FingerMotion(FNGR) - 2019 Q4 - Annual Report

Cautionary Note Regarding Forward-Looking Statements Forward-Looking Statements Disclosure This section cautions that the Annual Report contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially from current expectations - The report contains forward-looking statements that involve risks and uncertainties, reflecting current expectations about future events[14] - Actual future results may differ materially from forward-looking statements due to factors such as international/national/local economic conditions, demographic changes, ability to sustain/manage/forecast growth, ability to manage VIE contracts, ability to maintain relationships and licenses in China, adverse publicity, competition, fluctuations in operating results, and business disruptions[15][17] - Readers are cautioned not to place undue reliance on forward-looking statements, which are made only as of the report date, and the company does not undertake to update them[16] PART I Item 1. Business FingerMotion Inc. transitioned from mobile gaming to offering mobile payment and recharge services in China through B2B and B2C models, leveraging telecom licenses - FingerMotion Inc. is a US fintech company, incorporated in Delaware, with corporate offices in New York, NY[18] - The company transitioned from a mobile video gaming platform to offering Mobile Payment and Recharge services in China, starting September 2018[18][19] - FingerMotion holds licenses from China Unicom and China Mobile to process mobile payments and recharge services, earning revenue from negotiated rebates[20][37] - The company operates a B2B model by integrating with e-commerce platforms and expanded to a B2C model in Q1 2019, offering services directly to consumers on platforms like PinDuoDuo (PDD)[21] - FingerMotion has initiated other revenue streams, such as selling bulk SMS bundles to enterprise clients (car manufacturers, hotel chains, e-commerce companies), which are less capital-intensive but offer higher profits[25] Mobile Payment and Recharge Service Metrics (February-March) | Metric | February | March | | :----- | :------- | :------ | | GTV (US$) | $42 million | $56 million | | Revenue (US$) | $210,000 | $280,000 | | Revenue Rate | 50 basis points ($0.50 for every $100) | 50 basis points ($0.50 for every $100) | - The company's growth in mobile payment services is dependent on increasing deposits with telecommunications companies (China Unicom and China Mobile)[24][70] Overview Corporate Information Our Video Game Division Our Mobile Payment Platform Competition Intellectual Property Regulation Employees Available Information Item 1A. Risk Factors The company faces significant business, securities, and China-specific risks, including limited operating history, net losses, VIE enforceability, and government influence - The company has a limited operating history, making future results difficult to forecast and past results not indicative of future performance[54][55] - The company has a history of net losses and may not achieve or maintain profitability in the future, with accumulated deficit of $4.8 million as of February 28, 2019[56] - A significant risk is the concentration of earnings from China Unicom and China Mobile; loss of business, payment difficulties, or lower pricing terms from these two companies could materially impact financial condition[59] - The company's reliance on Variable Interest Entity (VIE) agreements in China carries risks, including potential unenforceability by PRC regulators, less effective control compared to direct ownership, and challenges in enforcing rights under PRC law[80][81][83][84] - Doing business in China exposes the company to risks from changes in political/economic situations, uncertainties in the PRC legal system, substantial government influence, inflation, currency exchange restrictions, and potential classification as a 'resident enterprise' for tax purposes[90][92][94][96][97][104][106] - The company's common stock has limited liquidity and trades on the OTC market, with no intention to pay dividends in the foreseeable future[73][74] Risks Related to the Business Risks Related to Our Securities Risks Related to the VIE Agreements Risks Related to Doing Business in China Item 1B. Unresolved Staff Comments No unresolved staff comments are reported - No unresolved staff comments[111] Item 2. Description of Properties The company operates its corporate and international offices through co-working spaces and does not own any real property - The company does not own any real property[112] - Corporate headquarters in New York and other offices in Malaysia and Hong Kong are operated through co-working space memberships (e.g., WeWork)[112] Item 3. Legal Proceedings As of February 28, 2019, no material outstanding claims or litigation are known to materially affect the company's financial position - As of February 28, 2019, there are no matters that management believes would have a material adverse effect on the company's results of operations, financial condition, or cash flows[114] - The company may become subject to legal proceedings and claims in the ordinary course of business, with uncertain outcomes that could affect financial results[113] Item 4. Mine Safety Disclosure This item is not applicable to the company's operations - Not applicable[115] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on OTCQB, has 116 stockholders, does not pay dividends, and issued significant shares and convertible notes in unregistered sales during FY2019 - The company's common stock trades on the OTCQB Market under the symbol "FNGR"[116] - As of May 15, 2019, there were approximately 116 stockholders of record[116] - The company has never declared or paid cash dividends and does not intend to in the foreseeable future, planning to finance business development and expansion with future earnings[117] Unregistered Sales of Securities (FY2019) | Type of Security | Shares Issued | Purchase Price per Share | Total Purchase Price | Exemption | | :--------------- | :------------ | :----------------------- | :------------------- | :-------- | | Common Stock | 310,000 | $2.00 | $620,000 | Regulation S | | Common Stock | 668,200 | $1.50 | $1,002,300 | Regulation S | | Common Stock | 50,000 | $1.00 | $50,000 | Regulation S | | Common Stock | 50,000 | $1.00 | $50,000 | Regulation S | | Common Stock | 100,000 | $2.50 | $250,000 | Regulation S | | Convertible Promissory Notes | N/A | N/A | $370,000 (aggregate principal) | Section 4(a)(2) | - No repurchases of equity securities were made during the year ended February 28, 2019[124] Item 6. Selected Financial Data As a smaller reporting company, selected financial data is not required - Not required for smaller reporting company filers[125] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The company shifted from gaming to mobile payment services in China via VIEs, driving significant revenue growth in FY2019, yet incurred a net loss due to increased operating expenses - The company operates two principal lines of business: a video game division (through FMCL) and a mobile payment platform (through JiuGe Technology via VIE agreements)[127][130] - In June 2018, the company refocused resources from video games to new mobile data business opportunities in China[129] - The mobile payment platform, launched in September 2018, provides real-time payment and recharge services to businesses for China Unicom and China Mobile, earning rebates[131] Revenue Breakdown (Years Ended February 28) | Category | 2019 (USD) | 2018 (USD) | Change (USD) | Change (%) | | :--------------- | :--------- | :--------- | :----------- | :--------- | | Gaming | 331,233 | 453,543 | (122,310) | -26.97% | | Mobile Recharge | 1,141,804 | - | 1,141,804 | N/A | | Total Revenue | 1,473,037 | 453,543 | 1,019,494 | 224.78% | Cost of Revenue Breakdown (Years Ended February 28) | Category | 2019 (USD) | 2018 (USD) | Change (USD) | Change (%) | | :----------------------- | :--------- | :--------- | :----------- | :--------- | | Cost of Revenue - Gaming | 256,837 | 434,717 | (177,880) | -40.92% | | Cost of Revenue - Mobile Recharge | 873,184 | - | 873,184 | N/A | | Total Cost of Revenue | 1,130,021 | 434,717 | 695,304 | 159.95% | General and Administrative Expenses (Years Ended February 28) | Category | 2019 (USD) | 2018 (USD) | Change (USD) | Change (%) | | :------------------- | :--------- | :--------- | :----------- | :--------- | | Advertising | 73,932 | 573,292 | (499,360) | -87.10% | | Contract Labor | 201,460 | 437,860 | (236,400) | -54.00% | | Consulting | 398,725 | 191,852 | 206,873 | 107.83% | | Consulting – non cash | 1,608,853 | 40,250 | 1,568,603 | 3897.40% | | Legal | 145,896 | 240,710 | (94,814) | -39.39% | | Salaries & Wages | 172,842 | - | 172,842 | N/A | | Others | 218,876 | 169,702 | 49,174 | 28.98% | | Total G&A Expenses | 2,820,584 | 1,653,666 | 1,166,918 | 70.57% | Net Loss and EPS (Years Ended February 28) | Metric | 2019 | 2018 | | :-------------------------- | :--------- | :--------- | | Net Loss | $(2,912,875) | $(1,751,121) | | Loss Per Share - Basic | $(0.12) | $(0.15) | | Loss Per Share - Diluted | $(0.16) | $(0.15) | | Wgt Ave Common Shares Outstanding - Basic | 24,763,753 | 11,729,514 | | Wgt Ave Common Shares Outstanding - Diluted | 18,604,860 | 11,760,199 | - Goodwill from the acquisition of JiuGe Technology was written off as it was internally generated and considered to be of no value[142] - The company had a net increase in cash of $1,326,694 during the twelve months ended February 28, 2019, with cash at period end of $1,337,245[144][145] Cash Flow Summary (Year Ended February 28, 2019) | Activity | Cash Flow (USD) | | :-------------------------- | :-------------- | | Operating Activities | $(718,274) | | Investing Activities | $(11,711) | | Financing Activities | $2,064,674 | | Effect of exchange rates | $(7,995) | | Net Change in Cash | $1,326,694 | - The company believes its cash on hand, equivalents, short-term investments, and revenues will fund operating requirements and repay indebtedness for at least the next 12 months[143] - The company does not have any off-balance sheet arrangements[146] General Results of Operations Liquidity and Capital Resources Off-Balance Sheet Arrangements Significant and Critical Accounting Policies and Practices and Recently Issued Accounting Pronouncements Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, market risk disclosures are not required - Not required for smaller reporting company filers[149] Item 8. Financial Statements and Supplementary Data Financial statements and supplementary data are appended to this report and detailed in Item 15 - Financial statements and supplementary data are appended to the report and listed in Item 15[150] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure No changes in or disagreements with accountants on accounting and financial disclosure are reported - No changes in or disagreements with accountants on accounting and financial disclosure[150] Item 9A. Controls and Procedures As of February 28, 2019, disclosure controls and procedures were ineffective due to material weaknesses in ICFR, which management is committed to remediating - As of February 28, 2019, disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting (ICFR)[151][153][154] - Identified material weaknesses include: lack of written documentation for internal control policies and procedures, limited segregation of duties and oversight in finance/accounting functions, and insufficient documentation of control procedure performance[156] - Management is working to build the necessary infrastructure of controls and is committed to remediating the identified material weaknesses[153][154] - Despite the ineffective ICFR, management believes the consolidated financial statements fairly present the financial position, results of operations, and cash flows[154] - No material changes in internal control over financial reporting occurred during the fourth fiscal quarter ended February 28, 2019[157] Effectiveness of Disclosure Controls and Procedures Management's Report on Internal Control over Financial Reporting Changes in Internal Control over Financial Reporting Item 9B. Other Information No other information is required to be disclosed under this item - No other information to report[158] PART III Item 10. Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the 2019 Proxy Statement, with a code of conduct pending adoption - Information is incorporated by reference to the Proxy Statement for the 2019 Annual Meeting of Stockholders[159] - The board has not yet adopted a code of conduct but expects to do so in the future[160] Item 11. Executive Compensation Executive compensation information is incorporated by reference from the 2019 Proxy Statement - Information is incorporated by reference to the Proxy Statement for the 2019 Annual Meeting of Stockholders[162] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security ownership and related stockholder matters are incorporated by reference from the 2019 Proxy Statement - Information is incorporated by reference to the Proxy Statement for the 2019 Annual Meeting of Stockholders[163] Item 13. Certain Relationships and Related Transactions, and Director Independence Related party transactions and director independence information are incorporated by reference from the 2019 Proxy Statement - Information is incorporated by reference to the Proxy Statement for the 2019 Annual Meeting of Stockholders[164] Item 14. Principal Accountant Fees and Services Principal accountant fees and services information is incorporated by reference from the 2019 Proxy Statement - Information is incorporated by reference to the Proxy Statement for the 2019 Annual Meeting of Stockholders[165] PART IV Item 15. Exhibits, Financial Statement Schedules This section lists the financial statements and an index to exhibits, including corporate documents and VIE agreements, many incorporated by reference - The report includes the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Comprehensive Loss, Cash Flows, and Stockholders' Equity, along with Notes to Consolidated Financial Statements[167] - An index to exhibits is provided, listing corporate documents such as Certificate of Incorporation, Bylaws, and various VIE agreements (Exclusive Consulting Agreement, Loan Agreement, Power of Attorney Agreement, Exclusive Call Option Agreement, Share Pledge Agreement), with many incorporated by reference[167][168][169][170] - Certifications of the Chief Executive Officer pursuant to Rule 13a-14(a) and 13a-14(b) of the Exchange Act are filed herewith[170] - Financial information for the fiscal year ended February 28, 2019, is filed in XBRL format[170] Item 16. Form 10-K Summary This item is not applicable to the company - Not applicable[171] Financial Statements Report of Independent Registered Public Accounting Firm Centurion ZD CPA & Co. issued an unqualified opinion on the financial statements, noting a going concern uncertainty due to recurring losses and capital deficiency - Centurion ZD CPA & Co. issued an unqualified opinion on the consolidated financial statements for the periods ended February 28, 2019 and 2018[182] - The financial statements were prepared assuming the company will continue as a going concern, but recurring losses and a net capital deficiency raise substantial doubt about this ability[183] - The audit did not include an opinion on the effectiveness of the company's internal control over financial reporting[185] Consolidated Balance Sheets Total assets and liabilities significantly increased in 2019, driven by cash, receivables, and prepayments, while shareholders' equity improved from a deficit to a positive balance Consolidated Balance Sheet Summary (February 28) | Category | 2019 (USD) | 2018 (USD) | Change (USD) | Change (%) | | :-------------------------- | :--------- | :--------- | :----------- | :--------- | | Total Assets | 4,437,692 | 439,839 | 3,997,853 | 908.94% | | Cash and cash equivalents | 1,337,245 | 10,551 | 1,326,694 | 12573.12% | | Accounts receivable | 493,808 | 296,249 | 197,559 | 66.69% | | Prepayment and deposit | 2,570,724 | 40,534 | 2,530,190 | 6241.00% | | Total Liabilities | 3,851,660 | 542,480 | 3,309,180 | 609.99% | | Accounts payable | 1,239,280 | 107,082 | 1,132,198 | 1057.30% | | Due to related parties | 1,880,373 | - | 1,880,373 | N/A | | Convertible notes payable | 370,000 | 50,000 | 320,000 | 640.00% | | Total Shareholders' Equity (Deficit) | 586,032 | (102,641) | 689,673 | -671.94% | | Accumulated deficit | (4,822,389) | (1,909,514) | (2,912,875) | 152.55% | Consolidated Statements of Operations Revenue significantly increased in 2019 due to mobile recharge, but higher operating expenses, including non-cash consulting and goodwill write-off, resulted in a larger net loss Consolidated Statements of Operations Summary (Years Ended February 28) | Metric | 2019 (USD) | 2018 (USD) | Change (USD) | Change (%) | | :-------------------------- | :--------- | :--------- | :----------- | :--------- | | Revenue | 1,473,037 | 453,543 | 1,019,494 | 224.78% | | Cost of revenue | (1,130,021) | (434,717) | (695,304) | 159.95% | | Gross profit (loss) | 343,016 | 18,826 | 324,190 | 1722.00% | | Total operating expenses | (2,907,743) | (1,768,394) | (1,139,349) | 64.43% | | Net loss from operations | (2,564,727) | (1,749,568) | (815,159) | 46.59% | | Total other income (expense) | (348,148) | (1,553) | (346,595) | 22317.77% | | Net Loss | (2,912,875) | (1,751,121) | (1,161,754) | 66.34% | | Comprehensive loss | (2,921,827) | (1,751,121) | (1,170,706) | 66.85% | - The increase in revenue of $1,019,494 was primarily due to the consolidation of VIE entities and the new mobile payment business model[133] - A significant portion of the increased operating expenses, $1,608,853, resulted from the total value of non-cash share issuance for consulting services[139][138] - The company also recorded a written-off goodwill of $322,973 in 2019[191] Consolidated Statement of Shareholders' Equity Shareholders' equity improved from a deficit to a positive balance in 2019, driven by significant common stock issuances for cash and services, despite a net loss Shareholders' Equity Summary (February 28) | Category | 2019 (USD) | 2018 (USD) | Change (USD) | | :-------------------------- | :--------- | :--------- | :----------- | | Common Stock Shares | 24,763,753 | 17,432,753 | 7,331,000 | | Common Stock Amount | $2,476 | $1,743 | $733 | | Additional Paid-in Capital | $5,414,897 | $1,655,130 | $3,759,767 | | Accumulated Deficit | $(4,822,389) | $(1,909,514) | $(2,912,875) | | Accumulated Other Comprehensive Income | $(8,952) | - | $(8,952) | | Total Shareholders' Equity (Deficit) | $586,032 | $(102,641) | $688,673 | - Common stock issued for cash in 2019 amounted to $3,760,500, significantly increasing additional paid-in capital[193] - The accumulated deficit increased by $2,912,875 in 2019 due to the net loss[193] Consolidated Statements of Cash Flows Cash increased significantly in 2019, primarily from financing activities, while operating cash outflow improved and investing activities used minimal cash Consolidated Statements of Cash Flows Summary (Years Ended February 28) | Cash Flow Activity | 2019 (USD) | 2018 (USD) | Change (USD) | | :-------------------------- | :--------- | :--------- | :----------- | | Net (loss) | $(2,912,875) | $(1,751,121) | $(1,161,754) | | Cash used in operating activities | $(718,274) | $(1,609,479) | $891,205 | | Net cash provided by investing activities | $(11,711) | $(201,739) | $190,028 | | Net cash provided by financing activities | $2,064,674 | $1,808,423 | $256,251 | | Effect of exchange rates on cash | $(7,995) | - | $(7,995) | | Net change in cash | $1,326,694 | $(2,795) | $1,329,489 | | Cash at end of year | $1,337,245 | $10,551 | $1,326,694 | - Financing activities provided $2,064,674 in cash, including $1,678,674 from issuance of shares and $386,000 from notes payable[195] - Operating cash outflow improved from $(1,609,479) in 2018 to $(718,274) in 2019[195] Notes to the Consolidated Financial Statements The notes detail the company's business transition, accounting policies, VIE consolidation, going concern uncertainty, revenue recognition, and financial instrument specifics, with no material subsequent events Note 1 – Nature of Business and basis of Presentation The company, incorporated in Delaware, transitioned from mobile gaming to mobile payment services in China via a VIE agreement with JiuGe Technology in 2018 - FingerMotion, Inc. was incorporated in Delaware on January 23, 2014, initially as Property Management Corporation of America[197] - On July 13, 2017, the company changed its name to FingerMotion, Inc. and acquired Finger Motion Company Limited (FMCL), a Hong Kong mobile gaming company, in a reverse acquisition[198][200] - On October 16, 2018, the company entered into Variable Interest Entity (VIE) agreements with Shanghai JiuGe Information Technology Co., Ltd. (JiuGe Technology) to operate its mobile payment platform in China, a common structure for foreign investment in restricted PRC industries[203] Note 2 - Summary of Principal Accounting Policies This note details principal accounting policies, including U.S. GAAP consolidation of VIEs, revenue recognition under ASC 606, asset impairment, and the immaterial impact of recent accounting pronouncements - Consolidated financial statements are prepared in accordance with U.S. GAAP and include wholly-owned subsidiaries and Variable Interest Entities (VIEs)[206] - The company consolidates JiuGe Technology as a VIE, being its primary beneficiary with power to direct activities and absorb losses/receive benefits[207][209] VIE Assets and Liabilities (February 28, 2019) | Category | Amount (USD) | | :---------------- | :----------- | | Current assets | $2,674,890 | | Non-current assets | - | | Total assets | $2,674,890 | | Current liabilities | $3,023,805 | | Non-current liabilities | - | | Total liabilities | $3,023,805 | VIE Operating Result (February 28, 2019) | Category | Amount (USD) | | :-------------------------- | :----------- | | Revenue | $1,141,804 | | Cost of revenue | $(873,184) | | Amortization & Depreciation | $(1,394) | | General & administrative expenses | $(294,472) | | Net loss from operations | $(27,246) | | Total other income (expense) | $1,244 | | Net Loss | $(26,002) | - The company adopted ASC 606 (Revenue from Contracts with Customers) on January 1, 2018, with no material change to the timing and pattern of revenue recognition for its current revenue streams[231][232] - The company relies on cloud-based hosting and periodically evaluates identifiable intangible assets and long-lived assets for impairment[221][222][224] - Recently issued accounting pronouncements (ASU 2017-13, 2017-14, 2018-02, 2018-05, 2018-10, 2018-11) are not expected to have a material impact on the company's financial statements[212][213][214][215][216][218][219] Note 3 - Going Concern The company's going concern assumption is challenged by recurring losses and accumulated deficit, requiring additional financing to achieve profitability - The company had an accumulated deficit of $4,822,389 and a net loss of $2,912,875 for the year ended February 28, 2019[237] - Continuation as a going concern depends on obtaining additional financing (equity or debt) to fund operations and achieve profitability[238] - There is no assurance that additional funding will be available on favorable terms or at all, and any financing may involve substantial dilution or restrictive covenants[238] Note 4 - Revenue Total revenue significantly increased to $1,473,037 in 2019, primarily driven by $1,141,804 from the new mobile recharge business Revenue Breakdown (Years Ended February 28) | Category | 2019 (USD) | 2018 (USD) | | :--------------- | :--------- | :--------- | | Gaming | 331,233 | 453,543 | | Mobile Recharge | 1,141,804 | - | | Total Revenue | 1,473,037 | 453,543 | - The increase in revenue of $1,019,494 was due to the consolidation of VIE entities and the new business model[239] Note 5 – Equipment Net equipment value increased to $10,606 in 2019, reflecting higher equipment costs and $2,844 in depreciation expense Equipment Details (February 28) | Category | 2019 (USD) | 2018 (USD) | | :---------------------- | :--------- | :--------- | | Equipment | $13,450 | $1,739 | | Less: accumulated depreciation | $(2,844) | $(145) | | Net equipment | $10,606 | $1,594 | - Depreciation expense for the year ended February 28, 2019, totaled $2,844, up from $145 in 2018[241] Note 6 – Intangible Assets Net intangible assets were $0 in 2019 as $200,000 in licenses were fully amortized, with amortization expense totaling $85,417 Intangible Assets (February 28) | Category | 2019 (USD) | 2018 (USD) | | :-------------------------- | :--------- | :--------- | | Licenses | $200,000 | $200,000 | | Less: accumulated amortization | $(200,000) | $(114,583) | | Net intangible assets | $0 | $85,417 | - The remaining amortization period of the company's amortizable intangible assets was fully amortized as of February 28, 2019[243] - Amortization expense for the year ended February 28, 2019, totaled $85,417[244] Note 7 – Prepaid expenses Prepaid expenses, primarily vendor deposit pledges for stock credits, significantly increased due to the inception of China entities in October 2018 - Prepaid expenses consist of deposit pledges to vendors for stock credits for resale[245] - Significant movement in prepaid expenses is attributed to the inception of Finger Motion (CN) Limited and its China entities on October 16, 2018[245] - Current vendors for prepaid expenses include China Unicom JiangXi and China Unicom Online[245] Prepayment and Account Payable Balances | Category | Amount (USD) | | :------------------ | :----------- | | Prepayment paid | $44,570,540 | | Prepayment received | $43,236,805 | | Account payable | $920,684 | Note 8 - Convertible notes payables As of February 28, 2019, the company held $370,000 in 10% convertible promissory notes, due February-May 2019, with fair value approximating face value Convertible Notes Payable (February 28, 2019) | Face Value (USD) | Interest Rate | Due Date | Conversion Price per Share (USD) | | :--------------- | :------------ | :------- | :------------------------------- | | $50,000 | 10% | Feb 8, 2019 | $2.50 | | $50,000 | 10% | Feb 23, 2019 | $2.00 | | $100,000 | 10% | Mar 28, 2019 | $1.00 | | $50,000 | 10% | May 3, 2019 | $2.50 | | $50,000 | 10% | May 18, 2019 | $2.50 | | $70,000 | 10% | May 18, 2019 | $2.50 | | Total | | | | - The fair value of these convertible debt approximates the face value, with no value assigned to the beneficial conversion feature[250] Note 9 - Note payable As of February 28, 2019, a $66,000 non-convertible note payable with 0% interest is due May 21, 2021 Note Payable (February 28, 2019) | Face Value (USD) | Interest Rate | Due Date | | :--------------- | :------------ | :------- | | $66,000 | 0% | May 21, 2021 | Note 10 - Common Stock The company underwent a reverse stock split in 2017, issued 12 million shares for an acquisition, and issued 7.33 million common shares for $3.76 million in FY2019 - On June 21, 2017, the company effected a 1-for-4 reverse stock split, increased authorized common shares to 200,000,000, and changed its name to FingerMotion, Inc[253] - On July 13, 2017, approximately 12,000,000 common shares were issued to FMCL shareholders as part of a Share Exchange Agreement, with additional shares issued to consultants (600,000) and accredited investors (up to 2,562,500)[254][255] - During the fiscal year ended February 28, 2019, approximately 7,331,000 common shares were issued for cash totaling $3,760,500[256] Note 11 - Common Stock Subscribed The company received $150,000 from common stock subscriptions in 2018, with all shares issued by February 28, 2019 - The company received $150,000 from common stock subscriptions during the year ended February 28, 2018[257] - As of February 28, 2019, all subscribed common stock shares were issued[257] Note 12 - Earnings Per Share Basic loss per share was $(0.12) and diluted loss per share was $(0.16) in 2019, with a significant increase in weighted average shares outstanding Earnings Per Share (Years Ended February 28) | Metric | 2019 | 2018 | | :---------------------------------------- | :--------- | :--------- | | Net Loss | $(2,912,875) | $(1,751,121) | | Weighted average number of common shares outstanding — basic | 24,763,753 | 11,729,514 | | Weighted average number of common shares outstanding — diluted | 18,604,860 | 11,760,199 | | Loss per common share — basic | $(0.12) | $(0.15) | | Loss per common share — diluted | $(0.16) | $(0.15) | Note 13 - Income Taxes The company faces varying tax rates across jurisdictions, with a 0.0% effective tax rate in 2018-2019 due to foreign income and a full valuation allowance on U.S. deferred tax assets - FingerMotion, Inc. is subject to a U.S. federal corporate income tax of 21%[261] - FMCL (Hong Kong) has a 16.5% profits tax rate, and PRC entities (JiuGe Management and JiuGe Technology) are subject to a 25% PRC income tax[262][264] Effective Tax Rate (Years Ended February 28) | Category | 2019 | 2018 | | :---------------------------------------- | :----- | :----- | | U.S. statutory tax rate | 21.0% | 34.0% | | Foreign income not registered in the U.S. | (21.0%) | (34.0%) | | PRC profit tax rate | 25.0% | 25.0% | | Changes in valuation allowance and others | (25.0%) | (34.0%) | | Effective tax rate | 0.0% | 0.0% | - The company has deferred tax assets of $236,331 (2019) and $367,735 (2018) from U.S. net operating losses, but a full valuation allowance has been provided[265][266] Note 14 - Commitments And Contingencies The company has $20,748 in future lease payments, discloses related party balances, and is unaware of any material outstanding claims or litigation Future Minimum Lease Payments | Period | Amount (USD) | | :--------------- | :----------- | | Not later than 1 year | $20,748 | Related Party Balances | Related Party | Amount Due (USD) | | :-------------------- | :--------------- | | FMCL director | $194,945 | | Lily | $1,685,428 | - The company is not aware of any material outstanding claims and litigation against them[268] Note 15 - Subsequent Events No significant subsequent events were identified from February 28, 2019, through the financial statement issuance date - No significant subsequent events were identified from February 28, 2019, through the financial statement issuance date[270]