FINGERMOTION, INC. – 10-Q – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The terms the "Registrant", "we", "us", "our", "FingerMotion" and the "Company"
mean
consolidated subsidiaries and contractually controlled companies.
Cautionary Note 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
limitation, this Quarterly Report on Form 10-Q for the six months ended
31, 2021
28, 2021
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
II - Other Information of this Quarterly Report.
Introduction
This MD&A is focused on material changes in our financial condition from
our results of operations for the three months and six months ended
2021
Analysis of Financial Condition and Results of Operations as contained in our
Annual Report on Form 10-K for the fiscal year ended
Corporate Information
The Company was initially incorporated as
America
On
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 "
to "
amended certificate of incorporation became effective on
Our principal executive offices are located at
10036, and our telephone number at that address is (347) 349-5339.
Share Exchange Agreement
Effective
Agreement (the "Share Exchange Agreement") by and among the Company,
Motion Company Limited
shareholders of FMCL (the "FMCL Shareholders"). FMCL, a
was formed on
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.
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
2018
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
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VIE Agreements
On
a series of agreements known as variable interest agreements (the "VIE
Agreements") pursuant to which
("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 designee(s) (the "JiuGe Technology Power of
Attorney Agreement");
? a call option agreement under which the owner of JiuGe Technology has granted
to JiuGe Management the irrevocable and unconditional right and option to
acquire all of their equity interests 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 pledged
all of their rights, titles and interests in JiuGe Technology to JiuGe
Management to guarantee JiuGe Technology's performance 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
Zhuhai,
In
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.
In
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
herein.
Acquisition of Beijing Technology
On
TianXia Technology Co., Ltd.
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
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.
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China Unicom Cooperation Agreement
On
Electronic Sales Platform Construction
"Cooperation Agreement") with China United Network Communications Limited
Branch
Technology is responsible for constructing and operating
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
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
China Mobile Cooperation Agreement
In
agreement (the "China Mobile Cooperation Agreement") with China Mobile's
subsidiary,
Financial") 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.
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 "
meaning there is still plenty of room for growth. These estimated 600 million
subscribers have accumulated an aggregate of points worth an estimated
billion yuan
"China Mobile will open "points" ecological stock, customer points worth over
billion yuan
The "
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.
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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 Technology Contractually
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 Contractually
Communication Technology Co., 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% owned 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-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.
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. ("
major telecommunications provider in
providing mobile payment and recharge services to customers of China Unicom and
China Mobile.
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We conduct our mobile payment business through
Ltd.
entry into a series of agreements known as variable interest agreements (the
"VIE Agreements") in
secured contracts with China Unicom and China Mobile to distribute mobile data
for businesses and corporations in nine provinces/municipalities, namely
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.
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
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
is planning to further expand its universal exchange platform by setting up B2C
stores on several other major e-commerce platforms in
that, we have been assigned as one of
partner where we will be providing the services for their customers via our
platform.
Additionally, as previously disclosed, on
contractually controlled affiliate, entered into that certain
Electronic Sales Platform Construction
"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.
During the recent fiscal year, the Company expanded its offering under their
telecommunication product and services by increasing their product line revenue
streams. In
and China Unicom to acquire new users to take up the respective subscription
plans. On
JiuGe Information Technology Co., Ltd.
Co., Ltd.
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
our platforms. This business will continue to contribute to the overall revenue
for the group as part of our offering to our customers.
SMS and MMS Services
On
TianXia Technology Co., Ltd.
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.
Beijing Technology, retains a license from the
Information Technology
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.
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Rich Communication Services
In
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
"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
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
Motion Financial Company Limited's
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
existing games, and the Company's board of directors decided to re-focus the
company's resources into new business opportunities in
mobile phone payment and data business.
Results of Operations
Three Months Ended
2020
The following table sets forth our results of operations for the periods
indicated:
For the three months ended
August 31, 2021 August 31, 2020
Revenue $ 5,386,914 $ 3,621,054
Cost of revenue $ (4,690,058 ) $ (3,362,663 )
Total operating expenses $ (2,084,511 ) $ (1,152,972 )
Total other income
(expenses) $ (66,962 ) $ (66,135 )
Net Loss attributable to
the Company's shareholders $ (1,455,764 ) $ (961,023 )
Foreign currency
translation adjustment $ (87,538 ) $ 27,613
Comprehensive loss
attributable to the Company $ (1,543,135 ) $ (933,423 )
Basic Loss Per Share
attributable to the Company $ (0.04 ) $ (0.03 )
Diluted Loss Per Share
attributable to the Company $ (0.04 ) $ (0.03 )
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Revenue
The following table sets forth the Company's revenue from its three lines of
business for the periods indicated:
For the three months ended
August 31, 2021 August 31, 2020 Change (%)
Telecommunication
Products & Services $ 1,711,295 $ 707,094 142 %
SMS & MMS Business $ 3,642,917 $ 2,913,060 25 %
Big Data $ 32,702 $ - 100 %
Total Revenue $ 5,386,914 $ 3,621,054 49 %
We recorded
increase of
2020
and
and Big Data business, respectively. We principally earn revenue by providing
mobile payment and recharge services to customers of telecommunications
companies in
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
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
August 31, 2021 August 31, 2020
Telecommunication Products & Services
SMS & MMS Business$ 3,384,291 $ 2,783,611 Big Data $ 90,000 $ - Total Cost of Revenue$ 4,690,058 $ 3,362,663
We recorded
2021
providing mobile payment and recharge services to customers of
telecommunications companies, subscription plans and mobile phone sales in
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 three months ended
increase of
2020
Amortization & Depreciation
We recorded depreciation of
ended
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General & Administrative Expenses
The following table sets forth the Company's general and administrative expenses
for the periods indicated:
For the three months ended
August 31, 2021 August 31, 2020
Accounting $ 57,134 $ 11,345
Consulting $ 557,570 $ 290,053
Entertainment $ 41,561 $ 31,490
IT $ 22,412 $ 27,865
Rent $ 27,010 $ 31,726
Salaries & Wages $ 626,789 $ 327,511
Technical Fee $ 32,522 $ 23,801
Travelling $ 23,303 $ 21,338
Others $ 56,613 $ 77,848
Total G&A Expenses $ 1,444,914 $ 842,977
We recorded
months ended
three months ended
are principally the result of the 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
August 31, 2021 August 31, 2020
Marketing Cost $ 59,075 $ 131,256
We recorded
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
August 31, 2021 August 31, 2020
Research & Development $ 144,549 $ 123,534
We incurred fees of
ended
31, 2020
fees charged by telecommunications companies.
The Insurtech division of
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.
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 end of
calendar 2021.
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Share Compensation Expenses
The following table sets forth the Company's share compensation expenses for the
periods indicated:
For the three months ended
August 31, 2021 August 31, 2020
Share compensation expenses $ 421,571 $ 50,033
We incurred fees of
of the services which have been provided to the Company for the three months
ended
31, 2020
compensated with shares of the Company.
Operating Expenses
We recorded
31, 2021
ended
ended
Net Loss attributable to the Company's shareholders
The net loss attributable to the Company's shareholders was
three months ended
shareholders of
operating expenses as discussed above.
Six Months Ended
The following table sets forth our results of operations for the periods
indicated:
For the six months ended
August 31, 2021 August 31, 2020
Revenue $ 11,383,403 $ 6,363,988
Cost of revenue $ (10,066,850 ) $ (5,811,158 )
Total operating expenses $ (3,560,090 ) $ (2,022,743 )
Total other income
(expenses) $ (120,586 ) $ (68,854 )
Net Loss attributable to
the Company's shareholders $ (2,367,654 ) $ (1,539,100 )
Foreign currency
translation adjustment $ (27,354 ) $ 11,739
Comprehensive loss
attributable to the Company $ (2,395,005 ) $ (1,527,457 )
Basic Loss Per Share
attributable to the Company $ (0.06 ) $ (0.05 )
Diluted Loss Per Share
attributable to the Company $ (0.06 ) $ (0.05 )
Revenue
The following table sets forth the Company's revenue from its three lines of
business for the periods indicated:
For the six months ended
August 31, 2021 August 31, 2020 Change (%)
Telecommunication
Products & Services $ 3,448,375 $ 1,100,886 213 %
SMS & MMS Business $ 7,803,610 $ 5,263,102 48 %
Big Data $ 131,418 $ - 100 %
Total Revenue $ 11,383,403 $ 6,363,988 79 %
We recorded
increase of
This increase resulted from an increase in revenue of
Big Data business, respectively. We principally earn revenue by providing mobile
payment and recharge services to customers of telecommunications companies in
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
the traditional insurance industry. This division has since recorded revenue and
we expect additional revenue from this division in the future.
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Cost of Revenue
The following table sets forth the Company's cost of revenue for the periods
indicated:
For the six months ended
August 31, 2021 August 31, 2020
Telecommunication Products & Services
SMS & MMS Business$ 7,196,880 $ 5,042,299 Big Data $ 180,000 $ - Total Cost of Revenue$ 10,066,850 $ 5,811,158
We recorded
2021
31, 2020
mobile payment and recharge services to customers of telecommunications
companies, subscription plans and mobile phone sales in
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 six months ended
increase of
This increase in gross profit resulted from higher revenue for the period.
Amortization & Depreciation
We recorded depreciation of
ended
General & Administrative Expenses
The following table sets forth the Company's general and administrative expenses
for the periods indicated:
For the six months ended
August 31, 2021 August 31, 2020
Accounting $ 96,877 $ 26,345
Consulting $ 913,413 $ 540,528
Entertainment $ 81,068 $ 60,662
IT $ 36,679 $ 45,582
Rent $ 52,145 $ 83,222
Salaries & Wages $ 1,215,216 $ 644,579
Technical Fee $ 55,636 $ 47,547
Travelling $ 50,892 $ 28,102
Others $ 122,735 $ 108,449
Total G&A Expenses $ 2,624,661 $ 1,585,016
We recorded
ended
months ended
principally the result of the building of our three lines of businesses.
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Marketing Cost
The following table sets forth the Company's marketing cost for the periods
indicated:
For the six months ended
August 31, 2021 August 31, 2020
Marketing Cost $ 144,082 $ 131,256
We recorded
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 six months ended
August 31, 2021 August 31, 2020
Research & Development $ 279,978 $ 227,144
We incurred fees of
2020
fees charged by telecommunications companies.
The Insurtech division of
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.
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 end of
calendar 2021.
Share Compensation Expenses
The following table sets forth the Company's share compensation expenses for the
periods indicated:
For the six months ended
August 31, 2021 August 31, 2020
Share compensation expenses $ 482,546 $ 71,710
We incurred fees of
of the services which have been provided to the Company for the six months ended
The increase of
with shares of the Company.
Operating Expenses
We recorded
2021
Net Loss attributable to the Company's shareholders
The net loss attributable to the Company's shareholders was
six months ended
31, 2020
as discussed above.
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Liquidity and Capital Resources
The following table sets out our cash and working capital as ofAugust 31, 2021 andFebruary 28, 2021 : As at August 31, 2021 As at February 28, 2021 Cash reserves $ 878,085 $ 850,717 Working capital (deficiency) $ 5,037,533 $ 2,992,232
At
cash and cash equivalents of
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.
We did, however, raise
in private placement transactions exempt from the registration requirements of
the United States Securities Act of 1933, as amended, during the six months
ended
Statement of Cashflows
The following table provides a summary of cash flows for the periods presented:
For the six months ended
August 31, 2021 August 31, 2020
Net cash used in operating
activities $ (3,513,630 ) $ (1,218,461 )
Net cash used in investing
activities $ (12,625 ) $ (115,239 )
Net cash provided by
financing activities $ 3,581,291 $ 1,639,207
Effect of exchange rates on
cash & cash equivalents $ (27,669 ) $ 11,281
Net increase (decrease) in
cash and cash equivalents $ 27,368 $ 316,788
Cash Flow used in Operating Activities
Net cash used in operating activities increased by
ended
primarily due to an increase in prepayment and deposit of (
31, 2020
2020
decrease in accounts payable of (
decrease in lease liability of (
decrease in account receivable of
increase in accrual and other payable of
Cash Flow used in Investing Activities
During the six months period ended
decreased by
Cash Flow provided by Financing Activities
During the six months period ended
increased by
which was primarily due to the issuance of convertible notes and proceed from
issuance of shares of our common stock.
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Table of Contents
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.
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
Refer to "Critical Accounting Policies" under Item 7, Management's Discussion
and Analysis of Financial Condition and Results of Operations in our Annual
Report on Form 10-K for our fiscal year ended
Recently 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.
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