AGRI-FINTECH HOLDINGS, INC. Tingo, Inc. ("we," "us," "our," "Tingo ," or the "Company"), aNevada corporation, was formed onFebruary 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 effectiveAugust 15, 2021 . The Company, including its subsidiary Tingo Mobile, is an Agri-Fintech company offering a comprehensive platform service through use of smartphones (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 ofSeptember 30, 2021 ,Tingo had approximately 9.3 million subscribers using its mobile phones and Nwassa payment platform (www.nwassa.com). Nwassa isAfrica's leading digital agriculture ecosystem that empowers rural farmers and agri-businesses by using proprietary technology to enable access to market. Farm produce can be shipped from farms acrossAfrica 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 our members until fulfilment. The platform also facilitates trade financing, ensuring that banks and other lenders compete to provide credit to our members.Tingo aims to beAfrica's leading Agri-Fintech player that transforms rural farming communities 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.com. Our website, however, does not constitute a part of this Quarterly Report. The information contained in this section should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this Quarterly Report. 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 ofTingo , 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, 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;
? political instability in the countries in which we operate;
? uncertainty regarding certain legal systems in
? our dependence upon external sources of capital;
? our expected financings and capital raising;
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? 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
? 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 Quarterly Report. 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 theSEC .
Acquisition of
OnAugust 15, 2021 , the Company acquired all of the share capital ofTingo Mobile plc , a Nigerian corporation ("Tingo Mobile") fromTingo International Holdings, Inc. , aDelaware corporation ("TIH"), the sole shareholder ofTingo 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.
Results of Operations
Three Months Ended
The Company's consolidated results from operations for the three months ended
Three Months Ended September 30,
($in Thousands) % of % of
2021 Revenue 2020 Revenue
Revenue $ 176,985 - $ 44,983
Operating Expense (206,284) 116.55 % (6,085) 13.53
Operating Income (29,298) (16.55) % 38,898 86.47
Other Income, net (243) - 3,520 7.8
Income before taxes (29,541) (16.69) % 42,418 94.30
Income tax expense (benefit) (15,142) (13,723)Income from continuing operations (44,683) (25.25) % 28,695
63.79 Net Income (Loss)$ (44,683) (25.25) %$ 28,695 63.79
Revenue for the three months ended
The Company generated$108.7 million , or 61.4% of its total revenue for the third quarter of 2021, from mobile leasing as compared to$0 during the three months endedSeptember 30, 2020 . The absence of mobile leasing revenue during the third quarter of 2020 was principally due to to smartphone supply shortages exacerbated by the Covid-19 pandemic. The Company's two groups of new three-year mobile leasing contracts commenced inMay 2021 andAugust 2021 , respectively. 19 Table of Contents
Nwassa agri-fintech revenues for the three months endedSeptember 30, 2021 totaled$56.5 million , a net increase of 89.5% from$29.8 million for the three months endedSeptember 30, 2020 . The significant increase was principally attributable to the introduction of mobile insurance, fees from which totaled$5.0 million during the third quarter of 2021, as well as a 281% increase in income from payments for utilities by customers during the quarter, which increased from$7.1 million in the third quarter of 2020 to$27.1 million in the third quarter of 2021. Cost of Sales for the three months endedSeptember 30, 2021 was$92.4 million as compared to$2.9 million for the three months dnededSeptember 30, 2020 . The principal difference consisted of expenses related to the Company's new mobile leasing contracts and airtime and data commissions paid per the mobile leasing contracts. Other major cost items in the third quarter of 2021 included expenses associated with the acquisition ofTingo Mobile Plc totaling$111.3 million , as compared to$0 for the third quarter of 2020. Other than the foregoing, there were no other material movements in the comparative operating expenses of the Company for the third quarters of 2021 and 2020.
Nine Months Ended
The Company's consolidated results from operations for the nine months ended
Nine Months Ended September 30,
($in Thousands) % of % of
2021 Revenue 2020 Revenue
Revenue $ 317,540 $ 574,618
Operating Expense (258,339) 81.36 % (398,351) 69.32
Operating Income (loss) 59,202 18.64 % 176,267 30.68
Other Income (expense) , net (3) 3,120
Income (loss) before taxes 59,199 18.64 % 17,987 31.22
Income tax expense (benefit) (54,548) (61,674)
Income (loss) from continuing 4,651 1.46 % 117,713 20.49
operations
Income from discontinued
operations , net of tax
Net Income (loss) $ 4,651 1.46 % $ 117,713 20.49
Revenue for the nine months ended
The Company generated revenue of approximately$310.0 million in connection with a one-off bulk sale of mobile phones during the nine months endedSeptember 30, 2020 . There were no one-off sales of mobile phones during the nine months endedSeptember 30, 2021 . The company earned$108.7 million and$161.9 million in the the three and nine months endedSeptember 30, 2021 , respectively, relating to the lease of mobile phones, as compared to$0 for both periods in 2020 due to smartphone supply and manufacturing shortages and other Covid-19 restrictions that affected our business as discussed above. Our new three-year mobile leasing contracts commenced inMay 2021 andAugust 2021 . The previous mobile leasing contracts expired inMay 2020 . Nwassa agri-fintech revenues for the nine months endedSeptember 30, 2021 totaled$120.7 million , an increase of 49.3% from$81.5 millin for the nine months endedSeptember 30, 2020 . The significant increase was attributable to a significant increase in income from agri-trading and utility top-up payments conducted on the platform. 20 Table of Contents Revenue Three Months to September 30, Nine Months to September 30, 2021 2020 2021 2020
Outright Phone Sales $ - $ - $ -$ 310,000,000 Mobile Phone Leasing 108,669,889 - 161,919,889 142,111,985 Services- Mobile calls & data 11,799,270 15,181,396 34,899,849 44,861,689 NWASSA revenue 56,516,282 29,801,537 120,720,464 77,644,601 Airtime 2,762,722 2,651,560 6,747,944 7,850,225 Brokerage on loans 552,180 1,027,717 1,563,546 2,271,341 Insurance 5,380,600 - 7,362,470 1,691,994 Trading on agricultural produce 20,746,218 19,012,268 51,269,806 30,269,146 Utility 27,074,562
7,109,992 53,776,698 35,561,895
Total Revenue$ 176,985,441 $
44,982,933
Our agri-fintech business grew from being 13.5% of total revenue in the nine months endedSeptember 30, 2020 to 38.0% in the nine months endedSeptember 30, 2021 . This trend demonstrates the increased activity resulting from the adoption of the smartphone 'device as a service' strategy the Company has implemented. Nwassa revenue increased by over 55.5% for the nine-month period endedSeptember 30, 2021 as compared to the nine months endedSeptember 30, 2020 . For the comparative quarter endedSeptember 30, 2021 , the Company reported an 89.6% increase in revenues from its Nwassa agri-fintech business. A contributing factor has been the significant take up of mobile insurance and the use of utility top-ups. Agri trading activity has also seen significant growth for the comparative nine-month period which is significant, given the impact of Covid 19 on the market as a whole. That trend has held consistently in 2021 as illustrated in the comparative results for the three-month period. Mobile sales leasing - the previous three-year cycle ended inMay 2020 . Due to Covid 19 and disruption to supply chains , the new three-year cycle recommenced inMay 2021 . Deliveries of 9 million devices was staggered betweenMay 2021 andAugust 2021 . We anticipate the level of revenue will increase significantly for subsequent quarters due to the full rollout of 9 million devices byAugust 2021 . In 2020, the Company secured a wholesale distribution contract to supply devices, delivering sales of$310.0 million included in the nine month period endedSeptember 30, 2020 . Leasing revenue is recognized over 36 months in equal instalments from the date of sign up of the contract. Nwassa, the Agri-Fintech platform generated 31.8% of total revenue. Total non-leasing ('device as a service') revenues represented 38.1% to total revenues. Typical fees and commissions range from 1.5% to 4.0%. Insurance revenue is fixed at$0.24 per device per month. There were no outright sales of phones in the period. Deferred Income represents the gross value of such contracts and a monthly release is made to revenue as per the terms of each contract and our accounting policy.
Cost of Sales
The following table sets forth the cost of sales for the three and nine month
periods ended
Three Months to September 30, Nine Months to September 30,
2021 2020 2021 2020
$ $ $ $
Commission to Cooperatives and Agents 2,241,861 64,567 6,630,971 8,946,179
Cost of Mobile Phones 90,114,111 2,819,898 133,864,111 371,841,515
Total cost of sales 92,355,972 2,884,465 140,495,082 380,787,694
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Cost of sales consists of two key elements:
Commissions to Cooperatives and Agents - the Company has over 17,000 agents
? that support the rollout of our services through Cooperatives and an
independent agency network of rural farmers and women.
Cost of mobile phones - we amortize and match the cost of the mobile devices in
line with the 36-month contract recognition of revenue for our leased phones.
? There were no outright sales of phones during this period. Prepayments on the
Balance Sheet represent the gross value of phone expenses that will be
amortized monthly. Prior year figures for the nine months ended
2020 include cost of the devices sold.
Selling, General & Administrative Expenses
The following table sets forth selling, general and administrative expenses for
the three and nine month periods ended
Three Months to Nine Months to
September 30, September 30,
2021 2020 2021 2020
$ $ $ $
Selling, General and Adminstrative Expenses 113,927,647 3,200,422 117,843,605 17,563,535
Selling , General and Administrative Expenses include the -$ 111.3m . All other operating expenses are in line with prior year and mainly relate to the opearing expenses forTingo Mobile Plc .
Gross Profit and Income from Operations
Gross profit for the comparative three-month period increased by over 200% mainly due to the higher margin business mix of the Nwassa platform activity. Gross Margins achieved for the three months period was 48% . For the nine-month comparative period endedSeptember 30, 2021 , gross margin achieved was 55.8%. The comparative gross margin for comparable nine months endedSeptember 30, 2020 was 33.6%. The margin mix is impacted by the proportion of mobile sales vs Nwassa activity. The increased activity on the Nwassa derives a higher gross margin, inasmuch as the level of direct expenses associated with this activity is relatively insignificant compared to cost of sales for mobile devices. This trend is evidenced by the increased level of income from operations we have posted for the nine months and three months endedSeptember 2021 compared to prior comparable period. For the comparable three-month period we have delivered a very strong growth of over 211% in income from Operations and maintained a relatively similar level of profitability despite a lower sales figure by 45% compared to the same nine-month period. This illustrates the significant value of the increased mix of Nwassa revenues relative to mobile sales will have a significant impact on margins and profitability into the future. Net margins achieved was 46% for the three months toSeptember 2021 and 53.6% for the nine months endedSeptember 30, 2021 . For the comparable period, net margins were 31.2% for the nine months. For the three months endedSeptember 30, 2020 net margins were 94%, demonstrating the high margin activity of our Nwassa Agri-Fintech business.
Other Income
Prior periods show a substantially higher level of income due mainly to recovery of bad debts.
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. OnSeptember 24, 2021 , we filed a Form D with theSecurities 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.
As of
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Operating activities generated approximately
Net cash used in investing activities was approximately$1.2 million during the nine months endedSeptember 30, 2021 , compared with approximately$169.8 million for the nine months endedSeptember 30, 2020 . The change is primarily due to the work in progress additions during the nine months endedSeptember 30, 2020 . Net cash provided by financing activities during the nine months endedSeptember 30, 2021 was zero compared with net cash used in financing activities of$6.6 million during the nine months endedSeptember 30, 2020 .
Indebtedness: The Company had no financial debt as at
We expect our cash on hand, proceeds received from our assets and operations,
cash flow from continuing operations, and availability of funds from our private
offering, 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.
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