Tingo Group Releases Report of Detailed Investigation, Maintains Innocence

Tingo Group, Inc. (NASDAQ: TIO) (“Tingo” or the “Company”), a profitable and fast growing fintech, agri-fintech and food company, today announced it has completed the investigation of the allegations made by short seller Hindenburg Research (“Hindenburg”), that relate directly to the Company and its businesses.

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:

Tingo Foods Revenue and Operating Margin stated that the revenue reported by Tingo Foods in Q1 2023 and its operating margin of 24.8 % has been confirmed. During the period from September 2022 to March 31, 2023, Tingo Foods purchased its raw crops from two organizations in Nigeria, including the All Farmers Association of Nigeria (“AFAN”), which delivered the crops to third-party food processors. Tingo Foods then sold the processed food to several large wholesalers in Nigeria.

The construction of the Tingo Foods processing facility in Nigeria is well underway, with food and beverage processing operations expected to commence in Q2 2024. The images and renderings used for the Foods Processing Facility’s groundbreaking ceremony in February 2023 and in early presentational materials were stock images provided by an external marketing company, whereas specific renderings of the actual facility are currently being utilized. The Company has contracts in place with the construction company for the project and with Evtec Energy Plc and TAE Power Solutions Limited for the construction of a solar power plant to power the processing facility. Evtec Energy Plc is a special purpose vehicle for the project, whereas TAE Power Solutions Limited is a part of a multinational group that has been trading for more than 25 years.

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.

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 Company’s recently established operations in Ghana are currently conducted exclusively through its trade agreement with the Ashanti Investment Trust. The Company leases mobile telephones to individuals introduced through the Ashanti Investment Trust and such customers also have access to Nwassa. The sim cards, airtime and data are sold to customers through a third-party vendor, as a result of which Tingo Mobile is not required to have a license with the National Communications Authority in Ghana. Tingo Mobile does not currently deal with or accept any new customers other than through its relationship with the Ashanti Investment Trust, it is however preparing to further expand the company’s business in Ghana and is currently recruiting a workforce and building a website to assist in facilitating this.

The engagement with Brightman Almagor Zohar & Co., a firm in the Deloitte Global Network, was after consideration of the relevant factors regarding the location of auditors. Such factors included that the Company does not have any operations in the U.S., and the consolidation process and preparation for the group’s financial statement and SEC filings is performed by the Company’s finance function in Israel.

Bank statements were obtained directly from the banks used by Tingo Mobile and Tingo Foods, and interviews with the banks were conducted over video conference calls. 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.

Tingo Mobile earns interest only on funds held in a fixed deposit account. Due to its cash needs from time to time, the Mobile brand is unable to encumber a large portion of its funds in a fixed-deposit account that would earn interest. The brand entered into a partnership with Visa on September 27, 2021, subsequent to which it has hosted several joint events with Visa, and it also launched a beta version of TingoPay with Visa on February 14, 2023. Prior to contracting with Visa, Tingo Mobile entered into a strategic partnership agreement with Stanbic Bank, dated November 17, 2020, and work was undertaken by the parties to develop an integrated e-wallet solution. After a disagreement over the Tingo Mobile press release in April 2021, the partnership with Stanbic Bank ceased and Tingo Mobile instead entered into the partnership and e-wallet integration with Visa.

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.

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.

All the information required to be disclosed relating to Certain Relationships and Related Transactions (including the acquisition of Tingo Mobile on November 30, 2022), and Director Independence, was included in the Form 10-K.
While the Company’s cash-flow statement inadvertently labeled an increase in trade receivables as a decrease, the numbers themselves were correct.

The discrepancies Hindenburg identified between the change in receivables reported on the balance sheet and change in receivables reported in the cash flow statement reflect Hindenburg’s misunderstanding of the numbers and the relevant U.S. GAAP accounting standards, including in relation to how the business combinations that closed during the relevant accounting periods impacted the numbers. In both cases, the “difference” resulted from non-cash adjustments related mainly to the Company’s acquisition of Tingo Mobile in Q4 2022 and its acquisition of Tingo Foods in Q1 2023, all of which were correct.

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.