FingerMotion Stock

FingerMotion, Inc. (FingerMotion) operates as a mobile data specialist company.

As a holding company, the company conducts a significant part of its operations through its subsidiaries and through contractual arrangements with a variable interest entity (VIE) based in the People's Republic of China (PRC or China).

The company operates the following lines of business: Telecommunications Products and Services; Value Added Products and Services; Short Message Services (SMS) and Multimedia Messaging Services (MMS); a Rich Communication Services (RCS) platform; Big Data Insights; and a Video Games Division (inactive).

Telecommunications Products and Services

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

To connect to the respective mobile telecommunications providers, these e-marketers must utilize a portal licensed by the applicable telecommunication company that processes the payment. The company has been granted one of these licenses by China United Network Communications Group Co., Ltd. (China Unicom) and China Mobile Communications Corporation (China Mobile), each of which is a major telecommunications provider in China. The company principally earns revenue by providing mobile payment and recharge services to customers of China Unicom and China Mobile.

The company conducts its mobile payment business through Shanghai JiuGe Technology Co., Ltd. (JiuGe Techology), its contractually controlled affiliate through the entry into the VIE Agreements in October 2018. In the first half of 2018, JiuGe Technology secured contracts with China Unicom and China Mobile to distribute mobile data for businesses and corporations in nine provinces/municipalities, namely Chengdu, Jiangxi, Jiangsu, Chongqing, Shanghai, Zhuhai, Zhejiang, Shaanxi, Inner Mongolia, Henan, and Fujian. In September 2018, JiuGe Technology launched and commercialized mobile payment and recharge services to businesses for China Unicom. In May 2021, JiuGe Technology signed a volume-based agreement with China Mobile Fujian to offer recharge services to the Fujian province which the company has launched and commercialized in November 2021.

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

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

On July 7, 2019, JiuGe Technology, the company's contractually controlled affiliate, entered into that certain Yunnan Unicom Electronic Sales Platform Construction and Operation Cooperation Agreement (the Cooperation Agreement) with China Unicom's Yunnan subsidiary. Under the Cooperation Agreement, JiuGe Technology is responsible for constructing and operating China Unicom's electronic sales platform through which consumers can purchase various goods and services from China Unicom, including mobile telephones, mobile telephone service, broadband data services, terminals, 'smart' devices and related financial insurance. The Cooperation Agreement provides that JiuGe Technology is required to construct and operate the platform's webpage in accordance with China Unicom's specifications and policies, and applicable law, and bear all expenses in connection therewith.

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

Value Added Product and Services

These are new product and services that the company expects to secure and work with the telecommunication provider and all its e-commerce platform partners to market. The current and upcoming value-added product is the Mobile Protection programs, which it plans to launch soon. In February 2022, the company's contractually controlled subsidiary, JiuGe Technology, through its 99% own subsidiary TengLian signed an agreement with both China Unicom and China Mobile to co-operate to roll out the Mobile Device Protection product, which is incorporated into the Telecommunication subscription plans in line with their roll out of new mobile phones and new 5G phones. In mid-July 2022, the company launched the roll out of the Mobile Device protection product with the roll out of the new mobile phones and 5G phones.

SMS and MMS Services

On March 7, 2019, the company through JiuGe Technology acquired Beijing XunLian TianXia Technology Co., Ltd. (Beijing Technology), a company in the business of providing mass SMS text services to businesses looking to communicate with large numbers of their customers and prospective customers. With this acquisition, the company expanded into a second partnership with the telecom companies by acquiring bulk SMS and MMS bundles at reduced prices and offering bulk SMS services to end consumers with competitive pricing. FingerMotion's subsidiary, Beijing Technology, retains a license from the Ministry of Industry and Information Technology (MIIT) to operate the SMS and MMS business in the PRC. Similar to the mobile payment and recharge business, Beijing Technology is required to make a deposit or bulk purchase in advance and has secured business customers, including premium car manufacturers, hotel chains, airlines and e-commerce companies that utilize Beijing Technology's SMS integrated platform to send bulk SMS text messages monthly. Beijing Technology has the capability to manage and track the entire process, including guiding the company's customer to meet MIIT's guidelines on messages composed, until the SMS messages have been delivered successfully.

Rich Communication Services

In March 2020, the company began the development of an RCS platform, also known as Messaging as a Platform (MaaP). This RCS platform will be a proprietary business messaging platform that enables businesses and brands to communicate and service their customers on the 5G infrastructure, delivering a better and more efficient user experience at a lower cost. For example, with the new 5G RCS message service, consumers will have the ability to list available flights by sending a message regarding a holiday and will also be able to book and buy flights by sending messages. This will allow telecommunication providers like China Unicom and China Mobile to retain users on their systems, without having to utilize third party apps or log onto the Internet, which will increase their user retention. The company expects this to open up a new marketing channel for its business partners.

Big Data Insights

In July 2020, the company launched its proprietary technology platform 'Sapientus' as its big data insights arm to deliver data-driven solutions and insights for businesses within the insurance, healthcare, and financial services industries. The company applies its vast experience in the insurance and financial services industry and capabilities in technology and data analytics to develop revolutionary solutions targeted towards insurance and financial consumers. Integrating diverse publicly available information, insurance and financial based data with technology and finally registering them into the FingerMotion telecommunications and insurance ecosystem, the company would be able to provide functional insights and facilitate the transformation of key components of the insurance value chain, including driving more effective and efficient underwriting, enabling fraud evaluation and management, empowering channel expansion and market penetration through novel product innovation, and more.

The company's proprietary risk assessment engine offers standard and customized scoring and appraisal services based on multi-dimensional factors. The company has the ability to provide potential customers and partners with insights-driven and technology-enabled solutions and applications including preferred risk selection, precision marketing, product customization, and claims management (e.g., fraud detection). The company's mission is to deliver the next generation of data-driven solutions in the financial services, healthcare, and insurance industries that result in more accurate risk assessments, more efficient processes, and a more delightful user experience.

On or around January 25, 2021, the company's wholly owned subsidiary, Finger Motion Financial Company Limited's, big data analytic arm branded 'Sapientus,' entered into a services agreement with Pacific Life Re, a global life reinsurer serving the insurance industry with a comprehensive suite of products and services.

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

Video Game Division

In June 2018, the company temporarily paused its publishing and operating plans for existing games, and the company decided to re-focus its resources into new business opportunities in China, particularly the mobile phone payment and data business.

Products and Services

Telecommunications Products and Services

In 2018, the company developed a proprietary universal exchange platform called 'PigeonHoles Integration System', which provides seamless integration between telecommunication operators and online stores servicing Chinese consumers all around China.

The company's products and services offerings include the following:

Recharge Services: The company offers recharge services to consumers throughout China.

Data Plan: The company offers mobile data plans to consumers, including 5G plans.

Mobile Phone: The company offers mobile phones to consumers online. Upon order completion, the company's up-stream partners or phone distributors (VSens and ZhengZhouXinSiWei) will arrange direct delivery to the customer.

Subscription Plan: The company acquires new customers by offering telecommunication subscription plans. The company shares revenue with telecommunication operators on a new subscribers' spending over the following 12 months.

Value Added Products and Services: New product lines and services will be brought in by the company to offer to the existing user base through the delivery channels of the Telecommunication partners and the platform partners.

Up-Stream Partners

The company partners with all three major telecommunication operators in China, namely China Mobile, China Unicom and China Telecom, to offer its products and services:

China Mobile: Products and services include recharge service, data plan, subscription plans, and mobile protection plans.

China Unicom: Products and services include recharge service, data plan, subscription plan, and mobile protection plans.

China Telecom: Products and services include recharge service and data plan.

In 2020, the company entered into arrangements with two third party smartphone distributors (VSens and ZhengZhouXinSiWei) to extend their product offerings across online stores on various platforms. The company plans to commercialize the offering in the first quarter of 2021.

Down-Stream Partners

The company operates online stores and pages on various e-commerce and social media platforms, gaining access to millions of users without having to incur the associated marketing expenditures or user acquisition investments.

SMS and MMS Services

Short Message Service (SMS) remains the only secure and reliable communication medium that connects all telecommunication operators globally.

In early 2019, the company completed beta testing of its proprietary SMS Integrated System and the commercialization phase began in April 2019. The SMS Integrated System provides a robust back-end control panel for corporate partners to access and manage their own messaging settings. Corporate partners can upload a list of targeted members, compose text or multimedia messages, and define broadcasting settings. All messages must be submitted to the ministry for review before being delivered to telecommunication operators' back-end for broadcasting.

The mass SMS text message service offers bulk SMS services to end consumers with competitive pricing. Beijing Technology retains a license from the Ministry of Industry and Information Technology to operate SMS and MMS business in the PRC. Similar to the mobile payment and recharge business, Beijing Technology is required to make a deposit or bulk purchase in advance and has secured business customers that will utilize Beijing Technology's SMS integrated platform to send bulk SMS text messages monthly. Beijing Technology has the capability to manage and track the entire process, including guiding its customer to meet government's guidelines on messages composed, until the SMS messages have been delivered successfully.

The company's SMS Integrated System performs more than 150 million SMS transactions monthly. The company focuses its efforts on:

Continuously enhancing the SMS Integrated System to offer a more flexible, reliable, and scalable platform.

Working closely with telecommunication operators in a select few provinces allows the company's business development team to negotiate and secure better bulk purchase pricing from time to time.

The company's corporate partners span various industries, such as airlines, insurance and financial services, e-commerce, and consumer markets; diversifying sources of revenue improves the stability of its revenue stream and minimizes seasonal fluctuations with SMS volume.

Rich Communication Services (RCS) Platform

Telecommunication operators around the world have reached consensus on the need to upgrade the operator messaging service from SMS to Rich Communication Services (RCS) messaging in the 5G era. Worldwide, the GSM Association (GSMA) indicates 90 operators have launched RCS in 60 countries, attracting approximately 421 million users.

On April 8, 2020, China's three major telecommunication operators, namely China Mobile, China Telecom, and China Unicom, released a 5G messaging white paper outlining their commitment to mandate all compatible handsets sold in the country support RCS.

5G messaging service or RCS can support not only Person-to-Person (P2P) messaging, but also Application-to-Person (A2P) messaging. Through P2P messaging, RCS offers a richer text-messaging system, provides phonebook polling and is capable of transmitting in-call multimedia features. A2P messaging enables businesses and brands to communicate with users via chatbot, facilitates the sharing of high-quality videos but also more direct interfacing with the internet; consumers will no longer have to download multiple mobile apps and can, for instance, directly buy train tickets and book flights by just sending messages.

In March 2020, the company's management allocated resources dedicated for the research and development of a RCS platform - MaaP (Messaging as a Platform). This RCS platform is expected to be a proprietary business messaging platform that enables businesses and brands to communicate and service their customers on 5G infrastructure, delivering better user experience. This is expected to open up a new marketing channel for the company's business partners.

The company has completed the development of the RCS platform and it is ready to be commercialized:

RCS Platform for Telecommunication Products and Services

The company intends to launch its own brand on the platform for the telecommunication products and services it carries. The platform is expected to provide the company with direct access to 5G mobile users. Furthermore, the company can continue building and enhancing its brand on the platform serving as the most comprehensive one-stop shop for telecommunication products and services.

RCS Platform for Partners and Brands

The company is targeting to engage larger partners and brands on this new RCS platform. It is working and negotiating with one of the largest phone distributors in China to be among the first partners launching services on the platform.

Big Data Insights

The company launched its proprietary platform 'Sapientus' in July 2020 as its big data insights arm to deliver data-driven solutions and insights for businesses within the insurance and financial services industries. Leveraging the company's strong tech and data backbone, Sapientus specializes in data mining and insights extraction. The company's flexible data structure is built from the ground up, by transforming raw telco data into basic building blocks, statistical measures and behavioral inferences, while layering in auxiliary contextual information, to extract behavioral insights, and power revolutionary applications for insurance and financial services.

The company's proprietary risk assessment engine offers standard and customized scoring and appraisal services based on multi-dimensional factors, enabled by extensive data coverage through exclusive telco partnerships. The company augments and shares value with its partners through various big data enabled applications, including preferred risk selection, precision marketing, product customization, and claims management (e.g. fraud detection).

Strategy

The key elements of the company's strategy are to enhance PigeonHoles Integration System and the SMS Integrated System; expand customer base; constantly increase its product offerings from its telco partners by designing new packages and offerings in order to differentiate the company from its competition; continue to build brand loyalty and enhance its customer service to ensure customer retention and repeat sales; and continue to explore opportunities in the financial technology services (fintech), healthcare and advertising industries.

Sales and Marketing

The company's sales and marketing efforts focuses on promoting brand awareness of its JiuGe telecommunication stores operating on most major e-commerce and social media platforms in China.

The company is continuously planning, in cooperation with its telco partners, seasonal, and targeted marketing events in different provinces and cities.

Since the inception of Shanghai JiuGe Information Technology Co., Ltd. (JiuGe Technology) in 2018, the company has secured contracts and agreements to work with nine online stores and twenty business partners. The company's strategy is to expand into the entire China region and to reach out to a wider base of customers and users that can benefit from its product offerings.

The company's new agreement with China Mobile on the loyalty redemption business is a step towards its customer retention strategy that is expected to also enable it to cross-sell additional products and offerings from it.

The company intends to continue to focus on, and expand, its roster of corporate clients to improve sales in its SMS business and intends to focus on expanding into different industries.

Research and Development

The company recorded $797,549 in research and development for the year ended February 28, 2023.

Regulation

FingerMotion is subject to anti-money laundering (AML) laws and regulations in China, the U.S., and other jurisdictions, as well as laws designed to prevent the use of the financial systems to facilitate terrorist activities.

In the U.S., the company is subject to privacy information safeguarding requirements under the Gramm-Leach-Bliley Act that require the maintenance of a written, comprehensive information security program, among other laws, which it does not have in place.

FingerMotion is subject to applicable anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, and similar anti-corruption laws in the jurisdictions in which it operates.