Triterras Fintech - global trading platform

[kettunen]

Homepage:

https://triterras.com/

Investor Presentation 01/2021

TRIT Investor Deck - Jan. 2021.pdf (1.6 MB)

Business

Triterras Inc. acts as a financing intermediary for small and medium-sized enterprises (SMEs) that need to move goods from one country or continent to another. Large banks and financial institutions have little interest in smaller transactions, and the risks for financiers are too high.

Triterras offers a disruptive Kratos platform for this purpose, through which payments are securely transmitted from buyer to seller using blockchain technology, without the need for an intermediary risk financier. According to the company, payments totaling $8.7 billion have been facilitated since June 2019, when the platform became operational.

The Kratos platform is scalable to other trade intermediation activities. For example, for insurance intermediation (https://ir.triterras.com/news-events/press-releases/detail/8/triterras-announces-agreement-with-the-worlds-leading).

Background

Triterras listed on Nasdaq in November 2020 through a SPAC reverse merger with Netfin Acquisition Corp., raising capital for faster development and expansion of its operations.

The original intention was to include the old, partly overlapping Rhodium platform, but this was dropped before the merger. Rhodium would have brought a significant amount of balance sheet-heavy figures, and at the same time, a larger share of Triterras would have transferred to Netfin’s owners. Rhodium was separated into another company, Antanium Resources, which continued as a Triterras client.

To make things suitably complicated, Triterras CEO Srinivas Koneru is also behind Antanium.

Financials

The company is debt-free, operates with a very light balance sheet, and has significant growth prospects. The Kratos platform offers not only a trading platform but also insurance sales, financing, and many other functions in the future.

Also noteworthy is the fiscal year, which deviates from the calendar year, running from the beginning of March to the end of February.

Revenues primarily come from intermediation fees on transactions conducted on the platform.

In March, the acquisition of Invoice Bazaar was announced, which should be confirmed by the end of April. https://ir.triterras.com/news-events/press-releases/detail/38/triterras-signs-letter-of-intent-to-acquire-invoice-bazaar

Short Reports and Responses

Antanium encountered financial difficulties (Why Triterras Stock Tanked Today | The Motley Fool) in December 2020, resulting in delayed payments of $1.7 million to Triterras. Antanium is in liquidation, but it appears that operations will continue, and payments will be received.

Short Report #1
As a result, or due to another opportune moment, the first short report was published, which is comprehensively reviewed in the article Singapore Stock Market Outlook & Analysis | Seeking Alpha.

This report primarily focused on the CEO’s connections and activities, as well as entries related to the SPAC merger. Triterras responded quickly and clearly, confirmed the FY2020 outlook, and the matter was more or less resolved.

Short Report #2
A second short report (Egnyte) prompted more actions, which are partly being investigated as an internal audit by a 3rd party within Triterras (https://ir.triterras.com/news-events/press-releases/detail/35/triterras-inc-announces-independent-investigation-by-the). The investigation should be completed by the end of April or early May.

The main concern is a potential internal data breach or unauthorized access to the company’s blockchain data. The keys related to chain identification have been changed, and an official response has been issued. https://ir.triterras.com/news-events/press-releases/detail/33/triterras-company-statement-in-response-to-short-report

Following the decline in the share price, Triterras is buying back its own shares worth $50 million, and the CEO is also purchasing shares. These are not visible in SEC filings due to the reporting obligations of foreign companies. However, cash has now been used for the Invoice Bazaar acquisition, so possibly not as much has been used for share buybacks.

Risks

TRIT is a potentially high-growth company with a favorable valuation. It has a scalable platform, is debt-free, and is a disruptive player.

The big IF, of course, is whether everything has been implemented according to regulations, whether the short reports’ claims are unfounded, whether the company’s reputation has not suffered from the suspicions, and whether the estimated growth figures are at least in the right direction.

TRIT still requires confirmation of at least FY2020 results, confirmation of FY2021 forecasts, and the publication of internal audit results without doubts about their reliability. If these materialize, the stock price will double or triple very quickly. If any part does not materialize, capital is at risk.

[kettunen]

Triterras has been mentioned in many places regarding foreign stocks, in the Bought/Sold thread, and especially in the SPAC thread, from which it should have been taken into its own thread a long time ago.

However, let’s now move the discussion to its own thread, as the moment of truth is approaching. I am referring to the opening short reports and their auditing.

This is a high-risk company, at least for now, and I advise treating it accordingly.

Disclaimer: At the time of opening, I own TRITW, i.e., the company’s warrants. I am prepared for the position to be zeroed out, but conversely, the growth potential is significant.

[kettunen]

Let’s open this up a bit more. The images are borrowed from last summer’s SEC filings: Redirecting...

Triterras solves problems in money transfers and financing between small and medium-sized enterprises (SMEs). The target market is primarily Asia and the Middle East. Arranging sellers, buyers, and potential bridge financing is currently very much manual work, involving a lot of paperwork and, overall, organizing connections between actors.

The current situation without Triterras or a similar player, which should be made more efficient and simpler. The same image as in the opening:

The Kratos platform offers these actors a place where arranging trade sums and loans is implemented transparently and reliably thanks to blockchain technology. Large banks are not interested in SME financing (at least according to Triterras), so the market has been open in this regard.

Direct payments from buyer to seller are considered “basic”, with a smaller commission. Conversely, facilitating potential loans is more profitable, but still competitively priced compared to established players.

There are some competitors in the field, but Triterras is the largest and most comprehensive – at least based on this. Invoice Bazaar seems to be a similar player in India, based on its company description. Now, a competitor is being acquired, and hopefully, this will bring new customers to use the Kratos platform.

Growth is intended to be achieved through a scalable platform

Figures forecasted in summer 2020, in connection with the SPAC merger in the SEC filing. FY2020 proceeded according to what was published at the end of December.

[Hikihattu]

Triterras currently accounts for ~20% of my portfolio. The plan is to increase that to about half within a week. Of all the undervalued targets I’m tracking, this is the most interesting.

I understand that short reports are a red flag for some. In TRIT’s case, I believe the short sellers are using a smoke machine. If anything is found in the audit, it’s unlikely to be anything substantial.

A significant catalyst for me was the announcement of a partnership with Western Union. It would be too big a reputational risk for them to enter into an agreement with a criminally operating company. And they certainly know what kind of company they are dealing with.

[EKI1]

Is Q1 on April 15th as Nordnet claims? I’m also involved in this.

[In_Der_Esche]

I read the Seeking Alpha ‘Debunking the short thesis’ article. It’s not directly related to TRIT (I might comment on the company later), but SPACs seem to be repeating the exact same pattern as the reverse merger boom 10+ years ago. Chinese companies flooded the US stock market, and in the rush to sell new Chinese growth stories to the market, outright scams ended up being listed. What happens in China stays in China. At least the culprits and investors’ money.

Unfortunately, even honest cases will have to bear the “guilty by association” label for years due to their listing method. So, we can expect that every short story will immediately remind the reader of the listing method and all the SPACs that ripped off investors 100-0. Hold onto your hats, short articles will keep coming.

E: According to Seeking Alpha, 34% of the share capital is shorted. Not quite GameStop numbers, but it raises questions.

[kettunen]

It probably hasn’t been mentioned here yet that TRIT is from Singapore, where corporate regulation is relatively strict and the operations of listed companies are generally more reliable. Of course, there are always exceptions, and that may still be the case here.

@EKI1

Is Q1 on April 15th as Nordnet claims? I’m also involved in this.

Timewise, it should be by mid-April, but I haven’t seen any specific date for its release. The first couple of reports often come with a delay after mergers, so it might even be later than that. Changes in reporting methods affect the release time.

Also, the auditor changed in January, which will likely affect reporting.

https://ir.triterras.com/news-events/press-releases/detail/35/triterras-inc-announces-independent-investigation-by-the

The Company has also announced that they will be replacing KPMG LLP as the Company’s independent accountants. For some time, there has been consideration and discussion with respect to replacing the independent accountants of the Company for various considerations, including to further separate the operations of Triterras, Inc. from its related party company Atanium (formerly Rhodium Resources). KPMG LLP resigned as the Company’s independent accountants effective January 20, 2021.

@In_Der_Esche

According to Seeking Alpha, 34% of the shares are shorted. It’s not reaching Gamestop levels, but it raises questions.

Depending on the sources, the short interest was previously around 50%. The figures vary depending on the reporting period, but considering the current situation, it’s expected that the short interest is high.

@In_Der_Esche

Unfortunately, even honest cases have to bear the “guilty by association” label for years due to their listing method. So we can expect that every short story will immediately remind the reader of the listing method and how many SPACs fooled investors 100-0. Hold on to your hats, short articles will continue to come.

The reputation of SPACs is constantly improving as more and more better companies list through them. Correspondingly, the number of active companies seeking targets has increased manifold, making the listing of potential bad targets also more likely.

@Hikihattu

For me, a significant catalyst was the announcement of cooperation with Western Union.

For me, the cooperation with Western Union also increases confidence, as does Marsh’s start of insurance sales on the Kratos platform last September. It’s also good to remember Wirecard, which was mentioned in the short article.

At the same time, when I opened the thread, I also canceled a sell order for half a position I’ve been with TRIT since last summer, sometimes with a larger and sometimes with a smaller position. Now the risk level is suitable, and I can see this through to the end.

[Yokyopeli]

I highly doubt the accuracy of the information, as Triterras’s calendar year ends in February. The next report should be Q4 + full year 2020. There are also some exceptions for non-US companies, and they have 120 days after the end of the quarter to publish this information. In practice, it is therefore possible that these would only be published at the end of June.

[Taikonautti]

I think they will publish once the external audit is complete and their “reputation is cleared.”

[naata]

Great that we got a thread open for TRIT! Thanks @kettunen

I’ve been holding this since the beginning of the year and trying to dig up as much as I can, and the gist of it boils down quite well to this:

@kettunen

TRIT still requires confirmation of at least FY2020 results, confirmation of FY2021 forecasts, and the publication of internal audit results without any doubts about their reliability.
IF these materialize, the share price will double or triple very quickly. If any part does not materialize, capital is at risk.

The company deliciously does exactly what is envisioned as use cases for blockchains in basic blockchain literature, and all publicly stated figures are quite tasty. The PE would be below 20 at the current approx. $640M USD price (which can actually be calculated), and there should be $180M in cash before bazaar purchases. You don’t often find profitable companies like this available!

If trust in this company were to emerge/return and this year’s outlook is confirmed, a 2-3X price increase would surely be very rapid. On the other hand, if trust falters on the customer side, then it’s a cold ride. That’s the biggest IF in those short reports, in my opinion. Trust is, however, a very important thing in the financial market, and no one would probably appreciate it much if their ledgers were found online, even if the system itself worked.

On the negative side, I would indeed emphasize the auditor resignation and the lack thereof. Almost everything found by searching “KPMG resigned” leads to some kind of horror story. However, sometimes there has just been a disagreement between the client and the auditor about the compensation amount, so this could just be business as usual.. I’m following with great interest, but indeed with a moderate position, which I just reduced.

By the way, Invoice Bazaar’s website has this funny little Finnish connection

[Parre]

Triterras päivittänyt sivujaan eli FAQ osiota.

When will Triterras, Inc. release its Fiscal 2020 earnings?

The Company’s fiscal year ended February 28th, 2021. SEC guidelines call for a foreign private issuer (of which Triterras is one) issue their audited earnings within 120 days of the close of the fiscal year unless an exemption is secured. The Company has not fixed a date for their earnings release and will make an announcement when the date is set.

What is the status of the independent investigation into the short seller report?

The short seller report had raised certain allegations, which the management feels were misleading or unfair. To address any doubts in the minds of investors, and as a matter of corporate governance, the Company’s Audit Committee has appointed a law firm to conduct an independent investigation into these allegations.

The management is co-operating fully with the investigation. However, to safeguard the independence of the investigation, the investigators do not report to the management on the status of the investigation. In addition, the management has not imposed any deadline for the firm conducting the investigation to complete the investigation. Therefore, management is unable to provide any updates or estimated completion dates other than to confirm that the process is underway.

What is the status of the new auditor?

A new auditor has not been engaged. The Company will announce the engagement of a new auditor when appropriate.

FAQ

[kettunen]

The circle is small, some fall off, and an extra seat has been taken on the board as a deputy (?).

https://ir.triterras.com/news-events/press-releases/detail/40/triterras-expands-board-of-directors

Disagreement at least on views regarding KPMG’s resignation and the second short report
https://sec.report/Document/0001213900-21-023315/#ea140021ex17-1_triterrasinc.htm

[naata]

@Taikonautti

Or could it be that they concluded that those sharks are not suitable for this sea. Could they even have gotten entangled in insider trading. Excellent communication from TRIT on a matter that didn’t need to be dissected at such a detailed level. Shows that openness works. You can raise the flag if it’s not good enough​

Is there any more information about this? I got a very different impression from the other shark’s message, which means we’re going with instincts…

[kettunen]

It’s all guesswork with these things. It’s often best to trust your own instincts.

Based on the description, the three new members seemed quite experienced, so one would think they also did some background checks before joining

[Odetus]

There haven’t been many good signals from this company. The auditor’s departure, a short report, and management resignations. Red flags everywhere. I don’t understand why they haven’t hired a new auditor yet. Soon, they’ll be in a rush to get the audit done before the 2020 earnings release deadline.

I’m holding a small position of about 300 shares and I’m not selling. Such a small position can sit at the bottom of the portfolio, waiting for better days. Or even bankruptcy; I’ve had a couple of those happen to me too.

[DayTraderXL]

I exited with a small profit and won’t re-enter until the table is clean.
There aren’t many investors left who are still in profit.

Triterras directors quit amid row over related party claims

• this is probably familiar?

[Pyrde]

Check out this job at TRITERRAS FINTECH PTE. LTD.: https://www.linkedin.com/jobs/view/2531688476

I dug up some information again that would create belief that this isn’t one big scam, and found the above. A job advertisement for a Product Owner position opened a couple of days ago. The text is quite vague, but based on the requirements, they are looking for a hands-on person, so if you believe in this, I would consider it a cautiously positive sign.

Edit:
Following the links, I also found a couple of other positions:

• Principal Solution Architect
• Corporate Communication Executive

All three announcements can also be found here:

MyCareersFuture Singapore

[N00B]

LinkedIn-kirjautuminen, kirjaudu sisään | LinkedIn

Another new job to apply for. Business Development Executive. Feeling confident.

[Joonas85]

It would just be nice to gradually see real news. We are already well into May, and still no real financial figures or release dates have been published. The short thesis is gaining traction.

[Odetus]

This company is quite incomprehensible. The deadline for the earnings release (I think it’s June 12th) is fast approaching, and they haven’t even completed the internal audit of the short report’s claims or CHOSEN a new auditor. Yet, the company isn’t communicating anything about it. A short seller’s dream.