TINGO GROUP, INC. This Quarterly Report on Form 10-Q (the "Quarterly Report"), contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws, and is subject to the safe-harbor created by such Act and laws. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of such terms, or other variations thereon or comparable terminology. The statements herein and their implications are merely predictions and therefore inherently subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those contemplated by the forward-looking statements. Such factors include, but are not limited to changes in economic conditions, government regulations, contract requirements and abilities, competitive pressures and constantly changing technology and market acceptance of our products and services and other risks and uncertainties discussed in this annual Form 10-K report. Such forward-looking statements appear in this Item 2 - "Management's Discussion and Analysis of Financial Condition and Results of Operations," and may appear elsewhere in this Quarterly Report and include, but are not limited to, statements regarding the following:
? our ownership position in Micronet's share capital;
? the impact of COVID-19 on both our operations and financial outlook and
those of Intermediate, Micronet and MICT ;
? our financing needs and strategies, and our ability to continue to
raise capital in the future;
? our corporate development objectives;
? our financial position and the value of and market for our common stock;
? use of proceeds from any future financing, if any; and
? the sufficiency of our capital resources.
Our business is subject to substantial risks, which increase the uncertainty
inherent in the forward-looking statements contained or implied in this report.
Except as required by law, we assume no obligation to update these
forward-looking statements to reflect actual results or changes in factors or
assumptions affecting such forward-looking statements. Further information on
potential factors that could affect our business is described in our
Overview
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Since
Following Intermediate's acquisition of
Intermediate launched Magpie Invest, a global stock trading app, on
These opportunities will continue to be realized and executed through our business development efforts, which include the acquisition of potential target entities, business and assets (such as applicable required licenses) in the relevant business space and segments in which we plan to operate. We believe that this will allow the Company to enter into the market quickly and leverage existing assets in order to promote our growth strategy.
Prior to
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Potential Merger with Tingo, Inc.
On
Pursuant to the Merger Agreement, subject to the terms and conditions set forth
therein, upon the consummation of the transactions contemplated by the Merger
Agreement (the "Closing"), Merger Sub will merge with and into Tingo (the
"Merger" and, together with the other transactions contemplated by the Merger
Agreement, the "Transactions"), with the Seller continuing as the surviving
corporation in the Merger and a wholly-owned subsidiary of
Tingo is the leading Agri fintech company operating in
As a result of the Merger, all of the issued and outstanding capital stock of the Seller immediately prior to the Closing, shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, in exchange for the right for each Seller Stockholder to receive its Pro Rata Share of the Merger Consideration, upon the terms and subject to the conditions set forth in the Merger Agreement.
As consideration for the Merger, the Seller Security Holders collectively shall
receive from
On
In accordance with US GAAP, upon Closing, which is subject to Tingo stock holder
approval,
The following diagram illustrates the Company's current corporate structure,
including its subsidiaries, and variable interest entities ("VIEs"), as of
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VIE agreements with Guangxi Zhongtong:
On
Loan Agreement
Pursuant to this agreement, Bokefa agreed to provide loans to the registered shareholders of Guangxi Zhongtong. The term of the loan shall start from the date when the loan is actually paid, until the date on which the loan is repaid in full. The agreement shall terminate when the shareholders repay the loan. The loan should be used solely for Guangxi Zhongtong's operating expenses and should be exclusively repaid by transferring shares of Guangxi Zhongtong to Bokefa when PRC Law permits.
Exclusive Option Agreement
The effective term of the agreement is unlimited and the agreement shall terminate upon the transfer of all the equity interest of Guangxi Zhongtong to Bokefa in accordance with relevant laws and provisions as provided in the agreement, or upon written notice by Bokefa to shareholders. In consideration of Bokefa's loan arrangement, the shareholders have agreed to grant Bokefa an exclusive option to purchase their equity interest. Distribution of residual profits, if any, are restricted without the approval of Bokefa. Upon request by Bokefa, Guangxi Zhongtong is obligated to distribute profits to the shareholders of Guangxi Zhongtong, who must remit such profits to Bokefa immediately. Guangxi Zhongtong and its shareholders are required to act in a manner that is in the best interest of Bokefa with regards to Guangxi Zhongtong's business operation.
Equity Pledge Agreement
The agreement will be terminated upon such date when the other agreements have been terminated. Pursuant to the agreement, the nominee shareholders pledged all their equity interest in Guangxi Zhongtong to Bokefa as security for the obligations in the other agreements. Bokefa has the right to receive dividends on the pledged shares, and all shareholders are required to act in a manner that is in the best interest of Bokefa.
Business Cooperation Agreement
The agreement is effective until terminated by both parties. Guangxi Zhongtong and its shareholders agree that the legal person, directors, general manager and other senior officers of Guangxi Zhongtong should be appointed or elected by Bokefa. Guangxi Zhongtong and its shareholders agree that all the financial and operational decisions for Guangxi Zhongtong will be made by Bokefa.
Exclusive Service Agreement
The effective term of this agreement is for one year and it can be extended an unlimited number of times if agreed by both parties. Bokefa agrees to provide exclusive technical consulting and support services to Guangxi Zhongtong and Guangxi Zhongtong agrees to pay service fees to Bokefa.
Entrustment and Power of Attorney Agreement
The shareholders of Guangxi Zhongtong agreed to entrust all the rights to exercise their voting power and any other rights as shareholders of Guangxi Zhongtong to Bokefa. The shareholders of Guangxi Zhongtong have each executed an irrevocable power of attorney to appoint Bokefa as their attorney-in-fact to vote on their behalf on all matters requiring shareholder approval. The agreement is effective until deregistration of Guangxi Zhongtong.
On
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VIE agreements with
On
Loan Agreement
Pursuant to this agreement, Bokefa agreed to provide loans to the registered
shareholders of Beijing Fucheng. The term of the loan under this agreement shall
start from the date when the loan is actually paid and shall continue until the
shareholders repay all the loan in accordance with this agreement. The agreement
shall terminate when the shareholders repay the loan. The loan should be used
solely for Beijing Fucheng's operating expenses, and should be exclusively
repaid by transferring shares of Beijing Fucheng to Bokefa when PRC Law
permits. As of
Exclusive Option Agreement
The effective term of the agreement is unlimited and the agreement shall terminate upon the transfer of all of the equity interest of Bejing Fucheng to Bokefa in accordance with relevant laws and provisions as provided in the agreement, or upon written notice by Bokefa to the shareholders. In consideration for Bokefa's loan arrangement, the shareholders have agreed to grant Bokefa an exclusive option to purchase their equity interest. Distribution of residual profits, if any, is restricted without the approval of Bokefa. Upon request by Bokefa, Beijing Fucheng is obligated to distribute profits to the shareholders of Beijing Fucheng, who must remit those profits to Bokefa immediately. Beijing Fucheng and its shareholders are required to act in a manner that is in the best interest of Bokefa with regards to Beijing Fucheng's business operations.
Equity Pledge Agreement
The agreement will be terminated at the date when the other agreements have been terminated. Pursuant to the agreement, the shareholders pledged all their equity interest in Beijing Fucheng to Bokefa as security for their obligations under the agreements. Bokefa has the right to receive dividends on the pledged shares, and all shareholders are required to act in a manner that is in the best interest of Bokefa.
Business Cooperation Agreement
The agreement is effective until terminated by both parties. Beijing Fucheng and its shareholders agree that the legal person, directors, general manager and other senior officers of Beijing Fucheng should be appointed or elected by Bokefa. Beijing Fucheng and its shareholders agree that all financial and operational decisions of Beijing Fucheng will be made by Bokefa.
Exclusive Service Agreement
The effective term of this agreement is for one year and it can be extended an unlimited number of times if agreed by both parties. Bokefa agrees to provide exclusive technical consulting and support services to Beijing Fucheng and Beijing Fucheng agrees to pay service fees to Bokefa.
Entrustment and Power of Attorney Agreement
The shareholders of Beijing Fucheng agreed to entrust all the rights to exercise their voting power and any other rights as shareholders of Beijing Fucheng to Bokefa. The shareholders of Beijing Fucheng have each executed an irrevocable power of attorney to appoint Bokefa as their attorney-in-fact to vote on their behalf on all matters requiring shareholder approval. The agreement is effective until deregistration of Beijing Fucheng.
VIE agreements with All Weather:
On
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Loan Agreement
Pursuant to this agreement, Bokefa agreed to provide loans to the shareholders of All Weather. The term of the loan shall start from the date when the loan is actually paid until the date on which the loan is repaid in full. The agreement shall terminate when the shareholders repay the loan. The loan should be used solely by All Weather for operating expenses, and should be exclusively repaid by transferring shares of All Weather to Bokefa when PRC Law permits.
Exclusive Option Agreement
The effective term of the agreement is unlimited and the agreement shall terminate upon the transfer of all of the equity interest of All Weather to Bokefa in accordance with relevant laws and provisions in the agreement, or upon written notice by Bokefa to the shareholders. In consideration for Bokefa's loan arrangement, the shareholders have agreed to grant Bokefa an exclusive option to purchase their equity interest. Distribution of residual profits, if any, is restricted without the approval of Bokefa. Upon request by Bokefa, All Weather is obligated to distribute profits to the shareholders of All Weather, who must remit the profits to Bokefa immediately. All Weather and its shareholders are required to act in a manner that is in the best interest of Bokefa with regard to All Weather's business operations.
Equity Pledge Agreement
The agreement will be terminated at the date when the other agreements have been terminated. Pursuant to the agreement, the nominee shareholders pledged all of their equity interest in All Weather to Bokefa as security for their obligations pursuant to the other agreements. Bokefa has the right to receive dividends on the pledged shares, and all shareholders are required to act in a manner that is in the best interest of Bokefa.
Business Cooperation Agreement
The agreement is effective until terminated by both parties. All Weather and its shareholders agree that the legal person, directors, general manager and other senior officers of All Weather should be appointed or elected by Bokefa. All Weather and its shareholders agree that all the financial and operational decisions of All Weather will be made by Bokefa.
Exclusive Service Agreement
The effective term of this agreement is for one year and it can be extended an unlimited number of times if agreed by both parties. Bokefa agrees to provide exclusive technical consulting and support services to All Weather and All Weather agrees to pay service fees to Bokefa.
Entrustment and Power of Attorney Agreement
The shareholders of All Weather agreed to entrust all their rights to exercise their voting power and any other rights as shareholders of All Weather to Bokefa. The shareholders of All Weather have each executed an irrevocable power of attorney to appoint Bokefa as their attorney-in-fact to vote on their behalf on all matters requiring shareholder approval. The agreement is effective until the deregistration of All Weather.
VIE agreements with Tianjin Dibao:
On
Loan Agreement
Pursuant to this agreement, Zhengzhong Energy agreed to provide loans to the shareholder of Tianjin Dibao. The term of the loan shall start from the date when the loan is actually paid. The agreement shall terminate when the shareholder repay the loan. The loan should be used solely to purchase Tianjin Dibao's 76% equity, and should be exclusively repaid by transferring shares of Tianjin Dibao to Zhengzhong Energy when PRC Law permits.
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Exclusive Option Agreement
The effective term of the agreement is unlimited and the agreement shall terminate upon the transfer of all of the equity interest of Tianjin Dibao to Zhengzhong Energy in accordance with relevant laws and provisions in the agreement, or upon written notice by Zhengzhong Energy to the shareholder. In consideration for Zhengzhong Energy's loan arrangement, the shareholder have agreed to grant Zhengzhong Energy an exclusive option to purchase their equity interest. Distribution of residual profits, if any, is restricted without the approval of Zhengzhong Energy. Upon request by Zhengzhong Energy, Tianjin Dibao is obligated to distribute profits to the shareholder of Tianjin Dibao, who must remit the profits to Zhengzhong Energy immediately. Tianjin Dibao and its shareholder are required to act in a manner that is in the best interest of Zhengzhong Energy with regard to Tianjin Dibao's business operations.
Equity Pledge Agreement
The agreement will be terminated at the date when the other agreements have been terminated. Pursuant to the agreement, the nominee shareholder pledged all of their equity interest in Tianjin Dibao to Zhengzhong Energy as security for their obligations pursuant to the other agreements. Zhengzhong Energy has the right to receive dividends on the pledged shares, and all shareholder are required to act in a manner that is in the best interest of Zhengzhong Energy.
Business Cooperation Agreement
The agreement is effective until terminated by both parties. Tianjin Dibao and its shareholder agree that the legal person, directors, general manager and other senior officers of Tianjin Dibao should be appointed or elected by Zhengzhong Energy. Tianjin Dibao and its shareholder agree that all the financial and operational decisions of Tianjin Dibao will be made by Zhengzhong Energy.
Exclusive Service Agreement
The effective term of this agreement is for one year and it can be extended an unlimited number of times if agreed by both parties. Zhengzhong Energy agrees to provide exclusive technical consulting and support services to Tianjin Dibao and Tianjin Dibao agrees to pay service fees to Zhengzhong Energy.
Entrustment and Power of Attorney Agreement
The shareholder of Tianjin Dibao agreed to entrust all their rights to exercise their voting power and any other rights as shareholder of Tianjin Dibao to Zhengzhong Energy. The shareholder of Tianjin Dibao have each executed an irrevocable power of attorney to appoint Zhengzhong Energy as their attorney-in-fact to vote on their behalf on all matters requiring shareholder approval. The agreement is effective until the deregistration of Tianjin Dibao.
Results of Operations
Three and Six Months Ended
As of
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These business activities conducted by
Revenues
Net revenues for the three and six months ended
Net revenues related to the MRM segment for the three and six months ended
Net revenues related to the insurance platform segment for the three and six
months ended
Net revenues related to the online stock trading platform segment for the three
and six months ended
Cost of revenues
Cost of revenues for the three and six months ended
Cost of revenues related to the MRM segment for the three and six months ended
Cost of revenues related to the insurance platform segment for the three and six
months ended
Cost of revenues related to the online stock trading platform segment for the
three and six months ended
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Gross profit
Gross profit for the three and six months ended
Gross profit related to the MRM (Micronet) segment for the three and six months
ended
Gross profit related to the insurance platform segment for the three and six
months ended
Gross profit (loss) related to the online stock trading platform segment for the
three and six months ended
Selling and Marketing Expenses
Selling and Marketing expenses are part of operating expenses. Selling and
marketing cost for the three and six months ended
General and Administrative Expenses
General and administrative expenses are part of operating expenses. General and
administrative expenses for the three and six months ended
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Research and Development Expenses
Research and development expenses are part of operating expenses. Research and
development costs, which mainly include wages, materials and sub-contractors,
for the three and six months ended
Loss from Operations
Our loss from operations for the three and six months ended
Financial Income (Expense), Net
Financial income (expenses), net for the three and six months ended
Net Loss Attributed to
Our net loss attributed to
Liquidity and Capital Resources
As of
Loans Provided byMICT
On
On
On
On
On
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Debt Repayment
As of
As of
Total Current Assets,
As of
Our trade accounts receivable as of
As of
For the
Six Months Ended
June 30,
2022 2021
USD in USD in
thousands thousands
(unaudited) (unaudited)
Net Cash Used in Operating Activities $ (16,134 ) $ (16,074 )
Net Cash Used in Investing Activities (2,570 ) (5,857 )
Net Cash Provided by (Used in) Financing Activities (736 ) 107,065
Translation adjustment on cash and restricted cash 445 -
Cash and restricted cash at Beginning of Period 97,347 29,526
Cash and restricted cash at end of period $ 78,352 $ 114,660 Cash Flow from Operating Activities
For the six months ended
For the six months ended
Cash Flow from Investing Activities
For the six months ended
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For the six months ended
Cash Flow from Financing Activities
For the six months ended
For the six months ended
Non-GAAP Financial Measures
In addition to providing financial measurements based on generally accepted
accounting principles in the
Management believes that these non-GAAP financial measures reflect our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in our business, as they exclude expenses and gains that are not reflective of our ongoing operating results. Management also believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies.
The non-GAAP financial measures do not replace the presentation of our GAAP financial results and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP.
The non-GAAP adjustments, and the basis for excluding them from non-GAAP financial measures, are outlined below:
? Amortization of acquired intangible assets - We are required to
amortize the intangible assets, included in our GAAP financial
statements, related to the Transaction and the Acquisition. The amount
of an acquisition's purchase price allocated to intangible assets and
term of its related amortization are unique to these transactions. The
amortization of acquired intangible assets are non-cash charges. We
believe that such charges do not reflect our operational performance.
Therefore, we exclude amortization of acquired intangible assets to
provide investors with a consistent basis for comparing pre- and
post-transaction operating results.
? Expenses related to the settlement agreements - These expenses relate
to a settlement agreement as described in part III -Item 1. Legal
Proceedings of this reports. We believe that these expenses do not
reflect our operational performance. Therefore, we exclude them to
provide the investors with a consistent basis for comparing pre- and
post-transaction operating results.
? Stock-based compensation - is share based awards granted to certain
individuals. They are non-cash and affected by our historical stock
prices which are irrelevant to forward-looking analyses and are not
necessarily linked to our operational performance.
? Options-based compensation - Refers to compensation components which
includes stock options awards granted to certain employees, officers,
directors or consultants of the Company. This is a non cash personal
compensation component for our employees, officers, directors or
consultants and its cost to the Company is calculated based on B&S.
This these costs attributed to the grant of stock options are
irrelevant to the forward-looking analyses and are not necessarily
linked to our operational performance.
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The following table reconciles, for the periods presented, GAAP net loss
attributable to MICT to non-GAAP net income attributable to MICT . and GAAP loss
per diluted share attributable to MICT to non-GAAP net loss per diluted share
attributable to MICT .
Six months ended
June 30,
(Dollars in Thousands,
other than share and
per share amounts)
2022 2021
GAAP net loss attributable to MICT, Inc. $ (23,023 ) $ (22,857 )
Amortization of acquired intangible assets 1,594 1,568
Expenses related to settlement agreements 143 532
Options- based compensation 235 458
Stock-based compensation 3,824 8,368
Income tax-effect of above non-GAAP adjustments (410 ) (414 )
Total Non-GAAP net loss attributable to MICT, Inc. $ (17,637 ) $ (12,345 ) Non-GAAP net loss per diluted share attributable to
$ (0.14 ) $ (0.12 )
Weighted average common shares outstanding used in per share calculations
124,455,921 102,992,830
GAAP net loss per diluted share attributable to MICT, Inc. $ (0.18 ) $ (0.22 )
Weighted average common shares outstanding used in per share
calculations 124,455,921 102,992,830
Three months ended
June 30,
(Dollars in Thousands,
other than share and
per share amounts)
2022 2021
GAAP net loss attributable to MICT, Inc. $ (14,337 ) $ (18,396 )
Amortization of acquired intangible assets 797 782
Expenses related to settlement agreements - 67
Options- based compensation 110 458
Stock-based compensation 3,824 8,368
Income tax-effect of above non-GAAP adjustments (206 ) (215 )
Total Non-GAAP net loss attributable to MICT, Inc. $ (9,812 ) $ (8,936 ) Non-GAAP net loss per diluted share attributable to
$ (0.07 ) $ (0.08 )
Weighted average common shares outstanding used in per share calculations
126,431,864 117,634,776
GAAP net loss per diluted share attributable to
126,431,864 117,634,776
Financing Needs
The Company will be required to support its own operational financial needs, which include, among others, our general and administrative costs (such as for our various consultants in regulatory, tax, legal, accounting and other areas of business) and our financing costs related to the loans and funding instruments assumed by us.
We expect the net proceeds from the sale of the securities will be used to fund the growth and development of our business, as well as for working capital and for other general corporate purposes. We may also use a portion of the net proceeds to acquire or invest in businesses, products and technologies that are complementary to our business, but we currently have no commitments or agreements relating to any of these types of transactions.
Based on our current business plan, and in view of our cash balance following the transactions described in this Item 2, we anticipate that our cash balances will be sufficient to permit us to conduct our operations and carry out our contemplated business plans for at least the next 12 months from the date of this Report.
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