FingerMotion Reports 22% Revenue Decline, Net Loss Increase in Six Months Ended August 31, 2024

FingerMotion, Inc. reported a challenging financial performance for the six months ended August 31, 2024, with total revenue of $16.8 million, a decrease of 22% from $21.4 million in the same period of 2023. The decline in revenue was primarily attributed to a significant drop in the telecommunications products and services segment, which fell 59% to $8.6 million, while the SMS and MMS business saw a notable increase, rising to $8.2 million from just $16,313 in the previous year.

The company's gross profit for the six months ended August 31, 2024, was $982,917, down 61% from $2.5 million in 2023. This decline in profitability was reflected in the net loss attributable to shareholders, which increased to $3.3 million from $1.4 million in the prior year, marking a 139% rise in losses. The comprehensive loss for the same period was $3.2 million, compared to $1.9 million in 2023.

In terms of operational expenses, FingerMotion reported a 12% increase in total operating expenses to $4.4 million, driven by higher general and administrative costs, which rose by 14% to $3.4 million. Marketing expenses surged by 160% to $134,106, primarily for promoting the Da Ge App platform. Research and development expenses also saw a slight increase, reflecting ongoing investments in data access and usage.

The company’s balance sheet showed a significant increase in current assets, rising to $29.9 million as of August 31, 2024, compared to $18.7 million at the end of February 2024. However, current liabilities also increased substantially to $15.2 million from $5.2 million, resulting in total liabilities of $20.3 million, up from $6.8 million. The accumulated deficit grew to $31.8 million, indicating ongoing financial challenges.

Strategically, FingerMotion incorporated a new subsidiary, Shanghai KeShunXiang Automobile Service Co., Ltd., in April 2024, which is focused on communication and streaming services in China. The company also secured a short-term loan of SGD$1.5 million for working capital, with the full amount drawn down by September 2024.

Despite these developments, the company continues to face risks associated with its Variable Interest Entity (VIE) structure, regulatory compliance in China, and the potential for operational disruptions due to changes in government policies. The management has acknowledged material weaknesses in internal controls, which they are actively working to address.