10-Q: Quarterly report [Sections 13 or 15(d)]
Published on
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
or
For the transition period from ______________ to _______________
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of organization) |
(I.R.S. employer identification no.) | |
| (Address of principal executive offices) | (Zip code) |
(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 | ||
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.
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).
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 | ☐ |
| ☒ | 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: shares of common stock outstanding as of October 13, 2026.
FINGERMOTION, INC.
FORM 10-Q
TABLE OF CONTENTS
| 2 |
PART 1 – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
FINGERMOTION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
| August 31, 2026 | February 28, 2026 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Prepayment and deposit | ||||||||
| Other receivables | ||||||||
| Total Current Assets | ||||||||
| Non-current Assets | ||||||||
| Equipment | ||||||||
| Intangible assets | ||||||||
| Right-of-use asset | ||||||||
| Investment | ||||||||
| Deferred tax asset | ||||||||
| Total Non-current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrual and other payables | ||||||||
| Loan payable, current portion | ||||||||
| Convertible note payable, current portion | ||||||||
| Derivative liabilities - Conversion | ||||||||
| Derivative liabilities - Warrant | ||||||||
| Lease liability, current portion | ||||||||
| Total Current Liabilities | ||||||||
| Non-current Liabilities | ||||||||
| Lease liability, non-current portion | ||||||||
| Deferred tax liabilities | ||||||||
| Total Non-current Liabilities | ||||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, par value $ per share; Authorized shares; issued and outstanding -- shares. | ||||||||
| Common Stock, par value $ per share; Authorized shares; issued and outstanding shares and issued and outstanding at August 31, 2026 and February 28, 2026 respectively | ||||||||
| Additional paid-in capital | ||||||||
| Stock subscription receivable | ( | ) | ||||||
| Additional paid-in capital - stock options | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ( | ) | ||||||
| Stockholders’ equity before non-controlling interests | ||||||||
| Non-controlling interests | ( | ) | ( | |||||
| TOTAL STOCKHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
FINGERMOTION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| August 31, 2026 | August 31, 2025 | August 31, 2026 | August 31, 2025 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit | ||||||||||||||||
| Amortization & depreciation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| General & administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Marketing cost | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Research & development | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Credit impairment (loss) gain | ( | ) | ( | ) | ( | ) | ||||||||||
| Stock based compensation expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Change in fair value of derivative liabilities | ||||||||||||||||
| Amortization of debt discount | ( | ) | ( | ) | ||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Exchange gain (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (loss) | ( | ) | ( | ) | ||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ||||||||||||
| Net loss before income tax | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Income tax expenses | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Less: Net loss attributable to the non-controlling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to the Company’s stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation adjustments | ||||||||||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Less: Comprehensive (loss) income attributable to non-controlling interest | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss attributable to the Company | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| NET LOSS PER SHARE | ||||||||||||||||
| Loss Per Share - Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss Per Share - Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| NET LOSS PER SHARE ATTRIBUTABLE TO THE COMPANY | ||||||||||||||||
| Loss Per Share - Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss Per Share - Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted Average Common Stock Outstanding - Basic | ||||||||||||||||
| Weighted Average Common Stock Outstanding - Diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
FINGERMOTION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)
For the six months ended August 31, 2026
| Common Stock – | Common Stock – | Capital Paid in Excess of | Stock Subscription | Additional Paid-in Capital –Stock | Accumulated | Accumulated Other Comprehensive | Stockholders’ | Non- controlling | ||||||||||||||||||||||||||||||||
| Shares | Amount | Par Value | Receivable | Options | Deficit | Income | Equity | Interest | Total | |||||||||||||||||||||||||||||||
| Balance at March 1, 2026 | ( | ) | ( | ) | $ | | ( | ) | ||||||||||||||||||||||||||||||||
| Common stock issued for cash | ||||||||||||||||||||||||||||||||||||||||
| Common stock issued for professional service | ||||||||||||||||||||||||||||||||||||||||
| Additional paid-in capital – stock options | — | |||||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income | — | |||||||||||||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance at May 31, 2026 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Additional paid-in capital – stock options | — | |||||||||||||||||||||||||||||||||||||||
| Common stock issued for conversion of convertible debt | ||||||||||||||||||||||||||||||||||||||||
| Common stock issued for acquisition of | ||||||||||||||||||||||||||||||||||||||||
| Common stock issued for American Ventures | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income | — | |||||||||||||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance at August 31, 2026 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| 5 |
FINGERMOTION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)
For the six months ended August 31, 2025
| Common Stock – | Common Stock – | Capital Paid in Excess of | Stock Subscription | Additional Paid-in Capital –Stock | Accumulated | Accumulated Other Comprehensive | Stockholders’ | Non- controlling | ||||||||||||||||||||||||||||||||
| Shares | Amount | Par Value | Receivable | Options | Deficit | Income | Equity | Interest | Total | |||||||||||||||||||||||||||||||
| Balance at March 1, 2025 | ( | ) | ( | ) | | |||||||||||||||||||||||||||||||||||
| Common stock issued for cash | ||||||||||||||||||||||||||||||||||||||||
| Common stock issued for professional service | ||||||||||||||||||||||||||||||||||||||||
| Common stock issued for conversion of customer deposit | ||||||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income | — | |||||||||||||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance at May 31, 2025 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Additional paid-in capital – stock options | — | |||||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income | — | |||||||||||||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance at August 31, 2025 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
FINGERMOTION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| Six Months Ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Stock based compensation expenses | ||||||||
| Amortization and depreciation | ||||||||
| Provision for expected credit losses | ||||||||
Change in value of derivative liabilities | ( | ) | ||||||
| Amortization of debt discount | ||||||||
| Gain on disposal of equipment | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Decrease (increase) in accounts receivable, net | ( | ) | ||||||
| (Increase) decrease in prepayment and deposit | ( | ) | ||||||
| Decrease (increase) in others receivable | ( | ) | ||||||
| (Increase) decrease in inventories | ( | ) | ||||||
| Increase in accounts payable | ||||||||
| (Decrease) increase in accrual and other payables | ( | ) | ||||||
| Increase (decrease) due to lease liability | ( | ) | ||||||
| Net Cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of equipment | ( | ) | ( | ) | ||||
| Net cash (used in) investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Repayment of loan payable | ( | ) | ||||||
| Proceeds from convertible promissory note | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rates on cash and cash equivalents | ( | ) | ( | ) | ||||
| Net change in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash and restricted cash at end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Supplemental disclosures of non-cash investing and financing activities: | ||||||||
| Shares issued for conversion of convertible debt | $ | $ | ||||||
| Common stock issued for professional service | $ | $ | ||||||
| Conversion of customer deposit to shares | $ | $ | ||||||
| Common stock issued for acquisition of | $ | |||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 7 |
FINGERMOTION, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended August 31, 2026 and 2025 (Unaudited)
Note 1 – Nature of Business and Basis of Presentation
FingerMotion, Inc. (the “Company”) was incorporated on January 23, 2014, under the laws of the State of Delaware. The Company then offered management and consulting services to residential and commercial real estate property owners who rent or lease their property to third-party tenants.
The Company changed its name to FingerMotion, Inc. on July 13, 2017, after a change in control. In July 2017 the Company acquired all of the outstanding shares of Finger Motion Company Limited (“FMCL”), a Hong Kong corporation formed on April 6, 2016, that is an information technology company which then specialized in operating and publishing mobile games.
Pursuant to the Share Exchange Agreement with FMCL, effective July 13, 2017 (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. At the Closing Date, the Company issued shares of common stock to the FMCL shareholders. In addition, the Company issued shares to other consultants in connection with the transactions contemplated by the Share Exchange Agreement.
The transaction was accounted for as a “reverse acquisition” since, immediately following completion of the transaction, the shareholders of FMCL effectuated control of the post-combination Company. For accounting purposes, FMCL was deemed to be the accounting acquirer in the transaction and, consequently, the transaction is treated as a recapitalization of FMCL (i.e., a capital transaction involving the issuance of shares by the Company for the shares of FMCL). Accordingly, the consolidated assets, liabilities, and results of operations of FMCL became the historical financial statements of FingerMotion, Inc. and its subsidiaries, and the Company’s assets, liabilities and results of operations were consolidated with FMCL beginning on the acquisition date. No step-up in basis or intangible assets or goodwill was recorded in this transaction.
As a result of the Share Exchange Agreement and the other transactions contemplated thereunder, FMCL became a wholly owned subsidiary of the Company.
On October 16, 2018, the Company through its indirect wholly owned subsidiary, Shanghai JiuGe Business Management Co., Ltd. (“JiuGe Management”), entered into a series of agreements known as variable interest agreements (the “VIE Agreements”) pursuant to which Shanghai JiuGe Information Technology Co., Ltd. (“JiuGe Technology”) became JiuGe Management’s contractually controlled affiliate. The use of VIE agreements is a common structure used to acquire operational control of 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 JiuGe Technology.
On
March 7, 2019, JiuGe Technology also acquired
Finger
Motion Financial Company Limited was incorporated on January 24, 2020, and is
Shanghai
TengLian JiuJiu Information Communication Technology Co., Ltd. was incorporated on December 23, 2020, for the purpose of venturing into
mobile phone sales in China. It is
On
February 5, 2021, JiuGe Technology disposed of its
| 8 |
Shanghai
KeShunXiang Automobile Service Co., Ltd. was incorporated on April 10, 2024 for the purpose of venturing into the communication and streaming
services in China. It is
Zhejiang
ChangXin Communication Equipment Co., Ltd. was incorporated on March 28, 2025 for the purpose of venturing into the research and development,
manufacturing and sales of communication equipment, as well as the technical service business of communication equipment in China. It
is
Shanghai
XiaoYi Bin Tong Technology Co., Ltd. was incorporated on April 15, 2025 for the purpose of venturing into the sale of household appliances
and electronic products in China. It is
The Company has added an additional business plan which it announced on August 27, 2026. the strategic plan developed by new management with BlueFlare Energy Solutions Inc. (“BlueFlare”) for behind-the-meter (“BTM”) artificial intelligence (“AI”) and high-performance computing (“HPC”) infrastructure in North America.
The Company believes its new business model provides the strongest prospect of success by leveraging BlueFlare’s existing operating platform (site origination, on-site natural gas power generation, modular construction, load management and field operations), rather than building those capabilities from scratch.
On
August 12, 2026, the Company entered into a share purchase agreement with Alset AI Ventures Inc. and Lyken AI Computing Inc. (“Lyken”),
pursuant to which the Company agreed to acquire common shares of Lyken, representing a
New business direction - As described in Item 2, since August 2026 the Company has begun pursuing a North American behind-the-meter artificial intelligence and high-performance computing infrastructure plan with BlueFlare Energy Solutions Inc. As of August 31, 2026, that plan had not generated revenue. Related period activity is described in Notes 1, 11 and 16. Subsequent events related to Alberta powered-land sites are described in Note 19.
Since
August 1, 2026, the new management team has accomplished the following:
Note 2 - Summary of Principal Accounting Policies
Principles of Consolidation and Presentation
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.
Variable interest entity
Pursuant to 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.
| 9 |
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.
The following assets and liabilities and of the VIE and VIE’s subsidiaries are included in the accompanying condensed consolidated financial statements of the Company as of August 31, 2026 and February 28, 2026:
Assets and liabilities of the VIE
| August 31, 2026 | February 28, 2026 | |||||||
| (unaudited) | ||||||||
| Current assets | $ | $ | ||||||
| Non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Current liabilities | $ | $ | ||||||
| Non-current liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
Assets and liabilities of the VIE’s Subsidiaries
| August 31, 2026 | February 28, 2026 | |||||||
| (unaudited) | ||||||||
| Current assets | $ | $ | ||||||
| Non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Current liabilities | $ | $ | ||||||
| Non-current liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
Operating Result of VIE
For the Six Months Ended August 31, 2026 | For the Six Months Ended August 31, 2025 | |||||||
| (unaudited) | (unaudited) | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ( | ) | ( | ) | ||||
| Gross profit | $ | $ | ||||||
| Amortization and depreciation | ( | ) | ( | ) | ||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| Marketing cost | ( | ) | ||||||
| Research & development | ( | ) | ||||||
| Credit impairment loss | ( | ) | ||||||
| Total operating expenses | $ | ( | ) | $ | ( | ) | ||
| Loss from operations | $ | ( | ) | $ | ( | ) | ||
| Interest income | ||||||||
| Interest expense | ( | ) | ||||||
| Other income | ( | ) | ||||||
| Total other income | $ | $ | ||||||
| Tax expense | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| 10 |
Operating Result of VIE’s Subsidiaries
For the Six Months Ended August 31, 2026 | For the Six Months Ended August 31, 2025 | |||||||
| (unaudited) | (unaudited) | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ( | ) | ( | ) | ||||
| Gross profit | $ | $ | ||||||
| Amortization and depreciation | ( | ) | ( | ) | ||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| Marketing cost | ( | ) | ( | ) | ||||
| Research & development | ( | ) | ( | ) | ||||
| Credit impairment loss | ( | ) | ( | ) | ||||
| Total operating expenses | $ | ( | ) | $ | ( | ) | ||
| Loss from operations | $ | ( | ) | $ | ( | ) | ||
| Interest income | ||||||||
| Other income | ||||||||
| Total other income | $ | $ | ||||||
| Tax expense | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
Use of Estimates
The preparation of the Company’s financial statements in conformity with generally accepted accounting principles of the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Actual results could differ from those estimates.
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.
| 11 |
Segment reporting
ASC
280, Segment Reporting (“ASC 280”), establishes standards for reporting information about operating segments
on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business
segments and major customers in consolidated financial statements for detailing the Company’s business segments. Based on the criteria
established by ASC 280, The Company uses the management approach to determine reportable operating segments. The management approach
considers the internal organization and reporting used by the Company’s CODM, specifically the Company’s CEO and CFO, for
making decisions, allocating resources and assessing performance. The Company does not distinguish revenues, costs and expenses between
segments in its internal reporting, but instead reports costs and expenses by nature as a whole. Based on the management’s assessment,
the Company determines that it has only
Foreign Currency Translation and Transactions
The Company’s reporting currency is the US dollar. The functional currencies of the Company’s foreign subsidiaries are their respective local currencies (China Renminbi, Singapore dollar and Hong Kong dollar), which are the monetary unit of account of the principal economic environment in which the Company’s foreign subsidiaries operate. Assets and liabilities of the foreign subsidiaries are translated into US dollars at exchange rates in effect at each period end. Revenues and expenses are translated at average exchange rates in effect during the period. The resulting translation adjustments are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity.
Translation of amounts from RMB into USD has been made at the following exchange rates for the respective periods:
| Balance sheet items, except for equity accounts | ||||
| August 31, 2026 | ||||
| February 28, 2026 | ||||
| Income statement and cash flows items | ||||
| For the six months ended August 31, 2026 | ||||
| For the six months ended August 31, 2025 |
Identifiable Intangible Assets
Identifiable
intangible assets are recorded at cost and are amortized over
| 12 |
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, Net
Accounts receivable is stated at the amount the Company expects to collect. The Company maintains allowances for credit losses for estimated losses. Management considers the following factors when determining the collectability of specific accounts: historical experience, creditworthiness of the clients, aging of the receivables and other specific circumstances related to the accounts. Allowance for credit losses is made and recorded into administrative expenses based on the aging of accounts receivable and on any specifically identified receivables that may become uncollectible. Accounts receivable which are deemed to be uncollectible are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Our assessment considered the estimates of expected credit and collectability trends. Volatility in market conditions and evolving credit trends are difficult to predict and may cause variability and volatility that may have an impact on our allowance for credit losses in future periods. Refer to Note 8 for allowances for credit losses recognized in profit or loss by the Company during the six months ended August 31, 2026 and for the year ended February 28, 2026.
| 13 |
Concentration of Credit Risks
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and other receivable. The Company’s cash and cash equivalents are placed with high-credit-quality financial institutions, and at times exceed federally insured limits. To date, the Company has not experienced any credit loss relating to its cash and cash equivalents.
For
the six months ended August 31, 2026, four customers each accounted for more than 10% of the Company’s total revenue, with individual
contributions of
For
the six months ended August 31, 2025, one customer each accounted for more than 10% of the Company’s total revenue, with individual
contributions of
For
the six months ended August 31, 2026, two suppliers each accounted for more than 10% of the Company’s total purchase, with individual
contributions of
For
the six months ended August 31, 2025, one supplier each accounted for more than 10% of the Company’s total purchase, with individual
contributions of
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.
Equipment
Equipment
is stated at cost. Depreciation of 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
| 14 |
Basic (loss) earnings per share is based on the weighted average number of shares of common stock outstanding during the period while the effects of potential shares of common stock outstanding during the period are included in diluted earnings per share.
FASB Accounting Standard Codification Topic 260, Earnings Per Share (“ASC 260”), requires that employee equity share options, non-vested shares and similar equity instruments granted to employees be treated as potential shares of common stock 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 recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of the revenue standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
● Step 1: Identify the contract with the customer;
● Step 2: Identify the performance obligations in the contract;
● Step 3: Determine the transaction price;
● Step 4: Allocate the transaction price to the performance obligations in the contract; and
● Step 5: Recognize revenue when the Company satisfies a performance obligation.
In order to identify the performance obligations in a contract with a customer, an entity must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met:
● the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct); and
● the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).
If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.
The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following:
● variable consideration;
● constraining estimates of variable consideration;
● the existence of a significant financing component in the contract;
● non-cash consideration; and
● consideration payable to a customer.
| 15 |
Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized under the accounting contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis.
The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time, as appropriate.
Telecommunication Services
The Company provides mobile recharge and top-up services, data plans, subscription plans, and other related telecommunication services to third-party businesses and online marketplaces through its digital platform. Revenue is recognized when the related services are delivered, activated, or otherwise made available to the customer, which is the point at which control of the promised services is transferred to the customer in accordance with the terms of the underlying arrangements.
Telecommunication Products
Telecommunication products revenue primarily relates to sales of mobile devices. Telecommunication products are generally considered separate performance obligations because customers can benefit from the devices independently. Revenue associated with mobile devices sales is recognized at a point in time when control transfers to the customer, generally upon picked up by the customer.
Other lines of business
The Company recognizes revenue from providing online-to-offline integration services (DaGe platform), communication and coordination solutions, and data and analytics services to its customers. The Company primarily provides data and analytics services, including the design of custom websites and related services. When a contract contains more than one performance obligation, the transaction price is allocated to each distinct performance obligation based on its relative standalone selling price. Revenue is recognized over time when the customer simultaneously receives and consumes the benefits as the Company performs (for example, ongoing services), or at a point in time when control transfers (for example, upon customer acceptance of a completed deliverable). The Company uses an input or output method that best depicts the transfer of control for performance obligations satisfied over time.
Cost of Revenue
Cost of revenue consists of telecommunication products and services, and SMS & MMS business for operators or other suppliers, and purchase cost of emergency equipment for command and communication.
Research and Development
Research and development costs are expensed as incurred. Research and development expenses for Sapientus include compensation, employee benefits, stock-based compensation, materials and components purchased for research and development. During the year ended February 28, 2026, the Company also commenced product development efforts under a new strategic collaboration to integrate its Mobile Integrated Command and Communication Platform into emergency response vehicles.
Selling, General and Administrative
Selling, general and administrative expenses include compensation, employee benefits, stock-based compensation, professional service fees, allocation of facility costs, depreciation and amortization associated with general selling and administrative overhead activities.
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.
| 16 |
Non-controlling interest
Non-controlling
interests held
Recently Issued Accounting Pronouncements
(i) Recently adopted accounting pronouncements
In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which enhances the transparency and decision usefulness of income tax disclosures. The amendments address more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The ASU also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in this ASU are effective for public business entities for annual periods beginning after December 15, 2024 on a prospective basis through retrospective application is permitted. Early adoption is permitted. The Company adopted ASU 2023-09 for the year beginning on March 1, 2025 on a retrospective basis and the adoption does not have a material impact on its disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which amends guidance on the measurement of credit losses for accounts receivable and contract assets. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.
(ii) Recently issued accounting pronouncements not yet adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40), (“ASU 2024-03”) This ASU requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. A reporting entity is required to 1) disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas-producing activities (DD&A) (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)–(e); 2) include certain amounts that are already required to be disclosed under current generally accepted accounting principles in the same disclosure as the other disaggregation requirements; 3) disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and 4) disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.
In January 2025, the FASB issued ASU 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures, (“ASU 2025-01”). The amendment in ASU 2025-01 amends the effective date of ASC 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.
In December 2025, the Financial Accounting Standards Board (“FASB”) issued ASU2025-11, Interim Reporting (Topic 270): Improvements to Interim Disclosure Requirements, (“ASU 2025-11”) The standard clarifies disclosure requirements for interim financial statements and is effective for interim periods beginning after December 15, 2026. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.
| 17 |
Note 3 - Going Concern
The
accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which
contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company
had an accumulated deficit of $
The accompanying interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The interim financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. The Company is at the development stage of its business plan. As such it is likely that additional financing will be needed by the Company to fund its operations and to develop and commercialize its technology. These factors raise substantial doubt about the Company’s ability to continue as a going concern. For the next twelve months from issuance of these interim financial statements, the Company plans to seek to obtain additional capital through the sale of debt or equity financings or other arrangements to fund operations; however, there can be no assurance that the Company will be able to raise needed capital under acceptable terms, if at all. The sale of additional equity may dilute existing shareholders and newly issued shares may contain senior rights and preferences compared to our currently outstanding common shares. If the Company is unable to obtain such additional financing, future operations would need to be scaled back or discontinued. Due to the uncertainty in the Company’s ability to raise capital, management believes that there is substantial doubt in the Company’s ability to continue as a going concern for twelve months from the issuance of these interim financial statements.
Note 4 - Revenue
We
recorded $
| For the six months ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| (unaudited) | (unaudited) | |||||||
| Telecommunication Products & Services | $ | $ | ||||||
| Marketplace Platform & Digital Commerce Infrastructure Solutions | ||||||||
| Advanced Technology & Platform Solutions | ||||||||
| Data & Analytics Platform Solutions | ||||||||
| $ | $ | |||||||
Note 5 – Equipment
At August 31, 2026 and February 28, 2026, the Company has the following amounts related to tangible assets:
| August 31, 2026 | February 28, 2026 | |||||||
| (unaudited) | ||||||||
| Equipment | $ | $ | ||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Net equipment | $ | $ | ||||||
No
significant residual value is estimated for the equipment. Depreciation expenses for the six months ended August 31, 2026 and 2025 totalled
$
| 18 |
Note 6 – Intangible Asset
At August 31, 2026 and February 28, 2026, the company has the following amounts related to intangible assets:
| August 31, 2026 | February 28, 2026 | |||||||
| (unaudited) | ||||||||
| Mobile applications | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Net intangible assets | $ | $ | ||||||
No
significant residual value is estimated for these intangible assets. Amortization expenses for the six months ended August 31, 2026 and
2025 totalled $
Note 7 – Prepayment and Deposit
Prepaid expenses consist of the deposit pledge to the vendor for stock credits for resale. Our current vendors are China Unicom and China Mobile for our Telecommunication Products & Services business. Deposits include payments placed into the e-commerce platforms where we offer our products and services. The platforms are PinDuoDuo, Tmall, and JD.com.
| August 31, 2026 | February 28, 2026 | |||||||
| (unaudited) | ||||||||
| Deposit | $ | $ | ||||||
| Prepayment | ||||||||
| $ | $ | |||||||
Note 8 – Accounts Receivable, net
| August 31, 2026 | February 28, 2026 | |||||||
| (unaudited) | ||||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for credit losses | ( | ) | ( | ) | ||||
| $ | $ | |||||||
The Company normally allows credit terms to customers ranging from 90 to 150 days. The Company seeks to maintain strict control over its accounts receivable. Overdue accounts receivable are reviewed regularly by the Management.
Activities related to allowance for credit losses are presented below.
| August 31, 2026 | February 28, 2026 | |||||||
| (unaudited) | ||||||||
| At beginning of the period | $ | $ | ||||||
| Provision for (release of) credit losses | ||||||||
| Write-off | ( | ) | ||||||
| Effect of exchange rate changes | ||||||||
| At end of the period | $ | $ | ||||||
| 19 |
Note 9 – Other Receivables
At August 31, 2026 and February 28, 2026, the company has the following amounts related to other receivables:
| August 31, 2026 | February 28, 2026 | |||||||
| (unaudited) | ||||||||
| Other receivables represent: | ||||||||
| Advances to suppliers | $ | $ | ||||||
| Security deposit | ||||||||
| Others | ||||||||
| $ | $ | |||||||
Note 10 – Right-of-use Asset and Lease Liability
The Company has entered into lease agreements with various third parties. The terms of operating leases typically range from one to two years. These operating leases are included in “Right-of-use Asset” on the Company’s Condensed Consolidated Balance Sheet and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligation to make lease payments is included in “Lease liability” on the Company’s Condensed Consolidated Balance Sheet. Additionally, the Company has entered into various short-term operating leases with an initial term of twelve months or less. These leases are not recorded on the Company’s Consolidated balance sheet. All operating lease expense is recognized on a straight-line basis over the lease term in the six months ended August 31, 2026.
Information related to the Company’s right-of-use assets and related lease liabilities were as follows:
| August 31, 2026 | February 28, 2026 | |||||||
| (unaudited) | ||||||||
| Right-of-use asset | ||||||||
| Right-of-use asset, net | $ | $ | ||||||
| Lease liability | ||||||||
| Current lease liability | $ | $ | ||||||
| Non-current lease liability | ||||||||
| Total lease liability | $ | $ | ||||||
| Remaining lease term and discount rate | August 31, 2026 | |||
| Weighted-average remaining lease term | ||||
| Weighted-average discount rate | % | |||
Commitments
The following table summarizes the future minimum lease payments due under the Company’s operating leases as of August 31, 2026:
| Twelve months ended August 31, 2027 | $ | |||
| Thereafter | ||||
| Less: imputed interest | ( | ) | ||
| $ |
The following summarizes cash flow information related to leases for the year ended August 31, 2026:
| Cash paid for amounts included in the measurement of lease liabilities: | ||||
| Operating cash flows from leases | $ |
| 20 |
Note 11 - Common Stock
On March 3, 2025, the Company issued shares of its common stock at a deemed price of $ per share to one entity pursuant to a consulting agreement.
On May 15, 2025, the Company issued shares of its common stock at a price of $ per share to one entity pursuant to the exercise of warrants.
On May 23, 2025, the Company issued shares of its common stock at a price of $ per share to one entity pursuant to the exercise of warrants.
On
May 28, 2025, the Company issued an aggregate of shares of its common stock at a price or deemed price of $ per share to
8 individuals due to the closing of a private placement, which resulted in the receipt of $
On May 28, 2025, the Company issued shares of its common stock at a price of $ per share to one entity pursuant to the exercise of warrants.
On May 29, 2025, the Company issued shares of its common stock at a price of $ per share to one entity pursuant to the exercise of warrants.
On September 30, 2025, the Company, its indirect wholly owned subsidiary, Shanghai JiuGe Business Management Co., Ltd. (“JiuGe Management”), and Shanghai Jihaohe Information Technology Co., Ltd. (“Shanghai Jihaohe”), entered into an asset purchase agreement (the “Asset Purchase Agreement”) pursuant to which the Company caused JiuGe Management to acquire all of the intellectual property (including, without limitation, all of the inventions, software in source code or object code, trademarks, copyrights and trade secrets) underpinning the Company’s DaGe platform, in consideration of the issuance by the Company to Shanghai Jihaohe of shares of common stock in the capital of the Company. The Asset Purchase Agreement closed on October 2, 2025, and the Company issued the shares of common stock to Shanghai Jihaohe at a deemed issuance price of $ per share.
On October 17, 2025, the Company issued shares of its common stock at a deemed price of $ per share to one individual pursuant to a settlement agreement.
On October 17, 2025, the Company issued shares of its common stock at a deemed price of $ per share to one entity pursuant to a consulting agreement.
On
October 23, 2025 the Company entered into a Sales Agreement (the “Sales Agreement”) with R.F. Lafferty & Co.,
Inc. as sales agent (the “Sales Agent”), under which the Company may, from time to time, sell shares of its common
stock, par value $ per share (the “Placement Shares”), having an aggregate offering price of up to $
From
October 23, 2025 to November 30, 2025, the Company issued shares of its common stock under the Sales Agreement for gross cash
proceeds of $
On
November 14, 2025, the Company issued shares of common stock at a price of $ per share to one individual due to the closing
of a private placement for gross proceeds of $
From
December 12, 2025 to December 23, 2025, the Company issued shares of its common stock under the Sales Agreement for gross cash
proceeds of $
| 21 |
On
May 13, 2026, the Company entered into a securities purchase agreement with an institutional investor and issued a senior secured convertible
note with an original principal amount of $
During
the period from July 6, 2026 through August 28, 2026, the holder of the Company’s May 2026 senior secured convertible note
converted an aggregate of $
On
August 12, 2026, the Company entered into a share purchase agreement with Alset AI Ventures Inc. and Lyken AI Computing Inc. (“Lyken”),
pursuant to which the Company agreed to acquire common shares of Lyken, representing a
On
August 16, 2026, the Company entered into a securities purchase agreement with an institutional investor pursuant to which the Company
issued a senior secured convertible note with an original principal amount of $
On
August 31, 2026, the
As of August 31, 2026 there were shares of the Company’s common stock issued and outstanding, and none of the preferred shares were issued and outstanding.
| 22 |
Share Purchase Warrants
A continuity schedule of outstanding stock purchase warrants as at August 31, 2026, and the changes during the periods, is as follows:
| Number of Warrants | Weighted Average Exercise Price | |||||||
| Balance, February 28, 2026 | $ | |||||||
| Correction of prior warrant count adjustment | ( | ) | ||||||
| Issuance of warrants | ||||||||
| Issuance of pre-funded warrants | ||||||||
| Exercise of pre-funded warrants | ( | ) | ||||||
| Balance, August 31, 2026 | $ | |||||||
On
May 14, 2025, the Company received $
On
May 23, 2025, the Company received $
On
May 27, 2025, the Company received $
On
May 29, 2025, the Company received $
On
October 21, 2025,
On
November 4, 2025,
On
November 5, 2025, the Company issued
In
connection with the preparation of the current period financial statements, the Company reviewed the adjustment provisions contained
within the Placement Agent Warrant and determined that the previously disclosed increase of
On
November 21, 2025,
| 23 |
On
May 13, 2026, the Company entered into a securities purchase agreement with an institutional investor and issued a senior secured convertible
note (the “Note”) with an original principal amount of $
In
connection with the issuance of the Note, pursuant to the adjustment provisions contained within the common stock purchase warrants and
placement agent warrant issued in the registered direct offering that closed on December 23, 2024, the exercise price of such warrants
was adjusted to $
The Company had previously disclosed in its Annual Report on Form 10-K that the number of warrants outstanding increased as a result of this adjustment. Upon further review, the Company determined that only the exercise price was adjusted, and the number of warrants outstanding remained unchanged. Accordingly, the warrant continuity schedule in this Quarterly Report reflects the corrected number of warrants outstanding and the adjusted exercise price.
On
August 16, 2026, in connection with the issuance of the senior secured convertible note described in Note 16, the Company issued to the
Note Investor a common stock purchase warrant to purchase up to
On
August 31, 2026,
On
August 31, 2026, the holder exercised pre-funded warrants to purchase an aggregate of
| Number of Warrants | Remaining Contractual | |||||||||||
| Exercise Price | Outstanding | Life (Years) | Expiry Date | |||||||||
| 24 |
Stock Options
On
December 28, 2021, the Company granted an aggregate of stock
options pursuant to the Company’s 2021 Stock Incentive Plan having an exercise price of $ per share and an expiry date of five
years from the date of grant to 40 individuals who were directors, officers, employees and consultants of the Company. We relied upon
the exemption from registration under the U.S. Securities Act provided by Rule 903 of Regulation S promulgated under the U.S. Securities
Act for the grant of stock options to individuals who are non-U.S. persons and upon the exemption from registration under Section 4(a)(2)
of the U.S. Securities Act for two individuals who are U.S. persons. The stock options are all subject to vesting provisions of 20% on
the date of grant and 20% on each of the first, second, third, and fourth anniversary of the date of grant. At our annual meeting of
stockholders held on February 17, 2023, the stockholder approved an amendment to the exercise price of the outstanding stock options
from $
The fair value of these stock options was estimated at the date of grant using the Black-Scholes Options Valuation Model. The weighted-average grant-date fair value was $ per option.
On July 28, 2023, the Company granted an aggregate of stock options pursuant to the Company’s 2023 Stock Incentive Plan having an exercise price of $ per share and an expiry date of five years from the date of grant to 22 individuals who were employees and consultants of the Company’s subsidiaries and contractually controlled affiliate. The stock options are all subject to vesting provisions of 20% on the date of grant and 20% on each of the first, second, third and fourth anniversary of the date of grant.
The fair value of these stock options was estimated at the date of grant using the Black-Scholes Option Valulation Model. The weighted-average grant-date fair value was $ per option.
| Stock Option Grant Date | Remaining Contractual Life as of August 31, 2026 (Years) | |||
| December 28, 2021 | ||||
| July 28, 2023 | ||||
| 25 |
Number of Stock Options | Exercise Price | |||||||
| Balance, February 28, 2026 | $ | |||||||
| Cancelled/Forfeited | ||||||||
| Balance, August 31, 2026 | $ | |||||||
A continuity schedule of outstanding unvested stock options at August 31, 2026, and the changes during the six months periods, is as follows:
Number of Unvested Stock Options | Weighted Average Grant Date Fair Value | |||||||
| Balance, February 28, 2026 | $ | |||||||
| Vested | ) | $ | ||||||
| Balance, August 31, 2026 | $ | |||||||
As at August 31, 2026, the aggregate intrinsic value of the outstanding stock options granted on December 28, 2021 was estimated at $ as the current price as of August 31, 2026 is $ which is lower than the strike price while the aggregate intrinsic value of the outstanding stock options granted on July 28, 2023 is $ as the current price as of August 31, 2026 is lower than the strike price.
A summary of stock options outstanding and exercisable as at August 31, 2026 is as follows:
| Options Outstanding | Options Exercisable | |||||||||||||||||||||||||
Range of Exercise Prices | Outstanding at August 31, 2026 | Exercise Price | Weighted Average Remaining Contractual Term (Years) | Exercisable at August 31, 2026 | Exercise Price | Weighted Average Remaining Contractual Term (Years) | ||||||||||||||||||||
| $ | to $ | $ | $ | |||||||||||||||||||||||
| $ | to $ | $ | $ | |||||||||||||||||||||||
| 26 |
| For the six months ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| (unaudited) | (unaudited) | |||||||
| Numerator - basic and diluted | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Denominator | ||||||||
| Weighted average number of common shares outstanding —basic | ||||||||
| Weighted average number of common shares outstanding —diluted | ||||||||
| Loss per share of common stock — basic | $ | ( | ) | $ | ( | ) | ||
| Loss per share of common stock — diluted | $ | ( | ) | $ | ( | ) | ||
Note 13 – Income Taxes
The Company and its subsidiaries file separate income tax returns.
The United States of America
FingerMotion,
Inc. is incorporated in the State of Delaware in the U.S. and is subject to a U.S. federal corporate income tax of
Hong Kong
Finger
Motion Company Limited, Finger Motion (CN) Limited and Finger Motion Financial Company Limited were incorporated in Hong Kong and Hong
Kong’s profits tax rate is
The People’s Republic of China (PRC)
JiuGe
Management, Beijing XunLian, Shanghai TengLian JiuJiu, Shanghai KeShunXiang, Zhejiang ChangXin Communication Equipment Co., Ltd and Shanghai
XiaoYi Bin Tong Technology Co., Ltd. were incorporated in the People’s Republic of China and subject to PRC income tax at
Income tax mainly consists of foreign income tax at statutory rates and the effects of permanent and temporary differences. The Company’s effective income tax rates for the six months ended August 31, 2026 and 2025 are as follows:
| For the six months ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| (unaudited) | (unaudited) | |||||||
| U.S. statutory tax rate | % | % | ||||||
| PRC profit tax rate | % | % | ||||||
| Changes in valuation allowance and others | ( | )% | ( | )% | ||||
| Effective tax rate | % | % | ||||||
| 27 |
| August 31, 2026 | February 28, 2026 | |||||||
| (unaudited) | ||||||||
| Current tax | $ | $ | ||||||
| Deferred tax benefit | ||||||||
| Total provision for (benefit from) income tax expense | $ | $ | ||||||
The
reconciliations of income tax expenses computed by applying the statutory income tax rates, ranging from
| August 31, 2026 | February 28, 2026 | |||||||
| (unaudited) | ||||||||
| Loss before income tax expenses | $ | ( | ) | $ | ( | ) | ||
| Income tax credit computed at various statutory income tax rate ( | ( | ) | ( | ) | ||||
| Reconciling items: | ||||||||
| Tax incentive – R&D Credit | ( | ) | ||||||
| Income not subject to tax in China | ( | ) | ( | ) | ||||
| Change in fair value of derivative liabilities | ||||||||
| Non-deductible expenses | ||||||||
| Total provision for (benefit from) income tax | $ | $ | ||||||
Deferred
tax has resulted primarily from future tax deductible or creditable temporary differences. In assessing the realizability of deferred
tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
At August 31, 2026 and February 28, 2026, the valuation allowances were $
The significant components of the Company’s deferred tax account balances are as follows:
| August 31, 2026 | February 28, 2026 | |||||||
| (unaudited) | ||||||||
| Deferred tax assets | ||||||||
| Net operating losses carry forward | $ | $ | ||||||
| Accruals and reserves | ||||||||
| Lease liability | ||||||||
| Total deferred tax assets | ||||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Total deferred tax assets, net of valuation allowance | ||||||||
| Deferred tax liabilities | ||||||||
| Right-of-use asset | ( | ) | ( | ) | ||||
| Total deferred tax liabilities | ( | ) | ( | ) | ||||
| Net deferred tax assets (liabilities) | $ | $ | ||||||
Note 14 - Commitments and Contingencies
From time to time, the Company may be involved in or referenced in legal matters arising in the ordinary course of business. The Company is not aware of any material outstanding claim or litigation against it
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Note 15 – Loan Payable
On
July 18, 2024,
On
July 21, 2025, the Company repaid a short-term loan of SGD
On
August 1, 2025, the Company repaid a short-term loan of SGD
On
September 4, 2025 the Company and the Lender entered into an extension of loan agreement of the final tranche of SGD$
On
December 9, 2025, the Company’s wholly owned subsidiary, Finger Motion Company Limited entered into a loan agreement with Dr. Liew
Yow Ming for a short-term loan facility of SGD$
On
December 24, 2025, the Company’s wholly owned subsidiary, Finger Motion Company Limited entered into a separate loan agreement
with Dr. Liew Yow Ming for a short-term loan facility of SGD$
On
March 4, 2026, Finger Motion Company Limited, a wholly owned subsidiary of the Company, entered into a further extension agreement with
the existing lender in respect of the remaining outstanding balance of SGD$
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Note 16 – Senior Secured Convertible Notes
May 2026 Note
On
May 13, 2026 (the “Closing Date”), we entered into a securities purchase agreement (the “May 2026 Note Purchase
Agreement”) with an institutional investor (the “Note Investor”), pursuant to which we issued to the Note
Investor a senior secured convertible note (the “Note”) with an original principal amount of $
The
Note is convertible, at any time at the Note Investor’s option, into shares of the Company’s common stock (the “Conversion
Shares”), at an initial fixed conversion price of $
If
an event of default occurs and is continuing, the Note shall become due and payable, at the Note Investor’s election, in cash at
an amount equal to
The
Note also contains additional conversion, redemption, and put mechanics, including (i) an optional redemption right in favor of the Company,
exercisable after 40 trading days following the effective date of the initial resale registration statement, at a price equal to
The
May 2026 Note Purchase Agreement contains customary representations, warranties, and agreements of the Company and the Note Investor,
and customary indemnification rights and obligations of the parties. The Company has agreed to seek stockholder approval for the issuance
of Conversion Shares in excess of
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In connection with the May 2026 Note Purchase Agreement, the Company entered into a registration rights agreement with the Note Investor. The Company also entered into a security agreement with the Note Investor (the “May Security Agreement”), pursuant to which the Company granted to the Note Investor, acting as collateral agent, a first-priority security interest in substantially all of the Company’s personal property assets, subject to customary permitted liens and excluded assets, as set forth in the Security Agreement.
During
the six months ended August 31, 2026, the Note Investor converted an aggregate of $
August 2026 Note
On
August 16, 2026, the Company entered into a securities purchase agreement (the “August Purchase Agreement” with an
institutional investor (the “Investor”) pursuant to which the Company issued a senior secured convertible note with
an original principal amount of $
The
Note is convertible, at any time at the Investor’s option, into shares of the Company’s common stock (the “Conversion
Shares”), at an initial fixed conversion price of $
If
an event of default occurs and is continuing, the Note shall become due and payable, at the Note Investor’s election, in cash at
an amount equal to
The
Note also contains additional conversion, redemption, and put mechanics, including (i) an optional redemption right in favor of the Company,
exercisable after 40 trading days following the effective date of the initial resale registration statement, at a price equal to
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The
Purchase Agreement contains customary representations, warranties, and agreements of the Company and the Investor, and customary indemnification
rights and obligations of the parties. The Company has agreed to seek stockholder approval for the issuance of Conversion Shares in excess
of
In
addition, the Company issued the Investor a Warrant exercisable into
In
connection with the Purchase Agreement, the Company entered into a registration rights agreement with the Investor (the “August
Registration Rights Agreement”), pursuant to which the Company has agreed to file a resale registration statement to register
for resale a number of shares of Common Stock equal to
The Company also entered into a security agreement with the Investor (the “August Security Agreement”), pursuant to which the Company granted to the Investor, acting as collateral agent, a first-priority security interest in substantially all of the Company’s personal property assets, subject to customary permitted liens and excluded assets, as set forth in the Security Agreement.
Note 17 – Related Party Transactions
In the ordinary course of business, the Company engages in transactions with its principal stockholders, affiliates, and executive officers. These transactions are carried out on terms comparable to those that would be obtained in arm-length dealings with unrelated third parties.
At
August 31, 2026 and February 28, 2026, the Company engaged in the following transactions with ZhongXin Marine (Zhoushan) Satellite Communications
Equipment Co., Ltd., which holds a
| August 31, 2026 | February 28, 2026 | |||||||
| Related party transaction | ||||||||
| Purchases of two satellite portable stations | $ | $ | ||||||
| Jinhua project traffic fees | $ | |||||||
| Yantai Wanhua project: satellite equipment | $ | |||||||
| Sichuan project | ||||||||
| Research & Development | $ | |||||||
The following balances were outstanding at the end of the reporting periods:
| August 31, 2026 | February 28, 2026 | |||||||
| Related party payable | $ | $ | ||||||
| August 31, 2026 | February 28, 2026 | |||||||
| Related party prepayment | $ | $ | ||||||
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Note 18 - Financial Instruments
The Company’s senior secured convertible notes are accounted for as liabilities and are subsequently measured at amortized cost. The Company evaluated the embedded conversion features of the convertible notes in accordance with ASC 815, Derivatives and Hedging, and determined that the conversion features require bifurcation and separate accounting as derivative liabilities.
The Company also determined that the common stock purchase warrant issued in connection with the August 2026 senior secured convertible note constitute a freestanding financial instrument and that the warrant requires separate accounting as a derivative liability.
The derivative liabilities are measured at fair value at each reporting date, with changes in fair value recognized in the unaudited condensed consolidated statements of operations and comprehensive loss. Debt discounts are amortized to interest expense over the contractual terms of the convertible notes using the effective interest method.
As of August 31, 2026, the carrying amounts of the convertible notes and related derivative liabilities were as follows:
As of August 31, 2026 | ||||
| Convertible Notes | $ | |||
| Derivative liabilities – Conversion | ||||
| Derivative liabilities – Warrant | ||||
| $ | ||||
Note 19 - Subsequent Events
Subsequent
to August 31, 2026, on September 2, 2026, the holder exercised pre-funded warrants to purchase
Subsequent
to August 31, 2026, the Company fully repaid the SGD
Subsequent to August 31, 2026, the Company filed a registration statement covering the resale of shares of common stock issuable upon conversion of the August 2026 senior secured convertible note and exercise of the related common stock purchase warrant.
On
September 23, 2026, the Company entered into a share purchase agreement to acquire
On September 30, 2026, the Company entered into a binding agreement to acquire approximately 20.2 acres of land located in Hanna, Alberta, Canada, for the development of the Company’s Hanna Campus #1. The transaction is subject to a due diligence period and customary closing conditions.
On October 6, 2026, the Company held a Special Meeting of Stockholders. At the Special Meeting, the Company’s stockholders approved the issuance of shares of common stock pursuant to the May 2026 and August 2026 senior secured convertible notes in excess of the applicable Nasdaq exchange cap. The Company’s stockholders also approved an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of common stock from to shares.
Except for the above, the Company has determined that it does not have any other material subsequent events to disclose in these consolidated financial statements.
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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The terms the “Registrant”, “we”, “us”, “our”, “FingerMotion” and the “Company” mean FingerMotion, Inc. or as the context requires, collectively with its 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 SEC and, including, without limitation, this Quarterly Report on Form 10-Q for the six months ended August 31, 2026, and our Annual Report on Form 10-K for the fiscal year ended February 28, 2026, including the consolidated financial statements and related notes contained therein. These factors, or any one of them, may cause our actual results or actions in the future to differ materially from any forward-looking statement made in this document. Refer to “Cautionary Note Regarding Forward-looking Statements” as disclosed in our Annual Report on Form 10-K for the fiscal year ended February 28, 2026, and Item 1A - Risk Factors, under Part II - Other Information of this Quarterly Report.
Introduction
This MD&A is focused on material changes in our financial condition from February 28, 2026, our most recently completed year end, to August 31, 2026, and our results of operations for the six months ended August 31, 2026, and should be read in conjunction with Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations as contained in our Annual Report on Form 10-K for the fiscal year ended February 28, 2026.
New Business Plan- Behind-the-Meter Data Centers
The Company announced an additional business plan on August 27, 2026, a strategic plan developed by new management with BlueFlare Energy Solutions Inc. (“BlueFlare”) for behind-the-meter (“BTM”) artificial intelligence (“AI”) and high-performance computing (“HPC”) infrastructure in North America.
The Company believes its new business model provides a reasonable foundation for a viable business by leveraging BlueFlare’s existing operating platform (site origination, on-site natural gas power generation, modular construction, load management and field operations), rather than building those capabilities from scratch.
Since we just recently embarked on this new business strategy, it is premature to comment upon potential revenue and expenses except to comment that this business is capital intensive and we do not expect to generate revenue from this new initiative until approximately nine months after a project is in full development. As a result, this MD&A does not include any projected revenues, costs or capital requirements for this new business strategy.
To date, we have disclosed the targets and goals we have set with respect to this new business - permitting of ten 9.9 MW sites by the end of the first quarter of 2027, first energization as early as late fourth quarter 2026, data-hall turnover on the order of 18 months from permit award—depend on counterparties, regulators, equipment vendors, weather, and financing that we do not control. Failure to meet those targets would not necessarily indicate a defect in the 9.9 MW BTM concept, but it would delay revenue and could impair investor confidence and project finance.
Corporate Information
The Company is a Delaware-incorporated holding company and conducts a significant part of its operations through subsidiaries and contractual arrangements with affiliated entities in the PRC, including Shanghai JiuGe Information Technology Co., Ltd. (“JiuGe Technology”, “our VIE” or “the VIE”). The Company’s operations in the PRC are primarily carried out through its wholly owned subsidiaries and Shanghai JiuGe Business Management Co., Ltd. (“JiuGe Management”, “our WFOE” or “the WFOE”), a wholly foreign-owned enterprise (“WFOE”), which has entered into a series of contractual agreements with the VIE and its respective shareholder.
These contractual arrangements are intended to provide the Company with effective control over the VIE and the ability to receive substantially all of the economic benefits of the VIE’s operations. The VIE structure is employed to comply with PRC laws and regulations that restrict or prohibit foreign ownership in certain industries. However, these arrangements have not been tested in a court of law in the PRC and carry associated risks and uncertainties. See “Item 1A. Risk Factors—Risks Related to VIE Agreements.”
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The Company’s holding company structure presents unique risks as the Company’s investors may never directly hold equity interests in the Company’s subsidiaries or the VIE.
The Company relies on distributions and other payments from its subsidiaries and VIE to fund its operations. These payments are subject to PRC laws and regulations, including restrictions on dividends, foreign exchange controls, and other regulatory requirements.
The Company’s subsidiaries and VIE are subject to regulation by PRC authorities, including the China Securities Regulatory Commission (“CSRC”) and the Cyberspace Administration of China (“CAC”). As of the date of this report, the Company is not required to obtain specific approvals from these authorities to operate its current business. However, under the CSRC’s Overseas Listing Trial Measures, the Company may be required to complete filing procedures for future overseas securities offerings, the failing of which may result in an order to make correction, a warning, and/or the imposition of fines.
The regulatory environment in China is evolving, and it remains uncertain how new or changing laws and regulations may impact the Company’s operations, its ability to accept foreign investment, or its ability to maintain a listing on a U.S. or other foreign exchange.
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Licensing
The Company’s operations in the PRC require specific licenses and permits. Its VIE and related operating entities hold value-added telecommunications business licenses issued by the Ministry of Industry and Information Technology (“MIIT”). These licenses are necessary for providing mobile payment, recharge, and messaging services in China.
VIE Structure
The Company conducts a substantial portion of its operations in China through VIE arrangements. These arrangements consist of a series of contractual agreements (the “VIE Agreements”) between the Company’s WFOE and the VIE, along with its shareholder, pursuant to which JiuGe Technology became the Company’s contractually controlled affiliate. 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 VIE.
The purpose of these agreements is to give the Company effective control over the VIE and to enable it to receive the majority of the economic benefits from its operations. However, the Company lacks direct equity ownership in the VIE, which means these arrangements may not be as effective as direct ownership.
The enforceability of the VIE agreements under PRC law remains uncertain, and there is no guarantee that the Company will be able to maintain effective control over the VIE. Please see “Item 1A. Risk Factors—Risks Related to VIE Agreements.”
Acquisition of Operational Control of Beijing Technology
The Company acting through the VIE expanded its telecommunications services through the acquisition of operational control of Beijing XunLian TianXia Technology Co., Ltd. (“Beijing Technology”), which provides enterprise messaging solutions, including short message services (“SMS”) and multimedia messaging services (“MMS”), for enterprise customers. This service complements the Company’s mobile payment and recharge offerings and operates under licenses issued by the MIIT.
Strategic Cooperation with China Unicom
The Company, through its VIE, JiuGe Technology, has established cooperative arrangements with China United Network Communications Limited and its regional branches, including China Unicom Yunnan. These arrangements represent a key component of the Company’s telecommunications ecosystem and support its transaction-based service model.
Under these cooperation arrangements, JiuGe Technology is responsible for constructing and operating electronic sales platforms and related services through which consumers may purchase telecommunications products and services, including mobile devices, mobile service plans, broadband services, and related offerings. The Company receives a share of the revenue generated from transactions processed through these platforms.
The Company believes these arrangements enhance its integration with major telecommunications operators in China and provide opportunities to increase transaction volume and service penetration. The extent of revenue generated from these arrangements depends on transaction activity, customer adoption, and ongoing commercial cooperation with the relevant counterparties.
In addition, in January 2022, TengLian, a subsidiary of JiuGe Technology, entered into a cooperation arrangement with China Unicom to support device protection programs for mobile and 5G devices. This initiative expands the Company’s involvement in value-added telecommunications services and may enhance its broader service offerings.
These cooperative arrangements are subject to customary commercial terms, including renewal provisions and termination rights, and their continuation and financial contributions will depend on ongoing performance, regulatory conditions, and market demand
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Intercorporate Relationships
The following is a list of all of our subsidiaries and the corresponding place of incorporation or organization and the ownership interest of each. All of our subsidiaries are directly or indirectly owned or controlled by us:
| Name of Entity | Place
of Incorporation / 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 Co., Ltd.(5) | PRC | Contractually controlled (5) | ||
| Beijing XunLian TianXia Technology Co., Ltd.(6) | PRC | Contractually controlled | ||
| Finger Motion Financial Group Limited(7) | Samoa | 100% | ||
| Finger Motion Financial Company Limited(8) | Hong Kong | 100% | ||
| Shanghai TengLian JiuJiu Information Communication Technology Co., Ltd.(9) | PRC | Contractually controlled | ||
| Shanghai KeShunXiang Automobile Service Co., Ltd.(10) | PRC | Contractually controlled | ||
| Zhejiang ChangXin Communication Equipment Co., Ltd.(11) | PRC | Contractually controlled | ||
| Shanghai XiaoYi Bin Tong Technology Co., Ltd.(12) | PRC | Contractually 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., sometimes referred to in this Quarterly Report as “the WFOE”, is a wholly owned subsidiary of Finger Motion (CN) Limited. | |
| (5) | Shanghai JiuGe Information Technology Co., Ltd., sometimes referred to in this Quarterly Report as “the VIE”, 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. | |
| (10) | Shanghai KeShunXiang Automobile Service Co., Ltd. is a 99% owned subsidiary of Shanghai JiuGe Information Technology Co., Ltd. | |
| (11) | Zhejiang ChangXin Communication Equipment Co., Ltd. is a 70% owned subsidiary of Shanghai KeShunXiang Automobile Service Co., Ltd. | |
| (12) | Shanghai XiaoYi Bin Tong Technology Co., Ltd. is an 80% owned subsidiary of Shanghai JiuGe Information Technology Co., Ltd. |
Because we do not directly hold equity interests in the VIE, we are subject to risks and uncertainties of the interpretations and applications of Chinese laws and regulations, including but not limited to, the validity and enforcement of the VIE Agreements among the WFOE, the VIE and the shareholder of the VIE. We are also subject to the risks and uncertainties about any future actions of the Chinese government in this regard that could disallow the VIE structure, which would likely result in a material change in our operations and may cause the value of our shares of common stock to depreciate significantly or become worthless.
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The VIE Agreements may not be as effective as direct ownership in providing operational control. For instance, the VIE and its shareholders could breach their contractual arrangements with us by, among other things, failing to conduct their operations in an acceptable manner or taking other actions that are detrimental to our interests. The shareholder of the VIE may not act in the best interests of our Company or may not perform their obligations under the VIE Agreements. Such risks exist throughout the period in which we intend to operate certain portions of our business through the VIE Agreements with the VIE. In the event that the VIE or its shareholder fail to perform their respective obligations under the VIE Agreements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. In addition, even if legal actions are taken to enforce the VIE Agreements, there is uncertainty as to whether Chinese courts would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. See “Risk Factors—Risks Related to the VIE Agreements”. We rely on the VIE Agreements with the VIE and its shareholder for a significant portion of our business operations. The VIE Agreements may not be as effective as direct ownership in providing operational control. Any failure by the VIE or its shareholder to perform their obligations under such contractual arrangements would have a material and adverse effect on our business.
As of the date of this Quarterly Report on Form 10-Q, we and the VIE are not required to seek permissions from the CSRC, the CAC, or any other entity that is required to approve of the operations of the VIE, other than a value-added telecommunications business license, which has already been obtained. Nevertheless, Chinese regulatory authorities may in the future promulgate laws, regulations or implement rules that require us, our subsidiaries or the VIEs to obtain permissions from such regulatory authorities to approve the operations of the VIE.
Overview
The Company is a mobile services, data, and technology company incorporated in Delaware, USA, with its head office located at 700 South Rosemary Avenue, Suite 204, West Palm Beach, FL 33401. As described elsewhere in this Quarterly Report, the Company has been organized as a holding company and conducts a significant part of its operations through its subsidiaries and through contractual agreements with JiuGe Technology, the VIE based in China. The Company indirectly owns 100% of the equity of JiuGe Management, a WFOE that has entered into the VIE Agreements which gives the Company operational control over JiuGe Technology and consolidates its financial results.
The Company organizes its operations in its legacy business across four primary areas: (i) telecommunications products and services, (ii) marketplace platform and digital commerce infrastructure solutions, (iii) data and analytics platform solutions, and (iv) advanced technology and platform solutions.
With respect to its legacy business, the Company’s strategic focus is to continue operating and optimizing its telecommunications products and services business while expanding its higher-margin, technology-driven platform offerings. These offerings include the development and commercialization of its marketplace platforms, data analytics solutions (including applications for insurance and financial services), and critical infrastructure technology platforms. The Company is also focused on enhancing its underlying technology capabilities, including platform scalability, data processing, and system integration, to support growth across multiple industry verticals. The timing and extent of growth in these areas will depend on factors such as market adoption, competitive conditions, regulatory developments, and the Company’s ability to execute its platform development and commercialization strategies.
Additionally, the Company has added an additional business plan which it announced on August 27, 2026. the strategic plan developed by new management with BlueFlare Energy Solutions Inc. (“BlueFlare”) for behind-the-meter (“BTM”) artificial intelligence (“AI”) and high-performance computing (“HPC”) infrastructure in North America.
The Company believes its new business model provides a reasonable foundation for a viable business by leveraging BlueFlare’s existing operating platform (site origination, on-site natural gas power generation, modular construction, load management and field operations), rather than building those capabilities from scratch.
Since August 1, 2026, the new management team has accomplished the following: (i) completed financing activities of approximately $8.3 million in the aggregate; (ii) acquisition of a minority interest in Lyken; (i) binding letters of intent for 12.9 MW of data center power; (iii) announced a 99 MW acquisition plan for data-center buildout; and (iv) secured indications of interest for 52.5 MW of offtake from potential tenants for its data centers.
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Lines of Business of the Company’s Legacy Telecommunications Business
The Company operates an integrated portfolio of technology-driven platforms and services across four core areas:
(i) telecommunication products and services,
(ii) marketplace platform and digital commerce infrastructure solutions,
(iii) data and analytics platform solutions, and
(iv) advanced technology and platform solutions.
These offerings leverage the Company’s technological capabilities across multiple industry applications, with a focus on scalable and extensible platform architectures.
| (i) | Telecommunications Products and Services |
The Company offers telecommunications-related services in the PRC through its subsidiaries and VIE structure. This line of business includes mobile payment and recharge services, as well as enterprise messaging services such as SMS and MMS. These services historically represent a significant portion of the Company’s revenue.
The Company conducts its operations through JiuGe Technology.
Mobile Payment and Recharge Services
The Company provides mobile airtime and data recharge services to telecommunications carriers and channel partners, allowing end users to purchase prepaid mobile credits through its platform. The Company procures airtime and data packages in bulk from telecommunications operators and distributes them through a network of enterprise customers, digital platforms, and other distribution channels.
JiuGe Technology holds licensed access agreements with major Chinese telecom providers, including China Mobile Communications Corporation (“China Mobile”) and China United Network Communications Group Co., Ltd. (“China Unicom”). Through these arrangements, JiuGe Technology offers mobile payment and recharge services, earning revenue from transaction rebates paid by telecom operators.
The platform provides real-time payment and recharge services to third-party businesses, e-commerce channels, and online marketplaces such as JD.com, Pinduoduo, and Tmall. JiuGe Technology generates revenue by processing payments for telecom services and receiving rebates from telecom operators. To attract users, it may offer discounted data or talk-time packages through its platform. Additionally, the Company serves as a loyalty redemption agent for China Mobile, allowing customers to redeem telecom loyalty benefits through its platform.
In 2019, JiuGe Technology entered into an agreement with China Unicom’s Yunnan division to build and operate an online sales platform for telecom-related products and services, including mobile phones, broadband services, smart devices, and related insurance offerings. Under this arrangement, JiuGe Technology receives a percentage of the sales revenue generated through the platform.
The Company has also secured contracts with China Mobile and China Unicom to acquire new telecom subscribers and continues to expand mobile phone sales through its online channels.
Enterprise Messaging Services (SMS and MMS)
The Company provides enterprise messaging services through Beijing Technology, which it controls operationally via JiuGe Technology. Beijing Technology is licensed by the MIIT to provide SMS and MMS services in the PRC.
The Company procures messaging capacity in bulk and delivers these services to enterprise customers, including automobile manufacturers, hotel chains, airlines, and e-commerce companies. Its integrated messaging platform enables enterprise customers to manage high-volume messaging campaigns, ensuring compliance with relevant regulatory requirements for message content and distribution, and provides delivery tracking capabilities.
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| (ii) | Marketplace Platform and Digital Commerce Infrastructure |
The Company develops mobile-first, online-to-offline (“O2O”) marketplace platform solutions designed to connect consumers with service providers and vendors of products and services. The platform integrates core marketplace functionalities, including service discovery, provider matching, booking and scheduling, payment processing, and post-transaction feedback mechanisms.
The Marketplace Platform and Digital Commerce Infrastructure line of business is designed to be scalable and extensible across multiple service-based and transaction-oriented industry verticals. The Company focuses on ongoing technology development and platform enhancement, including improvements to system performance, user experience, data analytics integration, and transaction processing efficiency. These initiatives are intended to enhance user engagement, improve transaction conversion rates, and support long-term scalability.
The Company intends to generate revenue from its Marketplace Platform and Digital Commerce Infrastructure services through transaction-based fees, subscription arrangements, advertising services, and other value-added offerings. The timing and extent of revenue generation will depend on factors such as market adoption, platform scalability, competitive conditions, regulatory developments, and the Company’s ability to execute its commercialization strategy.
DaGe Platform
The DaGe Platform is a digital marketplace designed to connect automotive owners with service providers and vendors of automotive-related products and services. This platform facilitates various services, including vehicle maintenance, repair, tire replacement, and electric vehicle (EV) charging, as well as the sale of automotive accessories.
The platform includes functionality for service discovery, booking management, payment processing, and user feedback, and is intended to support mobility-related applications.
The DaGe Platform is part of the Company’s Marketplace Platform and Digital Commerce Infrastructure services initiatives and is at early stages of development. These activities may require ongoing investment and may not generate significant revenue in the near term. The Company may seek to generate revenue from this platform through transaction-based fees, subscriptions, advertising, and related services; however, the timing and extent of such revenue remain uncertain and will depend on market adoption, platform development, and regulatory conditions.
JiuGe Procurement Platform
The JiuGe Procurement Platform is an enterprise procurement solution operated by JiuGe Technology and is included within the Company’s Marketplace Platform and Digital Commerce Infrastructure initiatives.
The platform is designed to support JiuGe Technology’s mobile recharge business by centralizing supplier product catalogues and facilitating procurement workflows for employee benefits, customer rewards, and promotional campaign distribution. The goal is to improve procurement efficiency, supplier coordination, and internal resource allocation.
| (iii) | Data And Analytics Platform Solutions |
The Company provides data analytics and data-driven solutions through its Sapientus platform to insurance companies, financial service providers, and enterprise customers. This line of business represents a key strategic focus and is intended to support the Company’s transition toward higher-margin and scalable services.
Sapientus aggregates and processes large volumes of structured and unstructured data from multiple sources to generate analytical insights and reporting outputs that support decision-making in sectors such as insurance, financial services, and mobility. The platform is designed to support risk assessment, trends identification, customer segmentation, marketing analysis, and related business operations.
The Company continues to invest in expanding its data capabilities and analytical models. The performance and growth of this line of business may be affected by market acceptance, regulatory developments, and the Company’s ability to access and utilize data in compliance with applicable laws and regulations.
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| (iv) | Advanced Technology and Platform Solutions |
The Company develops advanced technology and platform solutions designed for enterprise and mission-oriented environments that require real-time communication, coordination, and operational management capabilities. These solutions are intended to support complex workflows across a range of industry applications where reliability, performance, and system integration are important.
C2 Platform
The Company, through its VIE, JiuGe Technology, has developed a C2 Platform focused on communications and operational coordination for mobility-related applications, including emergency response, logistics, and specialized field operations.
The C2 Platform represents the Company’s initial deployment of its technology in mission-critical and public infrastructure environments that support public safety and operational coordination. The platform reflects the Company’s ability to design and implement system-level software solutions intended to operate in environments requiring reliability, performance, and continuity of service.
The Company intends to leverage its experience and technical capabilities developed through the C2 Platform to evaluate and pursue opportunities in other areas of critical infrastructure. These potential applications may include public safety systems, transportation networks, emergency response coordination, and other large-scale operational environments, subject to customer demand, technical feasibility, and regulatory considerations.
The C2 Platform integrates mobile communications, data processing, and system coordination functions to facilitate information sharing between field personnel and centralized command centres. This platform is designed to support real-time data transmission, remote monitoring, and coordination of field operations.
The Company’s C2 Platform initiatives focus on developing and deploying communication and platform solutions for commercial and specialty vehicles. These solutions aim to enhance situational awareness, fleet coordination, and remote operations across various use cases, including emergency response, logistics, and infrastructure services. The C2 Platform is currently in the commercialization stage and is being introduced to enterprise and public-sector customers through pilot deployments, procurement processes, and direct engagement activities. The timing and extent of future revenue generation will depend on a number of factors, including customer adoption, procurement cycles, competitive conditions, and the successful scaling of deployments across additional jurisdictions and applications.
Recent Developments
During the quarter ended August 31, 2026, the resale registration statement relating to shares issuable upon conversion of the Company’s May 2026 senior secured convertible note was declared effective, following which the remaining $1.0 million of the aggregate subscription amount was released to the Company. During the quarter, the Note Investor converted an aggregate of approximately $2.1million of principal into approximately 12.2 million shares of the Company’s common stock.
On August 4, 2026, Martin J. Shen resigned as Chief Executive Officer and a director of the Company. Effective the same date, Jolie Kahn was appointed Chief Executive Officer and a director of the Company. On August 17, 2026, Chris Polimeni was appointed Chief Financial Officer of the Company, succeeding Yew Hon Lee, whose resignation as Chief Financial Officer was accepted by the Board.
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Results of Operations
Three Months Ended August 31, 2026 Compared to Three Months Ended August 31, 2025
The following table sets forth our results of operations for the periods indicated:
| For the three months ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Revenue | $ | 281,076 | $ | 8,647,511 | ||||
| Cost of revenue | $ | (144,561 | ) | $ | (8,608,771 | ) | ||
| Total operating expenses | $ | (5,665,947 | ) | $ | (1,528,160 | ) | ||
| Total other income (expenses) | $ | 549,664 | $ | (60,104 | ) | |||
| Net loss attributable to the Company’s stockholders | $ | (4,932,239 | ) | $ | (1,541,010 | ) | ||
| Foreign currency translation adjustment | $ | 50,803 | $ | 129,045 | ||||
| Comprehensive loss attributable to the Company | $ | (4,881,435 | ) | $ | (1,411,965 | ) | ||
| Basic Loss Per Share attributable to the Company | $ | (0.08 | ) | $ | (0.03 | ) | ||
| Diluted Loss Per Share attributable to the Company | $ | (0.08 | ) | $ | (0.03 | ) | ||
Revenue
The following table sets forth the Company’s revenue from its lines of business for the periods indicated:
| For the three months ended | ||||||||||||
| August 31, 2026 | August 31, 2025 | Change (%) | ||||||||||
| Telecommunication Products & Services | $ | 253,639 | $ | 8,639,881 | -97 | % | ||||||
| Marketplace Platform & Digital Commerce Infrastructure Solutions | $ | 26,628 | $ | 6,898 | 286 | % | ||||||
| Advanced Technology & Platform Solutions | $ | 809 | $ | 585 | 38 | % | ||||||
| Data & Analytics Platform Solutions | $ | — | $ | 147 | -100 | % | ||||||
| Total Revenue | $ | 281,076 | $ | 8,647,511 | -97 | % | ||||||
We recorded $281,076 in revenue for the three months ended August 31, 2026, a decrease of $8,366,435 or 97%, compared to the three months ended August 31, 2025. The decrease was primarily attributed to decreases in revenue of $8,386,242 and $147 from our Telecommunication Product & Services line of business and Data & Analytics Platform Solutions line of business, respectively. These decreases were partially offset by increases in revenue of $19,730 and $224 from our Marketplace Platform & Digital Commerce Infrastructure Solutions and Advanced Technology & Platform Solutions, respectively.
We principally earn revenue by providing mobile payment and recharge services to customers of telecommunications companies in China. This operating model requires working capital to support transaction volumes with telecommunications operators and platform partners. During the three-month period ending August 31, 2026, revenue in this line of business decreased significantly compared to the prior year period, primarily due to lower transaction volume. The lower transaction volume was attributable to the Company’s available working capital position during the period. Management continues to monitor transaction volumes, collection cycles and working capital allocation, and intends to deploy available capital selectively based on liquidity, commercial demand and expected returns, and to balance this with capital needs of the new data center business initiative.
Revenue from our Marketplace Platform & Digital Commerce Infrastructure Solutions lone of business increased to $26,628 for the three months ended August 31, 2026, compared to $6,898 for the three months ended August 31, 2025. The DaGe platform and related marketplace initiatives remain at an early stage of commercialization, and revenue will depend on user adoption, business development activities, platform scaling, and available working capital.
Revenue from our Advanced Technology and Platform Solutions line of business have been minimal.
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Revenue from our Data and Analytics Platform Solutions line of business have been minimal.
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, 2026 | August 31, 2025 | |||||||
| Telecommunication Products & Services | $ | 115,877 | $ | 8,594,670 | ||||
| Marketplace Platform & Digital Commerce Infrastructure Solutions | $ | 23,984 | $ | 13,624 | ||||
| Advanced Technology & Platform Solutions | $ | 4,700 | $ | 477 | ||||
| Total Cost of Revenue | $ | 144,561 | $ | 8,608,771 | ||||
We recorded $144,561 in costs of revenue for the three months ended August 31, 2026, a decrease of $8,464,210 or 98%, compared to the three months ended August 31, 2025. The decrease was primarily attributable to the significant reduction in transaction volume in the Telecommunication Products & Services line of business during the period. As revenue from this line of business decreased, the related product and service costs, including costs associated with mobile recharge, subscription plans and mobile phone sales, decreased correspondingly.
Cost of revenue from the Marketplace Platform & Digital Commerce Infrastructure Solutions line of business increased compared to the prior year period. Cost of revenue from the Advanced Technology & Platform Solutions line of business increased to $4,700 for the three months ended August 31, 2026 from $477 for the three months ended August 31, 2025.
Gross profit
Our gross profit for the three months ended August 31, 2026 was $136,515, compared to $38,740 for the three months ended August 31, 2025, representing an increase of $97,775 or 252%. Gross margin improved to approximately 49% for the three months ended August 31, 2026 from approximately 0.45% for the three months ended August 31, 2025.
The increase in gross profit and gross margin was primarily attributable to a change in revenue mix during the period. Although revenue from the Telecommunication Products & Services line of business decreased significantly compared to the prior year period, the line of business generates gross profit of $137,762, representing a gross margin of approximately 54% during the current period. In addition, the Marketplace Platform & Digital Commerce Infrastructure Solutions line of business generated gross profit of $2,644, representing a gross margin of approximately 10%, while the Advanced Technology & Platform Solutions line of business generated gross loss of $3,891.
Management continues to evaluate revenue opportunities based on both transaction volume and margin contribution, with the objective of supporting sustainable gross profit while managing working capital requirements.
Amortization & Depreciation
We recorded amortization & depreciation of $200,514 for intangible assets and fixed assets for the three months ended August 31, 2026, an increase of $192,748 or 2482%, compared to the three months ended August 31, 2025. The increase resulted from the purchase of software IP.
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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, 2026 | August 31, 2025 | |||||||
| Accounting | $ | 66,107 | $ | 97,764 | ||||
| Consulting | $ | 540,221 | $ | 340,715 | ||||
| Entertainment | $ | 44,468 | $ | 34,179 | ||||
| IT | $ | 16,954 | $ | 25,431 | ||||
| Rent | $ | 22,603 | $ | 40,697 | ||||
| Salaries & Wages | $ | 492,591 | $ | 568,709 | ||||
| Technical fee | $ | 26,653 | $ | 32,026 | ||||
| Travelling | $ | 12,938 | $ | 38,017 | ||||
| Others | $ | 131,075 | $ | 209,928 | ||||
| Total G&A Expenses | $ | 1,353,610 | $ | 1,387,466 | ||||
We recorded $1,353,610 in general and administrative expenses for the three months ended August 31, 2026, a decrease of $33,856 or 2%, compared to the three months ended August 31, 2025. The decrease was primarily due to lower salaries & wages, traveling, accounting, rent and other miscellaneous expenses compared to the prior year. These decreases were partially offset by higher consulting and entertainment during the period.
General and administrative expenses consist primarily of personnel-related costs, professional and accounting services, and general office and operational expenses necessary to support regulatory compliance. These expenses include ongoing costs associated with corporate governance, audit and regulatory filings, consulting and advisory services, as well as operational support across our businesses.
Marketing Cost
The following table sets forth the Company’s marketing costs for the periods indicated:
| For the three months ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Marketing Cost | $ | 351 | $ | 18,836 | ||||
We recorded $351 in marketing costs for the three months ended August 31, 2026, a decrease of $18,485 or 98%, compared to the three months ended August 31, 2025. The decrease was primarily due to lower promotional and business development costs recognized during the period.
Research & Development
The following table sets forth the Company’s research & development for the periods indicated:
| For the three months ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Research & Development | $ | 55,028 | $ | 77,540 | ||||
We recorded $55,028 in research & development for the three months ended August 31, 2026, a decrease of $22,512 or 29% compared to the three months ended August 31, 2025. The decrease was primarily due to lower personnel-related costs and reduced development activity during the period. Research and development activities were focused on ongoing platform maintenance and selected project-based development work, with expenditures managed in line with available working capital and project requirements.
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Credit Impairment Loss
The following table sets forth the Company’s credit impairment loss for the periods indicated:
| For the three months ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Credit impairment loss | $ | 3,980,797 | $ | (71,198 | ) | |||
We recorded $3,980,797 in credit impairment loss for three months ended August 31, 2026, compared to$71,198 for the three months ended August 31, 2025. The increase was primarily attributable to a higher allowance for expected credit losses on trade receivables, based on management’s assessment of the aging of outstanding balances, collection experience, current business conditions and expected timing of recoveries.
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, 2026 | August 31, 2025 | |||||||
| Share compensation expenses | $ | 75,647 | $ | 107,750 | ||||
We incurred fees of $75,647 in share issuance for consultants in consideration of services and stock option compensation expense for the three months ended August 31, 2026 as compared to $107,750 for the three months ended August 31, 2025. The decrease of $32,103 or 30% was due to the reduced engagement of consultants to the Company that were compensated with shares of our common stock, which highlights our effort to minimize equity issuances as part of our broader financial strategy to optimize equity issuances. However, we will continue to employ equity compensation for consultants selectively, aligning with our strategic and financial objectives.
Operating Expenses
We recorded $5,665,947 in operating expenses for the three months ended August 31, 2026, as compared to $1,528,160 in operating expenses for the three months ended August 31, 2025. The increase of $4,137,787 or 271%, for the three months ended August 31, 2026 is as set forth above.
Net Loss attributable to the Company’s shareholders
The net loss attributable to the Company’s shareholders was $4,932,239 for the three months ended August 31, 2026 and $1,541,010 for the three months ended August 31, 2025. The increase in net loss attributable to the Company’s shareholders of $3,391,229 or 220% resulted primarily from the credit impairment loss and other items as discussed above.
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Six Months Ended August 31, 2026 Compared to Six Months Ended August 31, 2025
The following table sets forth our results of operations for the periods indicated:
| For the six months ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Revenue | $ | 931,165 | $ | 17,106,254 | ||||
| Cost of revenue | $ | (586,172 | ) | $ | (16,914,993 | ) | ||
| Total operating expenses | $ | (7,808,506 | ) | $ | (3,669,611 | ) | ||
| Total other income (expenses) | $ | 473,961 | $ | (93,935 | ) | |||
| Net loss attributable to the Company’s stockholders | $ | (6,932,566 | ) | $ | (3,549,566 | ) | ||
| Foreign currency translation adjustment | $ | 240,477 | $ | 281,354 | ||||
| Comprehensive loss attributable to the Company | $ | (6,691,472 | ) | $ | (3,268,754 | ) | ||
| Basic Loss Per Share attributable to the Company | $ | (0.11 | ) | $ | (0.06 | ) | ||
| Diluted Loss Per Share attributable to the Company | $ | (0.11 | ) | $ | (0.06 | ) | ||
Revenue
The following table sets forth the Company’s revenue from its lines of business for the periods indicated:
| For the six months ended | ||||||||||||
| August 31, 2026 | August 31, 2025 | Change (%) | ||||||||||
| Telecommunication Products & Services | $ | 756,311 | $ | 16,951,135 | -96 | % | ||||||
| Marketplace Platform & Digital Commerce Infrastructure Solutions | $ | 38,567 | $ | 17,836 | 116 | % | ||||||
| Advanced Technology & Platform Solutions | $ | 136,287 | $ | 109,826 | 24 | % | ||||||
| Data & Analytics Platform Solutions | $ | — | $ | 27,457 | -100 | % | ||||||
| Total Revenue | $ | 931,165 | $ | 17,106,254 | -95 | % | ||||||
We recorded $931,165 in revenue for the six months ended August 31, 2026, a decrease of $16,175,089 or 95%, compared to the six months ended August 31, 2025. The decrease was primarily attributed to decreases in revenue of $16,194,824 and $27,457 from our Telecommunication Product & Services line of business and Data & Analytics Platform Solutions line of business, respectively. These decreases were partially offset by increases in revenue of $20,731 and $26,461 from our Marketplace Platform & Digital Commerce Infrastructure Solutions and Advanced Technology & Platform Solutions, respectively.
We principally earn revenue by providing mobile payment and recharge services to customers of telecommunications companies in China. This operating model requires working capital to support transaction volumes with telecommunications operators and platform partners. During the six-month period ending August 31, 2026, revenue in this line of business decreased significantly compared to the prior year period, primarily due to lower transaction volume. The lower transaction volume was attributable to the Company’s available working capital position during the period. Management continues to monitor transaction volumes, collection cycles and working capital allocation, and intends to deploy available capital selectively based on liquidity, commercial demand and expected returns.
Revenue from our Marketplace Platform & Digital Commerce Infrastructure Solutions line of business increased to $38,567 for the six months ended August 31, 2026 compared to $17,836 for the six months ended August 31, 2025. The DaGe platform and related marketplace initiatives remain at an early stage of commercialization, and revenue will depend on user adoption, business development activities, platform scaling, and available working capital.
Revenue from our Advanced Technology and Platform Solutions line of business increased to $136,287 for the six months ended August 31, 2026, compared to $109,826 for the six months ended August 31, 2025. Revenue in this line of business was primarily project-based and related to delivery and deployment activities under the Company’s command and communication platform initiatives, including the delivery of two vehicles to a local emergency bureau in Zhejiang Province during the period as compared to 1 vehicle delivery and 2 accessories for the six months ended August 31, 2025. Revenue from this line of business may vary from period to period depending on customer procurement schedules, delivery timing and project implementation progress.
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No revenue was generated from our Data and Analytics Platform Solutions line of business during the six months ended August 31, 2026, compared to $27,457 for the prior year period. Activity in this line of business remains limited and is currently conducted on a project basis.
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, 2026 | August 31, 2025 | |||||||
| Telecommunication Products & Services | $ | 473,840 | $ | 16,789,322 | ||||
| Marketplace Platform & Digital Commerce Infrastructure Solutions | $ | 34,252 | $ | 36,114 | ||||
| Advanced Technology & Platform Solutions | $ | 78,080 | $ | 89,557 | ||||
| Total Cost of Revenue | $ | 586,172 | $ | 16,914,993 | ||||
We recorded $586,172 in costs of revenue for the six months ended August 31, 2026, a decrease of $16,328,821 or 97%, compared to the six months ended August 31, 2025. The decrease was primarily attributable to the significant reduction in transaction volume in the Telecommunication Products & Services line of business during the period. As revenue from this line of business decreased, the related product and service costs, including costs associated with mobile recharge, subscription plans and mobile phone sales, decreased correspondingly.
Cost of revenue from the Marketplace Platform & Digital Commerce Infrastructure Solutions line of business also decreased compared to the prior year period, reflecting the limited scale of activity during the quarter. Cost of revenue from the Advanced Technology & Platform Solutions line of business decreased to $78,080 for the six months ended August 31, 2026 from $89,557 for the six months ended August 31, 2025, while revenue from this line of business increased, reflecting project-specific margins during the period.
Gross profit
Our gross profit for the six months ended August 31, 2026 was $334,993, compared to $191,261 for the six months ended August 31, 2025, representing an increase of $153,732 or 80%. Gross margin improved to approximately 37% for the six months ended August 31, 2026 from approximately 1% for the six months ended August 31, 2025.
The increase in gross profit and gross margin was primarily attributable to a change in revenue mix during the period. Although revenue from the Telecommunication Products & Services line of business decreased significantly compared to the prior year period, the line of business generates gross profit of $282,471, representing a gross margin of approximately 37% during the current period. In addition, the Advanced Technology & Platform Solutions line of business generated gross profit of $4,315, representing a gross margin of approximately 11%, while the Marketplace Platform & Digital commerce Infrastructure Solutions line of business generated gross profit of $58,207, representing a gross margin of approximately 43%.
Management continues to evaluate revenue opportunities based on both transaction volume and margin contribution, with the objective of supporting sustainable gross profit while managing working capital requirements.
Amortization & Depreciation
We recorded depreciation of $398,106 for fixed assets for the six months ended August 31, 2026, an increase of $379,787 or 2073%, compared to the six months ended August 31, 2025. The increase resulted from the purchase of software IP.
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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 six months ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Accounting | $ | 102,947 | $ | 147,643 | ||||
| Consulting | $ | 924,894 | $ | 796,324 | ||||
| Entertainment | $ | 77,118 | $ | 79,267 | ||||
| IT | $ | 35,103 | $ | 36,209 | ||||
| Rent | $ | 57,066 | $ | 72,318 | ||||
| Salaries & Wages | $ | 925,755 | $ | 1,180,754 | ||||
| Technical fee | $ | 188,932 | $ | 63,743 | ||||
| Travelling | $ | 33,173 | $ | 117,204 | ||||
| Others | $ | 245,168 | $ | 404,431 | ||||
| Total G&A Expenses | $ | 2,590,156 | $ | 2,897,892 | ||||
We recorded $2,590,156 in general and administrative expenses for the six months ended August 31, 2026, a decrease of $307,736 or 11%, compared to the six months ended August 31, 2025. The decrease was primarily due to lower salaries & wages, traveling, accounting, rent and other miscellaneous expenses compared to the prior year. These decreases were partially offset by higher consulting and technical fee during the period.
General and administrative expenses consist primarily of personnel-related costs, professional and accounting services, and general office and operational expenses necessary to support regulatory compliance. These expenses include ongoing costs associated with corporate governance, audit and regulatory filings, consulting and advisory services, as well as operational support across our businesses.
Marketing Cost
The following table sets forth the Company’s marketing cost for the periods indicated:
| For the six months ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Marketing Cost | $ | 48,380 | $ | 30,942 | ||||
We recorded $48,380 in marketing costs for the six months ended August 31, 2026, an increase of $17,438 or 56%, compared to the six months ended August 31, 2025. The increase was primarily due to higher promotional and business development costs recognized during the period.
Research & Development
The following table sets forth the Company’s research & development for the periods indicated:
| For the six months ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Research & Development | $ | 111,308 | $ | 250,192 | ||||
We recorded $111,308 in research & development for the six months ended August 31, 2026, a decrease of $138,884 or 56% compared to the six months ended August 31, 2025. The decrease was primarily due to lower personnel-related costs and reduced development activity during the period. Research and development activities were focused on ongoing platform maintenance and selected project-based development work, with expenditures managed in line with available working capital and project requirements.
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Credit Impairment Loss
The following table sets forth the Company’s credit impairment loss for the periods indicated:
| For the six months ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Credit impairment loss | $ | 4,503,743 | $ | 236,769 | ||||
We recorded $4,503,743 in credit impairment loss for six months ended August 31, 2026, compared to $236,769 for the six months ended August 31, 2025. The increase was primarily attributable to a higher allowance for expected credit losses on trade receivables, based on management’s assessment of the aging of outstanding balances, collection experience, current business conditions and expected timing of collections.
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, 2026 | August 31, 2025 | |||||||
| Share compensation expenses | $ | 156,813 | $ | 235,497 | ||||
We incurred fees of $156,813 in share issuance for consultants in consideration of services and stock option compensation expense for the six months ended August 31, 2026 as compared to $235,497 for the six months ended August 31, 2025. The decrease of $78,684 or 33% was due to the reduced engagement of consultants to the Company that were compensated with shares of our common stock, which highlights our effort to minimize equity issuances as part of our broader financial strategy to optimize equity issuances. However, we will continue to employ equity compensation for consultants selectively, aligning with our strategic and financial objectives.
Operating Expenses
We recorded $7,808,506 in operating expenses for the six months ended August 31, 2026, as compared to $3,669,611 in operating expenses for the six months ended August 31, 2025. The increase of $4,138,895 or 113%, for the six months ended August 31, 2026 is as set forth above.
Net Loss attributable to the Company’s shareholders
The net loss attributable to the Company’s shareholders was $6,932,566 for the six months ended August 31, 2026 and $3,549,566 for the six months ended August 31, 2025. The increase in net loss attributable to the Company’s shareholders of $3,383,000 or 95% resulted primarily from the credit impairment loss as discussed above.
Liquidity and Capital Resources
The following table sets out our cash and working capital as of August 31, 2026 and February 28, 2026:
As at August 31, 2026 | As at February 28, 2026 | |||||||
| Cash reserves | $ | 2,135,825 | $ | 68,596 | ||||
| Working capital | $ | 1,827,367 | $ | 6,093,153 | ||||
At August 31, 2026, we had cash and cash equivalents of $2,135,825, as compared to cash and cash equivalents of $68,596 at February 28, 2026.
The increase in cash was primarily attributable to proceeds received from the issuance of the senior secured convertible notes in May and August 2026. The May 2026 financing provided aggregate subscription proceeds of $4.3 million, of which $3.3 million was received at the initial closing and the remaining $1.0 million was subsequently released to the Company. The August 2026 financing provided aggregate subscription proceeds of $4.3 million, of which $1.3 million was available to the Company as of August 31, 2026, with the remaining $3.0 million subject to restrictions. These financing proceeds were partially offset by cash used in operating activities during the period.
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Working capital decreased to $1,827,367 at August 31, 2026 from $6,093,153 at February 28, 2026. The decrease was primarily attributable to the Company’s operating activities during the period and the recognition of the current obligations associated with the convertible note financings.
Our business model, particularly in mobile payment, requires periodic fund deposits with telecommunication operators and platform partners to support transaction volumes. During the six months ended August 31, 2026, the Company’s available working capital affected the level of transaction activity that it was able to support. Management continues to monitor cash flows, collection cycles, payment terms and working capital allocation.
The Company’s ability to support its operations and execute its business strategy will depend on a combination of operational cash flows, effective working capital management, and access to additional financing. There can be no assurance that additional financing will be available on acceptable terms, or at all.
Statement of Cashflows
The following table provides a summary of cash flows for the periods presented:
| For the six months ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Net cash used in operating activities | $ | (3,490,279 | ) | $ | (3,086,249 | ) | ||
| Net cash used in investing activities | $ | (39,505 | ) | $ | (1,826 | ) | ||
| Net cash provided by financing activities | $ | 5,600,000 | $ | 2,205,493 | ||||
| Effect of exchange rates on cash & cash equivalents | $ | (2,987 | ) | $ | (23,717 | ) | ||
| Net decrease in cash and cash equivalents | $ | 2,067,229 | $ | (906,299 | ) | |||
Cash Flow used in Operating Activities
Net cash used in operating activities was $3,490,279 for the six months ended August 31, 2026 compared to $3,086,249 the six months ended August 31, 2025. The increase in net cash used in operating activities was primarily attributable to changes in operating assets and liabilities, including accounts receivable, prepayments and deposits, accounts payable and other accrued liabilities.
Cash Flow used in Investing Activities
During the six months ended August 31, 2026, net cash used in investing activities was $39,505, compared to $1,826 for the six months ended August 31, 2025. This is due to the renovation works for the newly leased company premise.
Cash Flow provided by Financing Activities
During the six months ended August 31, 2026, net cash provided by financing activities was $5,600,000 compared to $2,205,493 for the six months ended August 31, 2025. The increase was primarily attributable to proceeds received from the Company’s May 2026 and August 2026 senior secured convertible note financings. In May 2026, the Company issued a senior secured convertible note with an original principal amount of $5,000,000 and an original issue discount of $700,000. The financing provided aggregate subscription proceeds of $4,300,000, of which $3,300,000 was received at the initial closing and the remaining $1,000,000 was subsequently released to the Company.
In August 2026, the Company issued an additional senior secured convertible note with an original principal amount of $5,000,000 and an original issue discount of $700,000. The financing provided aggregate subscription proceeds of $4,300,000, of which $1,300,000 was available to the Company as of August 31, 2026, with the remaining $3,000,000 subject to restrictions. See Note 16 to the unaudited condensed consolidated financial statements for further information regarding these financings.
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Legacy Business Capital Allocation Strategy
Our capital allocation strategy focuses on:
| 1. | Supporting Core Business Operations – Maintaining adequate working capital to support the telecommunications products and services business at sustainable transaction volumes while optimizing capital efficiency. |
| 2. | Selective Platform Investments – Allocating capital to platform-based initiatives (C2 Platform, DaGe Platform, JiuGe Procurement Platform, Sapientus solutions) based on commercial traction, market opportunity, and potential return on investment. |
| 3. | Strategic Acquisitions – Pursuing selective acquisition opportunities that provide complementary technology capabilities, expand market access, enhance operational scale, or accelerate platform development. |
| 4. | Regional Expansion – Investing in market entry and business development activities in Southeast Asian markets, such as Indonesia and Thailand, for the C2 Platform and Sapientus solutions. |
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
Subsequent to August 31, 2026, holders of the Company’s pre-funded warrants exercised warrants to purchase 6,708,611 shares of common stock. Following the exercise, no pre-funded warrants to purchase remained outstanding.
Subsequent to August 31, 2026, the Company fully repaid the SGD500,000 and SGD150,000 loans previously advanced by Dr. Liew Yow Ming, together with all accrued interest thereon. Following these repayments, a separate loan from Dr. Liew Yow Ming with a principal amount of US$100,000 remained outstanding.
On September 23, 2026, the Company entered into a share purchase agreement to acquire 100% of the outstanding shares of Newbit Technology Inc. for a total cash purchase price of $2,300,000. Newbit Technology Inc. holds the Brooks Campus #1 site located in the County of Newell, Alberta, Canada. The closing of the acquisition is subject to customary closing conditions and is expected to occur on or before October 29, 2026.
On September 28, 2026, the Company filed a registration statement on Form S-3 with the SEC to register up to $50,000,000 of securities for potential future offerings. The registration statement had not been declared effective by the SEC as of the date of filing.
On September 30, 2026, the Company entered into a binding agreement to acquire approximately 20.2 acres of land located in Hanna, Alberta, Canada, for the development of the Company’s Hanna Campus #1. The transaction is subject to a due diligence period and customary closing conditions.
On October 6, 2026, the Company held a Special Meeting of Stockholders. At the Special Meeting, the Company’s stockholders approved the issuance of shares of common stock pursuant to the May 2026 and August 2026 senior secured convertible notes in excess of the applicable Nasdaq exchange cap. The Company’s stockholders also approved an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of common stock from 200,000,000 to 500,000,000 shares.
Other than the above, we have determined that we do not have any material subsequent events to report.
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Critical Accounting Policies
For a complete summary of all our significant accounting policies refer to Note 2 - Summary of Principal Accounting Policies of the Notes to the Consolidated Financial Statements as presented under Item 8, Financial Statements and Supplementary Data in our Annual Report on Form 10-K for our fiscal year ended February 28, 2026, filed with the SEC on May 29, 2026.
For our Critical Accounting Policies, please refer to the “Critical Accounting Policies” section 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 February 28, 2026 filed with the SEC on May 29, 2026.
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
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company as defined in Rule 12b-2 under the Exchange Act, the Company is not required to provide the information required by this item.
ITEM 4 – CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on such evaluation of our disclosure controls and procedures as of August 31 2026, our Chief Executive Officer and Chief Financial Officer concluded that due to the existence of material weaknesses in our internal controls over financial reporting, as discussed in more detail below, our disclosure controls and procedures were not effective as of August 31, 2026. Management has continued to monitor the implementation of the remediation plan described below.
Management’s quarterly report on internal control over financial reporting
Management of FingerMotion, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). The Company’s internal control over financial reporting (“ICFR”) is designed under the supervision of our Chief Executive Officer, acting in the capacity of principal executive officer, and our Chief Financial Officer, acting in the capacity of principal financial officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles, or GAAP. The Company’s ICFR includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
We are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K under the Securities Act. For as long as we continue to be a smaller reporting company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not smaller reporting companies.
Our management, including our principal executive officer and principal financial officer, assessed the effectiveness of the Company’s internal control over financial reporting as of August 31, 2026 in accordance with the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
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Based on this assessment, Management concluded that certain aspects of the Company’s internal control over financial reporting as of August 31, 2026, were not effective.
A material weakness, as defined in standards established pursuant to the Sarbanes-Oxley Act, is a deficiency or combination of deficiencies in internal controls over financial reporting such that there is a reasonable possibility that a material misstatement or our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
The ineffectiveness of our internal control over financial reporting was due to the following material weakness, which also existed as of February 29, 2026:
| ● | We have limited segregation of duties and oversight of work performed as well as lack of compensating controls in the Company’s finance and accounting functions due to limited personnel. As a result, segregation of all conflicting duties may not always be possible and may not be economically feasible. Furthermore, we cannot provide reasonable assurance that receipts and expenditures are being made only in accordance with management and director authorization. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. |
Management’s Plan to Remediate the Material Weaknesses:
Management has taken significant steps towards remediation of these material weaknesses since 2023, including implementing measures designed to address the control deficiencies. While progress has been made in designing and implementing these controls, testing and validating their effectiveness has yet to commence. The remediation actions include:
| ● | Management has documented a complete set of controls incorporating segregation of duties, separate individuals performing and reviewing controls, and proper authorization and segregation of duties around payments and expenditures since 2023. While significant progress has been made in implementing most of these controls, the process is not yet complete. Management continues to work towards completing the implementation and anticipates further progress during the year. |
| ● | Management has implemented corporate governance policies and charters that will further align the Company’s governance procedures with the requirements noted in the Sarbanes-Oxley Act, including a Codes of Business Conduct and Ethics, which reflects the overall corporate principles, policies and values that provides overall guidance for our control procedures. |
Notwithstanding the assessment that our ICFR was not effective as of August 31, 2026 and that there is a material weaknesses as identified herein, we believe that our consolidated financial statements contained in this Quarterly Report fairly present our financial position, results of operations and cash flows for the period covered thereby in all material respects. We are committed to continuing to improve our internal control processes and we are undertaking measures to remediate the material weaknesses we have identified and generally strengthen our internal control over financial reporting. We will also continue to further review, optimize, and enhance our financial reporting controls and procedures. These material weaknesses will not be considered remediated until the applicable remediated controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Changes in internal control over financial reporting
Except for the remediation procedures being implemented by the Company as described above, there have been no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our fiscal quarter ended August 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1 – LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, affiliates or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.
ITEM 1A – RISK FACTORS
In addition to the information contained in our Annual Report on Form 10-K for the fiscal year ended February 28, 2026, and this Quarterly Report on Form 10-Q, we have identified the following material risks and uncertainties which reflect our outlook and conditions known to us as of the date of this Quarterly Report. These material risks and uncertainties should be carefully reviewed by our stockholders and any potential investors in evaluating the Company, our business and the market value of our common stock. Furthermore, any one of these material risks and uncertainties has the potential to cause actual results, performance, achievements or events to be materially different from any future results, performance, achievements or events implied, suggested or expressed by any forward-looking statements made by us or by persons acting on our behalf. Refer to “Cautionary Note Regarding Forward-looking Statements” as disclosed in our Annual Report on Form 10-K for the fiscal year ended February 28, 2026.
There is no assurance that we will be successful in preventing the material adverse effects that any one or more of the following material risks and uncertainties may cause on our business, prospects, financial condition and operating results, which may result in a significant decrease in the market price of our common stock. Furthermore, there is no assurance that these material risks and uncertainties represent a complete list of the material risks and uncertainties facing us. There may be additional risks and uncertainties of a material nature that, as of the date of this Quarterly Report, we are unaware of or that we consider immaterial that may become material in the future, any one or more of which may result in a material adverse effect on us. You could lose all or a significant portion of your investment due to any one of these material risks and uncertainties.
Risks Related to Our Alberta Data Center and Powered-Land Business
We have limited operating history in data centers, generation, or powered land, and the Alberta program may never generate material revenue.
Our historical business is mobile payments and related services in China. The Alberta program—owning project companies that hold land, permits, on-site generation, and modular data halls, and contracting capacity to AI/HPC customers—is a new line of business. As of the date of this report, we have not energized a commercial 9.9 MW site, have not recognized operating revenue from this business, and have not executed binding long-term offtake for the ten-site program. Failure to complete permitting, gas supply, construction, or customer contracts on acceptable terms would leave us with holding costs and impairment risk and could cause the strategy to fail.
Our model depends on completing and operating many small, separately permitted 9.9 MW sites rather than a single large campus.
Each site is intended to stay below the 10 MW individual power-plant threshold under Alberta Utilities Commission Rule 007 and to operate behind the meter under an Industrial System Designation (or equivalent self-supply structure). That structure is designed to avoid transmission interconnection queues and large-load regulation that applies to facilities of 75 MW or more. It also means we must repeat land control, gas interconnection at the parcel, municipal and AUC permitting, construction, commissioning, and operations across ten sites and four campus zones. Delay or denial at one site does not automatically stop the others, but it also means we do not obtain the single-campus scale, shared electrical infrastructure, or customer “campus” branding of a hyperscale facility. If the 9.9 MW envelope is later interpreted more restrictively, or if aggregation of nearby sites is treated as a single large facility, we could lose the permitting path on which the program is built.
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We may be unable to obtain or maintain the permits and designations our sites require.
Each site is expected to require, among other things, municipal development approval, Alberta Environment and Protected Areas authorizations, AUC Rule 007 power-plant approval for a facility under 10 MW, and an Industrial System Designation or other lawful self-supply arrangement. Timelines we have disclosed (including a target of fully permitted sites within a defined period after release to work, and program-wide permitting by the end of the first quarter of 2027) are targets, not approvals. Conditions, appeals, information requests, changes in Rule 007 practice, or denial of an Industrial System Designation could delay energization, increase cost, or make a site uneconomic. Because generation and load are intended to remain on site, we do not face Alberta Electric System Operator large-load interconnection allocation in the same way as grid-connected hyperscale projects; we remain exposed to changes in provincial self-supply, emissions, methane, and industrial-system rules.
We depend on BlueFlare (and a small number of Alberta vendors) for development, construction, and field operations.
Development, construction, and site operations are expected to be performed by BlueFlare Group Holdings Inc. or its affiliates, which
is not expected to take title to project assets. We do not have a large internal Alberta construction or plant-operations organization.
If BlueFlare is unable or unwilling to perform, if the commercial arrangements are not documented on the terms we expect, or if we cannot
replace that capability at comparable cost and speed, sites will be delayed or stranded. Concentration of technical know-how in one development
partner is a material risk for a distributed 9.9 MW fleet.
Natural gas supply, local delivery, and fuel price are core operating risks, even though we do not depend on the Alberta power grid.
Sites are planned next to producing or recently producing gas infrastructure so that fuel can be delivered at or near the parcel boundary and electricity generated and consumed on site. That design is intended to avoid grid interconnection, transmission tariffs, and the AESO large-load queue. It substitutes gas-market and midstream risk: wellhead or plant outages, gathering or lateral constraints, commodity-price spikes, producer insolvency, take-or-pay imbalance, quality specifications, and winter deliverability. A 9.9 MW site has a smaller absolute fuel requirement than a hyperscale campus, but it has little on-site fuel diversity. Interruption at a single adjacent facility can take a whole site offline. We may not have fully executed, long-tenor, fixed-price gas contracts for the program.
Equipment lead times and cost inflation apply to modular generation and halls, not only to large turbines.
Global tightness in gas generation equipment is most acute for large frame turbines used by hyperscalers. Our sites are expected to use multiple smaller generating units, modular data halls, switchgear, cooling skids, and battery or bridging equipment. Those categories also face lengthening lead times, price increases, and commissioning risk. A missed genset or hall delivery can idle an entire 9.9 MW site. We may be required to place deposits long before offtake and project financing are closed.
Modular construction reduces some civil-works risk and creates others.
Halls and generation are intended to be factory-built or skid-mounted and assembled on prepared pads. That can shorten field construction relative to a poured hyperscale hall, but it introduces factory-slot risk, transport of oversized modules on Alberta roads (seasonal weight restrictions, weather, permitting), interface risk among vendors, and warranty complexity. Site work in Brooks, Coronation, Fox Creek, and Vulcan still requires foundations, gas and electrical interconnects, fiber laterals, security, and winter-capable access. Modular does not eliminate construction delay.
We may be unable to contract capacity on take-or-pay or other terms that support construction capital.
Our stated approach is to contract capacity before committing construction capital to a site. Customers are expected to provide their own GPUs, servers, network gear, and software; we provide powered land, generation to the rack, cooling, white space, security, and operations. That splits capex but also means utilization, density, and thermal design depend on customer equipment we do not control. Enterprise and mid-market AI/HPC buyers may demand shorter terms, higher SLAs, or more redundancy than a single 9.9 MW islanded plant can offer. If offtake lags permitting, we will hold permitted land at carrying cost. If we build ahead of contracts, we take merchant or Bitcoin-flex utilization risk.
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Each 9.9 MW site has a smaller addressable customer set than a hyperscale campus.
A site of this size is generally better suited to inference, enterprise HPC, or partitioned colocation than to frontier model training that seeks hundreds of megawatts in one hall. Customers that require massive contiguous clusters, diverse utility feeds, or multi-building campuses may not use our product. Conversely, if inference demand is weaker or more price-sensitive than expected, we may not fill ten sites. Campus grouping (several separately permitted 9.9 MW sites under one field organization) is intended to offer expansion without a single 75 MW+ regulated facility; customers may still view the product as fragmented.
Alberta climate and operating conditions differ from the heat- and water-constrained markets often described in data-center risk factors; they create a different set of physical risks.
Our sites are in Alberta. Mean summer temperatures and humidity are lower than in many U.S. Sun Belt data-center markets, which reduces—but does not eliminate—the need for high-capacity evaporative or adiabatic cooling and the associated water withdrawals that characterize large campuses in arid regions. We do not currently expect water scarcity or extreme heat derates to be the primary physical constraint on these 9.9 MW plants. Material physical risks instead include extreme cold, freeze-off of gas supply or cooling circuits, snow and ice limiting access and maintenance, chinook-driven temperature swings, wildfire smoke affecting air-cooled equipment and filters, and spring road bans that delay module delivery. Cooling design, winterization, and spare-parts logistics must be specified for that climate. A design copied from a hot climate hyperscale campus would be mismatched.
Political and permitting opposition of the kind seen against some large U.S. or coastal hyperscale campuses is not the principal near-term risk we identify in rural Alberta, but it is not zero.
Alberta policy has been explicitly oriented toward attracting data-center investment on a “bring your own power” basis, and our sites are sized and sited as small industrial plants next to existing gas activity rather than as multi-hundred-megawatt campuses on the edge of major cities. We therefore do not treat organized political shutdown or water-rights campaigns as the base-case permitting risk. Residual risks remain: municipal land-use conditions, Indigenous consultation and treaty-related process, federal impact-assessment or methane/carbon rules, changes in government, and local nuisance, noise, or flaring concerns. Any of those can add time and cost. A change in Alberta’s self-supply or data-centre regulation could be more consequential than activism.
Fiber, latency, and remote-site operations may limit the product.
Rural or semi-rural Alberta parcels that are attractive for gas may be less attractive for carrier diversity and low-latency paths to U.S. or Toronto/Vancouver interconnects. Identified fiber routes can fail to materialize on schedule or at the capacity customers require. A 9.9 MW islanded plant still needs reliable transport; without it, the hall is stranded generation.
Project-level ownership and financing may not close on acceptable terms.
Each site is expected to sit in a dedicated Alberta project company that we own, with BlueFlare providing services and taking no title. Construction capital is expected to attach at the project level against contracted cash flows. We are a small-cap issuer with limited parent liquidity relative to a ten-site, 99 MW program. If lenders require more sponsor equity, completion guarantees, or offtake quality than we can provide, sites will stall after permitting. Cross-default or parent support, if given, could transmit project risk to the listed company.
Regulatory, tax, and cross-border structure risk.
Project companies, land, and operations will be in Canada; the parent is a Delaware corporation with a historical China operating footprint. We will be exposed to Canadian federal and Alberta tax, withholding, transfer-pricing, GST, carbon-pricing or output-based allocation rules, and any future border or investment-review measures. Currency mismatch (CAD costs and, potentially, USD customer contracts) can move project IRRs. Our China businesses continue to require management attention and capital and remain subject to PRC regulatory risk; that distraction or a need to fund China operations could slow Alberta execution.
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Insurance, environmental, and operational incidents at a small unmanned or lightly staffed site can take the entire plant offline.
A 9.9 MW islanded site has less internal redundancy than a multi-hall hyperscale campus with multiple substations. Generator failure, fire in a modular hall, gas leak, or control-system fault can interrupt all critical IT load at that site. Insurance for generation-plus-compute in rural Alberta may be costly or limited. Environmental liability for spills, emissions, or noise sits with the project company and, depending on structuring, could reach the parent.
Competition and technology change.
Other developers are pursuing Alberta BTM and grid-tethered capacity. Hyperscalers that obtain scarce AESO allocations or build large tethered plants may set price and SLA expectations we cannot match at 9.9 MW. Modular hall and cooling standards will change with rack density. If customer GPU thermal design outruns our permitted envelope or cooling plant, we may need new permits or stranded halls.
Bitcoin or other flexible load, if used to firm a site before AI offtake, introduces commodity and policy risk.
Some early concepts contemplated co-located Bitcoin mining as a load-following sink. Bitcoin hash price, equipment cost, and any future Alberta or federal treatment of digital-asset loads could make that buffer uneconomic, leaving generation without a customer.
Forward-looking timelines we have announced are subject to substantial uncertainty.
Disclosed targets—permitting of ten 9.9 MW sites by the end of the first quarter of 2027, first energization as early as late fourth quarter 2026, data-hall turnover on the order of 18 months from permit award—depend on counterparties, regulators, equipment vendors, weather, and financing that we do not control. Failure to meet those targets would not necessarily indicate a defect in the 9.9 MW BTM concept, but it would delay revenue and could impair investor confidence and project finance.
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUIRY SECURITIES
On May 13, 2026, the Company entered into a securities purchase agreement with an institutional investor and issued a senior secured convertible note with an original principal amount of $5,000,000 and an original issue discount of $700,000. The note is convertible into shares of the Company’s common stock at an initial fixed conversion price of $0.94 per share, subject to adjustment as set forth in the note. The note was, and the shares of common stock issuable upon conversion of the note will be, issued in a transaction exempt from the registration requirements under the Securities Act in reliance on Section 4(a)(2) thereof and Rule 506(b) of Regulation D thereunder.
On August 16, 2026, the Company entered into a securities purchase agreement with an institutional investor pursuant to which the Company issued a senior secured convertible note with an original principal amount of $5,000,000 and an original issue discount of $700,000, together with a common stock purchase warrant to purchase up to 4,092,993 shares of the Company’s common stock. The note has an initial fixed conversion price of $0.35 per share, subject to adjustment in accordance with its terms, and an initial floor price of $0.06 per share.
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 – MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5 – OTHER INFORMATION
During
our fiscal quarter ended August 31, 2026, none of our directors or executive officers
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ITEM 6 – EXHIBITS
The following exhibits are included with this Quarterly Report:
Notes:
(*) Filed herewith
(**) Furnished herewith
(1) Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on August 17, 2026
(2) Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on August 31, 2026
(3) Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on September 29, 2026
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| FINGERMOTION, INC. | ||
| Dated: October 15, 2026 | By: | /s/ Jolie Kahn |
| Jolie Kahn, Chief Executive Officer | ||
| (Principal Executive Officer) and Director | ||
| Dated: October 15, 2026 | By: | /s/ Chris Polimeni |
| Chris Polimeni, Chief Financial Officer | ||
| (Principal Financial Officer) | ||
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