FingerMotion (FNGR) risk factors, FY2025 10-K

Risks Related to the Business

1. 01We have a limited operating history and, as a result, our past results may not be indicative of future operating performance
2. 02We have a history of net losses and we may not be able to achieve or maintain profitability in the future
3. 03If we fail to effectively manage our growth, our business, financial condition and results of operations could be adversely affected
4. 04We depend on our key personnel and other highly skilled personnel, and if we fail to attract, retain, motivate or integrate our personnel, our business, financial condition and results of operations could be adversely affected
5. 05Our concentration of earnings from two telecommunications companies may have a material adverse effect on our financial condition and results of operations
6. 06Any actual or perceived security or privacy breach could interrupt our operations, harm our brand and adversely affect our reputation, brand, business, financial condition and results of operations
7. 07Systems failures and resulting interruptions in the availability of our platform or offerings could adversely affect our business, financial condition and results of operations
8. 08The successful operation of our business depends upon the performance and reliability of Internet, mobile, and other infrastructures that are not under our control
9. 09We may be subject to claims, lawsuits, government investigations and other proceedings that may adversely affect our business, financial condition and results of operations
10. 10We may require additional funding to support our business
11. 11Claims by others that we infringed their proprietary technology or other intellectual property rights could harm our business
12. 12Geopolitical Tensions Between the United States and China Could Adversely Affect Our Operations and Business Environment

Risks Related to Our Securities

1. 13Our stock has limited liquidity
2. 14We do not intend to pay cash dividends for the foreseeable future
3. 15If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price and trading volume of our common stock could decline
4. 16The continued sale of our equity securities will dilute the ownership percentage of our existing shareholders and may decrease the market price for our Common Shares
5. 17If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired
6. 18Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit a stockholder’s ability to buy and sell our shares of common stock, which could depress the price of our shares of common stock
7. 19Our shares of common stock have been thinly traded, and you may be unable to sell at or near ask prices or at all if you need to sell your shares of common stock to raise money or otherwise desire to liquidate your shares

Risks Related to the VIE Agreements

1. 20The PRC government may determine that the VIE Agreements are not in compliance with applicable PRC laws, rules and regulations
2. 21JiuGe Management, our WFOE, manages and operates the mobile data business through JiuGe Technology, the VIE, pursuant to the rights its holds under the VIE Agreements. Almost all economic benefits and risks arising from JiuGe Technology’s operations are transferred to JiuGe Management under these agreements
3. 22Our ability to manage and operate JiuGe Technology under the VIE Agreements may not be as effective as direct ownership
4. 23The VIE Agreements have never been challenged or recognized in court for the time being, the PRC government may determine that the VIE Agreements are not in compliance with applicable PRC laws, rules and regulations
5. 24The payment arrangement under the VIE Agreements may be challenged by the PRC tax authorities
6. 25Shareholders of JiuGe Technology have potential conflicts of interest with our Company which may adversely affect our business
7. 26We rely on the approval certificates and business license held by JiuGe Management and any deterioration of the relationship between JiuGe Management and JiuGe Technology could materially and adversely affect our business operations
8. 27If JiuGe Management exercises the purchase option it holds over JiuGe Technology’s share capital pursuant to the VIE Agreements, the payment of the purchase price could materially and adversely affect our financial position

Risks Related to Doing Business in China

1. 28Changes in China’s political or economic situation could harm us and our operating results
2. 29Uncertainties with respect to the PRC legal system could limit the legal protections available to you and us
3. 30The current tensions in international trade and rising political tensions, particularly between the United States and China, may adversely impact our business, financial condition, and results of operations
4. 31You may have difficulty enforcing judgments against us
5. 32The PRC government exerts substantial influence over the manner in which we must conduct our business activities
6. 33The PRC government may exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers
7. 34Future inflation in China may inhibit our ability to conduct business in China
8. 35Capital outflow policies in the PRC may hamper our ability to remit income to the United States
9. 36Restrictions on currency exchange may limit our ability to receive and use our revenues effectively
10. 37Fluctuations in exchange rates could adversely affect our business and the value of our securities
11. 38Restrictions under PRC law on our PRC subsidiary’s ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to our shareholders, and otherwise fund and conduct our businesses
12. 39PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from making loans or additional capital contributions to our PRC subsidiary and affiliated entities, which could harm our liquidity and our ability to fund and expand our business
13. 40We may be subject to fines and legal sanctions by the SAFE or other PRC government authorities if we or our employees who are PRC citizens fail to comply with PRC regulations relating to employee stock options granted by offshore listed companies to PRC citizens
14. 41Under the New EIT Law, we may be classified as a “resident enterprise” of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC shareholders
15. 42We may be exposed to liabilities under the Foreign Corrupt Practices Act (the “FCPA”) and Chinese anti-corruption laws, and any determination that we violated these laws could have a material adverse effect on our business
16. 43Because our business is located in the PRC, we may have difficulty establishing adequate management, legal and financial controls, which we are required to do in order to comply with U.S. securities laws
17. 44Certain PRC regulations, including those relating to mergers and acquisitions and national security, may require a complicated review and approval process which could make it more difficult for us to pursue growth through acquisitions in China