FINGERMOTION, INC. – 10-K – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management's discussion and analysis of the Company's financial
condition and results of operations contain 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
Annual Report on Form 10-K filing for the fiscal year ended February 28, 2022,
including the consolidated financial statements and related notes contained
herein. 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" and Item 1A. Risk Factors.



Introduction



The following discussion summarizes the results of operations for each of our
fiscal years ended February 28, 2022 and February 28, 2021 and our financial
condition as at February 28, 2022 and February 28, 2021, with a particular
emphasis on fiscal 2022, our most recently completed fiscal year.



Overview



The Company operates the following lines of business: (i) Telecommunications
Products and Services; (ii) Value Added Product and Services; (iii) SMS and MMS
Services; (iv) a Rich Communication Services (RCS) platform; (v) Big Data
Insights; and (vi) a Video Game Division (inactive).

Telecommunications Products and Services

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

time.

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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 Unicom and 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 JiuGe Technology, our
contractually controlled affiliate through the entry into a series of agreements
known as VIE Agreements in October 2018. In the first half of 2018, JiuGe
Technology secured contracts with China Unicom and China Mobile to distribute
mobile data for businesses and corporations in nine provinces/municipalities,
namely Chengdu, Jiangxi, Jiangsu, Chongqing, Shanghai, Zhuhai, Zhejiang,
Shaanxi, Inner Mongolia, Henan and Fujian. In September 2018, JiuGe Technology
launched and commercialized mobile payment and recharge services to businesses
for China Unicom. In May 2021, JiuGe Technology signed a volume-based agreement
with China Mobile Fujian to offer recharge services to the Fujian province which
we have launched and commercialized in November 2021.



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



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



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 with yearly auto-renewal terms, but
it may be terminated by (i) JiuGe Technology upon three months' written notice
or (ii) by China Unicom unilaterally.



During the recent fiscal year, the Company expanded its offering under their
telecommunication product and services by increasing their product line revenue
streams. In March 2020, FingerMotion secured a contract with both China Mobile
and China Unicom to acquire new users to take up the respective subscription
plans.



Recently, in February 2021, we increased the mobile phones sales to end users
using all of our platforms. This business will continue to contribute to the
overall revenue for the group as part of our offering to our customers.

Value Added Product and Services

These are new product and services that the Company expects to secure and work
with the telecommunication provider and all our e-commerce platform partners to
market. The current and upcoming value-added product is the Mobile Protection
programs which we plan to launch soon. On February 2022, our contractually
controlled subsidiary, JiuGe Technology, through its 99% own subsidiary Shanghai
Tenglian JiuJiu Information Communication Technology Co., Ltd. ("TengLian")
signed an agreement with both China Unicom and China Mobile to co-operate to
roll out the Mobile Device protection product which is incorporated into the
Telecommunication subscription plans in line with their roll out of new mobile
phones and new 5G phones. The estimated roll out is expected to be in the second
quarter of FY2023.

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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.



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.



On or around December 2021, the Company through JiuGe Technology formed a
collaborative research alliance with Munich Re in extending behavioral analytics
to enhance understanding of morbidity and behavioral patterns in China market,
with the goal of creating value for both insurers and the end insurance
consumers through better technology, product offerings and customer experience.



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.

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Recent Developments

On or around December 2021, our contractually controlled subsidiary, JiuGe
Technology formed a collaborative Research lab with Munich Re in extending
behavioral analytics to enhance understanding of morbidity and behavioral
patterns in China market, with the goal of creating value for both insurers and
the end insurance consumers through better technology, product offerings and
customer experience.

On December 28, 2021, we successfully uplisted to Nasdaq Capital Market under
the current trading symbol of "FNGR".

On February 2022, our contractually controlled subsidiary, JiuGe Technology
through its 99% owned subsidiary TengLian signed an agreement with both China
Unicom and China Mobile to co-operate to roll out the Mobile Device protection
product which is incorporated into the telecommunication subscription plans in
line with their roll out of new mobile phones and new 5G phones.



Results of Operations

Year Ended February 28, 2022 Compared to Year Ended February 28, 2021

The following table sets forth our results of operations for the fiscal years
ended February 28, 2022 and February 28, 2021:

                                                                       Year Ended                Year Ended
                                                                 February 28, 2022        February 28, 2021
Revenue                                                        $        22,927,415      $        16,683,570
Cost of revenue                                                $       (20,113,294 )    $       (15,036,876 )
Total operating expenses                                       $        (7,681,356 )    $        (5,871,877 )
Total other income (expenses)                                  $           (73,313 )    $          (152,891 )
Net Loss attributable to the Company's shareholders            $        (4,943,444 )    $        (4,381,974 )
Foreign currency translation adjustment                        $            (2,995 )    $           136,942
Comprehensive loss attributable to the Company                 $        (4,946,696 )    $        (4,245,567 )
Basic Loss Per Share attributable to the Company                             (0.12 )                  (0.13 )
Diluted Loss Per Share attributable to the Company                         

 (0.12 )                  (0.13 )


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Revenues

The following table sets forth the Company's revenue from its three lines of
business for the periods indicated:

                                                             Year Ended               Year Ended
                                                      February 28, 2022        February 28, 2021        Change (%)

 Telecommunication Products & Services              $         8,657,277    

 $         3,211,103               170 %
 SMS & MMS Business                                 $        14,138,720      $        13,439,390                 5 %
 Big Data                                           $           131,418      $            33,077               297 %
 Total Revenue                                      $        22,927,415      $        16,683,570                37 %

We recorded $22,927,415 in revenue for the year ended February 28, 2022, an
increase of $6,243,845 or 37%, compared to the year ended February 28, 2021.
This increase resulted from an increase in revenue of $5,446,174, $699,330 and
$98,341 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 especially on the new collaboration
with China Mobile on Fujian province. Subscription plans and mobile phone sales
are other revenues that contributed to the Telecommunication Products & Services
revenue. Our SMS texting service saw a slight improvement compared to last year
as we are redistributing our resources to expand the Telecommunication Products
& Services as opportunity arises. This trend will continue to better manage our
resources to enable a healthier overall profit margin. 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 FY2021, 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. The revenue recorded flowed into the current
year 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:



                                                  Year Ended              Year Ended
                                           February 28, 2022       February 28, 2021
 Telecommunication Products & Services   $         6,517,568     $         2,412,178
 SMS & MMS Business                      $        13,235,726     $        12,624,698
 Big Data                                $           360,000     $                 -
 Total Cost of Revenue                   $        20,113,294     $        15,036,876

We recorded $20,113,294 in costs of revenue for the year ended February 28,
2022, an increase of $5,076,418 or 34%, compared to the year ended February 28,
2021. 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 year ended February 28, 2022 was $2,814,121, an
increase of $1,167,427 or 71%, compared to the year ended February 28, 2021.
This increase in gross profit resulted from higher revenue for the period as
well as an improved margin. The gross profit margin for the fiscal year ended
February 28, 2022 is 12.27% compared to a gross margin of 9.87% for the fiscal
year ended February 28, 2021.



Amortization & Depreciation



We recorded depreciation of $57,894 for fixed assets for the year ended February
28, 2022, an increase of $30,839 or 114%, compared to the year ended February
28, 2021. This increase resulted from the purchase of equipment.

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General and Administrative Expenses

The following table sets forth the Company's general and administrative expenses
for the periods indicated:

                               Year Ended              Year Ended
                        February 28, 2022       February 28, 2021
 Accounting           $           195,948     $           147,614
 Consulting           $         2,022,397     $         1,673,925
 Entertainment        $           212,584     $           152,290
 IT                   $           101,470     $            71,369
 Rent                 $           111,690     $           107,730
 Salaries & Wages     $         2,116,307     $         1,687,977
 Technical Fee        $           127,487     $            44,316
 Travelling           $           103,405     $           101,027
 Others               $           289,294     $           260,632
 Total G&A Expenses   $         5,280,582     $         4,246,880

We recorded $5,280,582 in general and administrative expenses for the year ended
February 28, 2022, an increase of $1,033,702 or 24%, compared to the year ended
February 28, 2021. The increased consulting and staff salaries are principally
the result of the commencement and building of our three lines of businesses.
Costs have also increased due to our up-listing process which includes some
engagement of consultants to assist the Company in the process.



Marketing Cost



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



                          Year Ended              Year Ended
                   February 28, 2022       February 28, 2021
Marketing Cost   $           641,917     $           364,160

We recorded $641,917 in marketing cost for the year ended February 28, 2022 for
our telecommunication products and services business. Marketing costs represent
the costs of promoting our product offerings through all our platforms.



Research & Development



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



                                             Year Ended              Year Ended
                                      February 28, 2022       February 28, 2021
Research & Development - Big Data   $           923,387     $           552,343

We recorded $923,387 in research & development for the year ended February 28,
2022, as compared to $552,343 for the year ended February 28, 2021. The increase
of $371,044 or 67% was due to increase in headcount for the Research &
Development team and higher data access and usage fee charged by
telecommunications company.



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

This division comprises of experienced actuaries, data scientists and computer
programmers.

The expenses for research & development include associated wages and salaries,
data access fees and IT infrastructure.

The 1st stage of prototyping on Phase 1 - analytical framework and business
applications have been completed and target to commercialize by the middle of
calendar 2022.

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Share Compensation Expenses



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



                                       Year Ended              Year Ended
                                February 28, 2022       February 28, 2021
Share compensation expenses   $           777,576     $           640,394




We incurred fees of $777,576 in share issuance for consultants in consideration
of the services which have been provided to the company for the year ended
February 28, 2022 as compared to $640,394 for the year ended February 28, 2021.
The increase of $137,182 or 21% was due to more consultants being compensated
with shares of the Company. The rationale is to minimize the usage of cash by
the Company in order for the Company to invest in revenue generating activities.



Operating Expenses



We recorded $7,681,356 in operating expenses for the year ended February 28,
2022 as compared to $5,871,877 in operating expenses for the year ended February
28, 2021. The increase of $1,809,479 or 31% for the year ended February 28,

2022
is as set forth above.

Net Loss attributable to the Company's shareholders

The net loss attributable to the Company's shareholders was $4,943,444 for the
year ended February 28, 2022 and $4,381,974 for the year ended February 28,
2021. The increase in net loss attributable to the Company's shareholders of
$561,470 or 13% 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 February 28,
2022 and February 28, 2021:

                    As at February 28, 2022       As at February 28, 2021
Cash reserves     $                 461,933     $                 850,717
Working capital   $               4,930,441     $               2,992,232




At February 28, 2022, we had cash and cash equivalents of $461,933 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 as explained above to ensure our cash is being used efficiently
by our operations to generate revenues. The Company otherwise does not have any
planned capital expenditures and has historically funded its operations from
revenues and sales of securities, including convertible debt securities. We
believe that our cash on hand, cash equivalents and short-term investments,
along with our revenues from operations, will fund our projected operating
requirements, fund our current operations and repay our outstanding
indebtedness, in each case, for at least the next 12 months. However, to grow
our business substantially, we will need to increase the amount of funds we have
deposited with the telecommunications companies for which we process mobile
recharge payments. Accordingly, we expect to seek additional capital through
public or private sales of our equity or debt securities, or both. We might also
enter into financing arrangements with commercial banks or non-traditional
lenders. We cannot provide investors with any assurance that we will be able to
raise additional funding from the sale of our equity or debt securities, or
both, in order to increase our deposits with our telecommunications company
clients, or if available, that such funding will be on terms acceptable to us.



We did, however, raise $5,114,499 through the sale of shares of our common stock
in private placement transactions exempt from the registration requirements of
the Securities Act during the year ended February 28, 2022.

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Statement of Cashflows



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



                                                                        Year Ended               Year Ended
                                                                 February 28, 2022        February 28, 2021
Net cash used in operating activities                          $        (5,847,862 )    $        (4,271,618 )
Net cash used in investing activities                          $           (26,072 )    $          (238,485 )
Net cash provided by financing activities                      $         5,414,194      $         5,174,600
Effect of exchange rates on cash & cash equivalents            $            70,956      $            83,301
Net increase (decrease) in cash and cash equivalents           $          (388,784 )    $           747,798

Cash Flow used in Operating Activities

Net cash used in operating activities increased by $1,576,244 in the year ended
February 28, 2022 compared to the year ended February 28, 2021, primarily due to
an increase in accounts receivable of ($775,837) (2021: ($1,437,329)), increase
in prepayment and deposit of ($2,684,965) (2021:$1,975,673), increase in other
receivable of ($32,545) (2021: ($906,265)), increase in inventories of ($6)
(2021:($1,401)) and decrease in lease liability of ($3,191) (2021:$3,191) offset
by an increase in accounts payable of $1,114,653 (2021: ($230,118)) and increase
in accrual and other payables of $639,107 (2021: $2,509). The increase of
prepayment and deposits were the key reasons for the higher cash flow used in
operating activities which were crucial for the Company to continue to commit
more deposits into the telcos to improve our revenue streams as noticeable in
the current financial year.

Cash Flow used in Investing Activities

During the year ended February 28, 2022, investing activities decreased by
$212,413 compared to the year ended February 28, 2021. The decreased was due to
the completed amortization of intangibles in the previous year. There were no
new acquisition for the current financial year.

Cash Flow provided by Financing Activities

During the year ended February 28, 2022, financing activities provided cash of
$5,414,194 compared to $5,174,600 during the year ended February 28, 2021. The
increase of $239,594 in the year ended February 28, 2022 was primarily due to
loan from non-controlling stockholder and proceeds from issuance of shares

of
our common stock.

Off-Balance Sheet Arrangements

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



Subsequent Events

We have determined that we do not have any material subsequent events to report.

Outstanding Share Data

At May 25, 2022, we have 42,777,260 issued and outstanding shares of common
stock.

Critical Accounting Policies



The consolidated financial statements have been prepared in accordance with U.S.
generally accepted accounting principles ("U.S. GAAP"). The consolidated
financial statements include the financial statements of the Company, and its
wholly-owned subsidiaries. All intercompany accounts, transactions, and profits
have been eliminated upon consolidation.

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Variable interest entity



Pursuant to Financial Accounting Standards Board ("FASB") Accounting Standards
Codification ("ASC") Section 810, "Consolidation" ("ASC 810"), the Company is
required to include in its consolidated financial statements, the financial
statements of its variable interest entities ("VIEs"). ASC 810 requires a VIE to
be consolidated if that company is subject to a majority of the risk of loss for
the VIE or is entitled to receive a majority of the VIE's residual returns. VIEs
are those entities in which a company, through contractual arrangements, bears
the risk of, and enjoys the rewards normally associated with ownership of the
entity, and therefore the company is the primary beneficiary of the entity.



Under ASC 810, a reporting entity has a controlling financial interest in a VIE,
and must consolidate that VIE, if the reporting entity has both of the following
characteristics: (a) the power to direct the activities of the VIE that most
significantly affect the VIE's economic performance; and (b) the obligation to
absorb losses, or the right to receive benefits, that could potentially be
significant to the VIE. The reporting entity's determination of whether it has
this power is not affected by the existence of kick-out rights or participating
rights, unless a single enterprise, including its related parties and de - facto
agents, have the unilateral ability to exercise those rights. JiuGe Technology's
actual stockholders do not hold any kick-out rights that affect the
consolidation determination.




Through the VIE agreements disclosed in Note 1, the Company is deemed the
primary beneficiary of JiuGe Technology. Accordingly, the results of JiuGe
Technology have been included in the accompanying consolidated financial
statements. JiuGe Technology has no assets that are collateral for or restricted
solely to settle their obligations. The creditors of JiuGe Technology do not
have recourse to the Company's general credit.

Certain Risks and Uncertainties

The Company relies on cloud-based hosting through a global accredited hosting
provider. Management believes that alternate sources are available; however,
disruption or termination of this relationship could adversely affect our
operating results in the near-term.

Identifiable Intangible Assets

Identifiable intangible assets are recorded at cost and are amortized over 3-10
years. Similar to tangible property and equipment, the Company periodically
evaluates identifiable intangible assets for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable.

Impairment of Long-Lived Assets

The Company classifies its long-lived assets into: (i) computer and office
equipment; (ii) furniture and fixtures, (iii) leasehold improvements, and (iv)
finite - lived intangible assets.

Long-lived assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying value of
such assets may not be fully recoverable. It is possible that these assets could
become impaired as a result of technology, economy or other industry changes. If
circumstances require a long-lived asset or asset group to be tested for
possible impairment, the Company first compares undiscounted cash flows expected
to be generated by that asset or asset group to its carrying value. If the
carrying value of the long-lived asset or asset group is not recoverable on an
undiscounted cash flow basis, an impairment is recognized to the extent that the
carrying value exceeds its fair value. Fair value is determined through various
valuation techniques, including discounted cash flow models, relief from royalty
income approach, quoted market values and third-party independent appraisals, as
considered necessary.



The Company makes various assumptions and estimates regarding estimated future
cash flows and other factors in determining the fair values of the respective
assets. The assumptions and estimates used to determine future values and
remaining useful lives of long-lived assets are complex and subjective. They can
be affected by various factors, including external factors such as industry and
economic trends, and internal factors such as the Company's business strategy
and its forecasts for specific market expansion.

Accounts Receivable and Concentration of Risk

Accounts receivable, net is stated at the amount the Company expects to collect,
or the net realizable value. The Company provides a provision for allowances
that includes returns, allowances and doubtful accounts equal to the estimated
uncollectible amounts. The Company estimates its provision for allowances based
on historical collection experience and a review of the current status of trade
accounts receivable. It is reasonably possible that the Company's estimate of
the provision for allowances will change.

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Lease



Operating and finance lease right-of-use assets and lease liabilities are
recognized at the commencement date based on the present value of the future
lease payments over the lease term. When the rate implicit to the lease cannot
be readily determined, the Company utilizes its incremental borrowing rate in
determining the present value of the future lease payments. The incremental
borrowing rate is derived from information available at the lease commencement
date and represents the rate of interest that the Company would have to pay to
borrow on a collateralized basis over a similar term and amount equal to the
lease payments in a similar economic environment. The right-of-use asset
includes any lease payments made and lease incentives received prior to the
commencement date. Operating lease right-of-use assets also include any
cumulative prepaid or accrued rent when the lease payments are uneven throughout
the lease term. The right-of-use assets and lease liabilities may include
options to extend or terminate the lease when it is reasonably certain that the
Company will exercise that option.



Cash and Cash Equivalents



Cash and cash equivalents represent cash on hand, demand deposits, and other
short-term highly liquid investments placed with banks, which have original
maturities of three months or less and are readily convertible to known amounts
of cash.



Property and Equipment



Property and equipment are stated at cost. Depreciation of property and
equipment is provided using the straight-line method for financial reporting
purposes at rates based on the estimated useful lives of the assets. Estimated
useful lives range from three to seven years. Land is classified as held for
sale when management has the ability and intent to sell, in accordance with

ASC
Topic 360-45.



Earnings Per Share

Basic (loss) earnings per share is based on the weighted average number of
common shares outstanding during the period while the effects of potential
common shares outstanding during the period are included in diluted earnings per
share.

FASB Accounting Standard Codification Topic 260 ("ASC 260"), "Earnings Per
Share," requires that employee equity share options, non-vested shares and
similar equity instruments granted to employees be treated as potential common
shares in computing diluted earnings per share. Diluted earnings per share
should be based on the actual number of options or shares granted and not yet
forfeited, unless doing so would be anti-dilutive. The Company uses the
"treasury stock" method for equity instruments granted in share-based payment
transactions provided in ASC 260 to determine diluted earnings per share.
Antidilutive securities represent potentially dilutive securities which are
excluded from the computation of diluted earnings or loss per share as their
impact was antidilutive.



Revenue Recognition



The Company adopted ASC 606, Revenue from Contracts with Customers ("ASC 606")
beginning on January 1, 2018 using the modified retrospective approach. ASC 606
establishes principles for reporting information about the nature, amount,
timing and uncertainty of revenue and cash flows arising from the entity's
contracts to provide goods or services to customers. The core principle requires
an entity to recognize revenue to depict the transfer of goods or services to
customers in an amount that reflects the consideration that it expects to be
entitled to receive in exchange for those goods or services recognized as
performance obligations are satisfied.



The Company has assessed the impact of the guidance by reviewing its existing
customer contracts and current accounting policies and practices to identify
differences that will result from applying the new requirements, including the
evaluation of its performance obligations, transaction price, customer payments,
transfer of control and principal versus agent considerations. Based on the
assessment, the Company concluded that there was no change to the timing and
pattern of revenue recognition for its current revenue streams in scope of ASC
606 and therefore there was no material changes to the Company's consolidated
financial statements upon adoption of ASC 606.



The Company recognizes revenue from providing hosting and integration services
and licensing the use of its technology platform to its customers. The Company
recognizes revenue when all of the following conditions are satisfied: (1) there
is persuasive evidence of an arrangement; (2) the service has been provided to
the customer (for licensing, revenue is recognized when the Company's technology
is used to provide hosting and integration services); (3) the amount of fees to
be paid by the customer is fixed or determinable; and (4) the collection of fees
is probable. We account for our multi-element arrangements, such as instances
where we design a custom website and separately offer other services such as
hosting, which are recognized over the period for when services are performed.

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Income Taxes



The Company uses the asset and liability method of accounting for income taxes
in accordance with Accounting Standards Codification ("ASC") 740, "Income Taxes"
("ASC 740"). Under this method, income tax expense is recognized as the amount
of: (i) taxes payable or refundable for the current year and (ii) future tax
consequences attributable to differences between financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the results of
operations in the period that includes the enactment date. A valuation allowance
is provided to reduce the deferred tax assets reported if based on the weight of
available evidence it is more likely than not that some portion or all of the
deferred tax assets will not be realized.



Non-controlling interest

Non-controlling interests held 1% of the shares of two of our subsidiaries are
recorded as a component of our equity, separate from the Company's equity.
Purchase or sales of equity interests that do not result in a change of control
are accounted for as equity transactions. Results of operations attributable to
the non-controlling interest are included in our consolidated results of
operations and, upon loss of control, the interest sold, as well as interest
retained, if any, will be reported at fair value with any gain or loss
recognized in earnings.

Recent Issued Accounting Pronouncements

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