Business Context and Reporting Period
This Form 8-K, dated July 13, 2017, reports a material definitive agreement and asset acquisition by FingerMotion, Inc. (formerly Property Management Corporation of America). The Company entered into a Share Exchange Agreement with Finger Motion Company Limited (FMCL), a Hong Kong-based information technology company specializing in mobile game publishing. As of the filing date, FMCL became a wholly-owned subsidiary of the Company.
Key Financial Metrics and Capital Structure
The filing details a significant restructuring of the Company's equity capital rather than operational financial performance metrics such as revenue or cash flow.
- Equity Issuance: Approximately 12,000,000 shares of common stock were issued to FMCL shareholders in exchange for their equity in FMCL.
- Additional Issuances: 200,000 shares were issued to Kline Law Group PC; up to 400,000 shares to other consultants; and up to 2,562,500 shares to accredited investors.
- Ownership Structure: The FMCL shareholders now hold approximately 67% of the Company's issued and outstanding common stock.
- Preferred Stock: All 100,000 shares of Series A Preferred Stock were cancelled in connection with the transaction.
- Financial Statements: The filing does not provide current revenue, profit, or cash flow data. Required financial statements for the acquired business and pro forma information are to be filed in an amendment within 71 days.
Material Changes Versus Prior Period
The Company underwent a fundamental change in business operations and control:
- Business Pivot: The Company transitioned from its prior identity (Property Management Corporation of America) to a mobile game publisher through the acquisition of FMCL.
- Control: While the transaction resulted in a majority ownership shift to FMCL shareholders, the filing states there was no change of control because the previous holders of Series A Preferred Stock (Cheong Chee Ming, Cheong Liong Foong, and Liew Siew Chin) are also the recipients of the majority of shares issued under the agreement, thereby maintaining voting control.
- Asset Base: The Company now holds licenses for three mobile games with worldwide distribution rights (excluding China).
Outlook, Management Commentary, and Risks
Business Outlook and Pipeline: FMCL has secured a strategic alliance with a Chinese game development studio. The Company plans to launch three titles within the next six months:
- Dragon Samurai: An Action Role Playing Game (ARPG) with 3D simulation, expected to launch within two months.
- Pirate Kingdom: A Simulated Life Game (SLG) focusing on naval warfare and strategy.
- Three Kingdom: An ARPG based on historical folklore and ancient documents.
Management Team: The new leadership includes Chairman Mr. Leong Yew Poh, with extensive experience in IT and regional expansion in Asia, and COO Mr. Lee Shiuan Jung (Snow), who will oversee operations in Taiwan, Hong Kong, Macau, and future overseas markets.
Risks and Contingencies:
- Unregistered Securities: The shares issued were not registered under the Securities Act of 1933 but claimed exemption under Section 4(2) due to the private nature of the offering.
- Delayed Financial Data: Investors must wait up to 71 days for the required financial statements and pro forma information to assess the financial health of the acquired entity.
- Execution Risk: The business model relies on the successful development and launch of mobile games within a competitive market.
Key Facts for Investor Verification
- Verify the upcoming 71-day amendment for the financial statements of FMCL to assess the subsidiary's actual financial position.
- Confirm the specific terms of the strategic alliance with the Chinese game development studio.
- Monitor the launch dates and market reception of the three announced games (Dragon Samurai, Pirate Kingdom, Three Kingdom).
- Review the final pro forma financial information to understand the impact of the equity dilution and the new capital structure.
- Validate the continued voting control of the original Series A Preferred Stock holders post-transaction.