotion, Inc.

     (2)  Finger Motion (CN) Global Limited is a wholly-owned subsidiary of
          FingerMotion, Inc.

     (3)  Finger Motion (CN) Limited is a wholly-owned subsidiary of Finger Motion
          (CN) Global Limited.

     (4)  Shanghai JiuGe Business Management Co., Ltd. is a wholly-owned
          subsidiary of Finger Motion (CN) Limited.

     (5)  Shanghai JiuGe Information Technology Co., Ltd. is a variable interest
          entity that is contractually controlled by Shanghai JiuGe Business
          Management Co., Ltd.

(6) Beijing XunLian TianXia Technology Co., Ltd. is a 99% owned subsidiary

of Shanghai JiuGe Information Technology Co., Ltd.

(7) Finger Motion Financial Group Limited is a wholly owned subsidiary of

FingerMotion, Inc.

(8) Finger Motion Financial Company Limited is a wholly owned subsidiary of

Finger Motion Financial Group Limited.

(9) Shanghai TengLian JiuJiu Information Communication Technology Co., Ltd.

is a 99% subsidiary of Shanghai JiuGe Information Technology Co.,

          Ltd.




Overview



The Company operates the following lines of business: (i) telecommunications
products and services; (ii) SMS and MMS service; (iii) a rich communication
services (RCS) platform; (iv) big data insights; and (v) a video game division
(inactive).


Telecommunications products and services



The Company's current product mix consisting of payment and recharge services,
data plans, subscription plans, mobile phones, and loyalty points redemption.
Chinese mobile phone consumers often utilize third-party e-marketing websites to
pay their phone bills. If the consumer connected directly to the
telecommunications provider to pay his or her bill, the consumer would miss out
on any benefits or marketing discounts that e-marketers provide. Thus, consumers
log on to these e-marketers' websites, click into their respective phone
provider's store, and "top up," or pay, their telecommunications provider for
additional mobile data and talk time.

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To connect to the respective mobile telecommunications providers, these
e-marketers must utilize a portal licensed by the applicable telecommunication
company that processes the payment. We have been granted one of these licenses
by China United Network Communications Group Co., Ltd. ("China Unicom") and
China Mobile Communications Corporation ("China Mobile"), each of which is a
major telecommunications provider in China. We principally earn revenue by
providing mobile payment and recharge services to customers of China Unicom
and
China Mobile.



We conduct our mobile payment business through Shanghai JiuGe Technology Co.,
Ltd. ("JiuGe Techology"), our contractually controlled affiliate through the
entry into a series of agreements known as variable interest agreements (the
"VIE Agreements") in October 2018. In the first half of 2018, JiuGe Technology
secured contracts with China Unicom and China Mobile to distribute mobile data
for businesses and corporations in nine provinces/municipalities, namely
Chengdu, Jiangxi, Jiangsu, Chongqing, Shanghai, Zhuhai, Zhejiang, Shaanxi and
Inner Mongolia. In September 2018, JiuGe Technology launched and commercialized
mobile payment and recharge services to businesses for China Unicom.



The JiuGe Technology mobile payment and recharge platform enables the seamless
delivery of real-time payment and recharge services to third-party channels and
businesses. We earn a rebate from each telecommunications company on the funds
paid by consumers to the telecommunications companies we process. To encourage
consumers to utilize our portal instead of using our competitors' platforms or
paying China Unicom or China Mobile directly, we offer mobile data and talk time
at a rate discounted from these companies' stated rates, which are also the
rates we must pay to them to purchase the mobile data and talk time provided to
consumers through the use of our platform. Accordingly, we earn income on the
rebates we receive from China Unicom and China Mobile, reduced by the amounts by
which we discount the mobile data and talk time sold through our platform.



FingerMotion started and commercialized its "Business to Business" ("B2B") model
by integrating with various e-commerce platforms to provide its mobile payment
and recharge services to subscribers or end consumers. In the first quarter of
2019 FingerMotion expanded its business by commercializing its first "Business
to Consumer" ("B2C") model, offering the telecommunication providers' products
and services, including data plans, subscription plans, mobile phones, and
loyalty points redemption, directly to subscribers or customers of the
e-commerce companies, such as PinDuoDuo ("PDD") and TMall ("TMALL"). The Company
is planning to further expand its universal exchange platform by setting up B2C
stores on several other major e-commerce platforms in China. In addition to
that, we have been assigned as one of China's Mobile's loyalty redemption
partner where we will be providing the services for their customers via our
platform.



Additionally, as previously disclosed, on July 7, 2019, JiuGe Technology, our
contractually controlled affiliate, entered into that certain Yunnan Unicom
Electronic Sales Platform Construction and Operation Cooperation Agreement (the
"Cooperation Agreement") with China Unicom's Yunnan subsidiary. Under the
Cooperation Agreement, JiuGe Technology is responsible for constructing and
operating China Unicom's electronic sales platform through which consumers can
purchase various goods and services from China Unicom, including mobile
telephones, mobile telephone service, broadband data services, terminals,
"smart" devices and related financial insurance. The Cooperation Agreement
provides that JiuGe Technology is required to construct and operate the
platform's webpage in accordance with China Unicom's specifications and
policies, and applicable law, and bear all expenses in connection therewith. As
consideration for the service it provides under the Cooperation Agreement, JiuGe
Technology receives a percentage of the revenue received from all sales it
processes for China Unicom on the platform. The Cooperation Agreement expires
three years from the date of its signature, but it may be terminated by (i)
JiuGe Technology upon three months' written notice or (ii) by China Unicom
unilaterally.

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During the recent fiscal year, the Company expanded its offering under their
telecommunication product and services by increasing their product line revenue
streams. In March 2020, FingerMotion secure a contract with both China Mobile
and China Unicom to acquire new users to take up the respective subscription
plans. On December 2, 2020, our contractually controlled subsidiary, Shanghai
JiuGe Information Technology Co., Ltd., and China Mobile Financial Technology
Co., Ltd., a subsidiary of China Mobile, signed a strategic cooperation
agreement to explore and create a new forward-leaning business model that
combines the traditional loyalty point redemption business with an e-commerce
platform designed to create a higher evolution of brand loyalty. Recently, in
February 2021, we increased the mobile phones sales to end users using all
of
our platforms.



SMS and MMS Services



On March 7, 2019, the Company through JiuGe Technology acquired Beijing XunLian
TianXia Technology Co., Ltd. ("Beijing Technology"), a company in the business
of providing mass SMS text services to businesses looking to communicate with
large numbers of their customers and prospective customers. With this
acquisition, the Company expanded into a second partnership with the telecom
companies by acquiring bulk Short Message Service ("SMS") and Multimedia
Messaging Service ("MMS") bundles at reduced prices and offering bulk SMS
services to end consumers with competitive pricing. FingerMotion's subsidiary,
Beijing Technology, retains a license from the Ministry of Industry and
Information Technology ("MIIT") to operate the SMS and MMS business in the PRC.
Similar to the mobile payment and recharge business, Beijing Technology is
required to make a deposit or bulk purchase in advance and has secured business
customers, including premium car manufacturers, hotel chains, airlines and
e-commerce companies, that utilize Beijing Technology's SMS integrated platform
to send bulk SMS text messages monthly. Beijing Technology has the capability to
manage and track the entire process, including guiding the Company's customer to
meet MIIT's guidelines on messages composed, until the SMS messages have been
delivered successfully.



Rich Communication Services


In March 2020, the Company began development of an RCS platform, also known as
MaaP (Messaging as a Platform). This RCS platform will be a proprietary business
messaging platform that enables businesses and brands to communicate and service
their customers on the 5G infrastructure, delivering a better and more efficient
user experience at a lower cost. For example, with the new 5G RCS message
service, consumers will have the ability to list available flights by sending a
message regarding a holiday and will also be able to book and buy flights by
sending messages. This will allow telecommunication providers like China Unicom
and China Mobile to retain users on their systems, without having to utilize
third party apps or log onto the internet, which will increase their user
retention. We expect this to open up a new marketing channel for the Company's
current and prospective business partners.



Big Data Insights



In July 2020, the Company launched its proprietary technology platform
"Sapientus" as its big data insights arm to deliver data-driven solutions and
insights for businesses within the insurance, healthcare, and financial services
industries.. The Company applies its vast experience in the insurance and
financial services industry and capabilities in technology and data analytics to
develop revolutionary solutions targeted towards insurance and financial
consumers. Integrating diverse publicly available information, insurance and
financial based data with technology and finally registering them into the
FingerMotion telecommunications and insurance ecosystem, the Company would be
able to provide functional insights and facilitate the transformation of key
components of the insurance value chain, including driving more effective and
efficient underwriting, enabling fraud evaluation and management, empowering
channel expansion and market penetration through novel product innovation, and
more. The ultimate objective is to promote, enhance and deliver better value to
our partners and customers.



The Company's proprietary risk assessment engine offers standard and customized
scoring and appraisal services based on multi-dimensional factors. The Company
has the ability to provide potential customers and partners with insights-driven
and technology-enabled solutions and applications including preferred risk
selection, precision marketing, product customization, and claims management
(e.g., fraud detection). The Company's mission is to deliver the next generation
of data-driven solutions in the financial services, healthcare, and insurance
industries that result in more accurate risk assessments, more efficient
processes, and a more delightful user experience.

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Contents

On or around January 25, 2021, the Company's wholly owned subsidiary, Finger
Motion Financial Company Limited's, big data analytic arm branded "Sapientus,"
entered into a services agreement with Pacific Life Re, a global life reinsurer
serving the insurance industry with a comprehensive suite of products and
services.



Our Video Game Division



The video game industry covers multiple sectors and is currently experiencing a
move away from physical games towards digital software. Advances in technology
and streaming now allow users to download games rather than visiting retailers.
Video game publishers are expanding their direct-to-consumer channels with
mobile gaming, the current growth leader, and eSports and virtual reality
gaining momentum as the next big sectors.



In June 2018, we temporarily paused its publishing and operating plans for
existing games, and the Company's board of directors decided to re-focus the
company's resources into new business opportunities in China, particularly the
mobile phone payment and data business.



Recent Developments



Recently, our contractually controlled subsidiary, Shanghai JiuGe Information
Technology Co., Ltd., successfully entered into a volume-based contract with
China Mobile Fujian with respect to our SMS services.



Results of Operations


Three months ended May 31, 2021 Compared to the three months ended May 31, 2020



The following table sets forth our results of operations for the periods
indicated:



                                                                  For the three months ended
                                                                May 31, 2021       May 31, 2020
Revenue                                                        $    5,996,489      $   2,742,934
Cost of revenue                                                $   (5,376,792 )    $  (2,448,495 )
Total operating expenses                                       $   (1,475,579 )    $    (869,771 )
Total other income (expenses)                                  $      (53,624 )    $      (2,719 )
Net Loss attributable to the Company's shareholders            $     (911,890 )    $    (578,077 )
Foreign currency translation adjustment                        $       60,184      $     (15,874 )
Comprehensive loss attributable to the Company                 $     (851,870 )    $    (594,034 )
Basic Loss Per Share attributable to the Company               $        (0.02 )    $       (0.02 )
Diluted Loss Per Share attributable to the Company             $        (0.02 )    $       (0.02 )


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Revenue


The following table presents the Company’s revenues from its three business segments for the periods indicated:


                                                        For the three months ended
                                                     May 31, 2021         May 31, 2020        Change (%)
 Telecommunication Products & Services              $    1,737,080       $ 
    393,792               341 %
 SMS & MMS Business                                 $    4,160,694       $    2,349,142                77 %
 Big Data                                           $       98,715       $            -               100 %
 Total Revenue                                      $    5,996,489       $    2,742,934               119 %




We recorded $5,996,489 in revenue for the quarter ended May 31, 2021, an
increase of $3,253,555 or 119%, compared to the quarter ended May 31, 2020. This
increase resulted from an increase in revenue of $1,343,288, $1,811,552 and
$98,715 from our Telecommunication Products & Services, SMS & MMS business and
Big Data business, respectively. We principally earn revenue by providing mobile
payment and recharge services to customers of telecommunications companies in
China. Specifically, we earn a negotiated rebate amount from the
telecommunications companies for all monies paid by consumers to those companies
that we process. As we continue to develop our mobile recharge business, we
expect that revenues will continue to grow. Our SMS texting service has grown
substantially compared to last year. The growth is expected to flourish further
with the Company continuing to make prepayments to purchase large bulks of
inventories to be resold to our increasing corporate clientele. We also earned
revenue during the most recently completed fiscal year from our new venture on
subscription plan acquisition and mobile phone sales. The Company expects and
hopes that these new product offerings will continue to provide additional
revenue for the Company in the future. During the last quarter of the fiscal
year, our Big Data division secured a contract with Pacific Life Re, a global
life reinsurance serving the insurance industry with comprehensive suite of
products and services, to develop a holistic multi-faceted risk rating concept,
leveraging the Company's proprietary approach to analytics by drawing data from
novel sources and filtering them through advance algorithms with the ultimate
goal to apply new insights generated from our FingerMotion's predictive model to
the traditional insurance industry. This division has since recorded revenue and
we expect additional revenue from this division in the future.



Cost of Revenue



The following table sets forth the Company's cost of revenue for the periods
indicated:



                                             For the three months ended
                                          May 31, 2021        May 31, 2020
 Telecommunication Products & Services   $    1,474,203      $      189,806
 SMS & MMS Business                      $    3,812,589      $    2,258,689
 Big Data                                $       90,000      $            -
 Total Cost of Revenue                   $    5,376,792      $    2,448,495




We recorded $5,376,792 in costs of revenue for the quarter ended May 31, 2021,
an increase of $2,928,297 or 120%, compared to the quarter ended May 31, 2020.
As previously mentioned, we principally earn revenue by providing mobile payment
and recharge services to customers of telecommunications companies, subscription
plans and mobile phone sales in China. To earn this revenue, we incur cost of
the product, certain customer acquisition costs, including discounts to our
customers and promotional expenses, which is reflected in our cost of revenue.



Gross profit



Our gross profit for the quarter ended May 31, 2021 was $619,697, an increase of
$325,258 or 110%, compared to the quarter ended May 31, 2020. This increase in
gross profit resulted from higher revenue for the period.

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Amortization & Depreciation


We recorded depreciation of $14,421 for fixed assets for the quarter ended May
31, 2021, an increase of $11,976 or 490%, compared to the quarter ended May 31,
2020. This increase resulted in purchase of equipment.



General and administrative expenses

The following table shows the general and administrative expenses of the Company for the periods indicated:


                           For the three months ended
                         May 31, 2021         May 31, 2020
 Accounting           $        39,743       $       15,000
 Consulting           $       355,843       $      250,475
 Entertainment        $        39,507       $       29,172
 IT                   $        14,267       $       17,717
 Rent                 $        25,135       $       40,385
 Salaries & Wages     $       588,427       $      317,068
 Technical Fee        $        23,114       $       23,746
 Travelling           $        27,589       $        6,764
 Others               $        66,122       $       41,712
 Total G&A Expenses   $     1,179,747       $      742,039




We recorded $1,179,747 in general and administrative expenses for the quarter
ended May 31, 2021, an increase of $437,708 or 59%, compared to the quarter
ended May 31, 2020. The increased consulting and staff salaries are principally
the result of the commencement and building of our three lines of businesses.



Marketing Cost



The following table sets forth the Company's marketing cost for the periods
indicated:



                        For the three months ended
                        May 31, 2021          May 31, 2020
Marketing Cost   $            85,007         $           -






We recorded $85,007 in marketing cost for the quarter ended May 31, 2021 for our
telecommunication products and services business. Marketing costs represent the
costs of promoting our product offerings through all our platforms including
other digital marketing expenses.



Research & Development



The following table sets forth the Company's research & development for the
periods indicated:



                             For the three months ended
                          May 31, 2021         May 31, 2020
Research & Development   $      135,429       $      103,610




We incurred fees of $135,429 in research & development for the quarter ended May
31, 2021 as compared to $103,610 for the quarter ended May 31, 2020. The
increase of $31,819 or 31% was due to higher data access and usage fees charged
by telecommunications companies.



The Insurtech division of FingerMotion focuses on consumer behavioral insights
extraction for the purpose of risk assessment. Insights are mined from a
multitude of data sources, harmonized with the objectives of our various
business partners. The initial phase of business application is to focus on
insurance industry particularly in the area of underwriting risk rating,
complementary claims adjudication and assessment, and risk segmentation & market
penetration.

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This division includes senior actuaries, data scientists and computer programmers.

Research and development expenses include associated salaries and wages, data access costs and IT infrastructure.

The 1st stage of the phase 1 prototyping – analytical framework and commercial applications has been completed and is expected to be commercialized by the end of the 2021 schedule.



Share Compensation Expenses



The following table sets forth the Company's share compensation expenses for the
periods indicated:



                                 For the three months ended
                              May 31, 2021        May 31, 2020
Share compensation expenses   $      60,975       $      21,677




We incurred fees of $60,975 in share issuance for consultants in consideration
of the services which have been provided to the company for the quarter ended
May 31, 2021 as compared to $21,677 for the quarter ended May 31, 2020. The
increase of $39,298 or 181% was due to more consultants were compensated with
shares of the company.



Operating Expenses


We recorded $1,475,579 in operating expenses for the quarter ended May 31, 2021,
as compared to $869,771 in operating expenses for the quarter ended May 31,
2020. The increase of $605,808 or 70%, for the quarter ended May 31, 2021 is as
set forth above.


Net loss attributable to shareholders of the Company



The net loss attributable to the Company's shareholders was $911,890 for the
quarter ended May 31, 2021 and $578,077 for the quarter ended May 31, 2020. The
increase in net loss attributable to the Company's shareholders of $333,813 or
58% resulted primarily from the increase in total operating expenses as
discussed above.



Liquidity and capital resources



The following table sets out our cash and working capital as of May 31, 2021 and
February 28, 2021:



                                 As at May 31,       As at February 28,
                                          2021                     2021
Cash reserves                  $       789,752     $            850,717
Working capital (deficiency)   $     2,352,502     $          2,992,232




At May 31, 2021, we had cash and cash equivalents of $789,752 as compared to
cash and cash equivalents of $850,717 at February 28, 2021. In order for us to
continue to operate our mobile payment business, we must deposit funds with our
telecommunication companies from time to time in order to obtain access to the
mobile data and talk-time we make available to consumers on our portal.
Accordingly, the amount of cash we have on hand fluctuates significantly from
period to period. The Company otherwise does not have any planned capital
expenditures and has historically funded its operations from revenues and sales
of securities, including convertible debt securities. We believe that our cash
on hand, cash equivalents and short-term investments, along with our revenues
from operations, will fund our projected operating requirements, fund our
current operations and repay our outstanding indebtedness, in each case, for at
least the next 12 months. However, to grow our business substantially, we will
need to increase the amount of funds we have deposited with the
telecommunications companies for which we process mobile recharge payments.
Accordingly, we expect to seek additional capital through public or private
sales of our equity or debt securities, or both. We might also enter into
financing arrangements with commercial banks or non-traditional lenders. We
cannot provide investors with any assurance that we will be able to raise
additional funding from the sale of our equity or debt securities, or both, in
order to increase our deposits with our telecommunications company clients, or
if available, that such funding will be on terms acceptable to us.

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Contents

We did, however, raise $179,999 through the sale of shares of our common stock
in private placement transactions exempt from the registration requirements of
the United States Securities Act of 1933, as amended, during the quarter ended
May 31, 2021.



Statement of Cashflows



The following table provides a summary of cash flows for the periods presented:



                                                                    For the three months ended
                                                                 May 31, 2021          May 31, 2020
Net cash used in operating activities                          $     (1,941,180 )     $       38,109
Net cash used in investing activities                          $         (4,401 )     $      (11,578 )
Net cash provided by financing activities                      $      1,826,694       $       41,514
Effect of exchange rates on cash & cash equivalents            $         57,922       $      (16,053 )
Net increase (decrease) in cash and cash equivalents           $        (60,965 )     $       51,992



Cash flow used in operating activities

Net cash used in operating activities increased by $1,979,289 in the three
months ended May 31, 2021 compared to the three months ended May 31, 2020,
primarily due to an increase in prepayment and deposit of ($2,812,004) (May 31,
2020: ($1,020,797)), increase in other receivable of ($10,307) (May 31, 2020:
$63,252), increase in inventories of ($967) (May 31, 2020: $nil), decrease in
accounts payable of ($170,474) (May 31, 2020: ($171,481)), decrease in lease
liability of ($2,108) (May 31, 2020: ($6,671)); offset by a decrease in account
receivable of $1,415,203 (May 31, 2020: $946,180), and an increase in accrual
and other payable of $473,587 (May 31, 2010: $774,884).



Cash flows used in investing activities

During the quarter ended May 31, 2021, investing activities fell by $ 7,177
compared to the quarter ended May 31, 2020.

Cash flow generated by financing activities



During the quarter ended May 31, 2021, financing activities increased by
$1,785,180 compared to the quarter ended May 31, 2020, which was primarily due
to advances from stock subscription, a loan from a non-controlling stockholder
and proceeds from issuance of shares of our common stock.



Off-balance sheet provisions



There are no off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.



Subsequent Events


At June 1, 2021, the Company issued 25,000 shares of our common stock at a deemed price of $ 5.00 by action to a natural person under a consultation agreement.

On July 13, 2021, the Company issued (i) 568,900 shares of our common stock at
price of $5.00 per share to 17 individuals and 2 entities (ii) 45,000 shares of
our common stock at $2.00 per share to 2 individuals pursuant to the exercise of
warrants, (iii) 60,000 shares of our common stock at $3.00 per share to one
individual pursuant to the exercise of warrants, (iv) 5,000 shares of our common
stock at a deemed price of $2.00 per share to one individual pursuant to a
consulting agreement, and (v) 25,000 shares of our common stock at a deemed
price of $5.00 per share to one individual pursuant to a consulting agreement.

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Critical accounting policies

For a complete summary of all of our significant accounting policies refer to
Note 2: Summary of Principal Accounting Policies of the Notes to the Condensed
Consolidated Financial Statements as presented under Item 8, Financial
Statements and Supplementary Data in our Annual Report on Form 10-K for our
fiscal year ended February 28, 2021.



See “Critical Accounting Policies” in Item 7, Management’s Discussion and Analysis of the Financial Condition and Results of Operations of our Annual Report on Form 10-K for our year ended February 28, 2021.

Recently published accounting position papers

The Company does not believe that the accounting standards recently issued but not yet in effect, if currently adopted, would have a material impact on the consolidated financial position, statements of operations and cash flows.

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