Tingo Group, Inc. (NASDAQ: TIO) (“Tingo” or the “Company”), a
profitable and fast growing fintech, agri-fintech and food company,
today issues a response to further allegations made by short seller
Hindenburg Research (“Hindenburg”) on August 31, 2023.
Response to further allegations issues by
Hindenburg on August 31, 2023:
- Conduct of the Investigations
We stated the
following within our press release dated August 30, 2023: “At the
direction of the Company’s independent directors, independent
counsel investigated certain of the Hindenburg allegations and
provided the independent directors with an interim report
summarizing evidence it had reviewed, along with items requiring
further investigation. The Company’s outside counsel then conducted
its own investigation into the allegations, which included
following up on the items identified by independent counsel. Based
on the Company’s outside counsel’s investigation and further
investigative work of its own, the Company has concluded it
can now provide the following response to the allegations in the
Hindenburg report.”
As clearly explained,
independent counsel investigated certain of the Hindenburg
allegations and provided an interim report summarizing evidence it
had reviewed along with items requiring further investigation.
Thereafter, as part of its own investigation into the Hindenburg
allegations, outside counsel followed up on the items identified by
independent counsel.
By way of further
clarification, in addition to appointing the U.S. Independent &
Internal Investigations team of a leading international law firm,
the company engaged a Top 10 U.S. Law Firm as outside counsel to
undertake its own investigation, and also the Nigerian offices of a
separate global and Top 10 U.S. Law Firm to undertake investigative
work in Nigeria.
The Company holds
accounts with two banks in Africa, one of which is a multi-national
bank with offices in the U.S., the U.K. and Europe.
As part of the
investigations, the legal counsel obtained bank statements and
other records directly from the banks. In addition, interviews were
conducted with both banks. The bank balances of each company were
confirmed at several dates, including at the Quarter End dates of
March 31, 2023, June 30, 2023, and as late as August 3, 2023, which
reconciled and agreed to each company’s accounting records and
financial statements.
The Company’s cash
utilization during the second quarter of 2023 is clearly explained
within the Company’s Form 10-Q, press release and financial results
conference call presentation. As stated, the cash utilization
included: (i) making an upfront payment of $434.2 million on the
purchase of 6 million handsets for new AFAN customers; (ii)
prepaying AFAN for produce for Tingo Foods and settling their
brought forward payables, resulting in a total net outlay of $336.1
million; and (iii) self-funding stock purchases of $225.8 million
for Tingo DMCCs export sales, the revenues for which are scheduled
to be received during the third quarter. In addition, tax payments
totaling $174.0 million were made for Tingo Mobile on its taxable
earnings for fiscal year 2022.
The above
expenditures have resulted in an addition of $434 million to the
Company’s fixed assets, a receivables balance at June 30, 2023 of
more than $360 million, and a reduction in current liabilities in
the second quarter of more than $270 million. The U.S. dollar
denominated balance sheet has however been materially impacted by
the devaluation of the Naira against the U.S. dollar, which
occurred during June 2023 as a result of the lifting of certain
foreign exchange restrictions by Nigeria’s new presidential
administration.
- Mobile Phone Supplier - UGC Technologies Company
Limited
As stated within our
press release of August 30, 2023: “Since 2020, Tingo Mobile has
purchased mobile phones from two suppliers: UGC Technologies
Limited, with which it has had a contractual relationship since
December 2020, and Bullitt Mobile, with which it has had a
distribution agreement since February 2022.
Hindenburg contacted
a company doing business by the name of UGC Mobile Technologies in
the U.S., not Tingo Mobile’s supplier, UGC Technologies Limited,
which has offices in Africa and China. Tingo Mobile has purchased
almost all its mobile phones from UGC Technologies Limited to date,
with only a small purchase of 1,000 units of Caterpillar branded
phones from Bullitt Mobile in 2022.”
By way of further
clarification, Hindenburg reported they have spoken to an
individual named Busty Okundaye who, according to his own
biographies, is the CEO of U.S. companies UGC Technologies Group
and UGC Technologies & Management, and also a director of a
Nigerian company doing business by the name of UGC Mobile
Technologies Company Limited.
These companies are
unrelated to Tingo Mobile’s supplier of mobile phones, namely UGC
Technologies Limited in Africa, which, according to government
documentation, was incorporated in 2017, and its mobile and
electronics supply company in Guangdong, China, which, according to
its business certificate, was incorporated in 2012.
As part of the
investigations, documentation of all transactions between Tingo
Mobile and UGC Technologies Limited was obtained and reviewed,
including in connection with the delivery of the phones and with
the existence of the UGC companies in Africa and China. In
addition, interviews were conducted with UGC, the cooperatives that
receive and lease the phones and with the end-users of the phones
(the farmers).
- Relationship with Cooperatives
Ailoje Royal Farms
Multi-Purpose Cooperative, which leases 4.844 million phones from
Tingo Mobile, is headed by its Chairman, His Royal Highness Alhaji
Bako E. Dogwo, who is also the Chairman of the Edo State Chapter of
AFAN. Ailoje has confirmed they have more than 6 million members
from over 1,100 smaller farming cooperatives and farming clusters
located across all 36 states of Nigeria.
Kebbi (Dala)
Multi-Purpose Cooperative Society, which leases 4.5 million mobile
phones from Tingo Mobile, is headed by its president, Mr. Haib
Umar. The Kebbi cooperative is registered in Kano State (and not
Kebbi State, as claimed by Hindenburg), with partnerships with
sub-cooperatives in the 19 states of Northern Nigeria.
As part of the
investigations into the Hindenburg allegations, the Nigeria office
of the Company’s outside counsel conducted investigative visits to
each of Ailoje, Kebbi and AFAN, which included the inspection and
review of large amounts of documentation and other information.
Separate video interviews were also conducted with the Chairmen /
President and National Secretaries of the three cooperatives in
Nigeria and the Ashanti Investment Trust in Ghana. In addition, the
Chairmen / President of the three cooperatives produced sworn
affidavits in the Federal High Court of Nigeria, which had been
authorized by the Board of Trustees of each cooperative,
confirming, among other information, their relationships with Tingo
Mobile, along with the number of phones that they and their members
leased from Tingo Mobile (which agreed to the numbers given in the
Company’s filings).
The existence of and
relationships with the cooperatives was proven and confirmed.
As stated within our
press release of August 30, 2023: “The inventory held by Tingo
Foods at the time it was purchased by the Company in February 2023
was sold to a customer on March 20, 2023, the proceeds for which
were received on June 29, 2023.”
The Company’s
cashflow statement in its Financial Statements and Form 10-Q for
the second quarter of 2023 is clearly labeled as “For the six
months ended June 30”. On this basis the cash flow statement
reflects the movement of inventory between January 1, 2023 and June
30, 2023. It therefore follows that the sale of stock that was
acquired in February 2023 (and therefore was not included in the
balance sheet at January 1, 2023) and June 2023 is not shown.
- Airtel and Network
Providers
As stated within our
press release of August 30, 2023: “Tingo Mobile does not directly
provide airtime and data services on the phones it leases to
customers, or through its Nwassa platform. Such services are
currently provided by a third-party vendor. Tingo Mobile therefore
does not require a Mobile License from the Nigerian Communications
Commission. This arrangement allows Tingo Mobile’s customers to
choose the best network provider for their location from Airtel,
MTN, 9 Mobile and Globacom. Tingo Mobile earns a commission on the
airtime and data services purchased by its customers, which it
receives from its vendor, and which were previously received from
Airtel.”
The Forms 10-Q for
the first quarter and second quarter of 2023 do not make any
mention of Airtel.
As stated within our
press release of August 30, 2023: “The Nwassa USSD platform is
pre-loaded on the Tingo Mobile phones that are leased to the
cooperatives and their farmers. Other individuals that have their
own mobile phone can also register on the Nwassa USSD platform and
conduct transactions on the platform. The Nwassa platform can be
used by farmers to purchase items such as farming inputs,
insurance, micro-loans, or additional airtime. The transactions
made through Nwassa are processed by a third-party payment
processing company owned by an American multi-national fintech
company, which collects a commission payment on behalf of Tingo
Mobile on each transaction and remits the commissions to its bank
account. Tingo Mobile has confirmed its Q1 2023 reported revenue
from the NWASSA platform.”
In the Q&A
sessions during the three conference calls following the report of
our results for the year ending December 31, 2022, and the first
and second quarters of 2023, we have answered questions about Tingo
Mobile’s Nwassa platform. As explained in the Q&A session of
our conference call of August 31, 2023:
Nwassa does not
currently have an operational website or app because the mobile
network coverage in rural areas of Nigeria (where the majority of
Tingo Mobile’s farmers are based) is not yet sufficiently developed
or reliable enough to support them. Nigeria’s telecoms and internet
infrastructure is not as well developed as the United States and
the UK for example. As a result, 4G, 5G and Wi-Fi are only
available in the larger cities and certainly not in most of
Nigeria’s rural regions. For this reason, Tingo Mobile, like many
other mobile phone-based businesses in Nigeria, operates its Nwassa
marketplace over a USSD platform (similar to the old WAP services,
which were commonly used on mobile phones when the displays were in
monochrome), which is primarily text message-based and is the only
type of platform that is accessible to many of Nigeria’s
farmers.
It is not only Tingo
Mobile that offers a USSD platform in Nigeria. Almost every major
bank, insurance company, telecoms company and public service
provider operates a USSD platform.
Tingo Mobile is in
the process of developing an NWASSA web-based app, which, once
launched, will be operated in parallel to the USSD platform. The
web-based app is expected to become increasingly popular as network
and data coverage in Nigeria (especially in its rural areas)
improves.
- Tingo DMCC and Export Business
As stated within our
press release of August 30, 2023: “Tingo DMCC is the Company’s new
agricultural export business. As of June 30, 2023, Tingo DMCC had
conducted three export sales transactions totaling $348 million
with customers located in neighboring countries within Africa.
Tingo DMCC currently conducts its business through its direct
contacts and sales leads. It is, however, in the process of
developing a separate website for use in the future.”
It would appear that
Hindenburg reviewed export records relating to the marine shipping
of exports/imports, which would not record the over-land transport
of exports/imports.
- Hindenburg’s submission of questions on August 9,
2023
The 38 questions
submitted to the Company by Hindenburg on August 9, 2023, were
clearly derived from the allegations contained within their report.
All the questions pertaining to the Company and its businesses have
been addressed through the recently concluded investigations and
the Company’s press release of August 30, 2023.
Furthermore, as
stated within our press release of August 30, 2023, having
concluded the investigation into the allegations made by Hindenburg
against the Company and its businesses, which was deemed to be the
highest priority, the Company and its outside counsel will now
proceed to investigate Hindenburg’s allegations against the founder
of Tingo Mobile and Tingo Foods, Dozy Mmobuosi.
About Tingo Group
Tingo Group, Inc. (Nasdaq: TIO) is a global
Fintech and Agri-Fintech group of companies with operations in
Africa, Southeast Asia and the Middle East. Tingo Group’s wholly
owned subsidiary, Tingo Mobile, is a leading Agri-Fintech company
operating in Africa, with a comprehensive portfolio of innovative
products, including a ‘device as a service’ smartphone and a
value-added service platform. As part of its globalization
strategy, Tingo Mobile has recently begun to expand internationally
and entered into trade partnerships that are contracted to increase
the number of subscribed farmers from 9.3 million in 2022 to more
than 32 million, providing them with access to services including,
among others, the Nwassa ‘seed-to-sale’ marketplace platform,
insurance, micro-finance, and mobile phone and data top-up. Tingo
Group’s other Tingo business verticals include: TingoPay, a
SuperApp in partnership with Visa, that is currently in beta
version, offering a wide range of B2C and B2B services including
payment services, an e-wallet, foreign exchange and merchant
services; Tingo Foods, a food processing business that processes
raw foods into finished products such as rice, groundnut oil, nut
products, wheat, millet and maize; and Tingo DMCC, a commodity
trading platform and agricultural commodities export business based
out of the Dubai Multi Commodities Center. In addition to its Tingo
business verticals, Tingo Group also holds and operates an
insurance brokerage platform business in China; and Magpie
Securities, a regulated finance services Fintech business operating
out of Hong Kong and Singapore. For more information visit
tingogroup.com.
Disclaimer
The information in this news release includes
certain information and statements about management and the
Company’s board of director’s view of future events, expectations,
plans and prospects that constitute forward looking statements.
These statements are based upon assumptions that are subject to
significant risks and uncertainties. Because of these risks and
uncertainties and as a result of a variety of factors, the actual
results, expectations, achievements or performance may differ
materially from those anticipated and indicated by these
forward-looking statements. Any number of factors could cause
actual results to differ materially from these forward-looking
statements as well as future results. Although the Company believes
that the expectations reflected in forward looking statements are
reasonable, it can give no assurance that the expectations of any
forward-looking statements will prove to be correct. These
forward-looking statements involve a number of risks, uncertainties
or other assumptions that may cause actual results or performance
to be materially different from those expressed or implied by these
forward-looking statements. These risks and uncertainties include,
but are not limited to, those discussed and identified in public
filings made with the SEC by the Company and: (i) the results of
the independent review; (ii) the risk of restatement of the
Company’s previously reported financial statements or the
identification of one or more material weaknesses in internal
control over financial reporting; (iii) costs relating to the
independent review, which are likely to be material; (iv) the
outcome of any legal proceedings that may be instituted against the
Company, including as may result from the independent review and
(v) the ability to meet stock exchange continued listing standards.
Except as required by law, the Company disclaims any intention and
assumes no obligation to update or revise any forward-looking
statements to reflect actual results, whether as a result of new
information, future events, changes in assumptions, changes in
factors affecting such forward-looking statements or otherwise.
Investor Relations
Contact949-491-8235TIO@mzgroup.uswww.mzgroup.us
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