UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission File Number: 001-41187

FINGERMOTION, INC.

(Exact name of registrant as specified in its charter)

Delaware		20-0077155
(State or other jurisdiction of organization)		(I.R.S. employer identification no.)

111 Somerset Road, Level 3

Singapore

238164

(Address of principal executive offices)

(Zip code)

(347) 349-5339

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 par value		FNGR		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 51,988,030 shares of common stock outstanding as of July 14, 2023.

FINGERMOTION, INC.

FORM 10-Q

TABLE OF CONTENTS

PART 1. FINANCIAL INFORMATION	1

ITEM 1. FINANCIAL STATEMENTS	1
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	27
Three Months Ended May 31, 2023 Compared to Three Months Ended May 31, 2022	37
Liquidity and Capital Resources	40
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	42
ITEM 4 – CONTROLS AND PROCEDURES	42
Evaluation of Disclosure Controls and Procedures	42
Changes in internal control over financial reporting	43

PART II – OTHER INFORMATION	44

ITEM 1 – LEGAL PROCEEDINGS	44
ITEM 1A. RISK FACTORS	44
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	66
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES	66
ITEM 4 – MINE SAFETY DISCLOSURES	66
ITEM 5 – OTHER INFORMATION	66
ITEM 6 – EXHIBITS	67

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PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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FINGERMOTION, INC.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three months ended May 31, 2023

(Unaudited - Expressed in U.S. Dollars)

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FingerMotion, Inc.

Condensed Consolidated Balance Sheets


	May 31,			February 28,
	2023			2023
ASSETS		(Unaudited)

Current Assets
Cash and cash equivalents	$	5,424,912		$	9,240,241
Accounts receivable		1,631,729			1,334,884
Prepayment and deposit		3,162,694			4,139,061
Other receivables		4,148,403			2,551,665
Total Current Assets		14,367,738			17,265,851
Non-current Assets
Equipment		68,992			78,098
Intangible assets		61,138			73,066
Right-of-use asset		98,636			130,109
Total Non-current Assets		228,766			281,273

TOTAL ASSETS	$	14,596,504		$	17,547,124

LIABILITIES AND SHAREHOLDER’S DEFICIT

Current Liabilities
Accounts payable	$	59,021		$	27,371
Accrual and other payables		453,385			1,096,225
Stock subscription payables		—			60,000
Convertible notes payable, current portion		—			730,000
Lease liability, current portion		95,289			122,924
Total Current Liabilities		607,695			2,036,520
Non-current Liabilities
Convertible notes payable, non-current portion		—			2,533,333
Lease liability, non-current portion		—			4,971
Total Non-current Liabilities		—			2,538,304

TOTAL LIABILITIES	$	607,695		$	4,574,824

SHAREHOLDERS’ EQUITY
Preferred stock, par value $.0001 per share; Authorized 1,000,000 shares; issued and outstanding -0- shares.		—			—

Common Stock, par value $.0001 per share; Authorized 200,000,000 shares; issued and outstanding 51,988,030 shares and 49,432,214 issued and outstanding at May 31, 2023 and February 28, 2023 respectively		5,199			4,943

Additional paid-in capital		39,273,122			37,406,415

Additional paid-in capital - stock options		632,664			632,664

Accumulated deficit		(25,956,785	)		(24,691,314	)

Accumulated other comprehensive income		22,116			(391,692	)

Stockholders’ equity before non-controlling interests		13,976,316			12,961,016

Non-controlling interests		12,493			11,284

TOTAL SHAREHOLDERS’ EQUITY		13,988,809			12,972,300

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	14,596,504		$	17,547,124

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FingerMotion, Inc.

Unaudited Condensed Consolidated Statements of Operations


	Three Months Ended
	May 31,			May 31,
	2023			2022
Revenue	$	12,169,091		$	4,855,123
Cost of revenue		(11,506,542	)		(4,478,052	)

Gross profit		662,549			377,071

Amortization & depreciation		(18,342	)		(14,172	)
General & administrative expenses		(1,361,990	)		(1,239,550	)
Marketing Cost		6,841			(57,191	)
Research & Development		(172,099	)		(211,647	)
Stock compensation expenses		(296,461	)		(289,931	)

Total operating expenses		(1,842,051	)		(1,812,491	)

Net loss from operations		(1,179,502	)		(1,435,420	)

Other income (expense):
Interest income		22,865			757
Interest expense		(121,451	)		(14,831	)
Exchange gain (loss)		2			(272	)
Other income		13,824			5,098
Total other income (expense)		(84,760	)		(9,248	)

Net loss before income tax	$	(1,264,262	)	$	(1,444,668	)
Income tax expenses		—			—
Net Loss	$	(1,264,262	)	$	(1,444,668	)

Less: Net profit attributable to the non-controlling interest		1,209			(545	)

Net loss attributable to the Company’s shareholders	$	(1,265,471	)	$	(1,444,123	)

Other comprehensive income:
Foreign currency translation adjustments		413,808			(305,370	)
Comprehensive loss	$	(851,663	)	$	(1,749,493	)
Less: comprehensive income (loss) attributable to non-controlling interest		(48	)		(89	)
Comprehensive loss attributable to the Company	$	(851,615	)	$	(1,749,404	)

NET LOSS PER SHARE
Loss Per Share - Basic	$	(0.02	)	$	(0.03	)
Loss Per Share - Diluted	$	(0.02	)	$	(0.03	)

NET LOSS PER SHARE ATTRIBUTABLE TO THE COMPANY
Loss Per Share - Basic	$	(0.02	)	$	(0.03	)
Loss Per Share - Diluted	$	(0.02	)	$	(0.03	)

Weighted Average Common Shares Outstanding - Basic		51,479,890			42,693,999
Weighted Average Common Shares Outstanding - Diluted		51,479,890			42,693,999

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FingerMotion, Inc.

Unaudited Condensed Consolidated Statement of Shareholders’ Equity


												Accumulated
					Capital Paid		Additional					Other
	Common Stock				in Excess		Paid-in capital		Accumulated			Comprehensive			Stockholders’			Non-controlling
	Shares		Amount		of Par Value		stock options		Deficit			Income			equity			interest		Total
Balance at March 1, 2023		49,432,214		4,943		37,406,415		632,664		(24,691,314	)		(391,692	)		12,961,016			11,284		12,972,300

Common stock issued for cash		20,000		2		59,998		—		—			—			60,000			—		60,000
Common stock issued for professional service		70,000		7		124,243		—		—			—			124,250			—		124,250
Execution of convertible notes		2,465,816		247		1,682,466		—		—			—			1,682,713					1,682,713
Accumulated other comprehensive income		—		—		—		—		—			413,808			413,808			—		413,808
Net (Loss)		—		—		—		—		(1,265,471	)		—			(1,265,471	)		1,209		(1,264,262	)

Balance at May 31, 2023		51,988,030		5,199		39,273,122		632,664		(25,956,785	)		22,116			13,976,316			12,493		13,988,809


												Accumulated
					Capital Paid		Additional					Other
	Common Stock				in Excess		Paid-in capital		Accumulated			Comprehensive			Stockholders’			Non-controlling
	Shares		Amount		of Par Value		stock options		Deficit			Income			equity			interest			Total
Balance at March 1, 2022		42,627,260		4,263		21,730,941		356,328		(17,152,172	)		137,911			5,077,271			10,979			5,088,250

Common stock issued for cash		—		—		—		—		—			—			—			—			—
Common stock issued for professional service		150,000		15		435,235		—		—			—			435,250			—			435,250
Accumulated other comprehensive income		—		—		—		—		—			(305,370	)		(305,370	)		—			(305,370	)
Net (Loss)		—		—		—		—		(1,444,123	)		—			(1,444,123	)		(545	)		(1,444,668	)

Balance at May 31, 2022		42,777,260		4,278		22,166,176		356,328		(18,596,295	)		(167,459	)		3,763,028			10,434			3,773,462

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FingerMotion, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows


	Three Months Ended
	May 31,			May 31,
	2023			2022
Net (loss)	$	(1,264,262	)	$	(1,444,668	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Share based compensation expenses		365,545			379,013
Amortization and depreciation		18,342			14,172

Change in operating assets and liabilities:
(Increase) decrease in accounts receivable		(322,774	)		887,094
(Increase) decrease in prepayment and deposit		899,836			326,836
(Increase) decrease in others receivable		(1,659,906	)		975
Increase (decrease) in accounts payable		32,328			(1,418,270	)
Increase (decrease) in accrual and other payables		(645,872	)		832,880
Increase (decrease) in due to lease liability		(1,188	)		—
Net Cash provided by (used in) operating activities		(2,577,951	)		(421,968	)

Cash flows from investing activities
Purchase of equipment		(380	)		—
Net cash provided by (used in) investing activities		(380	)		—

Cash flows from financing activities
Proceed from convertible note		—			730,000
Repayment of convertible note		(1,135,333	)		—
Common stock issued for cash		60,000			—
Net cash provided by (used in) financing activities		(1,075,333	)		730,000

Effect of exchange rates on cash and cash equivalents		(161,665	)		35,583

Net change in cash		(3,815,329	)		343,615

Cash at beginning of period		9,240,241			461,933

Cash at end of period	$	5,424,912		$	805,548

Major non-cash transactions:
Conversion of loan payables to shares	$	1,682,713		$	—

Supplemental disclosures of cash flow information:
Interest paid	$	—		$	—
Taxes paid	$	—		$	—

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FINGERMOTION, INC.

Three months ended May 31, 2023 and 2022

Notes to the Condensed Consolidated Financial Statements

Note 1 –Nature of Business and basis o

SEC Form 10-Q filed by FingerMotion Inc.