FingerMotion Inc

Previous wording

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 nine months ended November 30, 2023, and our Annual Report on Form 10-K for the fiscal year ended February 28, 2023, 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, 2023, and Item 1A, Risk Factors, under Part II - Other Information of this Quarterly Report.

Current wording

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 three months ended May 31, 2024, and our Annual Report on Form 10-K for the fiscal year ended February 29, 2024, 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 29, 2024, and Item 1A - Risk Factors, under Part II - Other Information of this Quarterly Report.

Previous wording

This MD&A is focused on material changes in our financial condition from February 28, 2023, our most recently completed year end, to November 30, 2023, and our results of operations for the three and nine months ended November 30, 2023, 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, 2023.

Current wording

This MD&A is focused on material changes in our financial condition from February 29, 2024, our most recently completed year end, to May 31, 2024, and our results of operations for the three months ended May 31, 2024, 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 29, 2024.

Previous wording

Our holding company structure presents unique risks as our investors may never directly hold equity interests in our subsidiaries or the VIE, and will be dependent upon contributions from our subsidiaries and the VIE to finance our cash flow needs. Our subsidiaries and the VIE are currently not required to obtain permission from the Chinese authorities including the China Securities Regulatory Commission (the “CSRC”), or Cybersecurity Administration Committee (the “CAC”), to operate or to issue securities to foreign investors. However, as of March 31, 2023, pursuant to the Overseas Listing Trial Measures promulgated by the CSRC, we may have to file with the CSRC with respect to a new offering of our securities. The business of our subsidiaries and the VIE until now are not subject to cybersecurity review with the CAC, given that: (i) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data by the authorities; (ii) we do not possess a large amount of personal information in our business operations. In addition, we are not subject to merger control review by China’s anti-monopoly enforcement agency due to the level of our revenues which provided from us and audited by our auditor and the fact that we currently do not expect to propose or implement any acquisition of control of, or decisive influence over, any company with revenues within China of more than RMB400 million. Currently, these statements and regulatory actions have had no impact on our daily business operations, the ability to accept foreign investments and list our securities on an U.S. or other foreign exchange. However, since these statements and regulatory actions, including the Overseas Listing Trial Measures, are new, it is uncertain what potential impact such modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments and list our securities on an U.S. or other foreign exchange.

Current wording

Our holding company structure presents unique risks as our investors may never directly hold equity interests in our subsidiaries or the VIE, and will be dependent upon contributions from our subsidiaries and the VIE to finance our cash flow needs. Our subsidiaries and the VIE are currently not required to obtain permission from the Chinese authorities including the China Securities Regulatory Commission (the “CSRC”), or Cybersecurity Administration Committee (the “CAC”), to operate or to issue securities to foreign investors. However, as of March 31, 2023, pursuant to the Overseas Listing Trial Measures promulgated by the CSRC, we will be required to file with the CSRC with respect to a new offering of our securities. The business of our subsidiaries and the VIE until now are not subject to cybersecurity review with the CAC, given that: (i) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data by the authorities; (ii) we do not possess a large amount of personal information in our business operations. In addition, we are not subject to merger control review by China’s anti-monopoly enforcement agency due to the level of our revenues which provided from us and audited by our auditor and the fact that we currently do not expect to propose or implement any acquisition of control of, or decisive influence over, any company with revenues within China of more than RMB400 million. Currently, these statements and regulatory actions have had no impact on our daily business operations, the ability to accept foreign investments and list our securities on an U.S. or other foreign exchange. However, since these statements and regulatory actions, including the Overseas Listing Trial Measures, are new, it is uncertain what potential impact such modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments and list our securities on an U.S. or other foreign exchange.

Previous wording

To operate, the VIE and Beijing XunLian TianXia Technology Co., Ltd. are required to obtain, and have obtained, a value-added telecommunications business licence from PRC authorities. In connection with our previous issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this periodic report on Form 10-Q, we, our PRC subsidiaries and the VIE, (i) are not required to obtain permissions from the CSRC except that as of March 31, 2023 we may have to file with the CSRC with respect to a new offering of our securities, (ii) are not required to go through cybersecurity review by the CAC, and (iii) have received or were not denied such requisite permissions by any PRC authority. If we, our subsidiaries or the VIE (i) do not receive or maintain such permissions or approvals, (ii) inadvertently conclude that such permissions or approvals are not required or (iii) applicable laws, regulations, or interpretations change and we are required to obtain such permissions or approvals in the future, we may be subject to government enforcement actions, investigations, penalties, sanctions and fines imposed by the CSRC, the CAC and relevant departments of the State Council. In severe circumstances, the business of our PRC subsidiary may be ordered to suspend and its business qualifications and licences may be revoked.

Current wording

To operate, the VIE and Beijing XunLian TianXia Technology Co., Ltd. are required to obtain, and have obtained, a value-added telecommunications business licence from PRC authorities. In connection with our previous issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this periodic report on Form 10-Q, we, our PRC subsidiaries and the VIE, (i) are not required to obtain permissions from the CSRC except that as of March 31, 2023 we will be required to file with the CSRC with respect to a new offering of our securities, (ii) are not required to go through cybersecurity review by the CAC, and (iii) have received or were not denied such requisite permissions by any PRC authority. If we, our subsidiaries or the VIE (i) do not receive or maintain such permissions or approvals, (ii) inadvertently conclude that such permissions or approvals are not required or (iii) applicable laws, regulations, or interpretations change and we are required to obtain such permissions or approvals in the future, we may be subject to government enforcement actions, investigations, penalties, sanctions and fines imposed by the CSRC, the CAC and relevant departments of the State Council. In severe circumstances, the business of our PRC subsidiary may be ordered to suspend and its business qualifications and licenses may be revoked.

Previous wording

To address challenges resulting from laws, policies and practices that may disfavours foreign-owned entities that operate within industries deemed sensitive by the Chinese government, we use the VIE structure to provide contractual exposure to foreign investment in the PRC-based companies. We own 100% of the equity of a WFOE, Shanghai JiuGe Business Management Co., Ltd. (“JiuGe Management”), which has entered into the VIE Agreements with the VIE, which is owned by Ms. Li Li the legal representative and general manager, and also the shareholder of the VIE. The VIE Agreements have not been tested in court. As a result of our use of the VIE structure, you may never directly hold equity interests the VIE. Any securities that we offer will be securities of the Company, the Delaware holding company, not of the VIE.

Current wording

To address challenges resulting from laws, policies and practices that may disfavors foreign-owned entities that operate within industries deemed sensitive by the Chinese government, we use the VIE structure to provide contractual exposure to foreign investment in the PRC-based companies. We own 100% of the equity of a WFOE, Shanghai JiuGe Business Management Co., Ltd. (“JiuGe Management”), which has entered into the VIE Agreements with the VIE, which is owned by Ms. Li Li the legal representative and general manager, and also the shareholder of the VIE. The VIE Agreements have not been tested in court. As a result of our use of the VIE structure, you may never directly hold equity interests in the VIE. Any securities that we offer will be securities of the Company, the Delaware holding company, not of the VIE.

Previous wording

These are new product and services that the Company expects to secure and work with the telecommunication provider and all our e-commerce platform partners to market. In February 2022, our 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, we launched the roll out of the Mobile Device protection product with the roll out of the new mobile phones and 5G phones.

Current wording

These are new product and services that the Company expects to secure and work with the telecommunication provider and all our e-commerce platform partners to market. In February 2022, our 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, we launched the roll out of the Mobile Device protection product with the roll out of the new mobile phones and 5G phones. Complementing our hardware protection services, we have introduced cloud services designed to offer corporate customers robust data storage, processing capabilities, and databases accessible via the internet.

Previous wording

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. We expect this to open up a new marketing channel for the Company’s current and prospective business partners.

Current wording

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. We expect this to open up a new marketing channel for the Company’s current and prospective business partners. Currently, the deployment of this RCS platform is under review, with discussion ongoing among government bodies, major service providers, and telecommunication companies. These deliberations aim to assess the potential market impacts and establish the necessary consents before the launch, considering the significant changes the platform may introduce to user interactions with existing services. These discussions seek to ensure that all stakeholders’ concerns are addressed comprehensively. Once these issues are resolved and the necessary approval is obtained, we anticipate a substantial enhancement in our service offerings and an expansion of our market reach.

Previous wording

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

Current wording

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 goal of creating value for both insurers and the end insurance consumers through better technology, product offerings and customer experience.

Previous wording

We recorded $27,588,403 in revenue for the nine months ended November 30, 2023, an increase of $6,347,388 or 30%, compared to the nine months ended November 30, 2022. This increase resulted from an increase in revenue of $12,658,790 from our Telecommunication Products & Services, buoyed by both the addition of a new product line and organic expansion; offset in part by a decrease in revenue of $6,293,438 from our SMS & MMS business and a decrease of revenue of $17,964 from our Big Data business. We principally earn revenue by providing mobile payment and recharge services to customers of telecommunications companies in China. Specifically, we earn a negotiated rebate amount from the telecommunications companies for all monies paid by consumers to those companies that we process. The increase in this line of business especially in the mobile recharge revenue was evident as we deployed certain funding that we had secured in the recent past months to this line of business. The notable revenue escalation in the Telecommunication Products & Services not only reflects our capital allocation into this domain, leveraging funds received in the preceding months but also our efforts in diversifying our offerings with new product lines. We foresee sustained growth for this segment as we strategize to allocate more resources in the near future. Contrastingly, our SMS and MMS business has reduced substantially as compared to the previous nine months ended November 30, 2022. Changes in the government protocol for SMS and MMS distribution resulted in a significant decline in our revenue in this sector, compelling us to focus on our other business lines. However, it’s imperative to note that we remain optimistic about the SMS and MMS business. It continues to hold significance in our broader financial picture, and we are actively re-evaluating our approach to adapt to these changes and uncover alternative avenues for growth within this segment. In shifting focus to our Big Data business in FY2021, we forged a valuable alliance with Pacific Life Re, a global life reinsurance serving the insurance industry with a comprehensive suite of products and services, to develop a holistic multi-faceted risk rating concept, leveraging the Company’s proprietary approach to analytics by drawing data from novel sources and filtering them through advance algorithms with the ultimate goal to apply new insights generated from our predictive model to the traditional insurance industry. Building upon the successful implementation of the initial phase, Pacific Life Re proceeded with Phase 2 in the previous fiscal year. During the last quarter of FY2022, we established a collaborative research alliance with Munich Re in extending behavioural analytics to enhance understanding of morbidity and behavioural patterns in the Chinese market. The objective is to create value for both insurers and the end insurance consumers through technology advancements, improved product offerings and enha…

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Current wording

We recorded $8,373,983 in revenue for the three months ended May 31, 2024, a decrease of $3,795,108 or 31%, compared to the three months ended May 31, 2023. This decrease resulted from an increase in revenue of $8,155,673 from our SMS & MMS business, offset by decreases in revenue of $11,801,075 and $149,706 from our Telecommunication Products & Services and Big Data businesses, respectively. We principally earn revenue by providing mobile payment and recharge services to customers of telecommunications companies in China. Specifically, we earn a negotiated rebate amount from the telecommunications companies for all monies paid by consumers to those companies that we process. For the three months ended May 31, 2024, our SMS & MMS business saw a significant revenue increase due to the strategic reallocation of resources to this segment, allowing us to capitalize on higher margins and improved profitability. This strategic shift reflects our focus on optimizing our business portfolio by prioritizing higher-margin segments, which has resulted in a corresponding decrease in revenue from our Telecommunication Product & Services. In shifting focus to our Big Data business in FY2021, we forged a valuable alliance with Pacific Life Re, a global life reinsurance serving the insurance industry with a comprehensive suite of products and services, to develop a holistic multi-faceted risk rating concept, leveraging the Company’s proprietary approach to analytics by drawing data from novel sources and filtering them through advance algorithms with the ultimate goal to apply new insights generated from our predictive model to the traditional insurance industry. Building upon the successful implementation of the initial phase, Pacific Life Re proceeded with Phase 2 in the previous fiscal year. During the last quarter of FY2022, we established a collaborative research alliance with Munich Re in extending behavioral analytics to enhance understanding of morbidity and behavioral patterns in the Chinese market. The objective is to create value for both insurers and the end insurance consumers through technology advancements, improved product offerings and enhanced customer experiences. Following the successful execution of our joint initiatives with Munich Re, we are now in active discussion to develop a new partnership arrangement.

Previous wording

We recorded $5,502,151 in costs of revenue for the three months ended November 30, 2023, a decrease of $5,042,170 or 48%, compared to the three months ended November 30, 2022. As previously mentioned, we principally earn revenue by providing mobile payment and recharge services to customers of telecommunications companies, subscription plans, and mobile phone sales in China. To earn this revenue, we incur cost of the product, certain customer acquisition costs, including discounts to our customers and promotional expenses, which is reflected in our cost of revenue.

Current wording

We recorded $7,692,094 in costs of revenue for the three months ended May 31, 2024, a decrease of $3,814,448 or 33%, compared to the three months ended May 31, 2023. As previously mentioned, we principally earn revenue by providing mobile payment and recharge services to customers of telecommunications companies, subscription plans and mobile phone sales in China. To earn this revenue, we incur cost of the product, certain customer acquisition costs, including discounts to our customers and promotional expenses, which is reflected in our cost of revenue.

Previous wording

We recorded depreciation of $17,525 for fixed assets for the three months ended November 30, 2023, an increase of $509 or 3%, compared to the three months ended November 30, 2022.

Current wording

We recorded depreciation of $12,014 for fixed assets for the three months ended May 31, 2024, a decrease of $6,328 or 35%, compared to the three months ended May 31, 2023.

Previous wording

We recorded $2,256,185 in general and administrative expenses for the three months ended November 30, 2023, an increase of $620,385 or 38%, compared to the three months ended November 30, 2022. The increase encompasses a range of costs integral to the Company’s ongoing operational and administrative requirements. The expenses include, but are not limited to, regulatory filings, professional services fees, ongoing funding activities, and other costs associated with adhering to both domestic and international operational standards and requirements.

Current wording

We recorded $1,881,777 in general and administrative expenses for the three months ended May 31, 2024, an increase of $519,787 or 38%, compared to the three months ended May 31, 2023. The key increases, especially for salaries, technical fee, travelling and others in the three months ended May 31, 2024 as compared to the three months ended May 31, 2023. The increase encompasses a range of costs integral to the Company’s ongoing operational and administrative requirements and these increases are necessary to support the Company’s growth and ongoing operational needs.

Previous wording

We recorded $40,963 in marketing cost for the three months ended November 30, 2023, being a decrease of $23,049 or 36%, compared to the three months ended November 30, 2022. These marketing costs were for our telecommunication products and services business. Marketing costs represent the costs of promoting our product offerings through all our platforms.

Current wording

We recorded $62,524 in marketing cost for the three months ended May 31, 2024, being an increase of $69,365 or 1,014%, compared to the three months ended May 31, 2023. These marketing costs were incurred across our various business segments including promoting our newly launched DaGe platform. Marketing costs represent the costs of promoting our product offerings through all our platforms.

Previous wording

We incurred fees of $176,119 in research & development for the three months ended November 30, 2023 as compared to $180,158 for the three months ended November 30, 2022. The decrease of $4,039 or 2% was due to the savings from data access and usage fee charged by telecommunications company.

Current wording

We incurred fees of $178,993 in research & development for the three months ended May 31, 2024 as compared to $172,099 for the three months ended May 31, 2023. The increase of $6,894 or 4% was due to the data access and usage fees charged by telecommunications company.

Previous wording

Our Insurtech division focuses on consumer behavioural insights extraction for the purpose of risk assessment. Insights are mined from a multitude of data sources, harmonized with the objectives of our various business partners. The initial phase of business application is to focus on the insurance industry, particularly in the area of underwriting risk rating, complementary claims adjudication and assessment, and risk segmentation & market penetration.

Current wording

Our Insurtech division focuses on consumer behavioral insights extraction for the purpose of risk assessment. Insights are mined from a multitude of data sources, harmonized with the objectives of our various business partners. The initial phase of business application is to focus on the insurance industry, particularly in the area of underwriting risk rating, complementary claims adjudication and assessment, and risk segmentation & market penetration.

Previous wording

It is important to emphasize that our allocation to research and development is foundational to our technology-oriented operations. Our steadfast dedication to innovation remains undiminished, and we expect to persistently advance in our developmental endeavours to reinforce our technological edge.

Current wording

It is important to emphasize that our allocation to research and development is foundational to our technology-oriented operations. Our steadfast dedication to innovation remains undiminished, and we expect to persistently advance in our developmental endeavors to reinforce our technological edge.

Previous wording

We incurred fees of $559,092 in share issuance for consultants in consideration of the services which have been provided to the company for the nine months ended November 30, 2023, as compared to $1,367,909 for the nine months ended November 30, 2022. The decrease of $808,817 or 59% was due to the reduced engagement of consultants to the Company that were compensated with shares of our common stock. The rationale for rewarding these consultants and advisors with shares is to minimize the usage of cash by the Company to allow the Company to use the cash to invest in revenue-generating activities.

Current wording

We incurred fees of $222,670 in share issuance for consultants in consideration of the services which have been provided to the Company for the three months ended May 31, 2024 as compared to $296,461 for the three months ended May 31, 2023. The decrease of $73,791 or 25% 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.

Previous wording

We recorded $2,599,005 in operating expenses for the three months ended November 30, 2023, as compared to $2,720,417 in operating expenses for the three months ended November 30, 2022. The decrease of $121,412 or 4%, for the three months ended November 30, 2023, is as set forth above.

Current wording

We recorded $2,357,978 in operating expenses for the three months ended May 31, 2024, as compared to $1,842,051 in operating expenses for the three months ended May 31, 2023. The increase of $515,927 or 28%, for the three months ended May 31, 2024 is as set forth above.

Previous wording

The net loss attributable to the Company’s shareholders was $1,944,343 for the three months ended November 30, 2023, and $2,521,992 for the three months ended November 30, 2022. The decrease in net loss attributable to the Company’s shareholders of $577,649 or 23% is as discussed above.

Current wording

The net loss attributable to the Company’s shareholders was $1,655,904 for the three months ended May 31, 2024 and $1,265,471 for the three months ended May 31, 2023. The increase in net loss attributable to the Company’s shareholders of $390,433 or 31% resulted primarily from the higher general & administrative expenses as discussed above.

Previous wording

At November 30, 2023, we had cash and cash equivalents of $1,934,565, as compared to cash and cash equivalents of $9,240,241 at February 28, 2023. Our mobile payment business model necessitates periodic fund deposits with our telecommunication companies to obtain access to the mobile data and talk time we make available to consumers on our portal. The capital influx from our November 2022 private placements enabled us to subsequently amplify our prepayments and deposits with the telecommunication entities, subsequently driving a surge in revenue. Therefore, the observed variability in our cash holdings is a deliberate operational strategy to try to optimize revenue generation. The Company otherwise does not have any planned capital expenditures and has historically funded its operations from revenues and sales of securities, including convertible debt securities. We believe that our cash on hand and cash equivalents, coupled with our operating revenues, will sufficiently cover our projected operational needs and address our outstanding liabilities for the next 12 monhts. For more expansive growth, further enhancing our deposits with telecommunication entities will be crucial. In line with this, we intend to continue to seek additional capital through public or private sales of our equity or debt securities, or both. We might also enter into financing arrangements with commercial banks or non-traditional lenders. We cannot provide investors with any assurance that we will be able to raise additional funding from the sale of our equity or debt securities, or both, in order to increase our deposits with our telecommunications company clients, or if available, that such funding will be on terms acceptable to us.

Current wording

At May 31, 2024, we had cash and cash equivalents of $1,064,124, as compared to cash and cash equivalents of $1,517,232 at February 29, 2024. Our mobile payment business model necessitates periodic fund deposits with our telecommunication companies to obtain access to the mobile data and talk time we make available to consumers on our portal. Additionally, our expansion into the cloud-based business, which features a longer collection cycle, has led to an increase in accounts receivable and consequently, a greater strain on our liquidity. To manage these operational demands effectively, we have had to carefully monitor and manage our cash flows. The Company otherwise does not have any planned capital expenditures and has historically funded its operations from revenues and sales of securities, including convertible debt securities. We believe that our cash on hand and cash equivalents, coupled with our operating revenues, will sufficiently cover our projected operational needs and address our outstanding liabilities for the next 12 months. For more expansive growth, further enhancing our deposits with telecommunication entities will be crucial. In line with this, we intend to continue to seek additional capital through public or private sales of our equity or debt securities, or both. We might also enter into financing arrangements with commercial banks or non-traditional lenders. We cannot provide investors with any assurance that we will be able to raise additional funding from the sale of our equity or debt securities, or both, in order to increase our deposits with our telecommunications company clients, or if available, that such funding will be on terms acceptable to us.

Previous wording

We did, however, raise $840,000 through the exercise of warrants to purchase shares of our common stock during the nine months ended November 30, 2023, which transactions were exempt from the registration requirements of the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”).

Current wording

We did, however, as of May 28, 2024, receive $775,000 in subscription proceeds to purchase 310,000 shares of our common stock at $2.50 per share on a private placement basis. When we issue the shares pursuant to the subscription agreements, we intend to rely upon the exemption from the registration requirements of the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) provided by Rule 903 of Regulation S promulgated under the U.S. Securities Act.

Previous wording

Net cash used in operating activities increased by $1,352,581 in the nine months ended November 30, 2023 compared to the nine months ended November 30, 2022, primarily due to an increase in account receivable of ($5,072,577) (November 30, 2022: $555,729), increase in prepayment and deposit of ($1,113,267) (November 30, 2022: ($1,695,534)), increase in other receivable of ($2,161,319) (November 30, 2022: $141,173), decrease in accrual and other payable of ($102,182) (November 30, 2022: $1,093,377) and decrease in lease liability of ($4,618) (November 30, 2022: ($1,322)); offset by increase in accounts payable of $3,864,745 (November 30, 2022: ($1,871,709)).

Current wording

Net cash used in operating activities decreased by $1,168,012 in the three months ended May 31, 2024 compared to the three months ended May 31, 2023, primarily due to an increase in account receivable of ($7,762,176) (May 31, 2023: ($322,774)), increase in other receivable of ($150,316) (May 31, 2023: ($1,659,906)); offset by decrease in prepayment and deposit of $24,000 (May 31, 2023: $899,836), increase in accounts payable of $6,884,661 (May 31, 2023: $32,328), increase in accrual and other payable of $833,177 (May 31, 2023: ($645,872)) and increase in lease liability of $12,006 (May 31, 2023: ($1,188)).

Previous wording

During the nine months ended November 30, 2023, net cash used in investing activities decreased by $67,382 compared to $67,761 in the nine months ended November 30, 2022.

Current wording

During the three months ended May 31, 2024, net cash used in investing activities decreased by $380 compared to $380 in the three months ended May 31, 2023.