Tingo, Inc.("we," "us," "our," "Tingo" or the "Company"), a Nevadacorporation, 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, Tingo Mobile, PLC, a Nigerian public limited company ("Tingo Mobile"), in a share exchange with its sole shareholder effective August 15, 2021. The Company, including its subsidiary Tingo Mobile, is 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, Tingohad 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 Africato 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 our members 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 23rd Street, 2nd Floor, New York, NY10010, and the telephone number is +1-646-847-0144. Our corporate website is located at www.tingoinc.com, although 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 shares are traded on OTC Markets under the ticker symbol 'TMNA'. The information contained in this section should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this Quarterly Report and in conjunction with the financial statements and notes thereto in the Company's Annual Report on Form 10-K filed with the SECon March 31, 2022("10-K"). In addition, some of the statements in this report constitute forward-looking statements. The matters discussed in this Quarterly Report, 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 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 Quarterly Report should not be regarded as a representation by us that our plans or objectives will be achieved. The forward-looking statements contained in this Quarterly Report include statements as to:
? our future operating results;
? our business prospects;
? currency volatility, currency and inflation risks;
? our contractual agreements with our customers and other relationships with
some thirds ;
? the dependence of our future success on the general economy and its impact on
the industries in which we invest;
19 Table of Contents
? political instability in the countries in which we operate;
? uncertainty regarding certain legal systems in
? our dependence on external sources of capital;
? our expected financing and capital raisings;
? our regulatory structure and tax treatment;
? the adequacy of our liquidity and working capital;
? the timing of cash flows from our operations;
? the impact of interest rate fluctuations on our business;
? market conditions and our ability to access additional capital, if deemed
? uncertainty about the timing, pace and depth of an economic recovery in
? natural or man-made disasters and other external events that may disrupt our
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 Quarterly Report, 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 Quarterly Report 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 Quarterly Report 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 Quarterly Report is filed with the
The acquisition of
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 Delawarecorporation ("TIH"), the sole shareholder of TingoMobile. 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. This transaction cost has been capitalized at a value of $ 111,387,840. 20 Table of Contents Results of Operations
Three months completed
The Company’s consolidated results of operations for the three months ended
Three Months Ended ($in Thousands) % of % of March 31, 2022 Revenue December 31, 2021 Revenue Revenue 257,058 -
Operating Expense (191,518) 74.50 % (689,602) (134.53) % Operating Income (loss) 65,539 25.50 %
Other Income , net 186 - (326) - Income (loss) before taxes 65,725 25.57 % (172,818) (33.46) % Income tax expense (benefit) (38,699)
Income (loss) from continuing operations 27,026 10.51 % (212,224) (41.09) % Net Income (loss) 27,026 10.51 %
In view of the fact that we acquired Tingo Mobile during the third quarter of 2021 and discontinued the prior existing business of the Company, the comparison of operating results in the first quarter of 2022 to the first quarter of 2021 does not provide a meaningful comparison, as the acquisition of Tingo Mobile significantly alters the performance of the Company. Supplemental information relating to the comparative results for Tingo Mobile for the quarters ended
March 31, 2022and 2021 are included below under Unaudited Proforma Management Results of Tingo Mobile for the Three Months Ended March 31, 2022and December 31, 2021. Revenue Three Months Ended March 31, 2022 December 31, 2021 $ $ Outright Sales - Mobile phones - 301,009,552 Sales- Mobile Phones ( leasing) 121,773,857 123,067,333 Services- Mobile calls & data 13,726,612 14,462,866 NWASSA revenue 121,557,050 77,918,210 Airtime 3,335,517 3,381,303 Brokerage on loans 4,120,651 770,766 Insurance 6,595,200 7,025,124 Trading on agricultural produce 62,198,505 29,385,688 Utility 45,307,177 37,355,329 Total Revenue 257,057,519 516,457,961
Leasing revenue is recognized over 36 months in equal instalments from the date of sign up of the contract. Nwassa, our Agri-Fintech platform generated 47.3% of total Company revenue during the three months ended
March 31, 2022. By comparison, the Agri-Fintech revenue for the three months ended December 31, 2021was 15.1%. The mobile leasing and services ('device as a service') element represented 52.7% of our total revenue during the first quarter of 2022. This compares with 26.7% for the three months ended December 31, 2021. Excluding one off sales this represents 63.8% for the three months ended December 31,2021.The Company has delivered strong growth in its Agri-Fintech Nwassa platform, which has proportionately reduced the mobile leasing and services revenues as a percentage of total revenues by over 20% quarter-on-quarter. The level of growth in our Nwassa Agri-Fintech platform recorded significant increased activity in the number of farmers trading on our Agri-Marketplace by over 90% for the three months ended March 31, 2022as compared to the three months ended December 31, 2021. Utility top-up activity levels increased by 38% for the three months ended March 31, 2022compared to the three months ended December 31, 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 21 Table of Contents percentage of our 'Device as a Service' customer base , powered through farmers' cooperatives. The level of loan brokerage increased by over 270% for the three months ended March 31, 2022 compares to the three months ended December 31,2021. We noted that at least 30% of the non-leasing customer base who purchased our mobile phones in November 2021registered for access to the Nwassa platform to manage airtime and utility payments. This is significant, inasmuch as it is 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 AgriFintech platform Nwassa, 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 $0.24per 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.
Cost of sales
The following table presents the cost of sales for the three months ended
Three Months Ended March 31, 2022 December 31, 2021 $ $ Commission to Cooperatives and Agents 2,499,840 2,747,945
Cost of Mobile Phones 101,282,845 385,226,378 Total cost of sales 103,782,685 387,974,323
The cost of sales is made up of two key components:
Commissions to cooperatives and agents – the company has more than 17,000 agents
? who support the deployment of our services through Cooperatives and a
network of independent agencies of rural farmers and women.
Cost of mobile phones – we depreciate and equalize the cost of mobile devices by
? in accordance with the contractual recognition of revenues from our leased phones over 36 months.
There were no outright sales of phones during this period. Quarter of the previous period
? Advances in the balance sheet represent the gross value of telephone charges which
will be amortized monthly.
Selling, general and administrative expenses
The following table presents selling, general and administrative expenses for the three months ended
Three Months Ended March 31, 2022 December 31, 2021 $ $ Payroll and related expenses 24,987,746 221,952,587 Distribution expenses 221,187 411,270 Professional fees 55,524,912 76,840,995 Bank fees and charges 636,047 412,914 Depreciation and amortization 5,458,094 796,029 General and administrative - other 860,331 1,158,576 22 Table of Contents Bad debt expenses 47,398 54,881
Selling, general and administrative expenses 87,735,715 301,627,252
23 Table of Contents Prior year costs mainly relate to general and administrative costs only. Our acquisition of Tingo Mobile and the attendant expenses to maintain our status as a public reporting company has substantially increased these costs. In addition, in 2021, we adopted our 2021 Equity Incentive Plan which provided for, among other awards, shares of restricted stock to Plan participants. This resulted in compensation expense of
$23.4 millionfor the quarter ended March 31, 2022, included under Payroll and related expenses ( prior three months ended December 31, 2021- $220.1m). In addition , Professional fees above relates to stock incentive granted to consultants at a cost of $55m( prior three months ended December 31, 2021- $ 76.5m). Eliminating non-cash expenditures such as compensation expense relating to these stock awards, the Company had profit before tax of approximately $105.4 millionon a consolidated basis during the first quarter of 2022. A detailed breakdown of other costs included in Selling General and Administrative Expenses are contained in the Consolidated Profit and Loss Statement. A substantial part of these costs relate to Tingo Mobile's operations in Nigeria. Unaudited Proforma Management Results of our principal subsidiary Tingo Mobile Plc( Nigeria) for the Three Months Ended March 31, 2022and December 31, 2021Three Months Ended March 31, 2022 December 31, 2021$ $ Revenues
Outright Sales - Mobile Phones -
301 009 552
Sales- Mobile Phones ( leasing) 121,773,857
123,067,333 Services- Mobile calls & data 13,726,612 14,462,866 NWASSA revenue 121,467,049 77,918,210 Airtime 3,335,517 3,381,303 Brokerage on loans 4,120,651 770,766 Insurance 6,595,200 7,025,124
Trading on agricultural produce 62,198,505
29,385,688 Utility 45,217,176 37,355,329 Total Revenue 256,967,518 516,457,961 Cost of Revenues 103,782,685 387,974,323 Gross Profit 153,184,833 128,483,638 Operating Expense 9,322,383 4,359,258 Income from Operations 143,862,450 124,124,380 Other income 185,798 326,170 Profit before tax 144,048,248 124,450,550 Taxation 38,698,829 39,406,255 Profit after Tax 105,349,419 85,044,295 Total Comprehensive Income attributable to ordinary shareholders of Tingo 105,349,419
Profit per share - Basic and Diluted $ 0.09 $ 0.07 Weighted Average number of common shares outstanding Basic and diluted 1,214,793,989
The figures above represent the unaudited pro forma performance of our core business, Tingo Mobile, for the three months ended
24 Table of Contents Tingo Mobile Revenue Generally. Excluding one off sales of mobile phones amounting to
$301.0 millionin 2021 , total revenue for Tingo Mobile increased substantially from from $215.5 millionin the fourth quarter of 2021 to $256.9 millionin the first quarter of 2022, an increase of $41.4 million, or 19.2%. Our Nwassa Agri-Fintech platform delivered a strong growth in revenue, increasing from $ 77.9 millionin the fourth quarter of 2021 to $121.8 millionin the first quarter 2022, a significant increase of 56.4% quarter-on-quarter. The change from the three months ended December 31, 2021to March 31, 2022was principally due to the following:
the increased use of our agri-fintech services by our subscribers, which has experienced
quarter of 2021 regarding the revenues of Nwassa, our Agri-fintech platform. This
represents a net growth of 55% over the period. Our strategy to enable rural people
? communities with an affordable smartphone “device as a service” has proven
succeeded in increasing the volume of trade in agricultural products carried out on
the platform. Based on the fees we receive for these services, the Company
during the first quarter of 2022. (fourth quarter of 2021 –
The agricultural market place that allows farmers to exchange their delivered agricultural products
a growth of more than 100% in the number of farmers now marketing their products. the
significant increase in activity showed a growth of over 115% in Nwassa’s revenues for
? this activity. The turnover for the first quarter of 2022 achieved was
transaction value of approximately
Complementary utilities in Nwassa saw its revenue increase to
? quarter of 2022 compared to
represents a growth rate of 20.8% quarter on quarter.
Nwassa’s significant revenue growth is in line with our strategy to
? grow our Agri-Fintech business as our primary focus with mobile access
devices as an enabler to ensure access and connectivity to our Nwassa platform.
The slight decline in the Naira-USD exchange rate on
both the activity in volume and the income thereof.
Mobile rental revenues continue to be in line with the expectations of the three-year rental contract and slightly impacted by the lower exchange rate.
Tingo Mobile Revenue Cost
Tingo Mobile's cost of revenue for the three months ended
March 31, 2022was $103.8 millionas compared to $387.9 millionfor the three months ended December 31, 2021, a decrease of $284.1 million, or approximately 73%. This is largely due to the one off cost associated with one off sales in November 2021of $301 millionCost of revenue principally consists of matching the release of our lease prepayments to our manufacturer to that of our customers over the 36-month mobile leasing period. Increases over the prior year are a combination of a longer leasing period in 2021, due to the renewal of new contracts in May and August of 2021. However, because overall cost of revenue also includes the cost of our agri-fintech services, the trending decrease in cost of revenue as a percentage of overall sales is inversely related to the proportional increase over time of revenue generation from our higher margin agri-fintech services as described below. In other words, as we expand our NWASSA platform and revenue streams associated therewith, we expect our overall cost of revenue, as a percentage of overall revenue, to decrease accordingly.
Gross profit and operating result of Tingo Mobile
Tingo Mobile's gross profit for the three months ended
March 31, 2022was $153.2 millionas compared to $128.5 millionduring the three months ended December 31, 2021, an increase of $26.6 million, or 20.1%. The substantial increase is largely due to 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%. 25 Table of Contents 2021 Equity Incentive Plan On October 6, 2021, the Board 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 Tingoto 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 quarter of 2022, the Tingo Compensation Committee granted awards under the Plan to certain directors, executive officers, employees, and consultants in the aggregate amount of 118,870,000 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. In connection with these awards, we recorded compensation expense of $78.4 millionfor the three months ended March 31, 2022( $ 23.4mfor staff and $55mfor consultants).
Cash 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 Commissionindicating the sale of our securities in one or more private transactions (the "Private Offering").
We anticipate that, following the private offering, we will also be able to secure sufficient operating and working capital for the operations of our parent company over the next twelve months.
Indebtedness: The Company had no financial debt as of
We expect our cash on hand, proceeds received from our assets and operations, cash flow from continuing 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 continuing 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. 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. 26 Table of Contents Dividends
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.
Our Management has carried out an assessment of the Company’s activity up to the date of issue of the financial statements by noting the following subsequent event:
May 10, 2022, the Company entered into an Agreement and Plan of Merger ("Merger Agreement") among MICT, Inc. ("MICT"), MICT Merger Sub, Inc.("Merger Sub"), and the Company, whereby Merger Sub would be merged with and into the Company, and the Company would therefore become a wholly-owned subsidiary of MICT. The shares of MICT are traded on the Nasdaq Capital Market under the symbol 'MICT'. A summary of the Merger Agreement and the actions taken by the Company and MICT in connection therewith are included in the Company's Current Report on Form 8-K filed with the U.S. Securities and Exchange Commissionon May 12, 2022. 27 Table of Contents
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