|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
|
(Address of principal executive offices)
|
(Zip Code)
|
(
|
(Registrant’s telephone number, including area code)
|
N/A
|
(Former name, former address and former fiscal year, if changed since last report)
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
|
|
☒
|
Smaller reporting company
|
|
|
Emerging growth company
|
|
PAGE | ||
PART I -
|
1 |
|
ITEM 1.
|
1 | |
ITEM 2.
|
2
|
|
ITEM 3.
|
15
|
|
ITEM 4.
|
15
|
|
PART II.
|
15 | |
ITEM 1.
|
15
|
|
ITEM 1A.
|
16
|
|
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 16 |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 16 |
ITEM 4. | MINE SAFETY DISCLOSURES | 16 |
ITEM 5. | OTHER INFORMATION | 16 |
ITEM 6.
|
17 | |
SIGNATURES |
18 |
F-1
|
|
|
|
F-2
|
|
|
|
F-3
|
|
|
|
F-4
|
|
|
|
F-5
|
June 30,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Sale proceeds held in escrow
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
|
||||||||
Property and equipment, net
|
|
|
||||||
Other assets |
||||||||
Total assets
|
$
|
|
$
|
|
||||
|
|
|||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
|
|||||||
Accounts payable
|
$
|
|
$
|
|
||||
Other current liabilities and accrued expenses
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Other non-current liabilities |
||||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies
|
||||||||
Shareholders’ equity:
|
|
|
||||||
Common shares,
|
|
|
||||||
Accumulated earnings
|
|
|
||||||
Total shareholders’ equity
|
|
|
||||||
|
|
|||||||
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Revenues
|
||||||||||||||||
Wireless service revenues
|
$
|
|
$
|
|
$ | $ | ||||||||||
Fixed broadband service revenues
|
|
|
||||||||||||||
Equipment sales
|
|
|
||||||||||||||
Non-subscriber international long distance and other revenues
|
|
|
||||||||||||||
Total revenues
|
|
|
||||||||||||||
Operating expenses
|
||||||||||||||||
Cost of service, exclusive of depreciation, amortization and accretion shown separately
|
|
|
||||||||||||||
Cost of equipment sales
|
|
|
||||||||||||||
Sales and marketing
|
|
|
||||||||||||||
General and administrative
|
|
|
||||||||||||||
Depreciation, amortization and accretion
|
|
|
||||||||||||||
Loss (gain) on sale of operations and disposal of assets
|
|
(
|
)
|
( |
) | |||||||||||
Total operating expenses
|
|
(
|
)
|
( |
) | |||||||||||
Operating (loss) income
|
(
|
)
|
|
( |
) | |||||||||||
Other income (expenses)
|
||||||||||||||||
Interest expense
|
|
( |
) | ( |
) | |||||||||||
Change in fair value of warrant liability
|
|
|||||||||||||||
Debt extinguishment costs | ( |
) | ( |
) | ||||||||||||
Other, net
|
|
|||||||||||||||
Total other income (expenses)
|
|
( |
) | |||||||||||||
(Loss) income before income taxes
|
(
|
)
|
( |
) | ||||||||||||
Income tax expense
|
(
|
)
|
( |
) | ( |
) | ( |
) | ||||||||
Net (loss) income
|
(
|
)
|
( |
) | ||||||||||||
Less: Net income attributable to noncontrolling interests
|
|
( |
) | ( |
) | |||||||||||
Net (loss) income attributable to Trilogy International Partners Inc.
|
$
|
(
|
)
|
$ | $ | ( |
) | $ | ||||||||
Comprehensive (loss) income
|
||||||||||||||||
Net (loss) income
|
$
|
(
|
)
|
$ | $ | ( |
) | $ | ||||||||
Other comprehensive loss:
|
||||||||||||||||
Foreign currency translation adjustments
|
|
( |
) | ( |
) | |||||||||||
Other comprehensive loss
|
|
( |
) | ( |
) | |||||||||||
Comprehensive (loss) income
|
(
|
)
|
( |
) | ||||||||||||
Comprehensive loss (income) attributable to noncontrolling interests
|
|
( |
) | |||||||||||||
Comprehensive (loss) income attributable to Trilogy International Partners Inc.
|
$
|
(
|
)
|
$ | $ | ( |
) | $ | ||||||||
Net (loss) income attributable to Trilogy International Partners Inc. per share:
|
||||||||||||||||
Basic (see Note 9 - Earnings per Share)
|
$
|
(
|
)
|
$ | $ | ( |
) | $ | ||||||||
Diluted (see Note 9 - Earnings per Share)
|
$
|
(
|
)
|
$ | $ | ( |
) | $ | ||||||||
Weighted average common shares:
|
||||||||||||||||
Basic
|
|
|
||||||||||||||
Diluted
|
|
|
Three Months Ended |
Accumulated
|
|||||||||||||||||||||||||||
|
Additional
|
Accumulated
|
Other
|
Total
|
||||||||||||||||||||||||
Common Shares
|
Paid-In
|
(Deficit)
|
Comprehensive
|
Noncontrolling
|
Shareholders’
|
|||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Income
|
Interests
|
(Deficit) Equity
|
||||||||||||||||||||||
Balance, March 31, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||||||||||
Equity-based compensation
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Other comprehensive loss
|
-
|
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||
Return of capital, net of distribution repaid
|
- | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||
Issuance of shares related to RSUs, change in noncontrolling interests and other
|
|
|
(
|
)
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||
Balance, June 30, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||||
|
||||||||||||||||||||||||||||
Balance, March 31, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||
Balance, June 30, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Six Months Ended |
Accumulated
|
|||||||||||||||||||||||||||
Additional
|
Accumulated
|
Other
|
Total
|
|||||||||||||||||||||||||
Common Shares
|
Paid-In
|
(Deficit)
|
Comprehensive
|
Noncontrolling
|
Shareholders’
|
|||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Income
|
Interests
|
(Deficit) Equity
|
||||||||||||||||||||||
Balance, December 31, 2021
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||||||||||
Equity-based compensation
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Other comprehensive loss
|
-
|
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||
Forfeiture of shares
|
(
|
)
|
|
|
|
|
|
|
||||||||||||||||||||
Return of capital, net of distribution repaid
|
- | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||
Issuance of shares related to RSUs, change in noncontrolling interests and other
|
|
|
(
|
)
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||
Balance, June 30, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||||
|
||||||||||||||||||||||||||||
Balance, December 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||
Balance, June 30, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Six Months Ended
June 30,
|
||||||||
2023
|
2022
|
|||||||
Operating activities:
|
||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
|||
Adjustments to reconcile net (loss) income to net cash used in operating activities:
|
||||||||
Provision for doubtful accounts
|
|
|
||||||
Depreciation, amortization and accretion
|
|
|
||||||
Equity-based compensation
|
|
|
||||||
Loss (gain) on sale of operations and disposal of assets
|
( |
) | ||||||
Non-cash right-of-use (“ROU”) asset lease expense
|
|
|
||||||
Non-cash interest expense
|
|
|
||||||
Settlement of cash flow hedges
|
|
(
|
)
|
|||||
Change in fair value of warrant liability
|
|
(
|
)
|
|||||
Debt extinguishment costs
|
||||||||
Non-cash gain from change in fair value on cash flow hedges
|
|
(
|
)
|
|||||
Loss (gain) on forward exchange contracts and unrealized foreign exchange transactions
|
|
(
|
)
|
|||||
Deferred income taxes
|
|
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
|
(
|
)
|
|||||
Equipment Installment Plan (“EIP”) receivables
|
|
|
||||||
Inventory
|
|
(
|
)
|
|||||
Prepaid expenses and other current assets
|
(
|
)
|
(
|
)
|
||||
Other assets
|
|
(
|
)
|
|||||
Accounts payable
|
|
(
|
)
|
|||||
Operating lease liabilities
|
|
(
|
)
|
|||||
Other current liabilities and accrued expenses
|
(
|
)
|
|
|||||
Customer deposits and unearned revenue
|
|
(
|
)
|
|||||
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
|
||||||||
Investing activities:
|
||||||||
Proceeds from the sale of operations, inclusive of proceeds from forward exchange contracts of $
|
||||||||
Purchase of property and equipment
|
|
(
|
)
|
|||||
Other, net
|
|
(
|
)
|
|||||
Net cash provided by investing activities
|
|
|
||||||
|
||||||||
Financing activities:
|
||||||||
Payments of debt, including sale-leaseback and EIP receivables financing obligations
|
( |
) | ||||||
Return of capital, net of distribution repaid
|
( |
) | ||||||
Proceeds from debt
|
|
|
||||||
Proceeds from EIP receivables financing obligation
|
|
|
||||||
Other, net
|
|
(
|
)
|
|||||
Net cash used in financing activities
|
(
|
)
|
||||||
|
||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
(
|
)
|
|||||
|
||||||||
Cash, cash equivalents and restricted cash, beginning of period
|
|
|
||||||
|
||||||||
Effect of exchange rate changes
|
|
(
|
)
|
|||||
|
||||||||
Cash, cash equivalents and restricted cash, end of period
|
$
|
|
$
|
|
As of May 19, 2022
|
||||
Current assets:
|
||||
Cash, cash equivalents and restricted cash
|
$
|
|
||
Accounts receivable, net
|
|
|||
EIP receivables, net
|
|
|||
Inventory
|
|
|||
Prepaid expenses and other current assets
|
|
|||
Total current assets
|
|
|||
|
||||
Property and equipment, net
|
|
|||
Operating lease ROU assets, net
|
|
|||
License costs, goodwill and other intangible assets, net
|
|
|||
Long-term EIP receivables
|
|
|||
Deferred income taxes
|
|
|||
Other assets
|
|
|||
Total assets
|
$
|
|
||
|
||||
Current liabilities:
|
||||
Accounts payable
|
$
|
|
||
Construction accounts payable
|
|
|||
Current portion of debt and financing lease liabilities
|
|
|||
Customer deposits and unearned revenue
|
|
|||
Short-term operating lease liabilities
|
|
|||
Other current liabilities and accrued expenses
|
|
|||
Total current liabilities
|
|
|||
|
||||
Long-term debt and financing lease liabilities
|
|
|||
Non-current operating lease liabilities
|
|
|||
Other non-current liabilities
|
|
|||
Total liabilities
|
$
|
|
||
|
||||
Net assets sold
|
$
|
|
||
|
||||
Net consideration (1)
|
$
|
|
||
Less: Net assets sold
|
(
|
)
|
||
Carrying amount of noncontrolling interests
|
|
|||
Accumulated other comprehensive loss attributable to TIP Inc.
|
(
|
)
|
||
Gain on sale of 2degrees operation
|
$
|
|
As of May 14, 2022
|
||||
Current assets:
|
||||
Cash, cash equivalents and restricted cash
|
$
|
|
||
Accounts receivable and EIP receivables, net
|
|
|||
Inventory
|
|
|||
Prepaid expenses and other current assets
|
|
|||
Total current assets
|
|
|||
|
||||
Property and equipment, net
|
|
|||
Operating lease ROU assets, net
|
|
|||
License costs and other intangible assets, net
|
|
|||
Other assets
|
|
|||
Total assets
|
$
|
|
||
|
||||
Current liabilities:
|
||||
Accounts payable
|
$
|
|
||
Construction accounts payable
|
|
|||
Current portion of debt and financing lease liabilities
|
|
|||
Customer deposits and unearned revenue
|
|
|||
Short-term operating lease liabilities
|
|
|||
Other current liabilities and accrued expenses
|
|
|||
Total current liabilities
|
|
|||
|
||||
Long-term debt and financing lease liabilities
|
|
|||
Non-current operating lease liabilities
|
|
|||
Other non-current liabilities
|
|
|||
Total liabilities
|
$
|
|
||
|
||||
Net liabilities sold
|
$
|
(
|
)
|
|
|
||||
Net consideration
|
$
|
|
||
Add: Net liabilities sold
|
|
|||
Carrying amount of noncontrolling interests
|
(
|
)
|
||
Gain on sale of NuevaTel operation
|
$
|
|
Three Months Ended
|
Six Months Ended
|
|||||||
June 30, 2022
|
June 30, 2022 | |||||||
EIP receivables derecognized
|
$
|
|
$ |
|||||
Cash proceeds
|
(
|
)
|
( |
) | ||||
Reversal of unamortized imputed discount
|
(
|
)
|
( |
) | ||||
Reversal of allowance for doubtful accounts
|
(
|
)
|
( |
) | ||||
Pre-tax gain on sales of EIP receivables
|
$
|
(
|
)
|
$ |
( |
) |
As of June 30, 2023
|
As of December 31, 2022
|
|||||||
Payroll, severance and other employee benefits
|
$
|
|
$
|
|
||||
Other
|
|
|
||||||
Other current liabilities and accrued expenses
|
$
|
|
$
|
|
• |
Level 1 – Quoted prices in active markets for identical assets or liabilities;
|
• |
Level 2 – Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable;
|
• |
Level 3 – Unobservable inputs in which little or no market activity exists, requiring an entity to develop its own assumptions that market participants would use to value the
asset or liability.
|
Fair Value Measurement as of December 31, 2022
|
||||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Forward exchange contracts
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Total liabilities
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months
Ended June 30,
2022
|
Six Months
Ended June 30,
2022
|
|||||||
Non-cash gain from change in fair value recorded in Other, net
|
$
|
|
$ |
|||||
Net cash settlement
|
$
|
|
$ |
Three Months Ended
|
||||||||||||||||
June 30, 2022
|
||||||||||||||||
New Zealand
|
Bolivia
|
Other
|
Total
|
|||||||||||||
Postpaid wireless service revenues
|
$
|
|
$
|
$
|
|
$
|
|
|||||||||
Prepaid wireless service revenues
|
|
|
|
|||||||||||||
Fixed broadband service revenues
|
|
|
|
|||||||||||||
Equipment sales
|
|
|
|
|||||||||||||
Other wireless service and other revenues
|
|
|
|
|||||||||||||
Total revenues
|
$
|
|
$
|
$
|
|
$
|
|
|||||||||
Six Months Ended
|
||||||||||||||||
June 30, 2022
|
||||||||||||||||
New Zealand
|
Bolivia
|
Other
|
Total
|
|||||||||||||
Postpaid wireless service revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Prepaid wireless service revenues
|
|
|
|
|
||||||||||||
Fixed broadband service revenues
|
|
|
|
|
||||||||||||
Equipment sales
|
|
|
|
|
||||||||||||
Other wireless service and other revenues
|
|
|
|
|
||||||||||||
Total revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
Contract Assets
|
||||
2022
|
||||
Balance at January 1
|
$
|
|
||
Increase resulting from new contracts
|
|
|||
Contract assets reclassified to a receivable or collected in cash
|
(
|
)
|
||
Foreign currency translation
|
(
|
)
|
||
Sale of operations
|
( |
) | ||
Balance at June 30
|
$
|
|
Deferred Revenue
|
||||
2022
|
||||
Balance at January 1
|
$
|
|
||
Net increase in deferred revenue
|
|
|||
Revenue recognized related to the balance existing at January 1(1)
|
(
|
)
|
||
Foreign currency translation
|
(
|
)
|
||
Sale of operations
|
( |
) | ||
Balance at June 30
|
$
|
|
Contract Costs
|
||||
2022
|
||||
Balance at January 1
|
$
|
|
||
Incremental costs of obtaining and contract fulfillment costs
|
|
|||
Amortization included in operating costs
|
(
|
)
|
||
Foreign currency translation
|
(
|
)
|
||
Sale of operations
|
( |
) | ||
Balance at June 30
|
$
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(in thousands, except per share amounts)
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Basic EPS:
|
||||||||||||||||
Numerator:
|
||||||||||||||||
Net (loss) income attributable to TIP Inc.
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||
Denominator:
|
||||||||||||||||
Basic weighted average Common Shares outstanding
|
|
|
|
|
||||||||||||
Net (loss) income per share:
|
||||||||||||||||
Basic
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||
Diluted EPS:
|
||||||||||||||||
Numerator:
|
||||||||||||||||
Net (loss) income attributable to TIP Inc.
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||
Denominator:
|
||||||||||||||||
Basic weighted average Common Shares outstanding
|
|
|
|
|
||||||||||||
Effect of dilutive securities:
|
||||||||||||||||
Unvested RSUs
|
|
|
|
|
||||||||||||
Diluted weighted average Common Shares outstanding
|
|
|
|
|
||||||||||||
Net (loss) income per share:
|
||||||||||||||||
Diluted
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||||
Classification
|
2023 |
2022 |
2023 |
2022 |
|||||||||||||
Operating lease cost:(1)
|
|||||||||||||||||
Cost of service
|
$ |
$ |
$ |
$ |
|||||||||||||
Sales and marketing
|
|||||||||||||||||
General and administrative
|
|||||||||||||||||
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Financing lease cost:
|
|||||||||||||||||
Amortization of ROU
assets
|
Depreciation, amortization and accretion
|
|
|
|
|
||||||||||||
Interest on lease
liabilities
|
Interest expense
|
|
|
|
|
||||||||||||
Total net lease cost
|
$
|
|
$
|
|
$
|
|
$
|
|
(1)
|
|
Six Months
Ended June 30,
|
||||
2022 |
||||
Cash paid for amounts included in
the measurement of lease liabilities
|
||||
Operating cash flows for operating
leases
|
$
|
|
||
Operating cash flows for finance
leases
|
$
|
|
||
Financing cash flows for finance
leases
|
$
|
|
||
Supplemental lease cash flow disclosures | ||||
Operating lease ROU assets obtained in exchange for new operating lease liabilities
|
$ |
|
Three Months Ended
|
Six Months Ended | ||||||||||||||
June 30, |
June 30, | |||||||||||||||
|
2023
|
2022
|
2023 |
2022 |
||||||||||||
Revenues
|
||||||||||||||||
New Zealand
|
$
|
|
$
|
|
$ |
$ |
||||||||||
Bolivia
|
|
|
||||||||||||||
Unallocated corporate & eliminations
|
|
|
||||||||||||||
Total revenues
|
$
|
|
$
|
|
$ |
$ |
||||||||||
Segment Adjusted EBITDA
|
||||||||||||||||
New Zealand
|
$
|
|
$
|
|
$ |
$ |
||||||||||
Bolivia
|
|
|
||||||||||||||
Equity-based compensation
|
|
(
|
)
|
( |
) | |||||||||||
Transactions and other nonrecurring costs
|
|
(
|
)
|
( |
) | |||||||||||
Depreciation, amortization and accretion
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Loss (gain) on sale of operations and disposal of assets
|
(
|
)
|
|
( |
) | |||||||||||
Interest expense
|
|
(
|
)
|
( |
) | |||||||||||
Change in fair value of warrant liability
|
|
|
||||||||||||||
Debt extinguishment costs |
( |
) | ( |
) | ||||||||||||
Other, net
|
|
|
||||||||||||||
Unallocated corporate & eliminations
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
(Loss) income before income taxes
|
$
|
(
|
)
|
$
|
|
$ |
( |
) | $ |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
• |
the timing of the liquidation and dissolution of the Company pursuant to its plan of liquidation adopted on June 10, 2022;
|
• |
the timing and amount of any distribution to shareholders;
|
• |
the expenses associated with the Company losing its foreign private issuer status under U.S. federal securities laws;
|
• |
the ability of U.S. persons to sell their common shares of TIP Inc. (the “Common Shares”);
|
• |
the Board’s expectation that the financial resources available to the Company following the cash distributions to shareholders will be adequate to fund the Company’s outstanding indemnification obligations, if any, and ongoing costs of
operating the Company prior to its liquidation and dissolution; and
|
• |
the possibility of changes in the securities regulations of Canada and the United States that could affect the ability of investors to trade their Common Shares.
|
• |
the expenses associated with the Company’s continued financial reporting and other compliance obligations through May 2028, when its remaining indemnification obligations related to the 2degrees Sale are scheduled to expire; and
|
• |
taxes payable by the Company.
|
• |
risks related to anti-corruption compliance;
|
• |
reliance on limited management resources;
|
• |
tax related risks;
|
• |
risks related to being a publicly traded company, including, but not limited to, compliance and costs associated with the U.S. Sarbanes-Oxley Act of 2002 (to the extent applicable);
|
• |
an increase in costs and demands on management resources as a result of the Company ceasing to qualify as an “emerging growth company” on December 31, 2022 under the U.S. Jumpstart Our Business Startups Act of 2012;
|
• |
additional expenses in connection with the Company losing its foreign private issuer status under U.S. federal securities laws;
|
• |
the determination to not pay dividends;
|
• |
risks related to the liquidity of the market for the Common Shares;
|
• |
risks related to litigation, including class actions and regulatory matters;
|
• |
risks that the market price and trading volume of the Common Shares may materially decrease or experience increased fluctuation;
|
• |
foreign exchange rate and associated risks;
|
• |
risks related to withholding taxes;
|
• |
risks related to the impact of new laws and regulations;
|
• |
risks associated with the Company’s internal controls over financial reporting; and
|
• |
the costs associated with the dissolution of the Company.
|
June 30, 2023
|
December 31, 2022
|
% Change
|
||||||||||
End of period NZD to USD exchange rate
|
0.611
|
0.635
|
(4
|
%)
|
June 30, 2023
|
December 31, 2022
|
% Change
|
||||||||||
End of period CAD to USD exchange rate
|
0.76
|
0.74
|
2
|
%
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2023
|
2022
|
% Change
|
2023
|
2022
|
% Change
|
|||||||||||||||||||
Average CAD to USD exchange rate
|
0.74
|
0.78
|
(5
|
%)
|
0.74
|
0.79
|
(6
|
%)
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
% Variance
|
||||||||||||||||||||||
2023
|
2022
|
2023
|
2022
|
3 mo. vs 3 mo.
|
6 mo. vs 6 mo.
|
|||||||||||||||||||
(in millions, unless otherwise noted)
|
||||||||||||||||||||||||
Service revenues
|
$
|
-
|
$
|
69.2
|
$
|
-
|
$
|
200.4
|
(100
|
%)
|
(100
|
%)
|
||||||||||||
Total revenues
|
$
|
-
|
$
|
83.2
|
$
|
-
|
$
|
238.5
|
(100
|
%)
|
(100
|
%)
|
||||||||||||
Net (loss) income
|
$
|
(1.2
|
)
|
$
|
471.5
|
$
|
(2.9
|
)
|
$
|
442.7
|
(100
|
%)
|
(101
|
%)
|
||||||||||
Net income margin(1)
|
-
|
%
|
681.4
|
%
|
-
|
%
|
220.9
|
%
|
(681.4)pts
|
(220.9) pts
|
||||||||||||||
Consolidated Adjusted EBITDA(2)
|
$
|
(1.4
|
)
|
$
|
15.9
|
$
|
(3.3
|
)
|
$
|
43.8
|
(109
|
%)
|
(107
|
%)
|
||||||||||
Consolidated Adjusted EBITDA Margin(2)
|
-
|
%
|
23.0
|
%
|
-
|
%
|
21.8
|
%
|
(23.0)pts
|
(21.8) pts
|
||||||||||||||
Capital expenditures(3)
|
$
|
-
|
$
|
6.1
|
$
|
-
|
$
|
32.4
|
(100
|
%)
|
(100
|
%)
|
• |
Received approximately $22 million NZD from the escrow established in connection with the 2degrees Sale.
|
• |
Cash and cash equivalents totaled $30.3 million as of June 30, 2023.
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
% Variance
|
% Variance
|
|||||||||||||||||||||
(in millions)
|
2023
|
2022
|
2023
|
2022
|
3 mo. vs 3 mo.
|
6 mo. vs 6 mo.
|
||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Wireless service revenues
|
$
|
-
|
$
|
53.3
|
$
|
-
|
$
|
154.8
|
(100
|
%)
|
(100
|
%)
|
||||||||||||
Fixed broadband service revenues
|
-
|
14.8
|
-
|
42.5
|
(100
|
%)
|
(100
|
%)
|
||||||||||||||||
Equipment sales
|
-
|
14.0
|
-
|
38.1
|
(100
|
%)
|
(100
|
%)
|
||||||||||||||||
Non-subscriber international long distance and other revenues
|
-
|
1.1
|
-
|
3.2
|
(100
|
%)
|
(100
|
%)
|
||||||||||||||||
Total revenues
|
$
|
-
|
$
|
83.2
|
$
|
-
|
$
|
238.5
|
(100
|
%)
|
(100
|
%)
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
% Variance
|
||||||||||||||||||||||
(in millions)
|
2023
|
2022
|
2023
|
2022
|
3 mo. vs 3 mo.
|
6 mo. vs 6 mo.
|
||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||
Cost of service, exclusive of depreciation, amortization and accretion shown separately
|
$
|
-
|
$
|
26.9
|
$
|
-
|
$
|
81.0
|
(100
|
%)
|
(100
|
%)
|
||||||||||||
Cost of equipment sales
|
-
|
14.3
|
-
|
39.2
|
(100
|
%)
|
(100
|
%)
|
||||||||||||||||
Sales and marketing
|
-
|
10.3
|
-
|
30.8
|
(100
|
%)
|
(100
|
%)
|
||||||||||||||||
General and administrative
|
1.4
|
26.0
|
3.3
|
57.0
|
(94
|
%)
|
(94
|
%)
|
||||||||||||||||
Depreciation, amortization and accretion
|
-
|
0.3
|
-
|
18.4
|
(100
|
%)
|
(100
|
%)
|
||||||||||||||||
Loss (gain) on sale of operations and disposal of assets
|
-
|
(458.1
|
)
|
-
|
(457.6
|
)
|
100
|
%
|
100
|
%
|
||||||||||||||
Total operating expenses
|
$
|
1.4
|
$
|
(380.3
|
)
|
$
|
3.3
|
$
|
(231.2
|
)
|
100
|
%
|
101
|
%
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
% Variance
|
||||||||||||||||||||||
(in millions)
|
2023
|
2022
|
2023
|
2022
|
3 mo. vs 3 mo.
|
6 mo. vs 6 mo.
|
||||||||||||||||||
Interest expense
|
$
|
-
|
$
|
8.6
|
$
|
-
|
$
|
22.9
|
(100
|
%)
|
(100
|
%)
|
||||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
(0.1
|
)
|
0
|
%
|
100
|
%
|
|||||||||||||||
Debt extinguishment costs
|
-
|
8.5
|
-
|
8.5
|
(100
|
%)
|
(100
|
%)
|
||||||||||||||||
Other, net
|
(0.2
|
)
|
(30.2
|
)
|
(0.5
|
)
|
(15.6
|
)
|
99
|
%
|
97
|
%
|
Three Months Ended
June 30,
|
Six Months Ended June
30,
|
% Variance
|
||||||||||||||||||||||
(in millions)
|
2023
|
2022
|
2023
|
2022
|
3 mo. vs 3 mo.
|
6 mo. vs 6 mo.
|
||||||||||||||||||
Income tax expense
|
$
|
-
|
$
|
5.2
|
$
|
0.1
|
$
|
11.3
|
(99
|
%)
|
(99
|
%)
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 30,
|
June 30,
|
% Variance
|
||||||||||||||||||||||
(in millions, unless otherwise noted)
|
2023
|
2022
|
2023
|
2022
|
3 mo. vs 3 mo.
|
6 mo. vs 6 mo.
|
||||||||||||||||||
Service revenues
|
$
|
-
|
$
|
56.4
|
$
|
-
|
$
|
161.0
|
(100
|
%)
|
(100
|
%)
|
||||||||||||
Total revenues
|
$
|
-
|
$
|
70.4
|
$
|
-
|
$
|
199.1
|
(100
|
%)
|
(100
|
%)
|
||||||||||||
Segment Adjusted EBITDA
|
$
|
-
|
$
|
18.7
|
$
|
-
|
$
|
51.5
|
(100
|
%)
|
(100
|
%)
|
||||||||||||
Segment Adjusted EBITDA Margin(1)
|
-
|
33.2
|
%
|
0.0
|
%
|
32.0
|
%
|
(33.2) pts
|
(32.0) pts
|
|||||||||||||||
Capital expenditures(2)
|
$
|
-
|
$
|
5.6
|
$
|
-
|
$
|
30.5
|
(100
|
%)
|
(100
|
%)
|
||||||||||||
Capital intensity
|
-
|
10.0
|
%
|
0.0
|
%
|
18.9
|
%
|
(10.0) pts
|
(18.9) pts
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 30,
|
June 30,
|
% Variance
|
||||||||||||||||||||||
(in millions, unless otherwise noted)
|
2023
|
2022
|
2023
|
2022
|
3 mo. vs 3 mo.
|
6 mo. vs 6 mo.
|
||||||||||||||||||
Service revenues
|
$
|
-
|
$
|
12.7
|
$
|
-
|
$
|
39.3
|
(100
|
%)
|
(100
|
%)
|
||||||||||||
Total revenues
|
$
|
-
|
$
|
12.8
|
$
|
-
|
$
|
39.4
|
(100
|
%)
|
(100
|
%)
|
||||||||||||
Segment Adjusted EBITDA
|
$
|
-
|
$
|
0.7
|
$
|
-
|
$
|
0.2
|
(100
|
%)
|
(100
|
%)
|
||||||||||||
Segment Adjusted EBITDA Margin(1)
|
-
|
5.2
|
%
|
0.0
|
%
|
0.5
|
%
|
(5.2) pts
|
(0.5) pts
|
|||||||||||||||
Capital expenditures(2)
|
$
|
-
|
$
|
0.5
|
$
|
-
|
$
|
1.9
|
(100
|
%)
|
(100
|
%)
|
||||||||||||
Capital intensity
|
-
|
3.7
|
%
|
0.0
|
%
|
4.9
|
%
|
(3.7) pts
|
(4.9) pts
|
As of June 30,
|
As of December 31,
|
||||||||
(in millions, except as noted)
|
2023
|
2022
|
Change includes:
|
||||||
Cash and cash equivalents
% Change
|
$
|
30.3
|
$
|
25.1
|
Increase is primarily due to $13.7 million of escrowed proceeds from the 2degrees Sale received in the second quarter of 2023. This increase was partially offset by $8.5 million of cash used to fund headquarters
operating activities, inclusive of severance payments to executives and former employees.
|
||||
21
|
%
|
||||||||
Other current assets
|
0.4
|
14.7
|
Decline is primarily driven by the aforementioned escrow proceeds
|
||||||
% Change
|
(97
|
%)
|
from the 2degrees Sale received in the second quarter of 2023. | ||||||
Other non-current assets
|
1.2
|
1.4
|
|||||||
% Change
|
(13
|
%)
|
|||||||
Total assets
|
$
|
31.9
|
$
|
41.2
|
|||||
Total current liabilities
|
1.0
|
7.4
|
Decline is primarily driven by accrued severance paid in the second
|
||||||
% Change
|
(86
|
%)
|
quarter of 2023. | ||||||
Other non-current liabilities
|
0.3
|
0.3
|
|||||||
% Change
|
(24
|
%)
|
|||||||
Total shareholders’ equity
|
30.6
|
33.5
|
Decline is due to the net loss during the six months ended June 30,
|
||||||
% Change
|
9
|
%
|
2023. | ||||||
Total liabilities and shareholders’ equity
|
$
|
31.9
|
$
|
41.2
|
2023
|
2022
|
2021
|
||||||||||||||||||||||||||||||
(in millions, except per share amounts)
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
||||||||||||||||||||||||
Service revenues
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
69.2
|
$
|
131.2
|
$
|
133.8
|
$
|
134.4
|
||||||||||||||||
Equipment sales
|
-
|
-
|
-
|
-
|
14.0
|
24.1
|
35.3
|
23.1
|
||||||||||||||||||||||||
Total revenues
|
-
|
-
|
-
|
-
|
83.2
|
155.4
|
169.1
|
157.5
|
||||||||||||||||||||||||
Operating expenses
|
(1.4
|
)
|
(1.8
|
)
|
(1.9
|
)
|
(3.4
|
)
|
380.3
|
(149.1
|
)
|
(170.7
|
)
|
(275.0
|
)
|
|||||||||||||||||
Operating (loss) income
|
(1.4
|
)
|
(1.8
|
)
|
(1.9
|
)
|
(3.4
|
)
|
463.5
|
6.2
|
(1.6
|
)
|
(117.5
|
)
|
||||||||||||||||||
Interest expense
|
-
|
-
|
-
|
-
|
(8.6
|
)
|
(14.3
|
)
|
(13.8
|
)
|
(13.4
|
)
|
||||||||||||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
-
|
-
|
0.1
|
(0.1
|
)
|
-
|
|||||||||||||||||||||||
Debt extinguishment costs
|
-
|
-
|
-
|
-
|
(8.5
|
)
|
-
|
-
|
-
|
|||||||||||||||||||||||
Other, net
|
0.2
|
0.2
|
1.8
|
(2.0
|
)
|
30.2
|
(14.6
|
)
|
(7.7
|
)
|
2.2
|
|||||||||||||||||||||
(Loss) income before income taxes
|
(1.2
|
)
|
(1.6
|
)
|
(0.1
|
)
|
(5.4
|
)
|
476.6
|
(22.6
|
)
|
(23.2
|
)
|
(128.7
|
)
|
|||||||||||||||||
Income tax (expense) benefit
|
-
|
-
|
(0.1
|
)
|
-
|
(5.2
|
)
|
(6.2
|
)
|
(5.3
|
)
|
1.0
|
||||||||||||||||||||
Net (loss) income
|
(1.2
|
)
|
(1.6
|
)
|
(0.2
|
)
|
(5.4
|
)
|
471.5
|
(28.8
|
)
|
(28.5
|
)
|
(127.7
|
)
|
|||||||||||||||||
Net (income) loss attributable to noncontrolling interests
|
-
|
-
|
-
|
-
|
(2.5
|
)
|
(1.1
|
)
|
0.3
|
37.1
|
||||||||||||||||||||||
Net (loss) income attributable to TIP Inc.
|
$
|
(1.2
|
)
|
$
|
(1.6
|
)
|
$
|
(0.2
|
)
|
$
|
(5.4
|
)
|
$
|
468.9
|
$
|
(29.8
|
)
|
$
|
(28.2
|
)
|
$
|
(90.6
|
)
|
Net (loss) income attributable to TIP Inc. per share:
|
||||||||||||||||||||||||||||||||
Basic
|
$
|
(0.01
|
)
|
$
|
(0.02
|
)
|
$
|
-
|
$
|
(0.06
|
)
|
$
|
5.36
|
$
|
(0.34
|
)
|
$
|
(0.33
|
)
|
$
|
(1.37
|
)
|
||||||||||
Diluted
|
$
|
(0.01
|
)
|
$
|
(0.02
|
)
|
$
|
-
|
$
|
(0.06
|
)
|
$
|
5.31
|
$
|
(0.34
|
)
|
$
|
(0.33
|
)
|
$
|
(1.37
|
)
|
• |
Lower prepaid subscribers due to a shift in focus to postpaid sales;
|
• |
Higher usage of wireless data due to the migration from 3G to 4G Long Term Evolution in Bolivia;
|
• |
Increased competition and changes in the market leading to larger data bundles offered for prices which impacted data ARPU;
|
• |
Stable postpaid churn in New Zealand, which the Company believes was a reflection of the Company’s heightened focus on high-value subscribers, bundled service offerings, and the Company’s enhanced subscriber service efforts;
|
• |
Decreasing voice revenue as rate plans increasingly incorporated more monthly minutes and calling features, such as long distance;
|
• |
Lower roaming revenue due to mobility restrictions associated with the COVID-19 pandemic;
|
• |
Varying handset subsidies as more consumers shifted toward smartphones with the latest technologies;
|
• |
Varying handset costs related to advancement of technologies and reduced supplier rebates or discounts on highly-sought devices;
|
• |
Seasonal promotions which were typically more significant in periods closer to year-end;
|
• |
Subscribers activating and suspending service to take advantage of promotions by the Company or its competitors;
|
• |
Higher voice and data costs related to the increasing number of subscribers, or, alternatively, a decline in costs associated with a decline in voice usage;
|
• |
Higher costs associated with the retention of high-value subscribers; and
|
• |
Decline in gross subscriber additions due to decreased commercial activity resulting from COVID-related societal restrictions and economic contraction.
|
• |
Higher internet subscription fees as subscribers increasingly upgraded to higher-tier speed plans, including those with unlimited usage;
|
• |
Subscribers bundling their service plans at a discount;
|
• |
Fluctuations in retail broadband pricing and operating costs influenced by government-regulated copper wire services pricing and changing consumer and competitive demands;
|
• |
Availability of fiber services in a particular area or general network coverage; and
|
• |
Individuals swapping technologies as fiber became available in their connection area.
|
Six Months Ended June 30,
|
% Variance
|
|||||||||||
(in millions)
|
2023
|
2022
|
2023 vs 2022
|
|||||||||
Net cash (used in) provided by
|
||||||||||||
Operating activities
|
$
|
(8.5
|
)
|
$
|
(1.6
|
)
|
(424
|
%)
|
||||
Investing activities
|
13.7
|
519.1
|
(97
|
%)
|
||||||||
Financing activities
|
-
|
(537.3
|
)
|
100
|
%
|
|||||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
5.2
|
$
|
(19.8
|
)
|
126
|
%
|
Consolidated Adjusted EBITDA
|
||||||||||||||||
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(in millions)
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Net (loss) income
|
$
|
(1.2
|
)
|
$
|
471.5
|
$
|
(2.9
|
)
|
$
|
442.7
|
||||||
Interest expense
|
-
|
8.6
|
-
|
22.9
|
||||||||||||
Depreciation, amortization and accretion
|
-
|
0.3
|
-
|
18.4
|
||||||||||||
Debt extinguishment costs
|
-
|
8.5
|
-
|
8.5
|
||||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
(0.1
|
)
|
|||||||||||
Income tax expense
|
-
|
5.2
|
0.1
|
11.3
|
||||||||||||
Other, net
|
(0.2
|
)
|
(30.2
|
)
|
(0.5
|
)
|
(15.6
|
)
|
||||||||
Equity-based compensation
|
-
|
3.1
|
-
|
3.6
|
||||||||||||
Loss (gain) on sale of operations and disposal of assets
|
-
|
(458.1
|
)
|
-
|
(457.6
|
)
|
||||||||||
Transaction and other nonrecurring costs(1)
|
-
|
7.2
|
-
|
9.6
|
||||||||||||
Consolidated Adjusted EBITDA
|
$
|
(1.4
|
)
|
$
|
15.9
|
$
|
(3.3
|
)
|
$
|
43.8
|
||||||
Net (loss) income margin (Net (loss) income divided by service revenues)
|
-
|
%
|
681.4
|
%
|
-
|
%
|
220.9
|
%
|
||||||||
Consolidated Adjusted EBITDA Margin
|
-
|
%
|
23.0
|
%
|
-
|
%
|
21.8
|
%
|
||||||||
(Consolidated Adjusted EBITDA divided by service revenues)
|
• |
Wireless data revenues (“data revenues”) is a component of wireless service revenues that includes the use of web
navigation, multimedia messaging service and value-added services by subscribers over the wireless network through their devices.
|
• |
Wireless service revenues (“wireless service revenues”) is a component of total revenues that excludes fixed broadband revenues, equipment sales and
non-subscriber international long distance revenues; it captures wireless performance and is the basis for the blended wireless ARPU calculations.
|
• |
Wireless data average revenue per wireless user (“data ARPU”) is calculated by dividing monthly data revenues during
the relevant period by the average number of wireless subscribers during the period.
|
• |
Service revenues (“service revenues”) is a component of total revenues that excludes equipment sales.
|
• |
Churn (“churn”) is the rate at which existing subscribers cancel their services, or are suspended from accessing the network, or have no revenue generating
event within the most recent 90 days, expressed as a percentage. Subscribers that subsequently have their service restored within a certain period of time are presented net of disconnections which may result in a negative churn percentage in
certain periods. Churn is calculated by dividing the number of subscribers disconnected by the average subscriber base. It is a measure of monthly subscriber turnover.
|
• |
Capital intensity (“capital intensity”) represents purchases of property and equipment divided by total service revenues. The Company’s capital expenditures do
not include expenditures on spectrum licenses. Capital intensity allows the Company to compare the level of the Company’s additions to property and equipment to those of other companies within the same industry.
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4. |
Controls and Procedures.
|
Item 1. |
Legal Proceedings.
|
Item 1A. |
Risk Factors.
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Item 3. |
Defaults Upon Senior Securities.
|
Item 4. |
Mine Safety Disclosures.
|
Item 5. |
Other Information.
|
Item 6. |
Exhibits.
|
3.1
|
|
3.2
|
|
3.3
|
3.4
|
|
31
|
|
32
|
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are
embedded within the Inline XBRL document)*
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document*
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document*
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document*
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document*
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document*
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)*
|
TRILOGY INTERNATIONAL PARTNERS INC.
|
||
Date: August 10, 2023
|
By:
|
/s/ Bradley J. Horwitz |
Title: President, Chief Executive Officer and
|
||
Chief Financial Officer
|