Tingo Group Issues Response to Short-Seller’s Statement of September 5, 2023
06 Setembro 2023 - 9:40AM
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 a statement made by short seller
Hindenburg Research (“Hindenburg”) on September 5, 2023.
The Company noted that Hindenburg has once again
attempted to repeat its previous allegations despite the completion
of a detailed investigation into the short-seller report of June 6,
2023, which disproved all such allegations.
Stockholders are reminded of Hindenburg’s
disclaimers in its short seller report and subsequent statements,
which disclose the following:
“Hindenburg Research
(possibly along with or through our members, partners, affiliates,
employees, and/or consultants) along with our clients and/or
investors has a short position in all stocks (and/or options of the
stock) covered herein, and therefore stands to realize significant
gains in the event that the price of any stock covered herein
declines.”
“Hindenburg Research
makes no representation, express or implied, as to the accuracy,
timeliness, or completeness of any such information or with regard
to the results to be obtained from its use. All expressions of
opinion are subject to change without notice, and Hindenburg
Research does not undertake to update or supplement this report or
any of the information contained herein.”
For the avoidance of doubt, the Company
reconfirms its rebuttal of all the allegations made by Hindenburg,
as summarized within its press releases of August 30, 2023 and
September 1, 2023. It is noted by the Company that Hindenburg has
attempted to discredit certain information contained in these two
press releases including, for example, in connection with the
confirmation of the Company’s cash balances, the details of the
cooperatives: Ailoje Royal Farms Multi-Purpose Cooperative and
Kebbi (Dala) Multipurpose Cooperative Society, and the details of
UGC Technologies Limited (and its supply company in China) despite
the fact that such information has been investigated in detail by
leading major law firms. At the same time, Hindenburg appears to be
ignoring the numerous errors it has made in its “research”,
including for example through its questioning of the wrong parties,
relying on unverified social media/internet sources, misreading
financial statements and distorting/misrepresenting various
information. Stockholders should therefore be warned that
Hindenburg’s statements are false and misleading which, as
disclosed within its own disclaimer, is seemingly for the purpose
of its direct financial gain. Bearing this in mind, the
Company is currently speaking with its advisers and its
stockholders about taking legal action against Hindenburg.
The majority of the misinformation reported by
Hindenburg in its statement of September 5, 2023 has already been
addressed in the Company’s press release of September 1, 2023, as
set out below.
- Conduct of the
InvestigationsWe stated the following within our press
release of 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 Hindenburg allegations and
provided an interim report summarizing evidence it had reviewed
along with items requiring further investigation. Then, 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.
- Cash BalancesThe
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 held 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 expenditure has led to 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 foreign exchange restrictions by Nigeria’s
new presidential administration.
- Mobile Phone Supplier - UGC
Technologies Company LimitedAs 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 called 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 have reported that they
have spoken to an individual called 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 called UGC Mobile Technologies
Company Limited.These companies are unrelated to Tingo Mobile’s
supplier of mobile phones, namely UGC Technologies Limited in
Africa which was incorporated in 2017, and its mobile and
electronics supply company in Guangdong, China, which was
incorporated in 2012.As part of the investigations documentation of
all the 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 received and lease the phones and with
the end-users of the phones (the farmers).
- Relationship with
CooperativesAiloje 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 have
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 head by its president, Mr Habib 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 from
the U.S. offices of legal counsel were also conducted with the
Chairmen/President and National Secretaries of the three
cooperatives in Nigeria and the Ashanti Investment Trust in
Ghana.The existence of and relationships with the cooperatives was
proven and confirmed.
- Tingo
Foods inventoryAs 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 in the 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 ProvidersAs 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.
-
NwassaAs 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 of the three conference calls for our
financial results of fully year 2022, and the first and second
quarters of 2023, the Company answered questions that were
submitted 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 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,
similar to 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 popular as network and data coverage in Nigeria
(especially in its rural areas) improves.
- Tingo DMCC and Export
BusinessAs 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, 2023The 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 business have been
addressed through the recently concluded investigations and the
Company’s press release of August 31, 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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