UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 2)10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20222023
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File Number 333-205835
TINGO,AGRI-FINTECH HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Nevada |
| 83-0549737 |
(State or other jurisdiction of |
| (I.R.S. Employer |
incorporation or organization) |
| Identification No.) |
| | |
Draper,
| | 10010 (Zip Code) |
(Address of principal executive offices) | | |
TINGO, INC.
43 West 23rd Street, 2nd Floor, New York, NY 10010
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Registrant’s telephone number, including area code: ((646)385) 847- 0144463-8168
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $0.001 par value per share
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
| | | ||
Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer ☒ | Smaller Reporting Company ☒ | Emerging Growth Company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company. Yes ☐ No ☒
There were 1,227,516,211 shares of the registrant’s Class A common stock, $0.001 par value, outstanding, as of May 12, 2022.15, 2023.
EXPLANATORY NOTE
As disclosed in the Registrant’s Current Report on Form 8-K filed on June 15, 2022, in preparation for the planned merger of AGRI-FINTECH HOLDINGS, INC. (f/k/a subsidiary of Tingo, Inc. (the “Company”) with a wholly-owned subsidiary of Nasdaq-listed MICT, Inc., the Company has reviewed and considered its accounting treatment of its acquisition of Tingo Mobile PLC (“Tingo Mobile”) on August 15, 2021 (the “Acquisition”). Based on this review, the Company has elected to modify its accounting treatment of the Acquisition as a reverse acquisition of the Company by Tingo Mobile instead of as a forward acquisition of Tingo Mobile by the Company as had been previously presented.
In addition, the Company has revised its accounting treatment of asset classifications and costs associated with the operating leases for its mobile phone devices. While this revision did not affect the Company’s gross revenue or net income, it did reallocate prepayments for the devices to property, plant, and equipment, and reallocated costs associated with the devices from cost of sales to depreciation expense.
Further, as disclosed in the Registrant’s Current Report on Form 8-K filed on August 24, 2022, the Company is revising its accounting treatment relating to the expensing of restricted stock awards (“Stock Awards”) granted pursuant to the Company’s 2021 Equity Incentive Plan adopted on October 12, 2021 (“Incentive Plan”). Most of the Stock Awards granted under the Incentive Plan are subject to time-based vesting requirements of up to two years. Accounting Standards Codification 718 – Compensation-Stock Compensation (“ASC 718”) requires that all Stock Awards which are subject to time-based vesting requirements should be ratably expensed over the vesting period based on the fair value of the Stock Award on the grant date, instead of being fully-expensed. Such treatment should be applied without regard as to whether the recipient is an employee, director, or contractor.
In the Company’s Quarterly Report on Form 10-Q filed on May 16, 2022 (“Original Filing”), as well as in the Company’s Amendment No. 1 to the Quarterly Report on Form 10-Q/A filed by the Company on July 21, 2022 (collectively, with the Original Filing, the “Previous Filings”), the Company’s Stock Awards to non-employees were all fully-expensed, even though some of these Stock Awards were subject to time-based vesting requirements. As a result, stock-based expenses for the Company were overstated for the first quarter of 2022 in the Previous Filings.
This Amendment No. 2 to the Company’s Quarterly Report on Form 10-Q/A (“Amended 10-Q”) now ratably allocates expenses associated with time-based vested Stock Awards for all Incentive Plan participants during their respective vesting periods. In this Amended 10-Q, the proper allocation of these non-cash expenses in accordance with ASC 718 has resulted in an increased net profit for the quarter as compared to the Previous Filings.
Accordingly, this Amended 10-Q supersedes and replaces in their entirety the Previous Filings.
This Amended 10-Q does not reflect events occurring after the Original Filing except as noted above. Except for the foregoing amended information concerning the Acquisition and accounting treatment of the Stock Awards, this Amended 10-Q continues to speak as of the date of the Original Filing and the Company has not otherwise updated disclosures contained therein or herein to reflect events that occurred at a later date.
2
TINGO, INC.
(A Nevada Corporation)
INDEX
32
Part I.Financial Information
Item 1. Unaudited Consolidated Financial Statements
TINGO,AGRI-FINTECH HOLDINGS, INC. (f/k/a Tingo, Inc.)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | | | | | |
|
| March 31, |
| December 31, | ||
| | 2023 | | 2022 | ||
Assets |
| |
|
| |
|
Current Assets |
| |
|
| |
|
Cash | | $ | 32,239 |
| $ | 985 |
Loans and other receivables – related parties | | | 19,882,400 | | | 19,637,668 |
Total Current Assets | | | 19,914,639 | | | 19,638,653 |
| | | | | | |
Non-Current Assets | | | | | | |
Investment in securities | | | 1,215,241,000 | | | 1,215,241,000 |
Total Non-Current assets | | | 1,215,241,000 | | | 1,215,241,000 |
Total Assets | | $ | 1,235,155,639 |
| $ | 1,234,879,653 |
| | | | | | |
Liabilities and Stockholders’ Equity | | | | | | |
Current Liabilities | | | | | | |
Accounts payable and accruals | | $ | 5,454,543 |
| $ | 4,286,181 |
Advances from related party | | | 465,000 | | | 505,000 |
Notes payable – related parties | | | 23,749,945 | | | 23,749,945 |
Settlement liability | | | 7,700,000 | | | ― |
Total Current Liabilities | | | 37,369,488 | | | 28,541,126 |
| | | | | | |
Total Liabilities | | | 37,369,488 | | | 28,541,126 |
| | | | | | |
Commitments and Contingencies | | | — | | | — |
| | | | | | |
Stockholders’ Equity | | | | | | |
Common stock - Class A, par value $.001 per share, 2,250,000,000 shares authorized, 1,227,516,211 and 1,227,516,211 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively | | | 1,227,516 | | | 1,227,516 |
Common Stock - Class B, par value $.001 per share, 200,000,000 shares authorized, 65,000,000 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively | | | 65,000 | | | 65,000 |
Additional paid-in-capital | | | 419,181,135 | | | 419,181,135 |
Retained earnings | | | 799,892,643 | | | 818,796,244 |
Deferred stock compensation | | | (22,580,143) | | | (32,931,368) |
Total Stockholders’ Equity | | | 1,197,786,151 | | | 1,206,338,527 |
Total Liabilities and Stockholders’ Equity | | $ | 1,235,155,639 |
| $ | 1,234,879,653 |
The accompanying notes are an integral part of these financial statements.
3
AGRI-FINTECH HOLDINGS, INC. (f/k/a Tingo, Inc.)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Consolidated for the Predecessor Period)
(Unaudited)
| | | | | | |
|
| March 31, |
| December 31, | ||
|
| 2022 |
| 2021 | ||
Assets | |
|
| |
|
|
Current Assets | |
|
| |
|
|
Cash | | $ | 25,346,663 | | $ | 128,367,605 |
Accounts receivable, net | | | 94,791,681 | | | 364,308,399 |
Inventory | | | 103,218 | | | 129,823 |
Total Current Assets | | | 120,241,562 | | | 492,805,827 |
| | | | | | |
Non-Current Assets | | | | | | |
Property, plant and equipment, net | | | 1,090,955,701 | | | 1,198,883,019 |
Intangible assets, net | | | 1,376,942 | | | 1,670,924 |
Total non-current assets | | | 1,092,332,643 | | | 1,200,553,943 |
Total Assets | | $ | 1,212,574,205 | | $ | 1,693,359,770 |
| | | | | | |
Liabilities and Stockholders’ Equity | | | | | | |
Current Liabilities | | | | | | |
Accounts payable and accruals | | $ | 272,883,402 | | $ | 755,885,193 |
Deferred income - current portion | | | 89,285,248 | | | 221,215,018 |
Value added tax - current portion | | | 6,953,424 | | | 17,162,192 |
Income tax payable | | | 138,456,513 | | | 100,606,352 |
Total current liabilities | | | 507,578,587 | | | 1,094,868,755 |
| | | | | | |
Non-current liabilities | | | | | | |
Deferred Tax | | | 4,326,714 | | | 2,171,039 |
Total non- current liabilities | | | 4,326,714 | | | 2,171,039 |
| | | | | | |
Total Liabilities | | | 511,905,301 | | | 1,097,039,794 |
| | | | | | |
Stockholders’ Equity | | | | | | |
Common stock - Class A, par value $.001 per share, 2,250,000,000 shares authorized, 1,215,016,211 and 1,205,016,211 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively | | | 1,215,016 | | | 1,205,016 |
Common Stock - Class B, par value $.001 per share, 200,000,000 shares authorized, 65,000,000 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively | | | 65,000 | | | 65,000 |
Additional paid-in-capital | | | 385,693,635 | | | 330,703,635 |
Retained earnings | | | 448,745,105 | | | 416,095,565 |
Deferred stock compensation | | | (49,318,303) | | | (66,357,804) |
Translation reserve | | | (85,731,549) | | | (85,391,436) |
Total Stockholders’ Equity | | | 700,668,904 | | | 596,319,976 |
Total Liabilities and Stockholders’ Equity | | $ | 1,212,574,205 | | $ | 1,693,359,770 |
| | | | | | | |
| | Successor Period | | | Predecessor Period | ||
| | For the 3 Months ended | | | For the 3 Months ended | ||
|
| March 31, 2023 |
|
| March 31, 2022 | ||
Revenue | | $ | ― | | | $ | 257,057,519 |
Cost of revenue | | | ― | | | | (2,499,840) |
Gross Profit | | | ― | | | | 254,557,679 |
| | | | | | | |
Operating Expenses | | | | | | | |
Payroll and related expenses | | | 11,023,462 | | | | 19,241,212 |
Distribution expenses | | | ― | | | | 221,187 |
Professional fees | | | 299,999 | | | | 55,669,412 |
Bank fees and charges | | | ― | | | | 636,047 |
Depreciation and amortization | | | ― | | | | 106,740,939 |
General and administrative expenses - other | | | 7,739,266 | | | | 838,913 |
Bad debt expenses | | | ― | | | | 47,398 |
Total Operating Expenses | | | 19,062,727 | | | | 183,395,108 |
| | | | | | | |
Income (Loss) from Operations | | | (19,062,727) | | | | 71,162,571 |
| | | | | | | |
Other Income (Expenses) | | | | | | | |
Other income | | | 452,962 | | | | 185,798 |
Interest expense | | | (293,836) | | | | ― |
Total Other Income | | | 159,126 | | | | 185,798 |
| | | | | | | |
Income (Loss) Before Tax | | | (18,903,601) | | | | 71,348,369 |
| | | | | | | |
Taxation | | | ― | | | | (38,698,829) |
| | | | | | | |
Net Income (Loss) | | $ | (18,903,601) | | | $ | 32,649,540 |
| | | | | | | |
Other Comprehensive Loss | | | | | | | |
Translation Adjustment | | | ― | | | | (340,113) |
| | | | | | | |
Total Comprehensive Income (Loss) | | $ | (18,903,601) | | | $ | 32,309,427 |
| | | | | | | |
Earnings per share - Basic and Diluted | | $ | (0.02) | | | $ | 0.03 |
| | | | | | | |
Weighted Average number of common shares outstanding | | | | | | | |
Basic and diluted | | | 1,227,516,211 | | | | 1,214,793,989 |
The accompanying notes are an integral part of these consolidated financial statements.
4
TINGO,AGRI-FINTECH HOLDINGS, INC. (f/k/a Tingo, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOMESHAREHOLDERS’ EQUITY
(Consolidated for the Predecessor Period)
(Unaudited)
| | | | | | |
| | For the 3 Months ended | | For the 3 Months ended | ||
|
| March 31, 2022 |
| March 31, 2021 | ||
Revenues | | $ | 257,057,519 | | $ | 45,238,125 |
Cost of sales | | | (2,499,840) | | | (2,511,941) |
Gross Profit | | | 254,557,679 | | | 42,726,184 |
| | | | | | |
Operating Expenses | | | | | | |
Payroll and related expenses | | | 19,241,212 | | | 690,696 |
Distribution expenses | | | 221,187 | | | 104,573 |
Professional fees | | | 55,669,412 | | | 315,434 |
Bank fees and charges | | | 636,047 | | | 62,824 |
Depreciation and amortization | | | 106,740,939 | | | 740,616 |
General and administrative expenses - other | | | 838,913 | | | 189,167 |
Bad debt expenses | | | 47,398 | | | — |
Total Operating Expenses | | | 183,395,108 | | | 2,103,310 |
| | | | | | |
Income from Operations | | | 71,162,571 | | | 40,622,874 |
| | | | | | |
Other Income (Expenses) | | | | | | |
Other income | | | 185,798 | | | 59,721 |
Total Other Income | | | 185,798 | | | 59,721 |
| | | | | | |
Income before tax | | | 71,348,369 | | | 40,682,595 |
| | | | | | |
Taxation | | | (38,698,829) | | | (13,018,431) |
| | | | | | |
Net Income | | $ | 32,649,540 | | $ | 27,664,164 |
| | | | | | |
Other Comprehensive Loss | | | | | | |
Translation Adjustment | | | (340,113) | | | (10,809,240) |
| | | | | | |
Total Comprehensive Income | | $ | 32,309,427 | | $ | 16,854,924 |
| | | | | | |
Earnings per share - Basic and Diluted | | $ | 0.03 | | $ | 0.02 |
| | | | | | |
Weighted Average number of common shares outstanding | | | | | | |
Basic and diluted | | | 1,214,793,989 | | | 1,028,000,000 |
The accompanying notes are an integral part of these consolidated financial statements.
5
TINGO, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
(Continued on Next Page)Three Months Ended March 31, 2022
| | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock - Class A | | Common Stock - Class B | | Additional Paid | | Retained | | Translation | | Total Stockholders’ | ||||||||||
|
| Number of Shares |
| Amount |
| Number of Shares |
| Amount |
| In Capital |
| Earnings |
| Reserve |
| Equity | ||||||
Balance as of January 1, 2021 |
| 1,028,000,000 | | $ | 1,028,000 | | 65,000,000 | | $ | 65,000 | | $ | 508,549 | | $ | 458,438,770 | | $ | (32,283,238) | | $ | 427,757,081 |
|
| | |
| | | | |
| | |
| | |
| | | | | | | |
Net income for the quarter ended March 31, 2021 | | — | | | — | | — | | | — | | | — | | | 27,664,164 | | | — | | | 27,664,164 |
| | | | | | | | | | | | | | | | | | | | | | |
Foreign Currency Translation Adjustment | | — | | | — | | — | | | — | | | — | | | — | | | (10,809,240) | | | (10,809,240) |
| | | | | | | | | | | | | | | | | | | | | | |
Balance as of March 31, 2021 | | 1,028,000,000 | | $ | 1,028,000 | | 65,000,000 | | $ | 65,000 | | $ | 508,549 | | $ | 486,102,934 | | $ | (43,092,478) | | $ | 444,612,005 |
6
TINGO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
(Continued from Previous Page)
| | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||
| | Common Stock - Class A | | Common Stock - Class B | | Additional Paid | | Deferred Stock | | Retained | | Translation | | Total Stockholders’ | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||
|
| Number of Shares |
| Amount |
| Number of Shares |
| Amount |
| In Capital |
| Compensation |
| Earnings |
| Reserve |
| Equity | | Common Stock - Class A | | Common Stock - Class B | | Additional Paid | | Deferred Stock | | Retained | | Translation | | Total Stockholders’ | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Number of Shares |
| Amount |
| Number of Shares |
| Amount |
| In Capital |
| Compensation |
| Earnings |
| Reserve |
| Equity | |||||||
Balance as of January 1, 2022 |
| 1,205,016,211 |
| $ | 1,205,016 |
| 65,000,000 |
| $ | 65,000 |
| $ | 330,703,635 |
| $ | (66,357,804) | | $ | 416,095,565 |
| $ | (85,391,436) |
| $ | 596,319,976 |
| 1,205,016,211 | | $ | 1,205,016 | | 65,000,000 | | $ | 65,000 | | $ | 330,703,635 | | $ | (66,357,804) | | $ | 416,095,565 | | $ | (85,391,436) | | $ | 596,319,976 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shares issued for incentive compensation plan – consultants |
| 10,000,000 | |
| 10,000 |
| — | |
| — | |
| 54,990,000 | |
| (55,000,000) | |
| — | |
| — | |
| — | |||||||||||||||||||||||||
Issuance of shares for incentive compensation plan – consultants |
| 10,000,000 | |
| 10,000 | | — | |
| — | |
| 54,990,000 | |
| (55,000,000) | | | — | |
| — | | | — | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| | | | |
| | |
| | |
| | | | | |
| | | | |
Vesting of Deferred Stock Compensation | | — | | | — | | — | | | — | | | — | | | 72,039,501 | | | — | | | — | | | 72,039,501 | |||||||||||||||||||||||||
Vesting of deferred stock compensation | | — | | | — | | — | | | — | | | — | | | 72,039,501 | | | — | | | — | | | 72,039,501 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income for the quarter ended March 31, 2022 |
| — | |
| — |
| — | |
| — | |
| — | |
| — | |
| 32,649,540 | |
| — | |
| 32,649,540 | |||||||||||||||||||||||||
Net income for the three months ended March 31, 2022 | | — | | | — | | — | | | — | | | — | | | — | | | 32,649,540 | | | ― | | | 32,649,540 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Foreign Currency Translation Adjustment |
| — | |
| — |
| — | |
| — | | �� | — | |
| — | |
| — | |
| (340,113) | |
| (340,113) | | — | | | — | | — | | | — | | | — | | | — | | | ― | | | (340,113) | | | (340,113) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance as of March 31, 2022 |
| 1,215,016,211 | | $ | 1,215,016 |
| 65,000,000 | | $ | 65,000 | | $ | 385,693,635 | | $ | (49,318,303) | | $ | 448,745,105 | | $ | (85,731,549) | | $ | 700,668,904 | | 1,215,016,211 | | $ | 1,215,016 | | 65,000,000 | | $ | 65,000 | | $ | 385,693,635 | | $ | (49,318,303) | | $ | 448,745,105 | | $ | (85,731,549) | | $ | 700,668,904 |
Three Months Ended March 31, 2023
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock - Class A | | Common Stock - Class B | | Additional Paid | | Deferred Stock | | Retained | | Translation | | Total Stockholders’ | |||||||||||
|
| Number of Shares |
| Amount |
| Number of Shares |
| Amount |
| In Capital |
| Compensation |
| Earnings |
| Reserve |
| Equity | |||||||
Balance as of January 1, 2023 |
| 1,227,516,211 | | $ | 1,227,516 | | 65,000,000 | | $ | 65,000 | | $ | 419,181,135 | | $ | (32,931,368) | | $ | 818,796,244 | | $ | — | | $ | 1,206,338,527 |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Vesting of deferred stock compensation | | — | | | — | | — | | | — | | | — | | | 10,351,225 | | | — | | | — | | | 10,351,225 |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss for the three Months ended March 31, 2023 | | — | | | — | | — | | | — | | | — | | | — | | | (18,903,601) | | | — | | | (18,993,601) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Balance as of March 31, 2023 | | 1,227,516,211 | | $ | 1,227,516 | | 65,000,000 | | $ | 65,000 | | $ | 419,181,135 | | $ | (22,580,143) | | $ | 799,892,643 | | $ | — | | $ | 1,197,786,151 |
The accompanying notes are an integral part of these consolidated financial statements.
75
TINGO,AGRI-FINTECH HOLDINGS, INC. (f/k/a Tingo, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Consolidated for the Predecessor Period)
(Unaudited)
| | | | | | |
| | For the Three months ended | ||||
|
| March 31, 2022 |
| March 31, 2021 | ||
Cash Flows from operating activities | | |
| |
|
|
Net Income | | $ | 32,649,540 | | $ | 27,664,164 |
Adjustments to reconcile net income to cash provided by (used in) operating activities | | | | | | |
Depreciation and amortization | | | 106,740,939 | | | 760,566 |
Stock issued for services | | | 55,000,000 | | | — |
Deferred compensation | | | 17,039,500 | | | — |
Increase/Decrease related to | | | | | | |
Inventories | | | 26,605 | | | (34) |
Trade and other receivables | | | 269,516,718 | | | 5,127,574 |
Accounts payable and accruals | | | (483,001,791) | | | (40,915) |
Deferred income | | | (131,929,770) | | | — |
Value added tax | | | (10,208,768) | | | (20,493,802) |
Taxes payable | | | 40,005,836 | | | 13,454,347 |
Net Cash provided by (used in) operating activities | | | (104,161,191) | | | 26,471,900 |
| | | | | | |
Translation Adjustment | | | (4,994,945) | | | 216,035 |
| | | | | | |
Net change in cash and cash equivalents | | | (109,156,136) | | | 26,687,935 |
| | | | | | |
Cash and cash equivalents, beginning of the period | | | 128,367,605 | | | 28,202,869 |
| | | | | | |
Cash and cash equivalents, end of the period | | $ | 25,346,663 | | $ | 54,890,804 |
| | | | | | |
Supplemental Cash flow information | | | | | | |
Cash paid for period for: | | | | | | |
Interest | | $ | — | | $ | — |
| | | | | | |
Non-cash disclosures | | | | | | |
Stock issued for services | | $ | 55,000,000 | | $ | — |
| | | | | | | |
|
| Successor Period | | | Predecessor Period | ||
| | Three Months Ended | | | Three Months Ended | ||
| | March 31, 2023 |
|
| March 31, 2022 | ||
Cash flows from operating activities: | | |
| |
| |
|
Net income (loss) | | $ | (18,903,601) | | | $ | 32,649,540 |
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | | | | | | | |
Depreciation and amortization | | | ― | | | | 106,740,939 |
Stock issued for services | | | ― | | | | 55,000,000 |
Deferred compensation | | | 10,351,225 | | | | 17,039,501 |
Settlement expense | | | 7,700,000 | | | | ― |
Increase/decrease related to: | | | | | | | |
Inventories | | | ― | | | | 26,605 |
Trade and other receivables | | | ― | | | | 269,516,718 |
Other current assets | | | (244,732) | | | | ― |
Accounts payable and accruals | | | 1,168,362 | | | | (483,001,791) |
Deferred income | | | ― | | | | (131,929,770) |
Value added tax | | | ― | | | | (10,208,768) |
Taxes payable | | | ― | | | | 40,005,836 |
Net cash provided by (used in) operating activities | | | 71,254 | | | | (104,161,190) |
| | | | | | | |
Cash flows from financing activities: | | | | | | | |
Payments on advances from related party | | | (40,000) | | | | — |
Net cash used in financing activities | | | (40,000) | | | | — |
| | | | | | | |
Translation adjustment | | | ― | | | | 1,140,248 |
| | | | | | | |
Net change in cash and cash equivalents | | | 31,254 | | | | (103,020,942) |
| | | | | | | |
Cash and cash equivalents, beginning of the period | | | 985 | | | | 128,367,605 |
| | | | | | | |
Cash and cash equivalents, end of the period | | $ | 32,239 | | | $ | 25,346,663 |
The accompanying notes are an integral part of these consolidated financial statements.
86
TINGO,AGRI-FINTECH HOLDINGS, INC. (f/k/a Tingo, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 20222023
(Unaudited)
(1) | Description of Business and Basis of Presentation |
Description of Business—Tingo,Agri-Fintech Holdings, Inc. (collectively, with our subsidiary, “we,, formerly known as ‘Tingo, Inc.’ (“we,” “us,” “our,” “Tingo” and the “Company”), a Nevada corporation, was formed on February 17, 2015. Our shares trade on the OTC Markets trading platform under the symbol ‘TMNA’. We acquired our wholly-owned subsidiary,
As described more fully under Note 2 - Sale of Tingo Mobile PLC, a Nigerian public limited company below, on December 1, 2022, we sold Tingo Mobile Limited (“Tingo Mobile”), our sole operating subsidiary, to Tingo Group, Inc. (“TIO”), a Nasdaq-traded financial services company (formerly known as MICT, Inc.), in exchange for 25,783,675 shares of TIO common stock and two series of preferred stock that are convertible into TIO common stock upon the occurrence of certain conditions (“Preferred Stock”). If we convert all of the Preferred Stock, our shareholding in TIO will be equal to 75.0% of TIO’s outstanding common stock, calculated as of the date of the sale of Tingo Mobile. Importantly, because we expect to hold 75.0% of the outstanding TIO common stock at some point during 2023, this report will discuss the historical operations of Tingo Mobile as a share exchangeformer subsidiary of the Company, and will discuss the future operations of Tingo Mobile, including the discussion of Risk Factors below, as a pending subsidiary of the Company.
Prior to our sale of Tingo Mobile, the Company, together with its sole shareholder effective August 15, 2021. The Company, including itsoperating subsidiary, Tingo Mobile, iswas an Agri-Fintech company offering a comprehensive platform service through use of smartphones – ‘device as a service’ (using GSM technology) to empower a marketplace to enable subscribers/farmers within and outside of the agricultural sector to manage their commercial activities of growing and selling their production to market participants both domestically and internationally. The ecosystem provides a ‘one stop shop’ solution to enable such subscribers to manage everything from airtime top ups, bill pay services for utilities and other service providers, access to insurance services and micro finance to support their value chain from ‘seed to sale’.
AsOur principal office is located at 11650 South State Street, Suite 240, Draper, UT 84020, and the telephone number is +1-385-463-8168. Our corporate website is located at www.tingoinc.com. We make available free of March 31, 2022, Tingo had approximately 9.3 million subscribers using its mobile phones and Nwassa payment platform (www.nwassa.com). Nwassa is Africa’s leading digital agriculture ecosystem that empowers rural farmers and agri-businesses by using proprietary technology to enable access to market. Nwassa’s payment gateway also has an escrow structure that creates trust between buyers and sellers. Our system provides real-time pricing, straight from the farms, eliminating middlemen. Our users’ customers pay for produce bought using available pricingcharge on our platform. Our platformwebsite our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is paperless, verified and matched against a smart contract. Data is efficiently stored on the blockchain.
Our platform has created an escrow solution that secures the buyer, funds are not releasedelectronically filed or furnished to the seller until fulfilment. The platform also facilitates trade financing, ensuring that banksSecurities and other lenders compete to provide credit to our members.
Tingo aims to be Africa’s leading Agri-Fintech player that transforms rural farming communities by enabling growers to connect through our proprietary platform to meet their complete needs from inputs, agronomy, off take and marketplace which delivers sustainable income in an impactful way. Additional information about the Company can be obtained from our website at www.tingoinc.comExchange Commission (“SEC”). Our website, however, does not constitute a part of this Amended 10-Q.
Basis of Presentation—The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Articles 3 and 3A of Regulation S-X. All normal recurring adjustments considered necessary for a fair presentation have been included. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
As a result of the sale of our operating business on December 1, 2022 as described in Note 2, Sale of Tingo Mobile below, the following terms refer to our operations before and after the sale:
● | “Predecessor” and “Predecessor Period” refers to the consolidated operations of the Company from January 1, 2022 through March 31, 2022; and |
● | “Successor” and “Successor Period” refers to the operations of the Company from December 1, 2022, the date of our sale of Tingo Mobile, through December 31, 2022, and from January 1, 2023 through March 31, 2023. |
Our financial statements include our accounts and those of our wholly-owned subsidiaries, as applicable. All intercompany transactions and balances have been eliminated in the accompanying consolidated financial statements.
Our results of operations for the quarterPredecessor Period ended March 31, 2022, the year ended December 31, 2022, or the three months ended March 31, 2023 are not necessarily indicative of results that ultimately may be achieved for the remainder of 2022.2023.
The Impact of COVID-19—In responseDue to the COVID-19 pandemic, there have been a broad numberlack of governmental and commercial actions taken to limit the spreadcomparability of the virus, including social distancing measures, stay-at-home orders, travel restrictions, business shutdownsfinancial statements of the Predecessor Period with the Successor Period, our financial statements and slowdowns.related footnotes are presented with a “black line” division to emphasize the lack of comparability between amounts presented as of, and after, December 1, 2022 and amounts presented for all prior periods.
7
(2) | Sale of Tingo Mobile |
Overview. On December 1, 2022, we sold Tingo Mobile, our sole operating subsidiary, to Tingo Group, Inc. (formerly known as MICT, Inc.), a Delaware corporation whose common shares are traded on the Nasdaq Capital Market under the symbol ‘TIO’. The COVID-19 pandemic continuessale was accomplished via a multi-phase forward triangular merger. Under the terms of the Merger Agreement we entered into with TIO and representatives of each of the shareholders of the Company and TIO, we contributed our ownership of Tingo Mobile to a newly organized holding company incorporated in the British Virgin Islands (“Tingo BVI Sub”). We then merged Tingo BVI Sub with and into MICT Fintech Ltd, a wholly-owned subsidiary of TIO also incorporated in the British Virgin Islands (“MICT Fintech”), resulting in Tingo Mobile being wholly-owned by TIO as a third-tier subsidiary (hereinafter, the “Merger”).
Consideration Received. As consideration for the Merger, we received the following:
● | Common and Preferred Stock. At the closing of the Merger, we received 25,783,675 shares of newly-issued common stock of TIO equal to 19.9% of its outstanding shares, calculated as of the closing date of the Merger, and two series of convertible preferred shares – Series A Convertible Preferred Stock (“Series A Preferred Stock”) and Series B Convertible Preferred Stock (“Series B Preferred Stock”). |
● | Undertaking to Pay Certain Liabilities of the Company. Pursuant to the terms of the Merger Agreement, we also received an undertaking from TIO to pay certain liabilities and accounts payable of the Company as of November 30, 2022, as well as certain other expenses relating to the maintenance of our reporting status under the Securities Exchange Act for the one-year period following the Merger. As of December 31, 2022 and March 31, 2023, the amount due to us pursuant to this undertaking was approximately $3.7 million and $3.6 million, respectively. This amount is set forth below as ‘Due from Related Party’ under Note 7 – Loans and Other Receivables – Related Parties. |
Key Terms of Series A Preferred Stock. Upon the approval of TIO’s stockholders, the Series A Preferred Stock will convert into 20.1% of the outstanding shares of TIO common stock, calculated as of the closing date of the Merger. If such shareholder approval is not obtained by June 30, 2023, all issued and outstanding shares of Series A Preferred Stock must be redeemed by TIO in exchange for Tingo receiving 27% of the total issued and outstanding shares of Tingo Group Holdings, LLC, a Delaware-incorporated subsidiary of TIO (“TGH”). TGH is the immediate parent of MICT Fintech, which is the sole shareholder of Tingo Mobile.
Key Terms of Series B Preferred Stock. Upon approval by Nasdaq of the change of control of TIO and upon the approval of TIO’s stockholders, the Series B Preferred Stock will convert into 35.0% of the outstanding shares of TIO common stock, calculated as of the closing date of the Merger, giving the Company an aggregate ownership of 75.0% of TIO’s outstanding common stock. If such shareholder or Nasdaq approval is not obtained by June 30, 2023, we will have the right to cause TIO to redeem all of the Series B Preferred Stock for either of the following, at our option: (x) $667 million in cash or, (y) a 33.0% ownership interest in TGH.
Temporary Investment Company Status. Effective upon the closing of the Merger, the Company became subject to the Investment Company Act of 1940, as amended (the “1940 Act”). Under the 1940 Act, any issuer of securities that has more than 100 beneficial owners and holds investment securities that exceed more than 40% of the value of the issuer’s unconsolidated assets is considered an ‘investment company’ and is therefore subject to various requirements of the 1940 Act, unless an exemption therefrom is applicable. Rule 3a-2 permits issuers such as the Company, to be dynamic,“deemed not to be engaged in the business of investing, reinvesting, owning, holding or trading in securities” for up to one year from the date that the 1940 Act would have technically applied if (i) the issuer’s business activities are inconsistent with those of an investment company, and near-term challenges across(ii) the economy remain. Although vaccinesissuer’s governing board passes a resolution stating the issuer’s “bona fide intent to be engaged primarily, as soon as is reasonably possible” to be “in a business other than that of investing, reinvesting, owning, holding or trading in securities” within such one year period. Because the Company is actively involved in acquiring operating assets or otherwise developing other operating businesses, its present activities are now being distributed and administered across many partsinconsistent with those of an investment company. Moreover, inasmuch as the Company expects to effect a conversion of the world, new variantsSeries A Preferred Stock and the Series B Preferred Stock no later than June 30, 2023 and, therefore, consolidate the operations of TIO and its subsidiaries with the Company’s own operations, the Company has expressed its bona fide intent to be in a business other than that of an investment company.
8
(3) | Significant Accounting Policies |
The following is a summary of significant accounting policies followed by the Company in the preparation of our financial statements:
Consolidation—In accordance with Article 6 of Regulation S-X under the Securities Act of 1933, we do not consolidate equity interests we hold in other entities. Under the investment company rules and regulations pursuant to the American Institute of Certified Public Accountants (“AICPA”) Audit and Accounting Guide for Investment Companies, codified in ASC 946, we are precluded from consolidating any entity other than another investment company, except that ASC 946 provides for the consolidation of a controlled operating company that provides substantially all of its services to the investment company or its consolidated subsidiaries.
Valuation of Our Holdings in TIO—In connection with the sale of Tingo Mobile to TIO, we received shares of TIO common stock and two series of convertible preferred stock of TIO. The shares of TIO common stock are traded on the Nasdaq Capital Market under the symbol ‘TIO’. Because, at December 31, 2022 and March 31, 2023, more than 40% of the virus have emergedvalue of our unconsolidated assets consists of ‘investment securities’ (as such term is defined pursuant to the Investment Company Act of 1940, as amended (the “1940 Act”), we are considered an ‘investment company’ under the 1940 Act and, may continueas a result, we are required to emergeassess the fair value of our holding in TIO.
Fair Value Measurement. Fair value is the price that have shownwould be received to be more contagious. We continuesell an asset or paid to adheretransfer a liability in an orderly transaction between market participants at the measurement date and sets out a fair value hierarchy. The fair value hierarchy gives the highest priority to applicable governmentalquoted prices in active markets for identical assets or liabilities (Level 1) and commercial restrictions andthe lowest priority to work to mitigateunobservable inputs (Level 3). Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. The three levels of the impact of COVID-19 on our employees, customers, communities, liquidity and financial position.
fair value hierarchy are described below:
|
|
● | Level 2—Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly; and fair value is determined through the use of models or other valuation methodologies. |
● | Level 3—Inputs are unobservable for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The inputs into the determination of fair value are based upon the best information under the circumstances and may require significant management judgment or estimation. |
As disclosedManagement Considerations. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset. In the case of Tingo, we assessed the nature of our holding of common and convertible Preferred Stock in TIO and considered certain factors which, in management’s view, made this holding a Level 2 asset, including the following:
● | the lack of institutional trading in TIO common stock; and |
● | the conditions associated with conversion of the TIO Preferred Stock into TIO common stock. |
With respect to the last point above, we consider it significant that, should conversion of our Series B Preferred Stock not occur by June 30, 2023, we can require TIO to redeem these shares in exchange for (1) a cash payment obligation of $667 million or, in the Company’s Current Report on Form 8-K filed on June 15, 2022,alternative, (2) 35% ownership in preparation for the planned merger of a subsidiary of the Company with a wholly owned subsidiary of Nasdaq-listed MICT, Inc., the Company reviewed and considered its accounting treatment of its AcquisitionTGH valued at $667 million, which imputes an underlying equity value of Tingo Mobile that is substantially higher than the TIO common and TIO Preferred stock on August 15, 2021. Basedan as-converted basis.
While we are considered a temporary investment company, we intend to adjust our net asset value for the changes in the value of our publicly held securities, if applicable, and material changes in the value of private securities, if any, on this review, the Company elected to modify its accounting treatment of the Acquisition as a reverse acquisition of the Company by Tingo Mobile instead of as a forward acquisition of Tingo Mobile by the Company as had been previously presented.quarterly basis.
9
Accordingly, the financial statements included herein have been prepared in accordance with reverse acquisition accounting rules, and now include the consolidated operating results of Tingo Mobile for the full periods presented, rather than using forward acquisition accounting as had been presented previously, which included the results of Tingo Mobile only from the date of the Acquisition.
As part of the adjustment, the Company recorded the following corrections to the prior accounting treatment on the balance sheet:
| | | |
Goodwill |
| $ | (3,694,107,417) |
Capitalized Acquisition Costs | | $ | (111,360,000) |
Additional Paid in Capital | | $ | 4,170,398,452 |
Accumulated Surplus | | $ | (397,390,240) |
Translation Reserve | | $ | 32,459,205 |
|
|
Reverse Acquisition Accounting—We have adopted reverse acquisition accounting methods in connection with the Company’s Acquisition of Tingo Mobile.Mobile in 2021. Accordingly, the consolidated financial statements reflect the results of Tingo Mobile for the periodsPredecessor Periods indicated in this Report.
Use of Estimates—The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Although we believe the estimates and assumptions used in preparing these financial statements and related notes are reasonable in light of known facts and circumstances, actual results could differ from those estimates.
Earnings Per Share—Basic and diluted per share calculations are computed utilizing the weighted-average number of shares of common stock outstanding for the period. Pursuant to our 2021 Equity Incentive Plan, adopted in 2021, in accordance with ASC 260, Earnings Per Share, the unvested shares of restricted stock awarded in the first quarter of 2022 pursuant to our equity compensation plans are participating securities and, therefore, are included in the basic earnings per share calculation.
Share-Based Compensation—We account for share-based compensation using the fair value method, as prescribed by ASC 718, Compensation-Stock Compensation. Accordingly, for restricted stock awards, we measure the grant date fair value based upon the market price of our common stock on the date of the grant and amortize the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term. For all share-based awards that are not subject to vesting, we recognize expense associated with the award during the period in which the award is granted, in an amount equal to the number of shares granted, multiplied by the closing trading price of the shares on the relevant grant date. Determining the appropriate fair value of share-based awards requires the use of subjective assumptions, particularly given that the Company’s common stock is not actively traded. The assumptions used in calculating the fair value of share-based awards representsrepresent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, share-based compensation expense could be materially different for future awards.
Classes of Common Stock—The Company has two classes of common stock. Each share of Class A common stock is entitled to one (1) vote, and is entitled to receive dividends when and if declared by the board of directors out of assets legally available therefor.therefore. Each share of Class B common stock is entitled to ten (10) votes, but carries no dividend, distribution, liquidation, conversion, or economic rights of any kind.
Retained Earnings—The components that make up distributable earnings (accumulated undistributed surplus)for the Successor Period and the Predecessor Period on the ConsolidatedCompany’s Balance Sheet as of March 31, 20222023 and December 31, 20212022 are as follows:
| | | | | | | | | | | | | |
|
| March 31, 2022 |
| December 31, 2021 |
| Successor Period | | | Predecessor Period | ||||
| | | | | | | | Three Months Ended | | | Three Months Ended | ||
Net income (loss) for the period | | $ | 32,649,540 | | $ | (39,026,340) | |||||||
Acquisition of Former Business of the Company (IWeb) | | | — | | | (3,316,865) | |||||||
Retained earnings | | | 416,095,565 | | | 458,438,770 | |||||||
| | | | | | | | March 31, 2023 |
|
| March 31, 2022 | ||
Retained Earnings | | $ | 448,745,105 | | $ | 416,095,565 | |||||||
| | | | | | | | ||||||
Net income (loss) for period | | $ | (18,903,601) | | | $ | 32,649,540 | ||||||
Retained Earnings - beginning of period | | | 818,796,244 | | | | 416,095,565 | ||||||
Retained Earnings (distributable earnings) | | $ | 799,892,643 | | | $ | 448,745,105 |
10
Accounts Receivable—The Company had no accounts receivable during the three months ended March 31, 2023. During the Predecessor Period, the total value of the twelve-month mobile leasing contract was recognized under accounts receivable at the outset. The balance is due and payable and is credited as receipts are received from the customers. Management reviews accounts receivable periodically to determine if any receivables will potentially be uncollectible. Management’s evaluation includes several factors including the aging of the accounts receivable balances, a review of significant past due accounts, economic conditions, and our historical write-off experience, net of recoveries. Tingo Mobile includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve, in its allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Given the manner in which Tingo Mobile bundles its services with its branded phones, it does not typically incur a substantial amount of bad debt. Accordingly, during the three months ended March 31, 2022, we made a general allowance of 3% of all accounts receivable and recognized bad debt expense of approximately $47,000 for such period.
Impairment of Long-Lived Assets—In accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets, as set forth in Topic 360 of the ASC, theThe Company assesses the recoverability of the carrying value of its long-lived assets when events occur that indicate an impairment in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. There was no impairment of long-lived assets for the three months ended March 31, 2023 and 2022.
Income Taxes—The Company uses the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the accounting bases and the tax bases of the Company’s assets and liabilities. The deferred tax assets are computed using enacted tax rates in effect for the year in which the temporary differences are expected to reverse.
The Company has adopted ASC guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. AtAs of March 31, 20222023 and December 31, 2021,2022, there were no uncertain tax positions that required accrual.
The reconciliation of income tax benefit of our parent company at the U.S. statutory rate of 25.0% for quarter and year ended March 31, 2022 and December 31, 2021, respectively,25% to the Company’s effective tax rate for the three months ended March 31, 2023 and 2022 is as follows:
| | | | | | | | | | | | | | | | | | | | | | |
|
| March 31, 2022 |
| Percent |
| December 31, 2021 |
| Percent |
| | Three Months Ended March 31, | | ||||||||||
Federal statutory rates | | $ | 18,009,875 |
| 25.0 | % | $ | 65,199,716 |
| 25.0 | % | |||||||||||
|
| 2023 |
| Percent |
| 2022 |
| Percent | | |||||||||||||
Income tax benefit | | $ | (2,587,806) | | 25.0 | % | $ | (18,009,875) | | 25.0 | % | |||||||||||
Valuation allowance against net deferred tax assets | |
| (18,009,875) |
| (25.0) | % |
| (65,199,719) |
| (25.0) | % | |
| 2,587,806 | | 25.0 | % |
| 18,009,875 | | 25.0 | % |
Effective Tax | | $ | — |
| 0.00 | % | $ | — |
| 0.00 | % | |||||||||||
Effective Rate | | $ | — | | 0.00 | % | $ | — | | 0.00 | % |
The tax effects of temporary differences that give rise to the Company’s net deferred tax assets on an unconsolidated basis for the quarter and yearthree months ended March 31, 20222023 and December 31, 2021, respectively,2022 are as follows:
| | | | | | | | | | | | |
|
| March 31, 2022 |
| December 31, 2021 | ||||||||
Deferred Tax Assets |
| March 31, 2023 |
| March 31, 2022 | ||||||||
| | | | | | | | | | | | |
Beginning of period | | $ | — | | $ | — | | $ | — | | $ | — |
Net Operating Loss Carryforward (unconsolidated) | |
| 83,209,591 | |
| 65,199,716 | ||||||
Net operating losses | |
| 98,269,131 | |
| 83,209,591 | ||||||
Valuation Allowance | |
| (83,209,591) | |
| (65,199,716) | |
| (98,269,131) | |
| (83,209,591) |
Net Deferred Tax Assets | | $ | — | | $ | — | | $ | — | | $ | — |
The income of a foreign subsidiary is not necessarily subject to U.S. tax, provided the income is from the active conduct of a trade or business within the non-U.S. jurisdiction. However, earnings of the foreign subsidiary, to the extent reinvested in the U.S. or distributed to the U.S. parent as a dividend, may be subject to U.S. tax. In addition, the Internal Revenue Code requires that transfer pricing between a U.S. parent and a foreign subsidiary be made on an arms’ length basis. Tingo Mobile, our sole operating subsidiary during the Predecessor Period, did not issue any dividends during the years ended December 31, 2021 and 2020, or the quarter ended March 31, 2022.such period.
11
In our Consolidated Statements of Comprehensive Income,Operations, as consolidated for the Predecessor Period, we have deducted taxes payable in connection with our former operations in Nigeria. However, inasmuch as the U.S. and Nigeria do not have a tax treaty, we do not receive a corresponding credit in the U.S. for tax paid in Nigeria by Tingo Mobile, then our wholly-owned subsidiary. In addition, our parent company Tingo, Inc. has incurred operating losses on an unconsolidated basis, largely due to non-cash expenses associated with stock awards made pursuant to our 2021 Equity Incentive Plan. Our ability to utilize tax losses associated with the operations of our parent company is restricted, however, due to limitations on the deductibility of certain share compensation to our executive officers and directors that may be deemed ‘excess compensation’ pursuant to Section 162(m) of the Internal Revenue Code.
Subject to any such disallowances pursuant to Code Section 162(m), as of March 31, 2022, the Company has approximately $83.2$98.2 million of net operating losses carried forward to offset taxable income, if any, in future years which expire commencing in fiscal year 2037. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled
11
reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on this assessment, management has established a full valuation allowance against all of the deferred tax asset relating to NOL’s because it is more likely than not that all of the deferred tax asset will not be realized as the parent company is not presently income producing.
Inventory—The Company holds certain stocks of spare parts to support the maintenance of new phones. These are recorded at cost. The company does not hold significant stock of new phones in the event of damage or replacement. Inventory is measured on the first-in, first-out method.
Operating Segments—We have examined our operating business for the three months ended March 31, 2022 in the Predecessor Period and the three months ended March 31, 2023 in the Successor Period pursuant to the guidance of ASC 280, Segment Reporting, which establishes standards for reporting information about operating segments. It also establishes standards for related disclosures about customers, products and geographic areas. Operating segments are defined as components of an enterprise that engage in business activities that earn revenues, incur expenses and prepare separate financial information that is evaluated regularly by our Chief Operating Decision Maker (“CODM”) in order to allocate resources and assess performance. Resources are allocated and performance is assessed by the CODM.
Based on the provisions of ASC 280, we have evaluated our former operating business and considered various factors associated therewith, including the concentration of our business in one country and the integration of our leasing business with the use of our agri-fintech platform that utilizes software embedded within the leased device. Accordingly, this evaluation resulted in one reportable segment.
Deferred Income—The Company reflects the full value of the 12-month revenues due in accordance with our mobile leasing contracts. We recognize leasing revenue from these contracts on a ratable basis over the 12-month term. We do not allocate the costs of our mobile phones against these revenues as a cost of sales, but instead recognize depreciation expense ratably on a straight-line basis over the estimated 3-year useful life of the devices.
Leased Assets—The Company makes the use ofhas entered into leasing arrangements principally for the provision of the offices and related facilities. The rental contracts for offices are typically negotiated for terms of between 1 and 10 years and some of these have extension terms. Lease terms for office fixtures and equipment have lease terms of between 1 year and 10 years without any extension terms. The company does not enter into sale and leaseback arrangements. All the leases are negotiated on an individual basis and contain a wide variety of different terms and conditions such as purchase options and escalation clauses. The Company assesses whether a contract is or contains a lease at inception of the contract.month-to-month basis. A lease conveys the right to direct the use and obtain substantially all of the economic benefits of an identified asset for a period of time in exchange for consideration.
Measurement and Recognition of Leases as a Lessee—At During the Predecessor Period, at lease commencement date, the Company recognizesTingo Mobile recognized a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costsexpenses incurred by the company, an estimate of any costsexpenses to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received). The companyTingo Mobile depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The CompanyTingo Mobile also assesses the right-of-use asset for impairment when such indicators exist.
AtAlso during the Predecessor Period, at the commencement date, the CompanyTingo Mobile measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the incremental borrowing rate. The incremental borrowing rate is the estimated rate that the CompanyTingo Mobile would have to pay to borrow the same amount over a similar term, and with similar security to obtain an asset of equivalent value. This rate is adjusted should the lessee entity have a different risk profile to that of the company.Tingo Mobile.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced by lease payments that are allocated between repayments of principal and finance costs.expenses. The finance cost is the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability.
12
The lease liability is reassessed when there is a change in the lease payments. Changes in lease payments arising from a change in the lease term or a change in the assessment of an option to purchase a leased asset. The revised lease payments are discounted using the incremental borrowing rate at the date of reassessment when the rate implicit in the lease cannot be readily determined. The amount of the remeasurement of the lease liability is reflected as an adjustment to the carrying amount of the right-of-use asset. The exception being when the carrying amount of the right-of-use asset has been reduced to zero then any excess is recognized in profit or loss.
Payments under leases can also change when there is either a change in the amounts expected to be paid under residual value guarantees or when future payments change through an index or a rate used to determine those payments, including changes in market rental rates following a market rent review. The lease liability is remeasured only when the adjustment to lease payments takes effect and the revised contractual payments for the remainder of the lease term are discounted using an unchanged discount rate. Except for where the change in lease payments results from a change in floating interest rates, in which case the discount rate is amended to reflect the change in interest rates.
The remeasurement of the lease liability is dealt with by a reduction in the carrying amount of the right-of use asset to reflect the full or partial termination of the lease for lease modifications that reduce the scope of the lease. Any gain or loss relating to the partial or full termination of the lease is recognized in profit or loss. The right-of-use asset is adjusted for all other lease modifications.
The CompanyTingo Mobile has elected to account for short-term leases and leases of low-value assets using the practical expedients. These leases relate to the use of residential houses for a year.one-year period by traveling Tingo Mobile executives. Instead of recognizing a right-of-use asset and lease liability, the payments in relation to these are recognized as an expense in profit or loss on a straight-line basis over the lease term.
Accounting Pronouncements—In August 2020, the FASB issued ASU No. 2020-06, “Debt“Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,,” which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments. The new guidance removes the separation models for convertible debt with a cash conversion feature or a beneficial conversion feature. In addition, the new standard provides guidance on calculating the dilutive impact of convertible debt on earnings per share. The ASU clarifies that the average market price should be used to calculate the diluted earnings per share denominator when the exercise price or the number of shares that may be issued is variable. The ASU is effective for the Company on January 1, 2022, including interim periods, with early adoption permitted, although implementation has been delayed for smaller reporting companies for fiscal years beginning after December 15, 2023. The ASU permits the use of either a full or modified retrospective method of adoption. The Company is still evaluating the impact of the adoption of this ASU on its future financial statements and disclosures.
13
(4) | Share-Based Compensation |
On October 6, 2021, the Company’s Board of Directors adopted our 2021 Equity Incentive Plan (“Incentive Plan”), the purpose of which was to promote the interests of the Company by encouraging directors, officers, employees, and consultants of Tingo to develop a long-term interest in the Company, align their interests with that of our stockholders, and provide a means whereby they may develop a proprietary interest in the development and financial success of the Company and its stockholders. The Incentive Plan is also intended to enhance the ability of the Company and its subsidiaries to attract and retain the services of individuals who are essential for the growth and profitability of the Company. The Incentive Plan permits the award of restricted stock, common stock purchase options, restricted stock units, and stock appreciation awards. The maximum number of shares of our Class A common stock that are subject to awards granted under the Incentive Plan is 131,537,545 shares. The term of the Incentive Plan will expire on October 6, 2031. On October 12, 2021, our stockholders approved our Incentive Plan and, during the fourth quarter of 2021 and the first three months of 2022, the Tingo Compensation Committee granted awards under the Incentive Plan to certain directors, executive officers, employees, and consultants in the aggregate amount of 118,870,000131,370,000 shares. The majority of the awards so issued are each subject to a vesting requirement over a 2-year period unless the recipient thereof is terminated or removed from their position without “cause”, or as a result of constructive termination, as such terms are defined in the respective award agreements entered into by each of the recipients and the Company. We account for share-based compensation using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, we measure the grant date fair value based upon the market price of our common stock on the date of the grant and amortize the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term. For all stock awards under the Incentive Plan that are not subject to vesting, we recognize expense associated with the award during the period in which the award is granted, in an amount equal to the number of shares granted, multiplied by the closing trading price of the shares on the relevant grant date. In connection with these awards, we recorded stock-based compensation expense and professional fees of $16.7$10.3 million and $55.1$72.0 million respectively, for the three months ended March 31, 2022.2023 and 2022, respectively. As of March 31, 2022,2023, total compensation expense to be recognized in future periods is $49.3$22.6 million. The weighted average period over which this expense is expected to be recognized is 1.50.54 years.
13
The following table summarizes the activity related to granted, vested, and unvested restricted stock awards under the Incentive Plan for the three months ended March 31, 2022:2023:
| | | | | |
| | | | Weighted | |
| | Number of | | Average Grant | |
|
| Shares |
| Date Fair Value | |
Unvested shares outstanding, January 1, 2022 |
| 36,950,833 | | $ | 1.80 |
Shares Granted |
| 10,000,000 | | $ | 5.50 |
Shares Vested |
| 19,739,167 | | $ | 3.65 |
Shares Forfeited |
| — | |
| — |
Unvested shares outstanding, March 31, 2022 |
| 27,211,666 | | $ | 1.81 |
| | | | | |
|
| |
| Weighted | |
| | Number of | | Average Grant | |
| | Shares | | Date Fair Value | |
Unvested shares outstanding, January 1, 2023 |
| 16,732,916 | | $ | 1.97 |
Shares Granted |
| — | | | — |
Shares Vested |
| 5,270,703 | | $ | 1.96 |
Shares Forfeited |
| — | |
| — |
Unvested shares outstanding, March 31, 2023 |
| 11,462,213 | | $ | 1.97 |
(5) | |
| Revenue Recognition |
Policy
Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount:
1. | Identification of the promised goods in the contract; |
2. | Determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; |
3. | Measurement of the transaction price, including the constraint on variable consideration; |
4. | Allocation of the transaction price to the performance obligations; and |
14
5. | Recognition of revenue when (or as) the Company satisfies each performance obligation. |
The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally,During the Predecessor Period, the Company’s performance obligations with regard to its leasing contracts are satisfied over time in the case of our mobile phone leases, and at a point in time in the case of our agri-fintech services, typically upon delivery.
OurDuring the Predecessor Period, our revenue iswas comprised of lease payments for our smartphone devices, and fees for services and financial technology solutions. We offeroffered service-only contracts and contracts that bundle equipment used to access the services and/or with other service offerings. Some contracts havehad fixed terms and others are cancellable on a short-term basis (i.e., month-to-month arrangements). We have elected to record revenue net of taxes collected from our customers that are remitted to governmental authorities, with the collected taxes recorded within other current liabilities until remitted to the relevant government authority.
Sources
TheDuring the Predecessor Period (prior to our sale of Tingo Mobile), the Company hashad the following principal revenue sources:
● | Mobile Leasing – customers |
● | Call and Data Services – our customers |
14
● | Nwassa services – this is |
● | Agri- Marketplace |
● | Mobile |
● | Utilities – fixed percentage of value of transaction |
● | Mobile Insurance – fixed fee recognized monthly based on contract |
● | Financial Services (Loans and |
While ourTingo Mobile’s Nwassa applications are integrated with ourits branded phones, each of the services are distinct and independent performance obligations of the Company.obligations. The range and quantity of services used are determined solely by the end-user.
| Foreign Currency Translation |
Functional and presentation currency—The consolidated financial statements are presented in U.S. dollars, which is the presentation currency and the functional currency during the Successor Period, and the functional currency for the Predecessor Period is Nigeria Naira. Due to the sale of Tingo
15
Mobile, our sole operating subsidiary, on December 1, 2022, the exchange rate is not applicable as of and for the three months ended March 31, 2023.
The exchange raterates used for conversion is:are:
| | | | | ||||
| | | | | ||||
|
| March 31, |
| December 31, |
| March 31, |
| December 31, |
| | 2022 | | 2021 | | 2023 | | 2022 |
Balance Sheet: |
|
|
|
|
|
|
|
|
| | | | | | | | |
Nigerian Naira |
| 415.72 |
| 412.99 |
| n/a |
| 412.99 |
| | | | | | | | |
Profit and Loss : |
|
|
|
| ||||
Statement of Operations: |
|
|
|
| ||||
| | | | | | | | |
Nigerian Naira |
| 414.355 |
| 396.46 |
| n/a |
| 396.46 |
Foreign currency transactions—Foreign currency transactions are translated into the functional currencies of the Company’s subsidiaries using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the consolidated statements of operations and comprehensive income. Non-monetary items carried at cost are translated using the exchange rate at the date of the transaction. Non-monetary items carried at fair value are translated at the date the fair value is determined. For Nigeria, due to the volatile nature of the exchange rate, during the Predecessor Period, we have applied the prudent approach to convert both the Profit and LossStatement of Operations and Balance Sheet at the same rate to indicate a fairer reflection of the state of affairs.
15
|
|
Inventory on hand consisted of the following:
| | | | | | |
|
| March 31, 2022 |
| December 31, 2021 | ||
Spare parts | | $ | 103,218 | | $ | 129,823 |
| | | | | | |
Total Inventory | | $ | 103,218 | | $ | 129,823 |
(8) |
|
| | | | | | |
|
| March 31, 2022 |
| December 31, 2021 | ||
Accounts receivable gross | | $ | 94,840,775 | | $ | 364,350,175 |
Allowance for expected credit loss | |
| (49,094) | |
| (42,065) |
| |
| 94,791,681 | |
| 364,308,110 |
Directors current account | |
| - | |
| 289 |
Total Accounts Receivable, net | | $ | 94,791,681 | | $ | 364,308,399 |
Accounts Receivable—This amount consists almost exclusivelyLoans and other receivables due from related parties consisted of trade receivables relating to our 1-year smartphone leasing contract we entered into with our customers during 2021. The release and delivery of new phones in accordance with the new phone contracts took place in May 2021 and August 2021, respectively. The balances reflect the remaining balance outstanding as at March 31, 2022 and December 31, 2021. The previous lease contracts expired in May 2020. The delay in renewal of new contracts was due to impact of Covid 19 and delays in recommencement of our supply chains as a consequence. The new phone leasing contracts will expire in April 2022 and July 2022 respectively. The company had approximately 9.3 million subscribers for this servicefollowing as of March 31, 20222023 and December 31, 2021. 2022:
| | | | | | |
|
| March 31, 2023 |
| December 31, 2022 | ||
| | | | | | |
Due from related party |
| $ | 3,631,949 |
| $ | 3,713,179 |
Advances to related party |
| | 21,489 |
| | 58,489 |
Note receivable due from Tingo Mobile, dated October 15, 2022, interest at 5%, due on May 10, 2024 |
| | 16,228,962 |
| | 15,866,000 |
Total loans and other receivables – related parties |
| $ | 19,882,400 |
| $ | 19,637,668 |
Due from related party consists of obligations due under the terms of the Merger Agreement with TIO. Pursuant to the terms of the agreement, TIO agreed to pay certain liabilities and accounts payable of the Company as of November 30, 2022, as well as certain other expenses relating to the maintenance of our reporting status under the Securities Exchange Act for the one-year period following the Merger.
The note receivable due from Tingo Mobile relates to sums provided to Tingo Mobile by the Company has successfully renewed its previous contract that expired in May 2020 without any attritionduring the Predecessor Period to acquire mobile devices in the numberfourth quarter of subscribers. We view this2022 and was advanced to Tingo Mobile prior to its sale to TIO as significant, givendescribed Under Note 2 – Sale of Tingo Mobile above. The balance consists of principal in the gapamount of $15,866,000 and interest of $362,962.
(9) | Investments in Securities |
Investment in Securities—In connection with the sale of Tingo Mobile as described under Note 2 above, we concluded a year due tovalue of $1.2 billion for the Covid-19 pandemicconsideration received from TIO, determined in accordance with ASC 820 and ASC 805. ASC 820 requires that affected our supply chain in 2020a fair value determination be based on objective evidence, using assumptions that a market participant would use, and the early part of 2021. We believewhen level 1 inputs exist, it is a clear demonstration of our ability to maintain subscriber loyalty and reflection of affordability at the price point we offer our subscribers over the three-year leasing period. Management reviews accounts receivable periodically to determine if any receivables will potentiallyshould be uncollectible. Management’s evaluation includes several factors including the aging of the accounts receivable balances, a review of significant past due accounts, economic conditions, and our historical write-off experience, net of recoveries. The Company includes any accounts receivable balances that areused unless determined to be uncollectible, along withnot representative. As described in Note 4 above, we are of the opinion that the TIO trading price, as quoted on Nasdaq, is not representative of the fair value of the consideration received and should not be used to determine the merger consideration. Accordingly, pursuant to ASC 805-30-30-5, we determined that a general reserve, in its allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. We recognized bad debt expense of $47,398 during the quarter ended March 31, 2022 and $99,247 relating to our receivables in 2021. The allowance for credit loss for the quarter ended March 31, 2022 was $49,094 and was $42,065 for the year ended December 31, 2021.
We offer our customers the option to purchase certain wireless devices in installments over a specified period of time and, in many cases, once certain conditions are met, they may be eligible to trade in the original equipment for a new device and have the remaining unpaid balance paid or settled. As of December 31, 2021, all receivables on this arrangement have been collected and the balance has been written off, and no new receivables have been incurred during the quarter ended March 31, 2022.
We have a strong history of mobile leasing to our subscriber base in partnership with our farmers’ cooperatives. Unlike a typical mobile leasing business, we analyze credit risk on these cooperatives and not directly with our 9.3m subscribers. We have history of leasingreference to the same number of subscribers since 2017, and have a strong collection record whereCompany’s share price, as traded at the cooperatives settleOTC at the monthly leasing receivables in bulk. The cooperatives manage the interaction and collection from their members and, therefore, we do not undertake direct credit risk with our subscribers. This ‘business to business’ credit model has assured minimal bad debts and late payments, as well as reduced administrative effort needed to collect monthly receivables due over the 12-month contract.
The Company’s agreement with its manufacturer does not include a renewal or termination feature once deliveryclosing of the devices has occurred and the Company has approved the qualityMerger, is a more appropriate determinant of the delivery and/or waived any such approval by failing to object to any nonconformity within 30 days of delivery.fair value.
(9)Property, Plant & Equipment
16
| | | | | | | | | | | | | | | | | | |
| | |
| |
| MOTOR |
| FURNITURE & |
| OFFICE |
| PLANT & | | SITE |
| MOBILE | |
|
| | LAND | | BUILDING | | VEHICLES | | FITTINGS | | EQUIPMENT | | MACHINERY | | INSTALLATIONS | | DEVICES | | Total |
|
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
COST | | | | | | | | | | | | | | | | | | |
December 31, 2021 |
| 8,794,695 |
| 31,774,624 |
| 207,709 | | 60,009 |
| 66,142 | | 10,112,085 | | 191,316,838 | | 1,219,411,221 | | 1,461,743,323 |
Additions |
| — |
| — |
| — | | — |
| — | | — | | — | | — | | - |
Forex translation difference |
| (57,754) |
| (208,661) |
| (1,363) | | (394) |
| (434) | | (66,405) | | (1,256,362) | | — | | (1,591,373) |
March 31, 2022 |
| 8,736,941 |
| 31,565,963 |
| 206,346 | | 59,615 |
| 65,708 | | 10,045,680 | | 190,060,476 | | 1,219,441,221 | | 1,460,151,950 |
| | | | | | | | | | | | | | | | | | |
DEPRECIATION |
| |
| |
| |
| |
| |
| | | |
| | | |
December 31, 2021 |
| — | | 8,246,459 | | 126,507 | | 41,444 | | 62,662 | | 10,074,915 | | — | | 244,290,317 | | 262,860,304 |
Charged for the period |
| — | | 395,874 | | 6,698 | | 1,609 | | 567 | | 2,240 | | 4,767,165 | | 101,282,845 | | 106,456,998 |
Forex translation difference |
| — | | (55,571) | | (853) | | (278) | | (414) | | (48,286) | | (15,651) | | — | | (121,053) |
March 31, 2022 |
| — | | 8,604,762 | | 132,352 | | 42,775 | | 62,815 | | 10,028,869 | | 4,751,514 | | 345,573,162 | | 369,196,249 |
| | | | | | | | | | | | | | | | | | |
NET BOOK VALUE |
| |
| |
| |
| |
| |
| | | |
| | | |
December 31, 2021 |
| 8,794,695 | | 23,510,165 | | 81,202 | | 18,565 | | 3,480 | | 37,170 | | 191,316,838 | | 975,120,904 | | 1,198,883,019 |
March 31, 2022 |
| 8,736,941 | | 22,961,201 | | 73,994 | | 16,840 | | 2,893 | | 16,811 | | 185,308,962 | | 873,838,059 | | 1,090,955,701 |
The fixed assets table above refers to the Tingo Mobile business as consolidated into Tingo Inc. for the quarter and year ended March 31, 2022 and December 31, 2021, respectively.
Property, plant and equipment are carried at historical value and depreciated over their useful life. All property and equipment with a cost of $5,000 or greater are capitalized. Major betterments that extend the useful lives of assets are also capitalized. Normal maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations.
Plant and equipment consist of prototypes, mobile devices leased to our customers, software, furniture and equipment, which are depreciated on a straight-line basis over their expected useful lives.
|
|
|
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| |
|
|
|
|
| |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Site Installations relates to the capitalization of the Company’s investment in rural fiber network and equipment. Previously, it was classified as Work in Progress and the works were completed as of December 31, 2021. Depreciation on these assets commenced on January 1, 2022.
The total depreciation charge for the quarters ended March 31, 2022 and March 31, 2021 was $106,456,998 and $450,719, respectively.
(10) |
|
Intangible Assets—The details below relate to Intangible Assets for Tingo Mobile as consolidated into the Company for the three months ended March 31, 2022. This represents cost incurred on software development of our mobile operating system and secure browser. This is Tingo’s proprietary operating system and mobile/web browser. The system and its technology platform is designed to help our customers securely execute financial transactions. This cost is amortized over 5 (Five) years, because on or before then we are expected to have significantly upgraded the software. For the three months ended March 31, 2022, the Company incurred capitalized costs of $ 0 and charged $283,941 in amortization costs for this period. For the year ended December 31, 2021, the Company incurred capitalized expenses of $0 and charged $1,187,042 in amortization expenses for this period.
17
| | | |
Cost |
| |
|
January 1, 2022 | | $ | 6,193,507 |
Additions | |
| — |
Forex translation difference | |
| (904,770) |
March 31, 2022 | |
| 5,288,737 |
| | | |
Amortization | |
| |
January 1, 2022 | |
| 4,026,671 |
Charge for the period | |
| 283,941 |
Forex translation difference | |
| (398,817) |
March 31, 2022 | |
| 3,911,795 |
| | | |
Carrying Amount | | $ | 1,376,942 |
| Liquidity and Financing Arrangements |
Liquidity—There are several factors that may materially affect our liquidity during the reasonably foreseeable future including, for example, currency volatility, foreign exchange controls and other items that affect our cash flows to our parent company.flows. In view of the foregoing, we believe that our operating cash flow and cash on hand will be sufficient to meet operating requirements from the date of this filing through the next twelve months.
Cash and Cash Equivalents—As of March 31, 2023, we had cash and cash equivalents of approximately $32,000. As of December 31, 2022, we had cash and cash equivalents of $25.3 million on a consolidated basis. As of December 31, 2021, we had cash and cash equivalents of $128.4 million on a consolidated basis. The cash and cash equivalent mainly consists of funds held with the company’s bank in Nigeria. The company ensures weapproximately $1,000. We seek to optimize value by managing and placing excess liquidity on fixed deposits to earn income from such excess cashflows. Reduction is cash and cash equivalent is mainly due to a significant repayment of accounts payables to our core suppliers of mobile phones.
| (10) Current and Non-Current Liabilities |
Accounts Payablepayable and Accrualsaccruals
| | | | | | |
|
| March 31, 2022 |
| December 31, 2021 | ||
Trade payables | | $ | 273,013,297 | | $ | 755,758,199 |
Accrued compensation | |
| 1,947,820 | |
| — |
Other payables | |
| (129,895) | |
| 126,994 |
Total Accounts Payable and Accruals | | $ | 272,883,402 | | $ | 755,885,193 |
Accounts payable and accruals consisted of the following:
| | | | | | |
|
| March 31, 2023 |
| December 31, 2022 | ||
Accounts payable |
| $ | 926,577 |
| $ | 1,003,787 |
Accrued compensation |
| | 3,764,750 |
| | 2,948,013 |
Other payables |
| | 763,216 |
| | 334,381 |
Total accounts payable and accruals |
| $ | 5,454,543 |
| $ | 4,286,181 |
Trade PayablesAdvances from Related Party—This represents the balance due to our Smartphone suppliers at March 31, 2022 and December 31, 2021.
Deferred Income—The balance represents to gross income due over the term of the 12-month phone leasing cycle. Monthly releases to revenue will be conducted in line with the Company’s revenue recognition policy and will reduce to $0 by April 2022 and July 2022 accordingly. The table below provides the aging of the balances between current and non-current liabilities as follows:
| | | | | | |
|
| March 31, 2022 |
| December 31, 2021 | ||
Due within one year | | $ | 89,285,248 | | $ | 221,215,018 |
Over one year | |
| — | |
| — |
Total Deferred income | |
| 89,285,248 | |
| 221,215,018 |
| | | | | | |
Deferred income - current portion | |
| 89,285,248 | |
| 221,215,018 |
Deferred income - non-current portion | |
| — | |
| — |
Total Deferred income | | $ | 89,285,248 | | $ | 221,215,018 |
VAT—This represents the current and future VAT liability at rate of 7.5% relating to the mobile phone leasing contracts included under Accounts Receivable and Deferred Income. The table below shows the aging of when such liabilities will become due and payable:
18
| | | | | | |
|
| March 31, 2022 |
| December 31, 2021 | ||
Due within one year | | $ | 6,953,424 | | $ | 17,162,192 |
Over one year | |
| — | |
| — |
Total Value added tax | |
| 6,953,424 | |
| 17,162,192 |
| | | | | | |
Value added tax - current portion | |
| 6,953,424 | |
| 17,162,192 |
Value added tax - non-current portion | |
| — | |
| — |
Total Value added tax | | $ | 6,953,424 | | $ | 17,162,192 |
|
|
The provision for income tax consists of the following components for the three months ended March 31, 2022 and 2021:
| | | | | | |
|
| March 31, 2022 |
| March 31, 2021 | ||
Income tax | | $ | 38,698,829 | | $ | 12,533,548 |
Deferred tax | | | — | | | — |
Education tax | | | — | | | 835,570 |
Current Tax | | $ | 38,698,829 | | $ | 13,018,431 |
The significant components of the tax liabilities Advances from related party was $465,000 as of March 31, 2023 compared to $505,000 as of December 31, 2022. These advances consist of expenses paid on behalf of the Company by a related party. These advances are non-interest bearing.
Notes Payable – Related Parties— This amount represents a promissory note in the amount of $23,700,000 due to TIO. The Note is dated October 6, 2022, bears interest at the rate of 5% per annum and December 2021 are summarized below:is due on May 10, 2024.
| | | | | | |
Current Tax Liabilities |
| March 31, 2022 |
| December 31, 2021 | ||
Beginning of period | | $ | 100,606,352 | | $ | 110,544,689 |
Charge for the period | |
| 38,698,829 | |
| 104,802,090 |
| |
| 139,305,181 | |
| 215,346,779 |
Paid during the period | |
| — | |
| (105,889,143) |
Forex translation difference | |
| (848,668) | |
| (8,851,284) |
| | | | | | |
Total Current Tax Liabilities | | $ | 138,456,513 | | $ | 100,606,352 |
(11) Commitments and Contingencies
The significant components of the deferred tax liabilities as of March 31, 2022 and December 31, 2021 are summarized below:
| | | | | | |
Deferred Tax |
| March 31, 2022 |
| December 31, 2021 | ||
Beginning of period | | $ | 2,171,039 | | $ | 2,360,004 |
Change for the period | |
| 2,147,290 | |
| — |
Forex translation difference | |
| 8,385 | |
| (188,965) |
Total Deferred Tax Liabilities | | $ | 4,326,714 | | $ | 2,171,039 |
|
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Commitments
Operating Leases—We haveDuring the Predecessor Period, we were responsible for an operating leaseslease covering office space in Nigeria and the United States. Ourfor Tingo Mobile, our former operating lease in Nigeria is a one-year lease withsubsidiary. We continue to be subject to an option for the Company to renew, and the operating lease in the United States is on a month-to-month basis. We consider each of these arrangementsthis arrangement to be a ‘low value lease’ and, accordingly, have not recognized a right of use asset or liability in our financial statements.
Purchase CommitmentsLitigation Settlement—Our principal purchase commitment consists of our agreement with our smartphone manufacturer, wherein we have two years to make full payment, but are otherwise not obligated to make any specified minimum payment duringDuring the interim. We nevertheless periodically make payments out of operating cash from time to time during the payment term and, atquarter ended March 31, 2022,2023, we had future commitments of approximately $271.1 million remaining under this agreement. Other than customary software licenses, we had no other significant purchase commitments, or commitments for capital expenditures, as of such date.
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Contingencies
Generally—Estimated losses from contingencies are accrued bysettled a charge to earnings when information available priorlawsuit with ClearThink Capital, LLC (“ClearThink”). Pursuant to the issuanceterms of the financial statements indicates that it is likely that a future event will confirm that an asset has been impaired or a liability incurred atsettlement, on the one-year anniversary date of the financial statementssettlement, we are obligated to pay ClearThink Capital, LLC a combination of Company common stock and common stock of TIO held by the amountCompany equal in value to $7.7 million. Accordingly, we have recognized this contingency payment on our balance sheet as of the loss can be reasonably estimated. As March 31, 2022 and December 31, 2021, we have not assessed any charges against earnings for contingencies.2023.
Legal Proceedings―
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Customers—While we may sell our branded phones from time to time to bulk purchasers, our primary customers consist of two farmers’ cooperatives in Nigeria, who collectively have approximately 9.3 million members. The cooperatives account for virtually all of our leasing revenue, while the members of the cooperatives account for a substantial majority of our Agri-Fintech revenue generated through our Nwassa platform. Should either of these cooperatives experience financial difficulties, our revenue and cash flows could be adversely impacted.
Manufacturer—We outsource the manufacture of our smartphones to a single manufacturer. During 2020 and 2021, we experienced substantial delays in the supply of new devices to our customers as a result of supply chain disruptions resulting principally from Covid-19, which in turn affected our revenue. Given that our manufacturer is located in China and may be subject to further economic dislocation in the future, we are subject to future risks of delayed or non-fulfillment under any new supply agreements into which we may enter.
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From time to time, we may enter into transactions or incur indebtedness to persons affiliated with members of our board of directors or executive officers. We will seek to ensure that, to the greatest extent possible, any such agreements or transactions are undertaken on an arms-length basis and representative of standard commercial terms and conditions that would be available to us from third parties.
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While we were not currently subject to any legal proceedings, during the quarter ended March 31, 2022, from time to time, the Company or one or more of its subsidiaries may become a party to certain proceedings incidental to the normal course of our business. While the outcome of any potential legal proceedings cannot at this time be predicted with certainty, we do not expect that any such proceedings will have a material effect upon our financial condition or results of operations.
Estimated losses from contingencies are accrued by a charge to earnings when information available prior to the issuance of the financial statements indicates that it is likely that a future event will confirm that an asset has been impaired or a liability incurred at the date of the financial statements and the amount of the loss can be reasonably estimated.
(12) Related-Party Transactions and Agreements
See Note 7 – Loans and Other Receivables – Related Parties.
2017
| From time-to-time, we may enter into transactions or incur indebtedness to persons affiliated with members of our board of directors, executive officers. We will seek to ensure that, to the greatest extent possible, any such agreements or transactions are undertaken on an arms-length basis and representative of standard commercial terms and conditions that would be available to us from third parties. Note payable – related party consists of a promissory note due to TIO in connection with the Merger Agreement. The note has a principal amount of $23,700,000, accrues interest at 5% per annum, and is due on May 10, 2024. Note receivable – related party consists of a promissory note due from Tingo Mobile that was used to acquire mobile devices during the Predecessor Period in the fourth quarter of 2022. The note has a principal amount of $15,866,000, accrues interest at 5% per annum, and is due on May 10, 2024. (13) Subsequent Events |
Management performed an evaluation of the Company’s activity through the date the financial statements were issued, noting the following subsequent event:
On October 6, 2022, the Company, MICT, Inc. (“MICT”), and representatives of each company’s shareholders entered into a Second Amended and Restated Agreement and Plan of Merger (“Restated Merger Agreement”). The common stock of MICT is traded on the Nasdaq Capital Market under the symbol ‘MICT’. The Restated Merger Agreement is the second restatement of the agreement and the result of efforts of Tingo and MICT to restructure the transactionApril 27, 2023, as a multi-phase forward triangular merger (“Merger”) instead of as a reverse triangular merger as previously agreed. Under the terms of the Restated Merger Agreement, Tingo will create a newly-formed subsidiary incorporateddescribed in the British Virgin Islands (“Tingo BVI Sub”) to facilitate the Merger and hold the Company’s beneficial ownership interest in Tingo Mobile. MICT will also create a subsidiary incorporated in the British Virgin Islands (“MICT BVI Sub”), which will be merged with and into Tingo BVI Sub, with MICT BVI Sub as the surviving corporation and a subsidiary of MICT. The Merger will, therefore, result in Tingo Mobile becoming an indirect wholly-owned subsidiary of MICT, and the operations of Tingo Mobile, as an agri-fintech company, becoming the predominant operations of MICT. The aggregate consideration tendered by MICT to Tingo, the sole shareholder of Tingo Mobile, will consist of: (i) newly-issued common stock of MICT equal to 19.9% of its outstanding shares, calculated immediately prior to the closing date of the Merger; and (ii) two series of convertible preferred shares – Series A Convertible Preferred Stock and Series B Convertible Preferred Stock (collectively, the “MICT Preferred Shares”). The conversion of the MICT Preferred Shares is subject to various conditions, including approval of MICT’s shareholders and, in the case of the MICT Series B Convertible Preferred Stock, is also subject to Nasdaq approving a change of control of MICT. If all of the MICT Preferred Shares are converted into MICT common stock, Tingo will hold 75.0% of the outstanding shares of MICT. A summary of the Restated Merger Agreement and the actions taken by the Company and MICT in connection therewith are included in our Current Report on Form 8-K/A8-K filed withon the U.S. Securitiessame date, the shareholders of the Company approved the amendment and Exchange Commission on October 14, 2022. On November 9, 2022, we filed a definitive Information Statementrestatement of the Company’s Articles of Incorporation to provide informationchange the Company’s corporate name from ‘Tingo, Inc.’ to our shareholders about the Merger, the Merger Agreement, and the transactions contemplated thereby.‘Agri-Fintech Holdings, Inc.’
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Tingo,Agri-Fintech Holdings, Inc., formerly known as ‘Tingo, Inc.’ (“we,” “us,” “our,” “Tingo” orand the “Company”), a Nevada corporation, was formed on February 17, 2015. Our shares trade on the OTC Markets trading platform under the symbol ‘TMNA’. We acquired our wholly-owned subsidiary,
As described more fully under Sale of Tingo Mobile PLC, a Nigerian public limited company below, on December 1, 2022, we sold Tingo Mobile Limited (“Tingo Mobile”), our sole operating subsidiary, to Tingo Group, Inc. (“TIO”), a Nasdaq-traded financial services company (formerly known as MICT, Inc.), in exchange for 25,783,675 shares of TIO common stock and two series of preferred stock that are convertible into TIO common stock upon the occurrence of certain conditions (“Preferred Stock”). If we convert all of the Preferred Stock, our shareholding in TIO will be equal to 75.0% of TIO’s outstanding common stock, calculated as of the date of the sale of Tingo Mobile. Importantly, because we expect to hold 75.0% of the outstanding TIO common stock at some point during 2023, this report will discuss the historical operations of Tingo Mobile as a share exchangeformer subsidiary of the Company, and will discuss the future operations of Tingo Mobile as a pending subsidiary of the Company.
Prior to our sale of Tingo Mobile, the Company, together with its sole shareholder effective August 15, 2021. The Company, including itsoperating subsidiary, Tingo Mobile, iswas an Agri-Fintech company offering a comprehensive platform service through use of smartphones – ‘device as a service’ (using GSM technology) to empower a marketplace to enable subscribers/farmers within and outside of the agricultural sector to manage their commercial activities of growing and selling their production to market participants both domestically and internationally. The ecosystem provides a ‘one stop shop’ solution to enable such subscribers to manage everything from airtime top ups, bill pay services for utilities and other service providers, access to insurance services and micro finance to support their value chain from ‘seed to sale’.
As of March 31, 2022, Tingo had approximately 9.3 million subscribers using its mobile phones and Nwassa payment platform (www.nwassa.com). Nwassas Africa’s leading digital agriculture ecosystem that empowers rural farmers and agri-businesses by using proprietary technology to enable access to markets in which they operate. Farm produce can be shipped from farms across Africa to any part of the world, in both retail and wholesale quantities. Nwassa’s payment gateway also has an escrow structure that creates trust between buyers and sellers. Our system provides real-time pricing, straight from the farms, eliminating middlemen. Our users’ customers pay for produce bought using available pricing on our platform. Our platform is paperless, verified and matched against a smart contract. Data is efficiently stored on the blockchain.
Our platform has created an escrow solution that secures the buyer, funds are not released to the seller until fulfilment. The platform also facilitates trade financing, ensuring that banks and other lenders compete to provide credit to our members.
Although we have a large retail subscriber base, ours is essentially a business-to-business-to-consumer (“B2B2C”) business model. Each of our subscribers is a member of one of two large farmers’ cooperatives with whom we have a contractual relationship and which relationship facilitates the distribution of our branded smartphones into various rural communities of member farmers. And it is through our phones and our proprietary applications imbedded therein where we are able to distribute our wider array of agri-fintech services and generate the diverse revenue streams as described in more detail in this report.
Our principal office is located at 43 West 23rd11650 South State Street, 2nd Floor, New York, NY 10010,Suite 240, Draper, UT 84020, and the telephone number is +1-646-847-0144.+1-385-463-8168. Our corporate website is located at www.tingoinc.comalthough it does not constitute a part of this Quarterly Report.. We make available free of charge on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed or furnished to the Securities and Exchange Commission (“SEC”). Our
Sale of Tingo Mobile
Overview. On December 1, 2022, we sold Tingo Mobile, our sole operating subsidiary, to TIO. The sale was accomplished via a multi-phase forward triangular merger. Under the terms of the Merger Agreement we entered into with TIO and representatives of each of the shareholders of the Company and TIO, we contributed our ownership of Tingo Mobile to a newly organized holding company incorporated in the British Virgin Islands (“Tingo BVI Sub”). We then merged Tingo BVI Sub with and into MICT Fintech Ltd, a wholly-owned subsidiary of TIO also incorporated in the British Virgin Islands (“MICT Fintech”), resulting in Tingo Mobile being wholly-owned by TIO as a third-tier subsidiary (hereinafter, the “Merger”).
Consideration Received. As consideration for the Merger, we received the following:
● | Common and Preferred Stock. At the closing of the Merger, we received 25,783,675 shares of newly-issued common stock of TIO equal to 19.9% of its outstanding shares, calculated as of the closing date of the Merger, and two series of convertible preferred shares – Series A Convertible Preferred Stock (“Series A Preferred Stock”) and Series B Convertible Preferred Stock (“Series B Preferred Stock”). |
● | Undertaking to Pay Certain Liabilities of the Company. Pursuant to the terms of the Merger Agreement, we also received an undertaking from TIO to pay certain liabilities and accounts payable of the Company as of November 30, 2022, as well as certain other expenses relating to the maintenance of our reporting status under the Securities Exchange Act for the one-year period following the Merger. As of December 31, 2022 and March 31, 2023, the amount due to us pursuant to this undertaking was approximately $3.7 million and $3.6 million, respectively. This amount is set forth below in our audited financial statements as ‘Due from Related Party’ under Note 7 – Loans and Other Receivables – Related Parties. |
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Structure. Immediately following the Merger, our ownership interest in TIO and TIO’s ownership of Tingo Mobile was as shown in the following diagram (other subsidiaries of TIO not shown):
Key Terms of SeriesA Preferred Stock. Upon the approval of TIO’s stockholders, the Series A Preferred Stock will convert into 20.1% of the outstanding shares are traded on OTC Marketsof TIO common stock, calculated as of the closing date of the Merger. If such shareholder approval is not obtained by June 30, 2023, all issued and outstanding shares of Series A Preferred Stock must be redeemed by TIO in exchange for Tingo receiving 27.0% of the total issued and outstanding shares of Tingo Group Holdings, LLC, a Delaware-incorporated subsidiary of TIO as shown in the diagram above (“TGH”). TGH is the immediate parent of MICT Fintech, which is the sole shareholder of Tingo Mobile.
Key Terms of Series B Preferred Stock. Upon approval by Nasdaq of the change of control of TIO and upon the approval of TIO’s stockholders, the Series B Preferred Stock will convert into 35.0% of the outstanding shares of TIO common stock, calculated as of the closing date of the Merger, giving the Company an aggregate ownership of 75.0% of TIO’s outstanding common stock. If such shareholder or Nasdaq approval is not obtained by June 30, 2023, we will have the right to cause TIO to redeem all of the Series B Preferred Stock for either of the following, at our option: (x) $666,666,667 in cash or, (y) a 33.0% ownership interest in TGH.
Temporary Investment Company Status. Effective upon the closing of the Merger, the Company became subject to the Investment Company Act of 1940, as amended (the “1940 Act”). Under the 1940 Act, any issuer of securities that has more than 100 beneficial owners and holds ‘investment securities’ (as defined under the ticker symbol ‘TMNA’.1940 Act) that exceed more than 40% of the value of the issuer’s unconsolidated assets is considered an ‘investment company’ and is therefore subject to various requirements of the 1940 Act, unless an exemption therefrom is applicable. One such requirement of the 1940 Act includes determining the fair value of equity securities held by the issuer instead of consolidating the underlying operations of such equity holdings. Rule 3a-2 permits issuers such as the Company, to be “deemed not to be engaged in the business of investing, reinvesting, owning, holding or trading in securities” for up to one year from the date that the 1940 Act would have technically applied if (i) the issuer’s business activities are inconsistent with those of an investment company, and (ii) the issuer’s governing board passes a resolution stating the issuer’s “bona fide intent to be engaged primarily, as soon as is reasonably possible” to be “in a business other than that of investing, reinvesting, owning, holding or trading in securities” within such one year period. Because the Company is actively involved in acquiring operating assets or otherwise developing other operating businesses, its present activities are inconsistent with those of an investment company. Moreover, inasmuch as the Company expects to effect a conversion of the Series A Preferred Stock and the Series B Preferred Stock no later than June 30, 2023 and, therefore, consolidate the operations of TIO and its subsidiaries with the Company’s own operations, the Company has expressed its bona fide intent to be in a business other than that of an investment company.
The information contained in this section should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this Amended 10-Q and in conjunction with the financial statements and notes thereto in the Company’s Annual Report on Form 10-K and any subsequent amendments thereto (“10-K”). In addition, some of the statements in this report constitute forward-looking statements. The matters discussed in this Amended 10-Q, as well as in future oral and written statements by management of Tingo, that are forward-looking statements are based on current management expectations that involve substantial risks
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and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. Important assumptions include our ability to generate revenues, achieve certain margins and levels of profitability, and the availability of additional capital. In light of these and other uncertainties, the inclusion of a forward-looking statement in this Amended 10-Q should not be regarded as a representation by us that our plans or objectives will be achieved. The forward-looking statements contained in this Amended 10-Q include statements as to:
● | our future operating results; |
● | our business prospects; |
● | currency volatility, foreign exchange, and inflation risk; |
● | our contractual arrangements with our customers and other relationships with third parties; |
● | the dependence of our future success on the general economy and its impact on the industries in which we invest; |
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● | political instability in the countries in which we operate; |
● | uncertainty regarding certain legal systems in Africa; |
● | our dependence upon external sources of capital; |
● | our expected financings and capital raising; |
● | our regulatory structure and tax treatment; |
● | the adequacy of our cash resources and working capital; |
● | the timing of cash flows from our operations; |
● | the impact of fluctuations in interest rates on our business; |
● | market conditions and our ability to access additional capital, if deemed necessary; |
● | uncertainty regarding the timing, pace and extent of an economic recovery in the United States and elsewhere; and |
● | natural or man-made disasters and other external events that may disrupt our operations. |
There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by such forward-looking statements. For a discussion of factors that could cause our actual results to differ from forward-looking statements contained in this Amended 10-Q, please see the discussion in “Item 1A. Risk Factors” in our 10-K. In particular, you should carefully consider the risks we have described in the 10-K and elsewhere in this Amended 10-Q concerning the coronavirus pandemic and the economic impact of the coronavirus on the Company and our operations. You should not place undue reliance on these forward-looking statements. The forward-looking statements made in this Amended 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date this Amended 10-Q is filed with the SEC.
Acquisition of Tingo Mobile plc
On August 15, 2021, the Company acquired all of the share capital of Tingo Mobile plc, a Nigerian corporation (“Tingo Mobile”) from Tingo International Holdings, Inc., a Delaware corporation (“TIH”), the sole shareholder of Tingo Mobile. Pursuant to the Acquisition Agreement executed in connection with the transaction, as subsequently amended, we issued TIH 1,028,000,000 shares of our Class A common stock and 65,000,000 shares of our Class B common stock. We also paid various fees and expenses in connection with the transaction, including 27,840,000 shares of our Class A common stock as a finder’s fee.
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Results of Operations
Three Months Ended March 31,Because we sold Tingo Mobile, our sole operating subsidiary, on December 1, 2022, Compared with the Three Months Ended March 31, 2021
The Company’s consolidateda comparison of results fromof operations, cost of revenues, and related items for the three months ended March 31, 2022 and March 31, 2021 are summarized as follows:
| | | | | | | | | | | |
| | Three Months Ended | | ||||||||
(In Thousands) | | | | | % of | | | | | % of | |
|
| March 31, 2022 |
| Revenue |
| March 31, 2021 |
| Revenue | | ||
Revenue | | $ | 257,058 | | — | | $ | 45,238 | | — | |
Operating Expense | | | (185,895) | | 72.32 | % | | (4,615) | | 10.20 | % |
Operating Income |
| | 71,163 |
| 27.68 | % | | 40,623 | | 89.80 | % |
| | | | | | | | | | | |
Other Income, net |
| | 186 |
| — | | | 60 | | — | |
Income before taxes |
| | 71,349 |
| 27.76 | % | | 40,682 |
| 89.93 | % |
Income tax expense |
| | (38,699) | | | | | (13,018) | | | |
Net Income |
| $ | 32,650 |
| 12.70 | % | $ | 27,664 |
| 61.15 | % |
Tingo’s operating income for2023 with the three months ended March 31, 2022 was $71.2 million as compared to $40.6 million during the three months ended March 31, 2021, an increase of $30.6 million, or 75.4%. Excluding costs during the quarter associated with awards made under our 2021 Equity Incentive Plan, Tingo’s operating income for the three months ended March 31, 2022 was $143.2 million. The substantial increasewould not be meaningful and, consequently, has not been included in revenue and operating income is largely due to renewal of the mobile leasing activity that commenced in May 2021, as well as significantly positive growth of revenue mix in the higher margin business in Nwassa, where we earn up to a 4.0% commission on various financial transactions and have relatively insignificant marginal costs as compared to our sales and leasing business. With increased adoption rates and growth in our subscriber base, as Nwassa becomes a progressively larger component of our aggregate revenue, we expect overall gross profit margins to increase accordingly. Nwassa generates net margins over 90%. This is reflective in the growth of Tingo’s Net Income (excluding costs associated with stock awards made under our 2021 Equity Incentive Plan) which grew by 278.0% to $104.7 million for the three months ended March 31, 2022 compared to $27.7 million for the three months ended March 31, 2021.this section.
Revenue
| | | | | | |
|
| Three Months Ended | ||||
|
| March 31, 2022 |
| March 31, 2021 | ||
| | | | | | |
Mobile Phone leasing |
| $ | 121,773,857 |
| $ | — |
Services- Mobile calls & data |
| | 13,726,612 |
| | 13,576,878 |
| | | | | | |
NWASSA revenue |
| | 151,557,050 |
| | 31,661,247 |
Airtime |
| | 3,425,518 |
| | 2,035,539 |
Brokerage on loans |
| | 4,120,651 |
| | 565,275 |
Insurance |
| | 6,595,200 |
| | — |
Trading on agricultural produce |
| | 62,198,505 |
| | 15,100,452 |
Utility |
| | 45,217,176 |
| | 13,959,981 |
| | | | | | |
Total Revenue |
| $ | 257,057,519 |
| $ | 45,238,125 |
Generally. We generated total revenue of $257.1 million during the quarter ended March 31, 2022 compared to $45.2 million during the quarter ended March 31, 2021, an over five-fold increase. In addition to recognizing leasing and service revenue from our mobile phones during the first quarter of 2022, we also experienced sharp growth in the utilization of our Nwassa agri-fintech platform as compared to the first quarter of 2021. Comparing successive quarters of Q4 2021 and Q1 2022, excluding one off-sales of mobile phones amounting to $301.0 million in the fourth quarter of 2021, total revenue for the Company increased substantially from from $215.5 million in the fourth quarter of 2021 to $257.1 million in the first quarter of 2022, an increase of $41.6 million, or 19.3%. Our Nwassa Agri-Fintech platform delivered a strong growth in revenue, increasing from $77.9 million in the fourth quarter of 2021 to $121.5 million in the first quarter 2022, a significant increase of 56.0% quarter-on-quarter. The principal reasons for the increases during the first quarter of 2022 as compared to the first quarter and fourth quarter of 2021 were as follows:
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Mobile leasing revenues continue to be in line with expectations of our one-year leasing contract and have been slightly impacted by the declining exchange rate.
Leasing revenue is recognized over 12 months in equal instalments from the date of sign up of the contract. Inasmuch as our lease agreements did not commence until later in 2021, we had $0 in leasing revenue during the quarter ended March 31, 2021 as compared to $121.8 million for the quarter ended March 31, 2022. Nwassa, our Agri-Fintech platform, generated 47.3% of total Company revenue during the three months ended March 31, 2022 compared to 70.0% of total revenue for the three months ended March 31, 2021. The substantially higher relative contribution of Nwassa to overall revenue in the first quarter of 2021 was merely due to the absence of leasing revenue during that period. By comparison, our agri-fintech revenue for the three months ended December 31, 2021 was 15.1%. Examining quarter-on-quarter growth more closely, the level of growth in our Nwassa Agri-Fintech platform recorded significant increased activity in the number of farmers trading on our Agri-Marketplace for the three months ended March 31, 2022 as compared to the three months ended December 31, 2021.
Utility top-up activity levels more than tripled during the first quarter of 2022 as compared to the first quarter of 2021, and were also up 38% as compared to the fourth quarter of 2021. We believe that the strong performance of the Agri-fintech side of our business is a clear demonstration of the maturity and adoption of the Nwassa platform by a higher percentage of our ‘Device as a Service’ customer base, powered through farmers’ cooperatives. The level of loan brokerage increased by over 700% for the first quarter of 2022 as compared to the first quarter of 2021 and over 270% as compared to the fourth quarter of 2021. We noted that at least 30% of the non-leasing customer base who purchased our mobile phones in November 2021 registered for access to the Nwassa platform to manage airtime and utility payments. This is significant, inasmuch as we view this as a demonstration of our successful campaigns we ran to register customers who bought a phone via a third cooperative with which we contracted in November 2021.
However, we believe that it is important to understand that the provision of smartphones is the means to drive a higher level of access to our Nwassa Agri-Fintech platform, to enable our customers to participate in our Agri-marketplace, top up their airtime, pay for utilities, insure their mobile devices and access credit services through partner institutions. Typical fees and commissions on these services can be up to 4.0%. Insurance revenue is fixed at $0.24 per device per month. Our focus on providing an affordable mobile device is core to the delivery of our fintech services and we call that ‘Device as a Service’ model. The richness of our Agri-Fintech service and related payment services deliver a very unique model of social upliftment and financial inclusion to rural communities. The agri-marketplace we have created provides our customers with an opportunity to market their fresh produce to reduce the ‘time to market’ and contribute towards our objectives to support the rural farming community with products and services that enable reduction in ‘post-harvest losses’ - a key area of focus for us as part of our investment to deliver services through use of smartphones to drive tangible social upliftment through increased sales for such farmers using the Nwassa platform.
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Cost of Revenues
The following table sets forth the cost of revenues for the three months ended March 31, 2022 and March 31, 2021:
| | | | | | |
| | Three Months Ended | ||||
| | March 31, 2022 | | March 31, 2021 | ||
| | | | | | |
Commission to Cooperatives and Agents |
| $ | 2,499,840 |
| $ | 2,511,941 |
| | | | | | |
Total cost of revenues |
| $ | 2,499,840 |
| $ | 2,511,941 |
The Company’s cost of revenues for the three months ended March 31, 2022 and 2021 was $2.5 million in each period. The Company does not expense the manufacturing cost of its leased phones, but instead records depreciation expense on a straight line basis over 36 months, which is the estimated useful life of the phones.
Cost of revenues consists of two key elements:
Selling, General & Administrative Expenses
The following table sets forth selling, general and administrative expenses for the three months ended March 31, 20222023 and March 31, 2021:2022:
| | | | | | | | | | | | |
| | Three Months Ended |
| Three Months Ended | ||||||||
|
| March 31, 2022 |
| March 31, 2021 |
| March 31, 2023 |
| March 31, 2022 | ||||
| | | | | | | | | | | | |
Depreciation and amortization | | $ | ― | | $ | 106,740,939 | ||||||
Professional fees | | | 299,999 | | | 55,669,412 | ||||||
Payroll and related expenses | | $ | 19,241,212 | | $ | 690,696 | | | 11,023,462 | | | 19,241,212 |
Bank fees and charges | | | ― | | | 636,047 | ||||||
Distribution expenses | | | 221,187 | | | 104,573 | | | ― | | | 221,187 |
Professional fees | | | 55,669,412 | | | 315,434 | ||||||
Bank fees and charges | | | 636,047 | | | 62,824 | ||||||
Depreciation and amortization | | | 106,740,939 | | | 740,616 | ||||||
General and administrative - other | | | 838,913 | | | 189,167 | ||||||
Bad debt expenses | | | 47,398 | | | — | | | ― | | | 47,398 |
General and administrative – other | | | 7,739,266 | | | 838,913 | ||||||
| | | | | | | | | | | | |
Selling, General and Administrative Expenses |
| $ | 183,395,108 |
| $ | 2,103,310 |
| $ | 19,062,727 |
| $ | 183,395,108 |
Prior year expenses mainly relateThe significant payroll expense and professional fees for the first quarter of 2022 as compared to general and administrative expenses only. Our acquisitionthe first quarter of Tingo Mobile and2023 relates to the attendant expenses to maintain our status asvesting of a public reporting company has substantially increased these costs. In addition, in 2021, we adoptedsignificant number of stock awards granted under our 2021 Equity Incentive Plan which provided for, among other awards, shares of restricted stock to Plan participants.during the quarter. This resulted in stock-based compensation expense for staff and directors of $17.0 million for the quarter ended March 31, 2022. In addition,and stock-based payments constitutingof professional fees wereof $55.0 million. Eliminating non-cash expenditures such as compensation expense and professional fees relating to these stock awards, the Company had profit before tax of approximately $143.3 million on a consolidated basis duringfor the first quarter of 2022. A detailed breakdown2022, as compared to stock-based compensation expense for staff and directors of other costs included in Selling General$10.2 million and Administrative Expenses are contained instock-based payments of professional fees of $144,500 for the Consolidated Profit and Loss Statement. A substantial partfirst quarter of these costs relate to Tingo Mobile’s operations in Nigeria.2023.
2021 Equity Incentive Plan
On October 6, 2021, the Company’s Board of Directors adopted our 2021 Equity Incentive Plan (“Incentive Plan”), the purpose of which was to promote the interests of the Company by encouraging directors, officers, employees, and consultants of Tingo to develop a long-term interest in the Company, align their interests with that of our stockholders, and provide a means whereby they may develop a proprietary interest
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in the development and financial success of the Company and its stockholders. The Incentive Plan is also intended to enhance the ability of the Company and its subsidiaries to attract and retain the services of individuals who are essential for the growth and profitability of the Company. The Incentive Plan permits the award of restricted stock, common stock purchase options, restricted stock units, and stock appreciation awards. The maximum number of shares of our Class A common stock that are subject to awards granted under the Incentive Plan is 131,537,545 shares. The term of the Incentive Plan will expire on October 6, 2031. On October 12, 2021, our stockholders approved our Incentive Plan and, during the fourth quarter of 2021 and the first quarter of 2022, the Tingo Compensation Committee granted awards under the Incentive Plan to certain directors, executive officers, employees, and consultants in the aggregate amount of 118,870,000131,370,000 shares. The majority of the awards so issued are each subject to a vesting requirement over a 2-year period unless the recipient thereof is terminated or removed from their position without “cause”, or as a result of constructive termination, as such terms are defined in the respective award agreements entered into by each of the recipients and the Company. We account for share-based compensation using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, we measure the grant date fair value based upon the market price of our common stock on the date of the grant and amortize the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term. For all stock awards under the Incentive Plan that are not subject to vesting, we recognize expense associated with the award during the period in which the award is granted, in an amount equal to the number of shares granted, multiplied by the closing trading price of the shares on the relevant grant date. In connection with these awards, we recorded stock-based compensation expense of $10.3 million and professional fees of $72.0 million in the aggregate for the three months ended March 31, 2022.2023 and 2022, respectively. As of March 31, 2023, total compensation expense to be
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recognized in future periods is $22.6 million. The weighted average period over which this expense is expected to be recognized is 1.50.54 years.
The following table summarizes the activity related to granted, vested, and unvested restricted stock awards under the Incentive Plan for the three months ended March 31, 2022:2023:
| | | | | | | | | | |
|
| |
| Weighted |
| |
| Weighted | ||
| | Number of | | Average Grant | | Number of | | Average Grant | ||
| | Shares | | Date Fair Value | | Shares | | Date Fair Value | ||
Unvested shares outstanding, January 1, 2022 |
| 36,950,833 | | $ | 1.80 | |||||
Unvested shares outstanding, January 1, 2023 |
| 16,732,916 | | $ | 1.97 | |||||
Shares Granted |
| 10,000,000 | | $ | 5.50 |
| — | | | — |
Shares Vested |
| 19,739,167 | | $ | 3.65 |
| 5,270,703 | | $ | 1.96 |
Shares Forfeited |
| — | |
| — |
| — | |
| — |
Unvested shares outstanding, March 31, 2022 |
| 27,211,666 | | $ | 1.81 | |||||
Unvested shares outstanding, March 31, 2023 |
| 11,462,213 | | $ | 1.97 |
Liquidity and Capital Resources
Sources and Uses of Cash: Our principal sources of liquidity are our cash and cash equivalents, and cash generated from operations. On September 24, 2021, we filed a Form D with the Securities and Exchange Commission indicating the sale of our securities in one or more private transactions (the “Private Offering”). We expect that, as a result of the Private Offering, we will also be able to secure sufficient operating and working capital for our parent company activities for the next twelve months.
Cash on Hand. As of March 31, 2022,2023, our cash and cash equivalents totaled $25.3 million on a consolidated basis. This is a significant reduction from the quarter ended December 31, 2021 due mainly to a substantial reduction in accounts payable linked to the Company’s mobile phone supplier. Virtually all of our cash is denominated in Nigerian Naira and deposited in Nigeria-based financial institutions.
Indebtedness: The Company had no financial debt as at March 31, 2022 or December 31, 2021.approximately $32,000.
We expect our cash on hand, proceeds received from our assets and operations, cash flow from operations will be sufficient to meet our anticipated liquidity needs for business operations for the next twelve months. There can be no assurance that we will continue to generate cash flows at or above current levels or that we will be able to raise additional financing to support our parent company’s operating and compliance expenditures.
Our cash flows from operations could be adversely affected by events outside our control, including, without limitation, changes in overall economic conditions, regulatory requirements, changes in technologies, demand for our products and services, availability of labor resources and capital, natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, and other conditions. Our ability to attract and maintain a sufficient customer base, particularly in our principal markets, is critical to our ability to maintain a positive cash flow from operations. The foregoing events individually or collectively could affect our results.
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We are evaluating the impact of current market conditions on our Company and its ability to generate dollar-denominated income. We believe that our operating cash flow and cash on hand will be sufficient to meet operating requirements and to finance routine capital expenditures through the next twelve months.
Off Balance Sheet Arrangements
None.
Dividends
On November 10, 2021, our Board adopted a Dividend Policy for the Company. The Policy provides a process that the Board will undertake when approving quarterly, annual, and special dividends for the Company including, but not limited to, various financial criteria and macroeconomic factors, as well as certain financial and economic factors specific to the Company. In the case of quarterly dividends, within ninety (90) calendar days following the end of each fiscal year, the Board will determine the dividend payment, if any, that will be made to holders of the Company’s capital stock. Such dividend will generally be expressed as a cash amount equal to a percentage of the Company’s consolidated after-tax net income for such prior fiscal year, and will be divided into fourths, with one-fourth of the amount payable each quarter. As of March 31, 2022,2023, the Company has not paid any dividends in its history.
Subsequent Events
Our Management performed an evaluation of the Company’s activity through the date the financial statements were issued, noting the following subsequent event:
On October 6, 2022, the Company, MICT, Inc. (“MICT”), and representatives of each company’s shareholders entered into a Second Amended and Restated Agreement and Plan of Merger (“Restated Merger Agreement”). The common stock of MICT is traded on the Nasdaq Capital Market under the symbol ‘MICT’. The Restated Merger Agreement is the second restatement of the agreement and the result of efforts of Tingo and MICT to restructure the transactionApril 27, 2023, as a multi-phase forward triangular merger (“Merger”) instead of as a reverse triangular merger as previously agreed. Under the terms of the Restated Merger Agreement, Tingo will create a newly-formed subsidiary incorporateddescribed in the British Virgin Islands (“Tingo BVI Sub”) to facilitate the Merger and hold the Company’s beneficial ownership interest in Tingo Mobile. MICT will also create a subsidiary incorporated in the British Virgin Islands (“MICT BVI Sub”), which will be merged with and into Tingo BVI Sub, with MICT BVI Sub as the surviving corporation and a subsidiary of MICT. The Merger will, therefore, result in Tingo Mobile becoming an indirect wholly-owned subsidiary of MICT, and the operations of Tingo Mobile, as an agri-fintech company, becoming the predominant operations of MICT. The aggregate consideration tendered by MICT to Tingo, the sole shareholder of Tingo Mobile, will consist of: (i) newly-issued common stock of MICT equal to 19.9% of its outstanding shares, calculated immediately prior to the closing date of the Merger; and (ii) two series of convertible preferred shares – Series A Convertible Preferred Stock and Series B Convertible Preferred Stock (collectively, the “MICT Preferred Shares”). The conversion of the MICT Preferred Shares is subject to various conditions, including approval of MICT’s shareholders and, in the case of the MICT Series B Convertible Preferred Stock, is also subject to Nasdaq approving a change of control of MICT. If all of the MICT Preferred Shares are converted into MICT common stock, Tingo will hold 75.0% of the outstanding shares of MICT. A summary of the Restated Merger Agreement and the actions taken by the Company and MICT in connection therewith are included in our Current Report on Form 8-K/A8-K filed withon the U.S. Securitiessame date, the shareholders of the Company approved the amendment and Exchange Commission on October 14, 2022. On November 9, 2022, we filed a definitive Information Statementrestatement of the Company’s Articles of Incorporation to provide informationchange the Company’s corporate name from ‘Tingo, Inc.’ to our shareholders about the Merger, the Merger Agreement, and the transactions contemplated thereby.‘Agri-Fintech Holdings, Inc.’
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Item 3. |
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We are subject to financial market risks, including changes in interest rates, lease rates, credit rates, and general debt terms.
We are subject to risks regarding currency volatility and foreign exchange rates. In particular, we are subject to fluctuations in foreign exchange rates between the U.S. dollar, our reporting currency, and currencies of countries where we market or source our products and services, which presently consists principally of the Nigerian Naira.services. Such fluctuations may result in significant increases or decreases in our reported revenue and other results as expressed in dollars, and in the reported value of our assets, liabilities and cash flows. In addition, currency fluctuation may adversely affect receivables, payables, debt, firm commitments and forecast transactions denominated in non-U.S. currencies. In particular, transition risks arise where parts of the cost of sales are not denominated in the same currency of such sales. We currently do not hedge this exposure. Fluctuation in exchange rates, depreciation of local currencies, changes in monetary and/or fiscal policy or inflation in the countries in which we operate could have a material adverse effect on our business, financial condition, results of operations and prospects.
In addition to foreign currency risk, our ability to generate operating cash flows at our parent company level depends on the ability of our subsidiaries to upstream funds. Nigeria and other countriesCountries in which we may operate have exchange controls that can, from time to time, place restrictions on the exchange of local currency for foreign currency and the transfer of funds abroad. These controls and other controls that may be implemented in the future could limit the ability of our subsidiaries to transfer cash to us and make us dependent upon external sources of cash and credit.
We can offer no assurance that additional restrictions on currency exchange will not be implemented in the future or that these restrictions will not limit the ability of our subsidiaries to transfer cash to us, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Item 4. |
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Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
Management assessedOur management, with the participation of our Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the design and operations of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of March 31, 2023. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at a reasonable assurance level. There has been no change in our internal control over financial reporting as ofduring the quarter ended March 31, 2022. In making this assessment, management used the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013.
Based upon our evaluation of internal controls, our CEO and CFO determined2023, that (i) we have a material weakness over our entity level control environment as of March 31, 2022 and (ii)has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting was not effective as of March 31, 2022, inasmuch as we have recharacterized the acquisition of Tingo Mobile as a reverse acquisition under applicable accounting rules and, in accordance with ASC 718, have modified our expensing of share-based compensation in order to ratably expense non-employee stock awards that are subject to a time-based vesting.reporting.
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Part II.Other Information
Item 1. |
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From time to time, the Company is a party to certain proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with our customers and subscribers. While the outcome of these legal proceedings cannot at this time be predicted with certainty, we do not expect that these proceedings will have a material effect upon the Company’s financial condition or results of operations.
Item 1A.Risk Factors
In connection with our acquisitionsale of Tingo Mobile and as a publictemporary investment company focused on the agri-fintech sector,following such sale, we are subject to a number of risks, many of which are identified in our Annual Report on Form 10-K and any subsequent amendments thereto (“10-K”). As the business of the Company and its subsidiaries continues to develop, we intend to identify, as will be reasonably possible, any such additional risks and include the same in our subsequent filings and reports with the SEC.
Moreover, the economic dislocation precipitated by the coronavirus pandemic is still rapidly evolving. As of the date of filing of this Amended 10-Q, we are unable to predict either the potential near-term or longer-term impact that the coronavirus may have on our financial and operating results due to numerous uncertainties regarding the duration and severity of the crisis. To the greatest extent possible, we intend to operate our business in the ordinary course. Nevertheless, the ultimate impact of the coronavirus pandemic is highly uncertain and subject to change, and our business, results of operations, and financial condition have been and will likely continue to be impacted by future developments concerning the pandemic and the resulting economic disruption.
Readers should carefully consider these risks and all other information contained in our 10-K, including the Company’s financial statements and the related notes thereto. The risks and uncertainties described in our 10-K and throughout this Amended 10-Q are not the only ones facing the Company.
Additional risks and uncertainties not presently known to us, or not presently deemed material by us, may also impair our operations and performance.performance.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3.Defaults Upon Senior Securities
None.
Item 4.Mine Safety Disclosures
Not Applicable.
Item 5.Other Information
Not Applicable.
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Item 6.Exhibits
3. |
| Articles of Incorporation or Bylaws | |
| | (a) | |
(b) | |||
| |||
10. | | Material Contracts | |
| | (a) | |
(b) | |||
(c) | |||
| | (d) | |
31. | | Rule 13a-14(a)/15d-14(a) Certifications | |
| | 1. | |
2. | |||
| | | |
32. | | Rule 1350 Certifications | |
| | 1. | |
| | 2. | |
| | | |
101.INS | | Formatted in Inline XBRL (Extensible Business Reporting Language) (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). | |
101.SCH | | Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
* Filed herewith
**The certifications furnished in Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed by the undersigned, thereunto duly authorized.
Dated: November 16, 2022May 19, 2023
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| /s/Dozy Mmobuosi |
| Dozy Mmobuosi |
| Chief Executive Officer |
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