2022 Annual Report
3
Mongolia Growth Group Ltd |
The fourth quarter of 2022 continued upon our prior
successes in terms of stabilizing our business and
preparing this company for the next steps in this
adventure that you’ve all joined us for. Key to this is
that we’ve continued to have positive operating income,
before changes in property valuations and our public
securities portfolio. Following a period of heightened
legal, tax, and consulting expenditures, we anticipate that
our overall spending levels will decline, which should aid
in this profitability. Most importantly, we have continued
to maintain and grow a very healthy and increasingly
liquid capital base from which to reinvest for the future.
Based on current subscriber trends at KEDM, we believe
that our company will show positive operating income
going forward (excluding one-time expenses).
We now segregate our business lines into three categories
(Investment Properties, Subscription Business Products,
and Corporate Division, which includes our investment
portfolio).
Investment Properties:
It continued to be a difficult year for our Mongolian
property operations. During the year we reported
$798,826 (2021- $679,091) of leasing revenue and
$100,572 (2021 - $190,850) of other revenue (primarily
3rd party), offset by $757,220 (2021- $759,100) of
expenses in Mongolia. Unfortunately, we have zero
visibility into the future trajectory of the economic crisis
in Mongolia.
Subscription Business Products:
During the year, KEDM, our subscription data business,
which tracks various Event-Driven strategies, recognized
$3,174,031 of revenue while taking in $3,685,713
of gross subscription receipts, representing a 236%
revenue growth when compared to the previous year
which began earning revenue in July 2021. As noted in
the prior quarter, we have now begun to experience
an increase in overall subscriber churn. This level of
elevated churn has continued into 2023. We believe this
churn is tied to a volatile investing environment where
overall research budgets have been reduced amongst
our subscribers. Additionally, we have seen a decline in
new subscribers—somewhat offset by the increase in
pricing that we initiated during the prior year. However,
we believe that we erred in raising subscription pricing
to a level that turned out to be unaffordable to some
subscribers. Our goal is to continue to offer the maximum
value to subscribers, while regularly reviewing our
pricing methodology in order to maximize the revenue of
a business that has elevated fixed costs.
Despite these challenges, recognized revenue continued
to increase during the year and has continued to increase
into the fourth quarter, though the overall subscriber
count has stayed relatively constant. As of the date
of this letter, we have taken in over $6 million in gross
subscription proceeds.
Having spoken with many financial publishing insiders,
we believe that KEDM has now reached a more mature
state and current revenue levels are unlikely to increase
at a rapid pace from here, as new subscribers are likely to
be offset by churn from existing subscribers. Despite this
fact, we intend to continue to focus on new marketing
approaches to grow the subscriber count.
Given the success to date of KEDM, we believe that there
are ancillary services that we can launch and monetize,
providing further value to KEDM subscribers. These
services will likely be a cost center as they are conceived
and grown before eventual monetization. To learn more
about KEDM, go to www.KEDM.COM. Additionally, the
company is considering acquiring other subscription
products that would be complementary to KEDM.
Corporate Division:
Our public securities portfolio produced a $1,031,997
unrealized gain and a $8,792,881 realized gain during the
year. I would like to caution you strongly that returns, as
we have recently experienced, are highly unlikely to be
repeated in future quarters and are likely to be rather
volatile given our elevated exposure to oil futures call
spreads, which have appreciated substantially since we
acquired them. Our portfolio is currently concentrated in
investments in oil futures and futures options (including
Harris Kupperman
CEO and Chairman of the Board
Letter to Shareholders
Dear Shareholders,
4
| Mongolia Growth Group Ltd
fully offsetting futures call option spreads), an oil ETF, energy
services companies, uranium, and the housing sector. We
view these investments as highly liquid, inflation-protected,
alternatives to holding cash and we intend to liquidate various
investments should we find additional businesses to launch or
in which to acquire stakes.
Business Update
For multiple years, I have mentioned that there are tax and
regulatory reasons why our public securities portfolio cannot
continue to increase. As a public company, we are required to
have a substantial portion of our assets invested in operating
businesses that we hold in excess of 25% over which we exert
some degree of control. Unfortunately, we have been unable
to find any such operating business that interests us, and this
causes something of a dilemma as we cannot continue on the
current path. As a result, we have invested substantial time
and expense looking for viable structures (hence the elevated
spend on legal) and continue to explore various options.
However, we have struggled to find an alternative and we
are now of the view that we may not find an acceptable path
forward.
When Gen and I originally decided to diversify this business,
we envisioned a company that would allow us to pivot
between public and private investments, bridging the frequent
gaps in valuation between them. We saw an enterprise that
could incubate businesses and grow them so that they could
one day be set free on public markets. We saw a world full
of opportunity, but at the time, we lacked the capital to
implement these dreams. Fast forward to today, and we are
flush with capital and the opportunity set appears to have
disappeared.
Unfortunately, the world has arrived in a place that we did not
expect. With Private Equity aggressively bidding for private
operating businesses, we simply cannot find anything in the
private space that is attractive for our investment capital.
Why would an intelligent owner ever sell 25% or more of a
company to you for less than it was worth? Meanwhile, that
scenario happens daily on the global stock exchanges, with
the caveat that it is difficult to purchase 25% or more of a
business. However, we frequently purchase a few percent for
a stunningly good price.
Now, as the world looks to enter a recession, the gap between
public and private valuations has become even more extreme
as global equities have sold off dramatically, while Private
Equity funds continue to raise record amounts of new capital
to deploy. We do not know when or if this gap will swing back
in the other direction, but we refuse to purchase a private
business at a premium valuation to a comparable public
business—particularly as a public markets business affords us
instant liquidity, allowing us the optionality to redeploy capital
into any future opportunity that presents itself.
We had hoped that this gap in valuation would swing back in
the other direction eventually. Instead, it has become even
more extreme. Unfortunately, we have something of a ticking
clock on our business as we have to eventually own more
private business assets or large stakes (25% or more) in public
companies. Unfortunately, during 2023, hard decisions must
be made. I refuse to make a bad investment decision simply
to check a regulatory or tax box. As a result, if we cannot find
anything intelligent to do, we’ll be forced by legal and tax
statutes to begin returning capital to shareholders.
Unfortunately, we are subscale as a public company. Gen and
I fought hard to get to this point where we have the heft to
execute on our business plan. If we are forced to return capital,
we’ll never be in a position to execute on this business plan,
should an opportunity eventually come up. At the same time,
it seems silly to burden our current equity holdings with the
operating costs of a public company, spread amongst a much
smaller capital base, as shareholders would be far better off
investing in similar securities in their own personal accounts.
As a result, if we start the process of returning capital, we’ll
likely end up returning a majority of the excess capital at the
same time. I want to make it clear that we are not going to
be forced sellers of any securities. If we do take the route
of returning capital to shareholders, we’ll only do so after
individual investments have matured.
As we get closer to the moment where we have to deal with
this issue, I wanted to more fully detail our current dilemma
and thinking so that I can have more fulsome conversations
with shareholders and seek out a possible solution to our
conundrum. Our path here is not set in stone and we are
hopeful that we can either find a solution or find an investment
that interests us. However, it would be unfair to you if we
sprung a large capital return on you, when you expected us
to be growing this business instead. It would be even worse
if we made a bad investment out of necessity to extend our
timeline.
We had a dream of building a unique sort of business, but it
may prove to be impossible due to regulatory limitations.
KEDM Restructuring
For over a decade, this company, my personal life, and my
business life have been oddly intertwined. I have always known
that related party transactions should be avoided at all costs,
but over the years, there have been a variety of related party
transactions, which MGG entered into. In all circumstances,
I have done my best to ensure that MGG always came out
ahead, often at my own expense. I even faithfully served as
Chairman and CEO for zero compensation during the majority
of MGG’s lifetime. I bring this up, as once again we have
entered into a related party transaction and this one is large.
As of November 2022, an entity that I control and am president
of, has become a Registered Investment Advisor (RIA) in the
USA. Unfortunately, this has multiple complications for KEDM,
as RIAs are highly regulated entities and all of my finance
facing business interactions must be contained within the RIA
and the RIA’s compliance process. As a business, MGG came to
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Mongolia Growth Group Ltd |
something of a fork in the road where we had three very unpleasant choices in front of us, characterized in terms of the worst
option first; we could disband KEDM and return everyone’s subscriptions (which would lead to a multi-million dollar outflow
from the company along with forgoing millions in future revenue), we could let KEDM continue without my involvement (which
would likely entail a rapid acceleration in subscriber churn and a dramatic decline in revenue), or we could have my RIA produce
KEDM for MGG to distribute. After spending far too much capital and an inordinate amount of our time seeking out a fourth
option that did not involve a very substantial related party transaction, we have decided that the least bad option is for my RIA
to produce KEDM.
As a reminder, MGG previously had engaged an arms-length third party to produce KEDM. That party had its expenses
reimbursed along with earning a 20% revenue share on all quarterly revenue in excess of USD $125,000 each quarter. My RIA
has now employed many of these same individuals and will shoulder the costs of producing KEDM along with passing through
the revenue share to these employees. Unfortunately, due to the costs of coexisting within a highly regulated RIA, the costs of
producing KEDM will increase somewhat. This is caused by added expenses for compliance, legal and IT—costs that I’ve mostly
shouldered over the past few years, often not realizing that I was paying these expenses. In the agreement that was approved
by the Board of MGG, my RIA will receive USD $50,000 a month along with 20% of all revenue in excess of USD $125,000
each quarter. The contract was structured to ensure that my RIA earns a very modest profit, as the overall costs of producing
KEDM within this new regulatory environment are unclear. Over time, my plan is to adjust this contract so that my RIA earns a
negligible profit on this contract, and nothing more, as necessitated by tax statutes. Offsetting these expenses, my RIA entered
into a rental agreement at a rate of USD $5,000 a month as of January 1, 2023 for use of part of the Puerto Rican office building
owned by MGG. MGG believes that this is a market rate of revenue.
I want to assure you that we’ve tried to make this square peg fit into a round hole for the better part of a year now, and we’ve
hit a level of exhaustion with the topic that only those of us who have been working on this, can truly appreciate. Unfortunately,
this is the only path forward that can preserve the value of KEDM for shareholders.
Once again, I wanted to be as forward as possible with you as related party transactions, particularly large ones, should be
avoided. Unfortunately, some simply cannot be avoided.
Conclusion
In summary, the fiscal year 2022 continued upon the past few years of progress. We have now incubated and launched KEDM
with great success. KEDM has passed through the first renewal period and has proven that subscribers find dramatic value in
it. Our public equity investments have succeeded beyond our wildest ambitions, and we are in the best financial position we
have been in since we started this adventure. Gen and I very much want to continue this adventure. We have big plans and even
bigger ambitions for this company, as noted by our continued and aggressive insider purchases over the years. Unfortunately,
various regulatory and tax authorities have put a roadblock in our way and despite speaking with multiple consultants and
spending a veritable treasure chest of money on this problem, we cannot find a way forward. We haven’t given up hope yet, but
are also realists, hence we are making you aware of the likely return of a substantial portion of this company’s capital.
During the quarter, the company repurchased 302,600 shares under its Normal Course Issuer Bid. At quarter end, our share
count was 27,710,499 or 23% fewer than during our peak share-count in 2016. To date, the company has repurchased a total
of 8,224,800 shares.
Sincerely,
Harris Kupperman
CEO and Chairman of the Board
6
| Mongolia Growth Group Ltd
MONGOLIA GROWTH GROUP LTD.
Management Discussion & Analysis
December 31, 2022
The management of Mongolia Growth Group Ltd. (“MGG” or “the Corporation”) presents the Corporation’s management
discussion and analysis for the year ended December 31, 2022 (the “MD&A”), compared with the year ended December 31,
2021. As of January 1, 2011, the Corporation adopted International Financial Reporting Standards (“IFRS”). This MD&A provides
an overall discussion, followed by analyses of the performance of the Corporation’s major reportable segments. The reporting
and presentation currency in the consolidated financial statements and in this discussion and analysis is the Canadian dollar,
unless otherwise noted.
This MD&A is dated April 19, 2023, and incorporates all relevant information and considerations to that date.
The following discussion and analysis should be read in conjunction with the audited consolidated financial statements of the
Corporation for the year ended December 31, 2022 and December 31, 2021 together with all of the notes, risk factors and
information contained therein, available on SEDAR at www.sedar.com.
Forward Looking Statements
This MD&A contains forward-looking statements relating to future events. In some cases, forward-looking statements can be
identified by words such as “anticipate”, “continue”, “estimate”, “expect”, “forecast”, “may”, “will”, “project”, “should”, “believe”,
or similar expressions. These statements represent management’s best projections but undue reliance should not be placed
upon them as they are derived from numerous assumptions. These assumptions are subject to known and unknown risks
and uncertainties, including the “Risks and Uncertainties” as discussed herein. Actual performance and financial results will
differ from any projections of future performance or results expressed or implied by such forward looking statements and the
difference may be material.
Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted.
From time to time, the Corporation’s management may make estimates and have opinions that form the basis for the forward-
looking statements. The Corporation assumes no obligation to update such statements if circumstances, management’s estimates,
or opinions change.
Forward looking statements are included within the Outlook and Executive Strategy sections of this MD&A.
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Mongolia Growth Group Ltd |
Section 1 – Overview
Financial and Operational Overview
The Corporation has three core focuses of operation: Investment Properties, Subscription Products, and Corporate.
Management believes that its current property operations are not at a sufficient scale to be cash flow positive. As such, the
Corporation is looking at various investment opportunities outside of Mongolia, in order to diversify its business and has adopted
a Merchant Bank model. Since 2017, the Corporation has spent substantial time evaluating a number of businesses for acquisition
but has not decided to move forward on any acquisition. However, the Corporation has incubated and launched a Subscription
Products business, which began to produce revenue during the third quarter of this year.
The year saw an increase in overall revenue primarily related to the Corporation recognizing subscription products revenue
and an increase in leasing revenue. Additionally, the Corporation recognized realized and unrealized gains from its investment
portfolio.
The Corporation’s rental revenue was up when compared to 2021. The Corporation managed to maintain a high occupancy rate,
with 100% office and 100% retail occupancy rates, and no longer had to offer significant discounts to tenants affected by closures
due to Covid-19 as it did in years prior.
During the year, the Company sold five properties for cash proceeds of $919,621 at a net loss of $146,544. (2021- $37,641 loss).
During 2021, the Corporation purchased a mixed-use property in Puerto Rico for $821,591 which has been classified as PPE, and
completed renovations and furnishings of $711,813 during the year. It is anticipated that the Corporation will continue to dispose
of non-core Mongolian properties in future quarters to fund future working capital needs, along with funding the start-up costs
or capital cost of the acquisition of a business outside of Mongolia.
During the year, the Corporation recognized revenue of $3,174,031 (2021- $944,411) from its subscription data product named
KEDM. It is anticipated that KEDM-related revenue will increase in future years as the number of subscribers increases and
the Corporation adds additional services to the core KEDM platform. The increases in revenue will be somewhat offset by the
expectation of additional costs in relation to KEDM.
While the Corporation seeks out a business to build or acquire, the Corporation has invested its excess capital in publicly traded
securities. During 2022, the Corporation’s investment portfolio experienced $8,792,881 of realized gains and $1,031,997 of
unrealized gains. As of the end of December, the Corporation has in excess of $38.7 million of cash and net marketable securities
with negligible debt (when excluding margin borrowings and short futures call options related to fully hedged call spreads). The
Corporation believes that over time, it will continue to dispose of property assets to fund potential future investments outside
Mongolia. The Corporation sees its public securities holdings as a source of capital to fund a future acquisition along with the
working capital needs of the business. The Corporation may also be forced to take on additional borrowings or issue equity to
finance a future acquisition.
Mongolian Economic Overview
Starting in 2012, the Mongolian government initiated a program to restrict and inhibit foreign investment. Additionally, various
government officials made statements designed to intimidate foreign investors, followed by arbitrary arrests of foreign employees
and confiscations of foreign investments. These actions led to a dramatic slowdown in foreign direct investment (FDI) and an
exodus of foreign investors. The economy would have entered a crisis sooner if not for expansionary fiscal policy and monetary
stimulus from the Central Bank of Mongolia. However, by 2014, even this stimulus was insufficient to avert the economic crisis
which is currently ongoing.
Despite official statistics that tended to show moderate economic growth, the Corporation is of the opinion that the economy
had been in contraction from 2014 until mid-2018, though the rate of contraction had varied based on economic policy. During
the second half of 2018, the Corporation noticed the first green shoots in many years.
Beginning in February 2020, the Government of Mongolia undertook extraordinary actions to limit the spread of Covid-19. These
actions included closing borders, closing schools, reducing gatherings, and drastic limitations on business operations including
the Corporation’s operations. During 2022, the government relaxed Covid-19 restrictions and overall operations have recovered
somewhat. It is anticipated that prior actions related to Covid-19 will continue to impact Mongolia’s economic recovery. To date,
the Corporation has experienced a low level of bad debt expense; however, it had to issue a significant number of discounts to
tenants affected by the economic crisis.
Management believes that the current economic crisis is the result of policies that have discouraged Foreign Direct Investment
(“FDI”) along with Covid-19. When the government takes the appropriate steps to stimulate FDI, it is expected that the economy
can return to sustainable economic growth. Management remains a believer in the long-term growth potential of Mongolia.
Mongolia’s economy is likely to be impacted by the Russian invasion of Ukraine as Russia is a substantial trading partner of
Mongolia. Recent actions to restrict Russian access to SWIFT may have negative impacts upon Mongolia’s ability to trade with
Russia, which may negatively impact the Mongolian economy. To date, Mongolia has taken a neutral view regarding the Russian
invasion. There is no way to know if Mongolia’s stance will shift over time.
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| Mongolia Growth Group Ltd
Mongolian Property Overview
During the boom years at the beginning of this decade, multiple sizable property developments were initiated. Despite an
economic crisis that began in 2014, many of these developments were ultimately completed, while new projects have continually
been initiated despite weak demand for these properties. There also remains a sizable shadow inventory of partially completed
projects that may re-commence development at any time.
Before the economy was impacted by Covid-19, well-placed office and retail space in the city center was beginning to get
absorbed and rental rates were starting to increase, for the first time in many years. Management continues to monitor and
evaluate the ultimate impact of Covid-19 on property prices and the Mongolian economy.
Management cautions investors that it is focused on continuing to dispose of non-core property assets, when possible, to recycle
capital.
Mongolian Property Business
During the past decade, Management and employees have worked hard to build up the infrastructure needed to manage MGG’s
institutional property platform. This platform is unique in Mongolia and is one of the only platforms capable of managing assets
through the full cycle of ownership from acquisition through disposition and includes dedicated departments that manage
maintenance, leasing, marketing, and tenant management. Management believes it has a strong team in place to manage the
business on an ongoing basis.
The Corporation has continued to have occupancy levels that are in excess of current market conditions, and it credits its leasing
and property management teams with this success. Additionally, bad debt expense has remained below expectations. However,
the Corporation issued significant discounts to tenants during the pandemic.
Portfolio
Mongolia Growth Group’s Mongolian properties are located in the Downtown and the Central Business District of Ulaanbaatar.
During 2021, the Company purchased an office building in Rincon, Puerto Rico. Within the financial statements, MGG classifies
properties in each of the following categories: Investment Properties, Property and Equipment, and Other Assets/Prepaid
Deposits. Fluctuations in the values of the Corporation’s property portfolio during the year can be attributed to changes in
valuations, properties purchased and sold, and the change in value of the functional currency (Mongolian Tögrög) versus the
Canadian dollar.
Investment Properties
Investment Properties include properties held to earn rental revenue, for capital appreciation, and/or for redevelopment.
Investment Properties are initially valued at fair value, which is the purchase price plus any directly attributable expenditure.
Investment Properties are subsequently valued at fair value, which reflects market conditions at the date of the statement of
financial position.
The following table represents properties classified as Investment Properties, as of December 31, 2022:
Property and Equipment
Properties are classified as Property and Equipment if the Corporation occupies more than 10% of the property. Properties
classified as Property and Equipment are measured at cost less accumulated depreciation, less any accumulated impairment
losses. All repairs and maintenance costs to these properties are charged to the Consolidated Statement of Operations during the
period in which they occur unless eligible for capitalization. The Corporation’s Mongolian headquarters, purchased in October
2011, as well as the newly purchased, mixed-use property in Puerto Rico, fall within this category. The Corporation anticipates
continuing capitalized expenditures for the renovation of the newly purchased property in Puerto Rico.
The following table represents properties classified as Property and Equipment, as of December 31, 2022:
2022
2021
# of Properties
Value at 31-December-2022
$CDN
# of Properties
Value at 31-December-2021
$CDN
Office
2
2,616,417
2
2,201,317
Retail
-
-
-
-
Land and Redevelopment
-
-
-
-
Total
2
2,616,417
2
2,201,317
2022
2021
# of Properties
Value at 31-December-2022
$CDN
# of Properties
Value at 31-December-2021
$CDN
Office
2
931,736
2
925,127
Retail
1
5,508,385
6
7,119,588
Land and Redevelopment
2
3,646,835
2
3,841,192
Total
5
10,086,956
10
11,885,907
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Mongolia Growth Group Ltd |
Occupancy Rates
A summary of MGG’s property portfolio occupancy rates is set forth in the following table:
31 –December- 2022
31 –December- 2021
31 –December- 2020
Occupancy Rate*
Occupancy Rate*
Occupancy Rate*
Office
100.0%
100.0%
96.6%
Retail
100.0%
84.2%
100.0%
Weighted Average**
100.0%
91.0%
97.0%
* Occupancy rates are calculated on a per-meter basis and only include properties in the rental pool. It does not include those currently listed for sale.
** Weighted Average is calculated based on total meters available for lease.
Demand for retail space has remained strong, despite a challenging economy. Occupancy levels for the Corporation’s office space
continue to be strong even while vacancy levels throughout the city have remained high as additional supply has entered the
market.
Leasing Schedule
In order to reduce the Corporation’s exposure to currency fluctuations and inflation, the Corporation targets shorter lease
durations with most tenants. Management’s experience is that this practice is in line with local industry standards, with the
expectation that once leases expire, existing tenants are offered the first right to re-lease the space at the prevailing market rates.
A summary of the Corporation’s lease signings by asset class is presented in the chart below:
The weighted average remaining lease length, calculated as a percentage of monthly revenues, increased during the year to 12.6
months in December 2022 compared to 10.6 months in December 2021.
It is Management’s belief that the majority of the Corporation’s existing leases are at rates that are in line with prevailing market
rates that existed before Covid-19. Future changes in lease rates are dependent on economic conditions.
Subscription Products
The Corporation has built a financial data product known as KEDM, which helps investors to monitor various Event-Driven
opportunities. The Corporation initiated a paywall on July 1, 2021, in order to monetize this service. During the year, the
Corporation recognized $3,174,031 of subscription revenue. At year-end, the Corporation has $1,547,154 of unearned revenue
(2021 - $1,035,471) related to subscription fees that have been collected and not earned. As of December 31, 2022, the
Corporation has received $5,665,595 of total billings.
The Corporation intends to increase the marketing of KEDM along with investing to improve the scope and quality of the data.
Should KEDM continue to perform acceptably, the Corporation may look to launch or acquire additional subscription products.
Additionally, the Corporation is reviewing additional services that it can add to the core KEDM platform to increase revenues.
The total KEDM subscriber base has continued to grow at an attractive rate since the end of the year. For more information on
KEDM, go to http://www.KEDM.COM.
Investments
The Corporation has invested a portion of its excess capital in marketable securities. As of December 31, 2022, the Corporation
held positions in multiple different publicly traded companies with the values of marketable securities owned of $49,237,506,
securities sold short of $5,159,131 and $7,393,046 due to broker.
During the year, the Corporation realized gains of $8,792,881 (2021- gain of $10,306,006) from sales of public securities and
experienced unrealized gains of $1,031,997 (2021 –gain of $7,946,088).
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
2023
2024
2025
Contractually Obligated Rental Revenue
Office
Redevelopment
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| Mongolia Growth Group Ltd
At the end of the year, the portfolio’s holdings with a weighting in excess of 10% of the brokerage account’s equity were:
The Corporation’s public securities as of December 31, 2022, are broken out in the following sectors:
Long Portfolio
Industry Sector
Percentage
Crude Oil Futures and Calls
39.0%
Energy Services
36.3%
Uranium
18.8%
Brent Oil ETF
13.3%
Land
10.5%
Media and communications
8.9%
Technology
2.9%
Building products
2.9%
Other long equities
1.3%
Short Portfolio
Industry Sector
Percentage
Short Crude Oil Futures Calls
-`14.0%
Other Short options
-0.1%
The Corporation believes that public securities are a liquid alternative to holding cash while seeking out additional businesses
to launch or acquire. The Corporation intends to sell its holdings to fund such future businesses. There are tax and regulatory
reasons that this portfolio should not be thought of as the future of the Corporation. The Corporation cautions investors that the
public securities portfolio is likely to be more volatile than the overall market or a money market account. Additionally, investing
in public securities entails substantial risks, far beyond the risks of investing excess cash into a bank account. The Corporation does
not expect the recent returns to be repeatable, sustainable or indicative of future returns from the public securities portfolio.
During the first quarter of 2022, the Corporation purchased various Russian securities. As at March 31, 2022, the Company
marked all of these securities to zero as sanctions prohibit the sale of Russian securities and the Company may never recover any
value from these securities. The Corporation continues to value these securities at zero.
As of December 31, 2022, the public securities portfolio had a net equity value of approximately $36,700,000 when compared to
a net equity value of about $27,800,000 at December 31, 2021. During the year, the Corporation withdrew $1,300,000 from the
public securities portfolio to fund working capital needs and the Corporation’s NCIB. As of March 31, 2023, the public securities
portfolio had a net equity value of approximately $33,200,000.
Due from and due to brokers
The Company has margin facilities with its prime brokers. As at December 31, 2022 and 2021, the Company’s amounts due
to brokers have no specific repayment terms, and they are governed by the margin terms set forth in the prime brokerage
agreements. As at December 31, 2022, the Company had net margin borrowings of $7,329,685 (2021 – $7,614,540). The fair
value of the collateral-listed equity securities is calculated daily and compared to the Company’s margin limits. The prime brokers
can at any time demand full or partial repayment of the margin balances and any interest thereon or demand the delivery of
additional assets as collateral.
Top Holdings
Holdings
Shares
%
Crude Oil Futures Calls
-
39.2%
Valaris PLC (VAL – USA)
76,230
19.0%
Sprott Uranium Trust (U-U – Canada)
365,500
15.8%
BNO Energy ETF
127,440
13.3%
St Joe Company (JOE – USA)
73,346
10.5%
Lee Enterprises (LEE – USA)
76,279
5.2%
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Mongolia Growth Group Ltd |
Digital Assets
During the year, the Corporation opened a digital currency account at Kraken Custody and purchased Monero (XMR)
cryptocurrency. The Corporation purchased 505 Monero coins during the year for $94,910. At the end of the year, the coins
were worth $284,253 as it experiences an unrealized loss of $98,700 and a currency gain of $21,153. The Corporation currently
owns 1,425 Monero.
2022
Gross
amounts due
from brokers
$
Gross
amounts due
to brokers
$
Net
amounts
$
Due from brokers
14,203
(14,203)
-
Due to brokers
-
(7,393,046)
(7,393,046)
2021
Gross
amounts due
from brokers
$
Gross
amounts due
to brokers
$
Net
amounts
$
Due from brokers
6,872
(4,552)
2,320
Due to brokers
-
(9,173,869)
(9,173,869)
12
| Mongolia Growth Group Ltd
Section 2 – Results of Operations
Selected Annual Financial Information (CAD)
Year ended
Year ended
Year ended
31-December-2022
31-December-2021
31-December-2020
($)
($)
($)
Revenue and other income
3,926,885
1,776,711
931,215
Income
Net income (loss) attributable to equity holders of the
Corporation
7,938,422
15,549,306
3,727,544
Total Comprehensive income/ (loss) attributable to
equity holders of the Corporation
6,403,237
15,491,985
2,516,287
Basic earnings per share ("EPS") (in CAD)
Net income/ (loss)
0.29
0.53
0.12
Diluted EPS (in CAD)
Net Income/ (loss)
0.29
0.53
0.12
Balance Sheet
Total assets
64,557,624
55,026,865
27,970,421
Total liabilities
18,434,092
14,849,578
1,123,994
Total equity
46,123,532
40,177,287
26,846,427
Shares outstanding at year-end
27,710,499
27,778,499
31,281,499
Book value per share
1.66
1.47
0.86
Rental Revenue from Investment Properties
Rental revenue from Investment Properties increased from $679,091 in 2021 to $798,826 in 2022 as the Company no longer had
to offer significant discounts to tenants affected by closures due to Covid-19 as it did in years prior.
Unearned Revenue
The Company has developed a data analytics service, named KEDM, that tracks various Event-Driven strategies. The Company
initiated a paywall on July 1, 2021, to start monetizing this service. Revenue collected that has not been earned has been
classified as unearned revenue and will be classified according to the Company’s revenue policies described in note 3 of the 2022
consolidated financial statements.
As of December 31, 2022, the Company has unearned revenue of $1,547,154 (December 31, 2021 - $1,035,471).
Prior to January 1, 2023, MGG had engaged an arm’s length company to compile and produce the KEDM report on an ongoing
basis, while MGG acted as the distributor and marketer of the product. As a part of this engagement, MGG had agreed to
pay certain direct and approved expenses related to producing KEDM in addition to 20% of quarterly earned revenues above
a threshold. Expenses related to the unearned revenue have generally not yet been incurred and are not reflected in the
Company’s financial statements. MGG owns all intellectual property related to KEDM and the arm’s length company disclaims
any ownership or rights to the intellectual property.
Beginning on January 1, 2023, MGG has engaged Praetorian PR LLC (PPR), a Puerto Rican company owned by MGG’s Chairman
and CEO to produce KEDM. Under the terms of the agreement, MGG will pay PPR a monthly fee of USD $50,000 along with 20%
of any quarterly revenue in excess of USD $125,000. This transaction was necessitated by the need to consolidate all financial-
related business activities conducted by the Corporation’s Chairman and CEO under the review of his Chief Compliance Officer,
following PPR’s registration as a Registered Investment Advisor with the US Securities and Exchange Commission (SEC). MGG
believes that the compensation paid to PPR will result in a negligible profit to PPR based upon a review of anticipated expenses
going forward. Both parties reserve the right to adjust the terms of the agreement following a short-notice period. Additionally,
PPR agrees to provide MGG with expense reports periodically to show the KEDM-related expenses that were incurred. For more
information about KEDM, go to www.KEDM.com.
Revenue from Other Sources
Revenue from other sources consists of late fees, fees earned for third-party leasing, and property management. For the year
ending December 31, 2022, revenues from other sources decreased to $100,572 compared to $190,850 for the year ending
December 31, 2021, as there was a significant decrease in brokerage transactions during the year.
13
Mongolia Growth Group Ltd |
Revenue from Subscriptions
Revenue from subscriptions consists of fees earned through our data analytics subscriptions. For the year ending December 31,
2022, revenues from subscriptions were $3,174,031 compared to $944,411 in 2021 as KEDM earned revenues for the full year
and continued to gain traction.
Gain/loss on disposal of Investment Properties
During the year, the Corporation sold five properties with a value of $1,066,165 for a net loss of $146,544 (2021 – eight properties
for cash consideration of $2,163,008 and a net gain of $37,641).
Fair Value Adjustment on Investment Properties
The estimate of fair value of investment properties is a critical accounting estimate to the Corporation. An external appraiser
estimates the fair value of the majority of the Investment Properties annually, the remainder are appraised internally by
Management. The fair value of investment properties is based on the nature, location and condition of the specific asset. The
fair value of investment properties represents an estimate of the price that would be made in an arm’s length transaction
between knowledgeable, willing parties. The Corporation operates in the emerging real estate market of Mongolia, which given
its current economic and industry conditions, has an increased inherent risk given the lack of reliable and comparable market
information. For the year ended December 31, 2022, the Corporation recorded a valuation gain of $622,186 (2021 – $441,870
loss). Management continues to evaluate the impacts of Covid-19 on property prices.
Income Taxes
The Corporation has subsidiaries in Mongolia that are subject to income taxes and, accordingly, has provided for current and
deferred income taxes with respect to those subsidiaries.
Differences between IFRS and statutory taxation regulations in Mongolia give rise to temporary differences between the carrying
amount of assets and liabilities for financial reporting purposes and their tax bases. The deferred tax liability on the balance
sheet increased by $1,962,278 during the year (Q4 2021- $531,408 increase) due to unrealized gains in our investment portfolio.
The Corporation’s marketable securities portfolio has generated large gains during 2021 and 2022. It is expected that the
Corporation will use up all of its Non-capital losses available and be required to pay taxes in Canada on some of these gains. The
Corporation has estimated the deferred liability to be approximately $2,972,522.
Unrealized public securities investment gain/loss
During the year, the Corporation had an unrealized public securities investment gain of $1,031,997 compared to an unrealized
public securities investment gain of $7,946,088 during 2021.
Realized public securities investment gain/loss
During the year, the Corporation had realized investment gains of $8,792,881 compared to a realized investment gain of
$10,306,006 in 2021.
Realized foreign currency gain/loss
During the year, the Corporation had a realized foreign currency gain of $255,315 compared to a realized foreign currency loss
of $313,464 in 2021.
Share Repurchase
During 2022, the Corporation repurchased 302,600 common shares under its Normal Course Issuer Bid (NCIB) at an average
price of $1.51 (2021-3,311,500, $0.65 average). As at December 31, 2022, the Corporation held 234,600 shares in Treasury to be
cancelled during the first quarter of 2023 (2021- Nil).
Property Operating Expenses
Property Operating Expenses consist of repairs and maintenance, bad debts, utilities, salaries, as well as land and property taxes.
For the year ending December 31, 2022, property operating expenses were $770,855 compared to $760,783 during the same
period in 2021.
Corporate Expenses
Corporate expenses include senior management and board of directors’ compensation, listing fees, professional fees, technology,
travel, investment research expenses, KEDM.COM development costs, and administrative costs.
For the year ending December 31, 2022, general and administrative expenses have increased from $2,021,493 in 2021 to
$2,769,687 in 2022. This increase was primarily driven by an increase in production expenses and revenue sharing at KEDM.
14
| Mongolia Growth Group Ltd
Unrealized digital assets investment gain/loss
During the year, the Corporation had an unrealized digital assets investment loss of $98,700 and a currency gain of $21,153
(2021– $42,606 investment loss and a $4,923 currency loss).
Currency
The Mongolian Tögrög has fluctuated significantly over the past ten years; however, it was relatively unchanged in 2021 increasing
from 2235 at the end of December 2020 to 2237 at the end of December 2021. During 2022, the Togrog depreciated 16% to 2,542.
The fluctuation in the currency is reflected in the Corporation’s financial statements, most notably in the investment property
portfolio. Note 11 in the financial statements discloses the foreign exchange adjustment, which flows through the investment
property classification during each period. As at December 31, 2022, the Corporation recognized an unrealized foreign exchange
adjustment loss of $1,354,972 (2021 - loss of $51,451) on its investment property portfolio.
Net Income
For the year ended December 31, 2022, the Corporation had a net income of $7,938,422 (2021 - $15,549,306). The bulk of this
income came unrealized and realized gains on marketable securities of $1,031,997 and $8,792,881 as well as the subscription
revenue of $3,174,031 earned during the period. Management cautions investors that the Corporation is primarily focused on
increasing shareholder value on a per-share basis. This means that, operationally, Management is more concerned with long-
term asset appreciation at the expense of short-term cash flow. Management expects this to be the case for the foreseeable
future.
15
Mongolia Growth Group Ltd |
Section 3 - Financial Condition
Cash Flow
Mongolia Growth Group’s primary sources of capital are cash generated from equity issuance, investing, financing, and asset
sales. Management expects to meet all of the Corporation’s obligations through current cash and cash equivalents along with
cash flows from asset sales.
The following table provides an overview of the Corporation’s cash flows from operating, financing, and investing activities for
the year ended December 31, 2022, and 2021.
For the year ending
31-December-2022
$
31-December-2021
$
Net change in cash related to:
Operating
(1,126,832)
8,986,056
Investing
1,321,361
(5,767,722)
Financing
(456,992)
(2,141,125)
Effects of exchange rates on cash
(82,603)
(42,669)
Net change in cash during the period
(345,066)
1,034,540
Overall, the Corporation had cash outflows of $345,066 during 2022 primarily due to significant cash outflows from operating
activities offset by Significant inflows from Investing activities. The changes in components of cash flows for the year ended
December 31, 2022, compared to the year ended December 31, 2021, were the result of the following factors:
• Operating– The Corporation experienced operating cash outflows due to a significant net change in non-cash working
capital as the Company had a large amount on deposit at the broker at year-end. In contrast, at the end of
2021, the Company had a large amount due to broker.
• Investing– The Corporation experienced significant inflows from investing activities for the year ended 2022 primarily
due to significant net sale of marketable securities and investment properties, offset slightly by the
acquisition of PPE. In contrast, the Corporation had outflows from the purchase of marketable securities
and the acquisition of office property, offset by proceeds on the sale of investment properties in 2021.
• Financing– The Corporation experienced smaller cash outflows from Financing activities during 2022 due to smaller
share repurchases than in 2021.
To date, the Corporation has been able to meet all of its capital and other cash requirements from its internal sources of cash.
As at December 31, 2022, the Corporation had $2,051,245 (2021 - $2,396,311) in cash and cash equivalents. Management
considers its marketable securities holdings to be fairly liquid and can be sold should the Corporation need to increase its cash
position.
Total Assets
As of December 31, 2022, the Corporation had $51,617,254 (2021 - $40,809,029) in Current Assets of which $2,051,245 were held
in cash and cash equivalents (2021 - $2,396,311) and $49,237,506 were held in marketable securities (Q4 2021 -$37,802,853),
none were held in unrealized gain on futures contract (Q4 2020-$311,437), $284,253 were held in digital assets (Q4 2021-
$266,890), and $44,250 were held in other assets (Q4 2021-$29,218). The increase in marketable securities is due to gains in
marketable securities during the period. Investment Properties are classified as Non-Current Assets and are carried at Fair
Market Value. During the year, Investment Properties decreased to $10,086,956 (Q4 2021 -$11,885,907) due to a decrease in the
total number of properties held and a foreign exchange adjustment loss offset by an unrealized fair value gain.
Property and Equipment, which primarily consists of properties that are measured at their cost base, increased from $2,220,207
as at December 31, 2021, to $2,804,232 as at December 31, 2022 as the Company made improvements on its office in Puerto
Rico during the year.
Total Liabilities
As of December 31, 2022, the Corporation had current liabilities of $15,461,570 (2021- $13,839,334) consisting primarily of
marketable securities sold short of $5,159,131, amounts due to broker of $7,393,046, payables of $659,402, unearned revenue
of $1,547,154 (Q4 2021-$1,035,471) and income tax liability of $642,837 (Q4 2021-$4,274).
As of December 31, 2022, the non-current liabilities on the balance sheet were deferred income taxes of $2,972,522 (Q4 2021-
$1,010,244).
Management considers all other current cash commitments to be immaterial and operational in nature.
16
| Mongolia Growth Group Ltd
Total Equity
During the year, the Company’s equity value increased to $46,123,532 as at December 31, 2022, from $40,177,287 at December
31, 2021.
The equity of the Corporation consists of one class of common shares.
Outstanding
31-December- 2022
31-December-2021
Common shares
27,710,499*
27,778,499*
Options to buy common shares
-
-
* As at December 31, 2022, the Corporation held 234,600 common shares in Treasury to be cancelled during the first quarter of 2023 (2021 Nil).
* As at April 19, 2023 the Corporation had 27,307,799 shares outstanding, no shares held in treasury and no options outstanding.
Acquisitions and Dispositions
During the year, the Company sold five properties with a value of $1,066,165 at a net loss of $146,544 (2021- $2,163,008 and a
net loss of $37,641). The Company purchased no properties in 2022 (2021-one property purchased).
Related Party Transactions
Parties are generally considered to be related if the parties are under common control or if one party has the ability to control
the other party or can exercise significant influence or joint control over the other party in making financial and operational
decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not
merely the legal form.
Key management personnel of the Corporation include all directors, executive management, and persons related to directors
and executive management. The summary of compensation for key management personnel is as follows:
As at December 31, 2022, amounts due to related parties totaled approximately $16,446 (2021 - $140,000) comprised of fees
owed to management were included in trade payables and accrued liabilities. Salaries to other related parties includes the salary
of an employee that is related to a director.
Off-Balance Sheet Items
As of December 31, 2022, the Corporation had no off-balance sheet items.
COVID-19
Beginning in February of 2020, the Government of Mongolia undertook extraordinary actions in order to limit the spread of
COVID-19. These actions included closing borders, closing schools, reducing gatherings and drastic limitations on business
operations. It is anticipated that these actions will lead to a severe economic crisis. Since the initiation of these actions, the
Company has experienced a material reduction in rental revenues received. It is also reasonable to expect there could be
a material negative impact on the fair values of investment properties; however, at this time the potential effect cannot be
quantified. At this time, there is no way to know the ultimate impact of these extraordinary actions upon the economy or the
Company.
Events Subsequent to Year End
• Beginning on January 1, 2023, MGG has engaged Praetorian PR LLC (PPR), a Puerto Rican company owned by MGG’s
Chairman and CEO to produce KEDM. Under the terms of the agreement, MGG will pay PPR a monthly fee of USD $50,000
along with 20% of any quarterly revenue in excess of USD $125,000. This transaction was necessitated by the need to
consolidate all financial-related business activities conducted by the Corporation’s Chairman and CEO under the review
of his Chief Compliance Officer, following PPR’s registration as a Registered Investment Advisor with the US Securities
and Exchange Commission (SEC). MGG believes that the compensation paid to PPR will result in a negligible profit to
PPR based upon a review of anticipated expenses going forward. Both parties reserve the right to adjust the terms of the
agreement following a short-notice period. Additionally, PPR agrees to provide MGG with expense reports periodically to
show the KEDM-related expenses that were incurred.
• Since January 1, 2023, the Company has repurchased 168,100 of its shares at an average price of $1.46/share and cancelled
402,700 shares.
Related Party Transactions
2022
$
2021
$
Salaries and other short-term benefits to officers
590,924
597,668
Salaries to other related parties
78,040
63,664
Director fees
60,000
60,000
Total
728,964
721,332
17
Mongolia Growth Group Ltd |
• As disclosed in the Corporation’s March 23, 2023 press release, the Corporation announced that the TSX Venture Exchange
(the “Exchange”) had accepted a Notice of Intention to renew its normal course issuer bid to purchase outstanding
common shares of the Corporation on the open market in accordance with the policies of the TSX.
Securities Sought
Up to 1,900,000 common shares, representing up to approximately 6.9% of the 27,475,899 Common Shares of the Issuer
currently issued and outstanding, or approximately 9.9% of the 19,030,149 common shares constituting the Issuer’s
current Public Float (as defined in the Policies of the Exchange).
Duration
The Issuer intends to commence purchasing its common shares under the Normal Course Issuer Bid three clear trading
days following acceptance of the same by the TSX Venture Exchange (the “Exchange”). The Bid will commence on or
about March 27, 2023, and the Bid will end no later than March 26, 2024.
Method of Acquisition
Purchases will be affected through the facilities of the Exchange. Purchase and payment for the common shares of the
Issuer will be made by the Issuer in accordance with Exchange requirements.
Member and Broker
The Normal Course Issuer Bid will be conducted by M Partners Inc. of 70 York Street, Suite 1560, Toronto ON M5J 1S9;
Thomas Matthews: Phone: (416) 603-7381.
Consideration Offered
Purchases of common shares under the Normal Course Issuer Bid will be conducted at applicable Market Prices in
accordance with Exchange requirements. Completion of purchases under the bid will be subject to the Issuer having
sufficient funds to acquire the common shares and continue to meet its working capital requirements throughout the
course of the bid. The Issuer may in the normal course of its business operations, subject to market conditions, sell one or
more of its investment properties to fund acquisitions throughout the course of the bid.
Reasons for the Normal Course Issuer Bid
The Issuer is undertaking the bid because, in the opinion of its board of directors, the market price of its common shares,
from time to time, may not fully reflect the underlying value of its operations and future growth prospects. The Issuer
believes that in such circumstances, the purchase of the common shares of the Issuer may represent an appropriate and
desirable use of the Issuer’s funds and further enhance market stability.
Persons Acting Jointly or in Concert with the Issuer
N/A
Valuation
After making reasonable enquiry, the Issuer is not aware of any appraisal or valuation of the Issuer’s securities that has
been prepared within the preceding two years.
In connection with the preparation of its audited financial statements for the financial year ending December 31, 2021,
the Issuer engaged Makedifference LLC, an arm’s length property valuator, to prepare the following independent valuation
report (the “Valuation”) in respect of the Issuer’s Mongolian real estate investment assets:
• Report entitled “Valuation Review Report”, dated February 1 2022, which ascribed a value of 27,867,614,522 MNT
(Mongolian Togrogs) to the Issuer’s material real estate investment assets as at December 31, 2021;
The Valuations were prepared for internal accounting purposes and the Issuer does not have permission to share the
Valuations externally.
Previous Purchases
The Issuer has purchased 470,700 of its common shares at an average price of $1.49 within the past 12 months.
Acceptance by Insiders, Affiliates and Associates
To the knowledge of the Issuer, no director, senior officer or other Insider of the Issuer or any associate or affiliate of the
Issuer or any insider of the Issuer currently intends to sell common shares under the Normal Course Issuer Bid. However,
such sales by persons through the facilities of the Exchange may occur if the personal circumstances of such persons
change or any such person makes a decision to sell shares as market circumstances may warrant. The benefits to any such
person whose shares are purchased under the bid would be the same as the benefits available to all other holders of the
Issuer’s common shares whose shares are purchased under the bid.
18
| Mongolia Growth Group Ltd
Benefits from the Normal Course Issuer Bid
N/A
Material Changes in the Affairs of the Issuer Company
The Issuer currently has no plans or proposals for any Material Change in the affairs of the Issuer or to make any Material
Changes in its business, corporate structure (debt or equity), management or personnel, or any other change which might
reasonably be expected to have a significant effect on the price or value of the securities.
19
Mongolia Growth Group Ltd |
Section 4 - Quarterly Information
Quarterly Results
The following table is a summary of select quarterly information over the previous eight quarters:
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Revenue
1,127,733
912,789
1,046,757
839,606
638,904
708,530
179,416
249,861
Net income (loss)
4,219,923
(344,086)
(2,218,219)
6,280,804
1,817,849
3,859,343
3,756,952
6,115,162
Income (loss) per common share
0.15
(0.01)
(0.08)
0.23
0.07
0.13
0.13
0.20
Total Assets
64,557,624
58,523,283
62,823,647
67,714,593
55,026,865
41,332,146
38,950,727
33,756,541
Weighted Average Shares (No.)
27,761,956
27,771,511
27,777,752
27,778,499
29,309,116
29,667,449
30,220,380
30,756,617
Ending Shares (No.)
27,710,499
27,759,299
27,759,299
27,778,499
27,778,499
28,415,999
28,849,499
30,028,499
Revenue
During the fourth quarter, the Corporation earned total revenues of $1,127,733 (Q4 2021 -$638,904) most of which was generated
through subscription revenue of $921,061 (Q4 2021 - $522,901). During the fourth quarter, the Company earned $194,258 in
rental revenue (Q4 2021 - $199,176), $12,414 in other revenue (Q4 2021 - $20,517) and no gain or loss on disposal of Investment
property (Q4 2021 - $103,692 loss).
During the quarter, the Corporation also incurred an $622,186 unrealized gain on fair value adjustment on investment properties
and impairment of PP&E of $127,538 (Q4 2021 - $388,240).
Lastly, during the quarter, the Corporation had unrealized gains of $4,126,946 and realized gains of $490,720 in its marketable
securities portfolio (Q4-2021– unrealized gain: $3,046,452, realized gain: $371,600)
Expenses
Quarterly expenses totaled $1,288,733 (Q4 2021 - $1,142,053). This increase was primarily due to expenses related to the
Company’s subscription business.
Net Income
During the quarter, the Corporation experienced a gain of $4,219,923 in comparison to a gain of $1,817,849 in the same quarter
of the previous year. This difference is mainly attributed to significant gains in the marketable securities portfolio during the
quarter as well as unrealized gains on fair value adjustment of investment properties.
20
| Mongolia Growth Group Ltd
Section 5 – Critical Estimates
Critical Accounting Estimates
The preparation of financial statements in accordance with IFRS required Management to make assumptions about the future
that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical
experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
In the future, actual experience may differ from these estimates and assumptions.
The critical estimates made in the preparation of the consolidated financial statements include the following:
Fair value of investment properties
The estimate of fair value of investment properties is the most critical accounting estimate to the Company. An external
appraiser estimates the fair value of the majority of Investment Properties annually, the remainder is appraised internally by
Management. The fair value of investment properties is based on the nature, location and condition of the specific asset. The fair
value of investment properties represents an estimate of the price that would be made in an arm’s length transaction between
knowledgeable, willing parties. The Corporation operates in the emerging real estate market of Mongolia, which given its current
economic and industry conditions, has an increased inherent risk given the lack of reliable and comparable market information.
For the year ending December 31, 2022, the Corporation recorded a fair value adjustment gain of $622,186 (Q4 2021 – $441,870
loss).
Operating Environment of the Corporation
Mongolia displays many characteristics of an emerging market including relatively high inflation and interest rates. The tax and
customs legislation in Mongolia is subject to varying interpretations and frequent changes. The future economic performance of
Mongolia is tied to continuing demand from China and continuing high global prices for commodities as well as being dependent
upon the effectiveness of economic, financial, and monetary measures undertaken by the Government of Mongolia together
with tax, legal, regulatory, and political developments. Management is unable to predict all developments that could have an
impact on the Mongolian economy and consequently, what effect, if any, they could have on the future financial position of the
Corporation.
Recently, the Corporation has experienced difficulty converting Mongolian Tögrög to U.S. Dollars at large Mongolian banks. There
can be no certainty regarding the ability to convert or wire money from Mongolia in the future.
In recent years, Mongolia signed an agreement with the IMF. There is no certainty regarding the demands that the IMF may make
upon Mongolia for austerity or the impacts that this may have on the economy of Mongolia.
During October 2019, Mongolia was added to the FATF “grey-list” for countries with weak anti-money laundering laws and
prevention practices. Though Mongolia was recently removed from the “grey-list,” the Corporation is unsure of how this will
impact its ability to convert currency or transfer funds internationally. Additionally, the Corporation is unsure of what other
impacts this may have upon its business.
Due to the economic crisis, businesses are increasingly paying for transactions using various forms of barter such as used
equipment, apartments, vehicles, future services and livestock. To date, the Corporation has only agreed to receive barter items
in extreme circumstances and has a strong preference to avoid using barter in transactions. As the economic crisis has worsened,
barter transactions have become a more substantial percentage of overall economic transactions. As a result, the Corporation
may be forced to receive barter items at a higher frequency. These barter items are often difficult to value and monetize and may
cause other difficulties for the Corporation that are impossible to predict.
On February 24, 2022, Russia invaded Ukraine. Mongolia’s economy is likely to be impacted by the Russian invasion of Ukraine as
Russia is a substantial trading partner of Mongolia. Recent actions to restrict Russian access to SWIFT may have negative impacts
upon Mongolia’s ability to trade with Russia, which may negatively impact the Mongolian economy. To date, Mongolia has taken
a neutral view regarding the Russian invasion. There is no way to know if Mongolia’s stance will shift over time.
Deferred Tax Assets
Deferred tax assets are recognized to the extent that it is probable that deductible temporary differences will reverse in the
foreseeable future and there will be sufficient future taxable profits against which the deductible temporary differences can
be utilized. The Corporation reviews the carrying amount of deferred tax assets at the end of each reporting period which is
reduced to the extent that it is no longer probable that deferred tax assets recognized will be recovered or increased to the
extent that sufficient future taxable profit will be available to allow all or part of a previously unrecognized deferred tax asset
to be recovered. Estimates of future taxable income are based on forecasted cash flows from operations, available tax planning
opportunities and expected timing of reversals of taxable temporary differences.
21
Mongolia Growth Group Ltd |
Valuation of Marketable Securities
The Company recognizes marketable securities at fair value. Fair value is determined on the basis of market prices from
independent sources, if available. If there is no market price, then the fair value is determined by using valuation models with
inputs derived from observable market data where possible but where observable data is not available, judgement is required
to establish fair values.
Significant judgments made in the preparation of these consolidated financial statements include the
following areas:
Judgement is required in determining whether an asset meets the criteria for classification as assets held for sale and or as
discontinued operations in the consolidated financial statements. Criteria considered by management include the existence of
and commitment to a plan to dispose of the assets, the expected selling price of the assets, the probability of the sale being
completed within an expected timeframe of one year and the period of time any amounts have been classified within assets
held for sale. Management reviews the criteria for assets held for sale each quarter and reclassifies such assets to or from this
financial position category as appropriate. On completion of the sale, Management exercises judgement as to whether the sale
qualifies as a discontinued operation.
As at December 31, 2022 and 2021, Management has made the judgment that none of the Corporation’s assets meet the criteria
to be classified as held for sale. While this is due to a number of factors, a primary reason is that due to the conditions of the
Mongolian economy and the lack of liquidity in the market, management was unable to conclude that the sale of any significant-
size asset could be considered highly probable.
Judgement is required in determining whether the Company’s Investment property and land use rights titles are at risk. As at
December 31, 2022, and 2021, Management has made the judgment that Investment Properties whereby the land title has
recently expired but is expected to be renewed in the near future should continue to be classified as Investment Properties.
Properties whereby Management judges that the Company’s titles are at risk, have been impaired to reflect the level of risk
estimated by Management.
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| Mongolia Growth Group Ltd
Section 6 – Risk Management
Credit Risk
The Corporation’s exposure to credit risk is managed through risk management policies and procedures with emphasis on the
quality of the investment portfolio. For the year, most of the Corporation’s credit risk consisted of institutional deposits. The
majority of the funds invested are held in reputable Canadian, American or Mongolian banks.
The Corporation is exposed to credit risk as an owner of real estate in which tenants may become unable to pay contracted
rents. The Corporation mitigates this risk by carrying out due diligence on significant tenants. The Corporation’s properties
are diversified across residential and commercial classes. Historically, bad debts have not been a substantial expense for the
Corporation. Recently, the Corporation has experienced an increase in late rental payments. The Corporation believes that it will
collect all of this debt, but there is no certainty that this will occur.
Liquidity Risk
Under certain market conditions, such as during volatile markets or when trading in a security or market is otherwise impaired,
the liquidity of the Corporation’s portfolio positions may be reduced. In addition, the Corporation may from time to time hold
large positions with respect to a specific type of financial instrument, which may reduce the Corporation’s liquidity. During such
times, the Corporation may be unable to dispose of certain financial instruments, including longer-term financial instruments,
which would adversely affect its ability to rebalance its portfolio. In addition, such circumstances may force the Corporation
to dispose of financial instruments at reduced prices, thereby adversely affecting its performance. If there are other market
participants seeking to dispose of similar financial instruments at the same time, the Corporation may be unable to sell such
financial instruments or prevent losses relating to such financial instruments. Furthermore, if the Corporation incurs substantial
trading losses, the need for liquidity could rise sharply while its access to liquidity could be impaired. In addition, in conjunction
with a market downturn, the Corporation’s counterparties could incur losses of their own, thereby weakening their financial
condition and increasing the Corporation’s exposure to their credit risk.
The Corporation does not believe its current maturity profile lends itself to any material liquidity risk, taking into account the
level of cash and cash equivalents, investments and marketable securities as at December 31, 2022.
As at December 31, 2022, the Corporation had working capital of $36,155,684 (2021- $26,969,695) comprised of cash and cash
equivalents, other assets, net of trade and accrued liabilities, income taxes payable, and short-term bank loan. Management
considers the funds on hand to be sufficient to meet its ongoing obligations.
Market Risk
Market risk is the risk that the fair value of, or future cash flows from, the Corporation’s financial instruments will significantly
fluctuate due to changes in market prices. The value of the financial instruments can be affected by changes in interest rates,
foreign exchange rates, and equity and commodity prices. The Corporation is exposed to market risk in trading its investments
and unfavorable market conditions could result in dispositions of investments at less than favorable prices.
Property Title Risk
Mongolian law has strong protections for property assets; however, implementation of Mongolian law is often arbitrary, with
high degrees of corruption and incompetence. Additionally, laws frequently change, which can invalidate a property title. To date,
the Corporation has only had one of its property assets confiscated by the Government of Mongolia; however, the Corporation
believes that there is a possibility that it will have additional assets confiscated by the Government of Mongolia or stolen by
private individuals during future periods. The Corporation is currently not aware of any individual asset that is in imminent
danger of being confiscated or stolen.
Catastrophe risk
The Company has obtained insurance on buildings and all permanent fixtures totaling approximately $6,600,000 effective May
8th, 2022 ($8,300,000- May 7th, 2021). To date, the Company has not been able to obtain insurance on its Puerto Rican property
with a value of $1,203,975 at December 31, 2022. As the property is located on the ocean, it is at risk of significant hurricane
damage or other natural disasters which could result in a significant impairment to its value.
Cryptocurrencies Risk
Cryptocurrencies are measured at fair value less cost to sell. Cryptocurrency prices are affected by various forces including
global supply and demand, interest rates, exchange rates, inflation or deflation and political and economic conditions. Further,
cryptocurrencies have no underlying backing or contracts to enforce recovery of invested amounts. The profitability of the
Corporation is related to the current and future market price of cryptocurrencies; in addition, the Corporation may not be able to
liquidate its inventory of cryptocurrencies at its desired price if necessary. Investing in cryptocurrencies is speculative, prices are
volatile, and market movements are difficult to predict. Supply and demand for such currencies change rapidly and are affected
by a variety of factors, including regulation and general economic trends.
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Mongolia Growth Group Ltd |
Cryptocurrencies have a limited history; their fair values have historically been volatile, and the value of cryptocurrencies held by
the Corporation could decline rapidly. A decline in the market prices of cryptocurrencies could negatively impact the Corporation’s
future operations. Historical performance of cryptocurrencies is not indicative of their future performance.
Many cryptocurrency networks are online end-user-to-end-user networks that host a public transaction ledger (blockchain) and
the source code that comprises the basis for the cryptographic and algorithmic protocols governing such networks. In many
cryptocurrency transactions, the recipient or the buyer must provide its public key, which serves as an address for a digital wallet,
to the seller. In the data packets distributed from cryptocurrency software programs to confirm transaction activity, each party
to the transaction user must sign transactions with a data code derived from entering the private key into a hashing algorithm,
which signature serves as validation that the transaction has been authorized by the owner of the cryptocurrency. This process
is vulnerable to hacking and malware and could lead to theft of the Corporation’s digital wallets and the loss of the Corporation’s
cryptocurrency.
Cryptocurrencies are loosely regulated and there is no central marketplace for exchange. Supply is determined by a computer
code, not a central bank. Additionally, exchanges may suffer from operational issues, such as delayed execution, that could have
an adverse effect on the Corporation.
The cryptocurrency exchanges on which the Corporation may trade on are relatively new and, in many cases, largely unregulated,
and therefore may be more exposed to fraud and failure than regulated exchanges for other assets. Any financial, security,
or operational difficulties experienced by such exchanges may result in an inability of the Corporation to recover money or
cryptocurrencies being held on the exchange. Further, the Corporation may be unable to recover cryptocurrencies awaiting
transmission into or out of the exchange, all of which could adversely affect an investment of the Corporation. Additionally, to
the extent that the digital asset exchanges representing a substantial portion of the volume in digital asset trading are involved
in fraud or experience security failures or other operational issues, such digital asset exchanges’ failures may result in loss or less
favorable prices of cryptocurrencies, or may adversely affect the Corporation, its operations, and its investments.
Furthermore, crypto-exchanges comingle their client’s assets in exchange wallets. When crypto-assets are commingled,
transactions are not recorded on the applicable blockchain ledger but are only recorded by the exchange. Therefore, there is a
risk around the occurrence of transactions or existence of period end balances represented by exchanges.
Loss of access risk
The loss of access to the private keys associated with the Corporation’s cryptocurrency holdings may be irreversible and could
adversely affect an investment. Cryptocurrencies are controllable only by an individual that possess both the unique public key
and private key or keys relating to the “digital wallet” in which the cryptocurrency is held. To the extent a private key is lost,
destroyed, or otherwise compromised and no backup is accessible the Corporation may be unable to access the cryptocurrency.
Irrevocability of transactions
Cryptocurrency transactions are irrevocable and stolen or incorrectly transferred cryptocurrencies may be irretrievable. Once a
transaction has been verified and recorded in a block that is added to the blockchain, an incorrect transfer or theft generally will
not be reversible, and the Corporation may not be capable of seeking compensation.
Hard fork and air drop risks
Hard forks may occur for a variety of reasons including, but not limited to, disputes over proposed changes to the protocol,
significant security breach, or an unanticipated software flaw in the multiple versions of otherwise compatible software. In the
event of a hard fork in a cryptocurrency held by the Corporation, it is expected that the Corporation would hold an equivalent
amount of the old and new cryptocurrency following the hard fork. Air drops occur when the promoters of a new cryptocurrency
send amounts of the new cryptocurrency to holders of another cryptocurrency that they will be able to claim a certain amount
of the new cryptocurrency for free. The Corporation may not be able to realize the economic benefit of a hard fork or air drop,
either immediately or ever, for various reasons. For instance, the Corporation may not have any systems in place to monitor or
participate in hard forks or airdrops.
Currency Risk
The Corporation owns properties located in Mongolia and collects rental revenue in Mongolian Tögrög, and is therefore subject
to foreign currency fluctuations that may impact its financial position and results. Changes in the Mongolian Tögrög, U.S. dollar,
and Canadian dollar foreign currency exchange rates impact the fair value of securities denominated in Mongolian Tögrög and
in U.S. dollars. All of the Corporation’s revenues are received in Mongolian Tögrög while approximately half of the Corporation’s
expenses are incurred in U.S. and Canadian Dollars. Therefore, a depreciation in the Mongolian Tögrög against the US and
Canadian Dollar will reduce net income. The exchange rate continues to be volatile and there is an expectation that volatility may
continue for the foreseeable future.
Economic Volatility and Uncertainty
Over the past few years, economic volatility and uncertainty around the world has contributed to dramatically restricted access
to capital and reduced capital markets activity for more speculative businesses. Management believes that the Corporation has
sufficient resources to carry on its business and remain a going concern.
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| Mongolia Growth Group Ltd
MGG holds a large portion its assets, investments, and operations in the nation of Mongolia. Mongolia is presently experiencing
drastic changes in its economy. Economic volatility and uncertainty in Mongolia could result in inflation, hyperinflation, economic
stagnation, political extremism, and other similarly detrimental scenarios which could materially harm the Corporation.
Preliminary growth estimates according to the National Statistics Office for 2022 was an increase of 4.8% year-over-year, while
inflation estimates were 13.2% according to Mongol Bank. Management cautions investors that official economic numbers
often deviate materially from actual underlying economic conditions.
Depending on the requirements of MGG’s businesses, additional funds may be required to be raised in the capital markets and
there is no guarantee that sufficient funds raised will be available to complete a financing required to augment the Corporation’s
operations.
Risks and Uncertainties
The Corporation, as part of its operations, carries financial instruments consisting of cash and cash equivalents, investments
and marketable securities, accounts receivable, and trade payables and accrued liabilities. It is Management’s opinion that the
Corporation is not exposed to significant credit, interest or currency risks arising from these financial instruments except as
otherwise disclosed in the notes to the Consolidated Financial Statements.
Further information related to Mongolia Growth Group Ltd. and the risks and uncertainties of MGG is filed on the System for
Electronic Document Analysis and Retrieval (“SEDAR”) and can be reviewed at www.sedar.com.
Financial Instruments
The Corporation’s financial instruments consist of cash and cash equivalents, investments and marketable securities, short-
term loans, dividend and interest accruals, accounts receivable and trade and accrued payables. The Corporation is subject to
interest risk as it earns interest income from its cash deposits. It is Management’s opinion that the Corporation is not exposed to
significant credit risks arising from these financial instruments and that the fair value of these financial instruments approximates
their carrying values. Management believes that there are material currency risks associated to certain Financial Instruments of
the Corporation as they are held in Mongolian Tögrög. For further discussion of financial instrument risks, see the Insurance and
Financial Risk Management note (Note 17 on December 31, 2022 Financial Statements).
Unless the context otherwise requires, references to the “Corporation” include the Corporation and its subsidiaries and affiliates
collectively.
Changes in Investment Strategies
The Corporation may alter its investment strategies and restrictions without prior approval by shareholders to adapt to changing
circumstances.
Possible Negative Impact of Regulation
The regulatory environment is evolving and changes to it may adversely affect the Corporation. To the extent that regulators adopt
practices of regulatory oversight that create additional compliance, transaction, disclosure or other costs for the Corporation,
returns of the Corporation may be negatively affected. In addition, the regulatory or tax environment for securities, derivatives
and related instruments is evolving and may be subject to modification by government or judicial action that may adversely affect
the value of the investments held by the Corporation. The effect of any future regulatory or tax change on the Corporation is
impossible to predict.
Property Specific Risk
The Corporation currently has a standing agreement with the owner of a 42 sq. meter apartment in Mongolia which has been
included in one of the Corporation’s properties classified as land and development. The agreement entitles the owner of the
apartment to 84 sq. meters of space on the first floor of a new building to be built on this land. In this agreement, the Corporation
had an obligation to complete the construction of a new building by the end of 2017 and the agreement was not extended. A
liability of $261,648 (2021- $263,667) is currently included in the Corporation’s balance sheet to reflect this liability. In addition,
the Corporation has recognized an $887,732 (2021 - $995,949 unrealized fair value loss on this property in excess of the fair value
adjustment calculated using the valuation approaches described. This adjustment is Management’s estimate of the market’s
perception of the risk related to this agreement. While the Corporation has received legal advice that it is not at a substantial
risk of losing the property in question, interpretations of Mongolian law can be varied and arbitrary. The Corporation cautions
investors that should it lose this property, it would result in a material reduction in the Corporation’s overall assets and fair value
(3.3 million dollars current carrying value). In addition, there is the potential that the 84 sq. meter liability could inhibit the sale or
development of this asset in future periods. The Corporation was not able to obtain any insurance on its Puerto Rican property.
There is a risk that the property could be significantly or completely impaired in the event of a hurricane, earthquake or any other
natural disaster.
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Mongolia Growth Group Ltd |
PFIC Risk
The Corporation has not undertaken an analysis to determine if it is a Passive Foreign Income Company (PFIC) under United
States tax statutes, nor does it intend to. US shareholders are advised to consult with tax professionals to determine the risks and
potential penalties that could be applicable if the Corporate is determined to be a PFIC at a later date.
Use of Derivatives
The Corporation may use derivative instruments. The use of derivatives in general presents additional risks to those applicable
to trading only in the underlying assets. To the extent of the Corporation’s investment in derivatives it may take a credit risk with
respect to parties with whom it trades and may also bear the risk of settlement default. When used for hedging purposes, an
imperfect or variable degree of correlation between price movements of the derivative instrument and the underlying investment
sought to be hedged may prevent the Corporation from achieving the intended hedge effect or expose the Corporation to the
risk of loss. In addition, derivative instruments may not be liquid at all times, so that in volatile markets the Corporation may not
be able to close out a position without incurring a loss. No assurance can be given that short sales, hedging, leverage and other
techniques and strategies utilized by the Corporation to hedge its exposure will not result in material losses.
Custody Risk and Broker or Dealer Insolvency
The Corporation does not control the custodianship of all of its assets. The Corporation’s assets will be held in one or more
accounts maintained for the Corporation by its broker or brokers. Such brokers are subject to various laws and regulations in
various jurisdictions that are designed to protect their customers in the event of their insolvency. However, the practical effect
of these laws and their application to the Corporation’s assets are subject to substantial limitations and uncertainties. Because
of the large number of entities and jurisdictions involved and the range of possible factual scenarios involving the insolvency
of a broker or any sub-custodians, agents or affiliates, it is impossible to generalize about the effect of their insolvency on the
Corporation and its assets. Investors should assume that the insolvency of any of the brokers or such other service providers
would result in the loss of all or a substantial portion of the Corporation’s assets held by or through such brokers and/or the
delay in the payment of withdrawal proceeds. The Corporation’s cryptocurrency is currently being held at Kraken Custody.
There is a risk that the custodian loses the Corporation’s cryptocurrency. Refer to the cryptocurrency risk section for further
cryptocurrency risks.
Investment and Trading Risks in General
All trades made by the Corporation risk the loss of capital. The Corporation may utilize trading techniques or instruments,
which can, in certain circumstances, maximize the adverse impact to which a client’s account may be subject. No guarantee
or representation is made that the Corporation’s investment program will be successful, and investment results may vary
substantially over time. Many unforeseeable events, including actions by various government agencies, and domestic and
international economic and political developments may cause sharp market fluctuations which could adversely affect the
Corporation’s portfolio and performance.
General Economic and Market Conditions
The success of the Corporation’s activities may be affected by general economic and market conditions, such as interest rates,
availability of credit, inflation rates, economic uncertainty, changes in laws, and national and international political circumstances.
These factors may affect the level and volatility of securities prices and the liquidity of the Corporation’s investments. Unexpected
volatility or illiquidity could impair the Corporation’s profitability or result in losses.
Issuer–Specific Changes
The value of an individual security or particular type of security can be more volatile than and can perform differently from the
market as a whole.
Portfolio Turnover
The Corporation has not placed any limits on the rate of portfolio turnover and portfolio securities may be sold without regard
to the time they have been held when, in the opinion of the Corporation, investment considerations warrant such action. A high
rate of portfolio turnover involves correspondingly greater expenses than a lower rate.
Liquidity of Underlying Investments
Some of the securities in which the Corporation may invest may be thinly traded. There are no restrictions on the investment of
the Corporation in illiquid securities. It is possible that the Corporation may not be able to sell or repurchase significant portions
of such positions without facing substantially adverse prices. If the Corporation is required to transact in such securities before
its intended investment horizon, the performance of the Corporation could suffer.
Highly Volatile Markets
The prices of financial instruments in which the Corporation’s assets may be invested can be highly volatile and may be influenced
by, among other things, specific corporate developments, interest rates, changing supply and demand relationships, trade, fiscal,
monetary and exchange control programs and policies of governments, and national and international political and economic
events and policies. The Corporation is subject to the risk of the failure of any of the exchanges on which the Corporation’s
positions trade or of their clearinghouses.
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| Mongolia Growth Group Ltd
Emerging Markets
The Corporation may invest in the securities of companies which operate in some emerging markets. Operating in emerging
markets involves additional risks because companies in emerging markets may be less regulated and not subject to the same
standards, reporting practices and disclosure requirements that apply in more developed markets. In addition, some emerging
markets and legal systems may not adequately protect investor rights.
Small- to Medium- Capitalization Companies
The Corporation may invest a portion of its assets in the securities of companies with small- to medium-sized market capitalizations.
While the Corporation believes these investments often provide significant potential for appreciation, those securities may
involve higher risks in some respects than do investments in securities of larger companies. For example, while smaller companies
generally have potential for rapid growth, they often involve higher risks because they may lack the management experience,
financial resources, product diversification, and competitive strength of larger companies. In addition, in many instances, the
frequency and volume of their trading may be substantially less than is typical of larger companies. As a result, the securities
of smaller companies may be subject to wider price fluctuations. When making large sales, the Corporation may have to sell
portfolio holdings at discounts from quoted prices or may have to make a series of small sales over an extended period of time
due to the trading volume of smaller Corporation securities.
Fixed Income Securities
The Corporation may occasionally invest in bonds or other fixed income securities of issuers, including, without limitation, bonds,
notes and debentures issued by corporations. Fixed income securities pay fixed, variable or floating rates of interest. The value
of fixed income securities in which the Corporation invests will change in response to fluctuations in interest rates. In addition,
the value of certain fixed-income securities can fluctuate in response to perceptions of credit worthiness, political stability
or soundness of economic policies. Fixed income securities are subject to the risk of the issuer’s inability to meet principal
and interest payments on its obligations (i.e., credit risk) and are subject to price volatility due to such factors as interest rate
sensitivity, market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). If fixed income
investments are not held to maturity, the Corporation may suffer a loss at the time of sale of such securities.
Equity Securities
To the extent that the Corporation holds equity portfolio investments, or short positions in equities, it will be influenced by stock
market conditions in those jurisdictions where the securities held by the Corporation, are listed for trading and by changes in the
circumstances of the issuers whose securities are held by the Corporation.
Options
Selling call and put options is a highly specialized activity and entails greater than ordinary investment risk. The risk of loss when
purchasing an option is limited to the amount of the purchase price of the option; however, investment in an option may be
subject to greater fluctuation than an investment in the underlying security. In the case of the sale of an uncovered option there
can be potential for an unlimited loss. To some extent this risk may be hedged by the purchase or sale of the underlying security.
Shorting
Selling a security short (“shorting”) involves borrowing a security from an existing holder and selling the security in the market
with a promise to return it at a later date. Should the security increase in value during the shorting period, losses will incur to the
Corporation. There is in theory no upper limit to how high the price of a security may go. Another risk involved in shorting is the
loss of a borrow, a situation where the lender of the security requests its return. In cases like this, the Corporation, must either
find securities to replace those borrowed or step into the market and repurchase the securities. Depending on the liquidity of
the security shorted, if there are insufficient securities available at current market prices, the Corporation, may have to bid up
the price of the security in order to cover the short position, resulting in losses to the Corporation.
Trading Costs
The Corporation may engage in a high rate of trading activity resulting in correspondingly high costs being borne by the
Corporation.
Currency and Exchange Rate Risks
The Corporation’s assets will be denominated in multiple currencies. The Corporation will report their results in Canadian dollars.
The Corporation expects to report allocations of profit and loss for income tax purposes in Canadian dollars. Changes in currency
exchange rates may affect the value of the Corporation’s portfolio and the unrealized appreciation or depreciation of investments.
Leverage
The Corporation may use financial leverage by borrowing funds against the assets of the Corporation. Leverage increases
both the possibilities for profit and the risk of loss for the Corporation. From time to time, the credit markets are subject to
periods in which there is a severe contraction of both liquidity and available leverage. The combination of these two factors can
result in leveraged strategies being required to sell positions typically at highly disadvantageous prices in order to meet margin
requirements, contributing to a general decline in a wide range of different securities. Illiquidity can be particularly damaging to
leveraged strategies because of the essentially discretionary ability of dealers to raise margin requirements, requiring leveraged
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Mongolia Growth Group Ltd |
strategy to attempt to sell positions to comply with such requirements at a time when there are effectively no buyers in the
market at all or at any but highly distressed prices. These market conditions have in the past resulted in major losses. Such
conditions, although unpredictable, can be expected to recur.
Future Acquisitions and Business Diversification
Management is currently evaluating future acquisitions of businesses and operating assets that are not related to investments
within Mongolia. There can be no certainty that the Corporation will acquire any business. Additionally, if the Corporation
acquires part or all of a business outside of Mongolia, it may dilute management’s focus on current operations within Mongolia.
Additionally, shareholders who desire a Mongolia focused investment vehicle may sell shares of the Corporation if they do not
desire investments outside of Mongolia. There can be no certainty that the Corporation can raise adequate funding to finance
an acquisition of a business outside of Mongolia or that diversification of the Corporation’s business is in the best interest of the
Corporation. Capital spent on researching businesses outside of Mongolia will increase operating expenses and operating losses
as long as such due diligence is ongoing.
Internal Controls over Financial Reporting
Changes in securities laws no longer require the Chief Executive Officer and Chief Financial Officer of junior reporting issuers
to certify that they have designed internal control over financial reporting, or caused it to be designed under their supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with IFRS.
Instead, an optional form of certification has been made available to junior reporting issuers and has been used by the
Corporation’s certifying officers since December 31, 2013 annual filings. The new certification reflects what the Corporation
considers to be a more appropriate level of CEO and CFO certification given the size and nature of the Corporation’s operations.
This certification requires the certifying officers to state that: they have reviewed the interim MD&A and consolidated financial
statements; they have determined that there is no untrue statement of a material fact, or any omission of material fact required
to be stated which would make a statement or its omission misleading in light of the circumstances under which it was made
within the interim MD&A and consolidated financial statements; based on their knowledge, the interim filings, together with the
other financial information included in the interim filings, fairly present in all material respects the financial condition, results of
operations and cash flows of the Corporation as of the date and for the periods presented in the filings.
Additional Information
Additional information relating to Mongolia Growth Group Ltd., including its interim financial statements, is available on SEDAR
at www.sedar.com.
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| Mongolia Growth Group Ltd
December 31, 2022
Mongolia Growth Group Ltd.
Consolidated Financial Statements
(expressed in Canadian dollars)
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Mongolia Growth Group Ltd |
Mongolia Growth Group
Ltd.
Consolidated Financial Statements
December 31, 2022
(Expressed in Canadian dollars)
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of
Mongolia Growth Group Ltd.
Opinion
We have audited the accompanying consolidated financial statements of Mongolia Growth Group Ltd. (the “Company”),
which comprise the consolidated statements of financial position as at December 31, 2022 and 2021, and the consolidated
statements of operations and comprehensive income (loss), changes in equity, and cash flows for the years then ended, and
notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the
Company as at December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in
accordance with International Financial Reporting Standards (“IFRS”).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under
those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are
relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audit is
sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current year. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Valuation of Investment Properties
As described in Note 11 to the consolidated financial statements, the carrying amount of the Company’s investment
properties was $10,086,956 as of December 31, 2022. As more fully described in Notes 3 and 4 to the consolidated financial
statements, investment properties are measured at fair value at each reporting period. Management uses valuation
techniques, including the income approach, the sales comparison approach or a combination thereof, to determine the fair
value of investment properties. There are significant unobservable inputs used in estimating the value of investment
properties and significant judgements are made related to uncertainty of operating in an emerging market.
The principal considerations for our determination that the fair value of investment properties is a key audit matter are due
to the estimation uncertainty underlying the valuations and the significant value of the investment properties at year-end.
This determination required the use of appropriate valuation techniques which included significant unobservable inputs.
This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate audit
evidence relating to the judgments made by management in their assessment of the fair value of the investment properties.
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| Mongolia Growth Group Ltd
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures include, among others:
Evaluating the competency, capabilities and objectivity of the third-party valuator used by management.
Reviewing the valuations reports and substantively testing a sample of the assumptions within to independent
sources of information.
Utilizing our internal valuations department to conclude on the appropriateness of the methodology used in the
valuations reports.
Utilizing our internal valuations department to test the accuracy of the calculations in applying the methodology
used in the valuations reports.
Assessing management estimates underlying the valuation for evidence of bias or error.
Reviewing title documents for properties and assessing the status of properties.
Checking and evaluating the financial statement disclosures in relation to the fair value of investment properties.
Other Information
Management is responsible for the other information. The other information obtained at the date of this auditor's report
includes Management’s Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance
with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
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Mongolia Growth Group Ltd |
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company's ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Company to express an opinion on the consolidated financial statements. We are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor’s report is Daniel Nathan.
Vancouver, Canada
Chartered Professional Accountants
April 19, 2023
32
| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Consolidated Statements of Financial Position
As at December 31
(Expressed in Canadian dollars)
2022
2021
$
$
Assets
Current assets
Cash and cash equivalents (note 5)
2,051,245
2,396,311
Marketable securities owned (note 7)
49,237,506
37,802,853
Futures contract (note 7)
-
311,437
Due from broker (note 6)
-
2,320
Digital assets (note 9)
284,253
266,890
Other assets (note 10)
44,250
29,218
51,617,254
40,809,029
Non-current assets
Investment properties (note 11)
10,086,956
11,885,907
Other assets-long term receivable (note 10)
49,182
111,722
Property and equipment (note 12)
2,804,232
2,220,207
12,940,370
14,217,836
Total assets
64,557,624
55,026,865
Liabilities
Current liabilities
Trade payables and accrued liabilities (note 13)
659,402
913,391
Unearned revenue (note 8)
1,547,154
1,035,471
Due to broker (note 6)
7,393,046
9,173,869
Marketable securities sold short (note 7)
5,159,131
2,652,329
Short Term CEBA Loan (note 6)
60,000
60,000
Income taxes payable
642,837
4,274
15,461,570
13,839,334
Non-current liabilities
Deferred income tax liability (note 14)
2,972,522
1,010,244
Total liabilities
18,434,092
14,849,578
Equity
Share capital (note 15)
50,547,130
51,004,122
Contributed surplus
6,849,976
6,849,976
Accumulated other comprehensive loss
(17,037,148)
(15,501,963)
Retained earnings (deficit)
5,763,574
(2,174,848)
Total equity
46,123,532
40,177,287
Total equity and liabilities
64,557,624
55,026,865
Commitment and contingencies (note 19)
Subsequent events (note 25)
Approved by the Board of Directors
“Harris Kupperman” Director “Nick Cousyn“ Director
33
Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Consolidated Statements of Operations
For the years ended December 31
(Expressed in Canadian dollars)
2022
$
2021
$
Revenue
Rental income
798,826
679,091
Subscription revenue (note 8)
3,174,031
944,411
Other revenue
100,572
190,850
Loss on disposal of investment property (note 11)
(146,544)
(37,641)
Total revenue
3,926,885
1,776,711
Expenses
Salaries and wages
1,251,661
887,864
Other expenses (note 22)
2,681,891
2,209,606
Depreciation (note 12)
103,662
72,108
Total operating expenses
(4,037,214)
(3,169,578)
Interest income
6,813
-
Unrealized gain (loss) on fair value adjustment on
Investment properties (note 11)
622,186
(441,870)
Reversal of impairment of property and equipment (note 12)
127,538
53,630
Unrealized gain on short term investments
1,031,997
7,946,088
Realized gain on short term investments
8,792,881
10,306,006
Unrealized loss on digital assets (note 9)
(98,700)
(42,606)
Foreign currency gain (loss)
255,315
(313,464)
Reclassification of accumulated other comprehensive income on
disposal of subsidiary (note 24)
-
(33,006)
10,738,030
17,474,778
Net income before income taxes
10,627,701
16,081,911
Income tax expense (note 14)
(2,689,279)
(532,605)
Net income for the year
7,938,422
15,549,306
Net income per share (note 15)
Basic
From net income for the year
0.29
0.53
Diluted
From net income for the year
0.29
0.53
The accompanying notes are an integral part of these consolidated financial statements.
34
| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Consolidated Statements of Comprehensive Income (Loss)
For the years ended December 31
(Expressed in Canadian dollars)
2022
$
2021
$
Net income for the year
7,938,422
15,549,306
Other comprehensive loss
Items that may be subsequently reclassified to income or loss
Unrealized losses on translation of financial statement
operations with Mongolian Tögrög functional
currency to Canadian dollar reporting currency
(1,535,185)
(90,327)
Items subsequently reclassified to income or loss
Reclassification of accumulated other comprehensive
income on disposal of subsidiary (note 24)
-
33,006
Total comprehensive income
6,403,237
15,491,985
The accompanying notes are an integral part of these consolidated financial statements.
35
Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Consolidated Statements of Changes in Equity
For the years ended December 31
(Expressed in Canadian dollars)
Share capital
$
Contributed
surplus
$
Accumulated
other
comprehensive
loss
$
Retained
earnings
(deficit)
$
Total
$
Balance at January 1,
2021
53,165,247
6,849,976
(15,444,642)
(17,724,154) 26,846,427
Net income for the year
-
-
-
15,549,306 15,549,306
Reclassification (note 24)
-
-
33,006
-
33,006
Other comprehensive loss
-
-
(90,327)
-
(90,327)
53,165,247
6,849,976
(15,501,963)
(2,174,848) 42,338,412
Share repurchase
(2,161,125)
-
-
-
(2,161,125)
Balance at December 31,
2021
51,004,122
6,849,976
(15,501,963)
(2,174,848) 40,177,287
Share capital
$
Contributed
surplus
$
Accumulated
other
comprehensive
loss
$
Retained
earnings
(deficit)
$
Total
$
Balance at January 1,
2022
51,004,122
6,849,976
(15,501,963)
(2,174,848)
40,177,287
Net income for the year
-
-
-
7,938,422
7,938,422
Other comprehensive loss
-
-
(1,535,185)
-
(1,535,185)
51,004,122
6,849,976
(17,037,148)
5,763,574
46,580,524
Share repurchase
(456,992)
-
-
-
(456,992)
Balance at December
31, 2022
50,547,130
6,849,976
(17,037,148)
5,763,574
46,123,532
The accompanying notes are an integral part of these consolidated financial statements.
36
| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Consolidated Statements of Cash Flow
For the years ended December 31
(Expressed in Canadian dollars)
2022
$
2021
$
Cash and cash equivalents provided by (used in)
Operating activities
Net income for the year
7,938,422
15,549,306
Items not affecting cash
Depreciation (note 12)
103,662
72,108
Deferred taxes
1,962,278
531,408
Allowance for doubtful receivable (note 10)
-
55,862
Realized loss on disposal of investment properties (note 11)
146,544
37,641
Reversal of impairment of property and equipment (note 12)
(127,538)
(53,630)
Unrealized gain on marketable securities
(1,031,997)
(7,946,088)
Realized gain on marketable securities
(8,792,881)
(10,306,006)
Unrealized loss on digital assets (note 9)
98,700
42,606
Unrealized (gain) loss on fair value adjustment on investment
properties (note 11)
(622,186)
441,870
Reclassification of accumulated other comprehensive income on
disposal of subsidiary (note 24)
-
33,006
(324,996)
(1,541,917)
Net change in non-cash working capital balances (note 20)*
(801,836)
10,523,050
(1,126,832)
8,981,133
Financing activities
Share repurchase (note 15)
(456,992)
(2,161,125)
CEBA loan (note 6)
-
20,000
(456,992)
(2,141,125)
Investing activities
Net (purchase) sale of marketable securities
1,208,463
(6,636,823)
Acquisition of property and equipment (note 12)
(711,813)
(941,847)
Net proceeds on sale of investment properties (note 11)
919,621
2,125,367
Acquisition of digital assets (note 9)
(94,910)
(314,419)
1,321,361
(5,767,722)
(262,463)
1,072,286
Effect of exchange rates on cash and cash equivalents
(82,603)
(37,746)
Increase (decrease) in cash and cash equivalents
(345,066)
1,034,540
Cash and cash equivalents– Beginning of year
2,396,311
1,361,771
Cash and cash equivalents – End of year
2,051,245
2,396,311
*Supplementary cash flow information (note 20)
The accompanying notes are an integral part of these consolidated financial statements.
37
Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
1
Corporate information
Mongolia Growth Group Ltd. (“MGG” or the “Company”) was incorporated in Alberta on
December 17, 2007, and is a Merchant bank with real estate investments in Ulaanbaatar, Mongolia,
a subscription product business and a public securities portfolio.
The Company trades on the TSX Venture Exchange, having the symbol YAK.
MGG has three wholly-owned subsidiaries at December 31, 2022; Mongolia (Barbados) Corp.,
MGG US Inc., and Lemontree PR LLC. Mongolia (Barbados) Corp. owns the wholly-owned
subsidiaries MGG Properties LLC and Big Sky Capital LLC. Big Sky Capital LLC owns the
wholly-owned subsidiaries, Carrollton LLC, Biggie Industries LLC, Zulu LLC, Crescent City LLC
and Oceanus LLC (together “the investment property operations”). The investment property
operations are conducted in Big Sky Capital LLC and its subsidiaries. No active business operations
occur in Oceanus LLC at this time. MGG’s marketable securities are currently held in brokerage
accounts owned by Mongolia (Barbados) Corp and MGG US Inc.
At December 31, 2022 and 2021, the principal subsidiaries of the Company, their geographic
locations, and the ownership interest held by the Company, were as follows:
Ownership
Name
Principal Activity
December
31, 2022
December
31, 2021
Location
Mongolia (Barbados) Corp.
Holding Company and Brokerage
Account
100%
100%
Barbados
Lemontree PR LLC
Real estate operations
100%
100%
Puerto Rico
MGG US Inc.
Investments
100%
100%
United States
MGG Properties LLC
Holding Company and Real estate
operations
100%
100%
Mongolia
Big Sky Capital LLC
Holding Company and Real estate
operations
100%
100%
Mongolia
Carrollton LLC
Real estate operations
100%
100%
Mongolia
Biggie Industries LLC
Real estate operations
100%
100%
Mongolia
Zulu LLC
Real estate operations
100%
100%
Mongolia
Crescent City
Real estate operations
100%
100%
Mongolia
Oceanus LLC
Real estate operations
100%
100%
Mongolia
The Company is registered in Alberta, Canada, with its Head Office at its registered and records
address at Centennial Place, East Tower, 1900, 520 – 3rd Avenue S.W. Calgary, Alberta, Canada
T2P 0R3. The Company’s Canadian headquarters are located at 100 King Street West, Suite 5600,
Toronto, Ontario, M5X 1C9, Canada. The Company’s Mongolian investment property operations
are based out of its office located at the MGG Properties Building on Seoul St. in Ulaanbaatar,
Mongolia.
At December 31, 2022, the Company is organized into three segments based on the business
operations:
Big Sky Capital LLC and its subsidiaries own investment properties which are located in
Ulaanbaatar, Mongolia and are held for the purpose of generating rental revenue, capital
appreciation, and/or redevelopment; and
The MGG Corporate office is located in Toronto, Canada.
The Subscription Products office is located in Toronto, Canada.
38
| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
2
Basis of presentation
The consolidated financial statements of the Company have been prepared in accordance with
International Financial Reporting Standards (IFRS) and International Financial Reporting
Interpretations Committee (IFRIC), as issued by the International Accounting Standards Board
(IASB). The significant accounting policies used in the preparation of these consolidated financial
statements are summarized in note 3.
These consolidated financial statements have been prepared on a going concern basis, meaning
that the Company will continue in operation for the foreseeable future and will be able to realize
assets and discharge liabilities in the ordinary course of operations. The Company estimates it has
sufficient working capital to continue operations for the upcoming 12 months.
The consolidated financial statements, including the notes to the consolidated financial
statements, are presented in Canadian dollars ($) which is the presentation currency and the
functional currency of the parent Company. The functional currency of the Mongolian subsidiaries
is the Mongolian National Tögrög (MNT). The functional currency of the Company’s operating
subsidiary in Barbados in the Canadian Dollar. The functional currency of the Company’s
operating subsidiaries in the United States is the US Dollar.
These consolidated financial statements were approved by the Board of Directors of the Company
for issue on April 19, 2023.
3
Significant accounting policies
a.
Basis of measurement
The consolidated financial statements have been prepared on a historical cost basis, as
modified by the revaluation of investment properties, marketable securities, options on
futures, calls, puts and digital assets at fair value. In addition, these financial statements
have been prepared using the accrual basis of accounting, except for cash flow information.
b.
Basis of consolidation
These consolidated financial statements include the accounts of MGG and its wholly-owned
subsidiaries. Subsidiaries are entities controlled by MGG. Control exists when MGG is
exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. The financial statements of
the subsidiaries are prepared for the same reporting year as MGG, using consistent
accounting policies. Intercompany balances and transactions, and any unrealized income and
expenses arising from intercompany transactions, are eliminated in preparing the
consolidated financial statements. Upon the disposal of a subsidiary, amounts previously
recognized in other comprehensive income in respect of that entity, are reclassified to profit
or loss.
39
Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
4
Significant accounting policies (conttinued)
c.
Financial instruments
Classification and measurement
The classification of financial assets is based on the Company’s business models and the
financial asset’s contractual cash flow characteristics. Business models are reassessed
periodically, and contractual cash flow characteristics are assessed to determine whether they
are “Solely payments of principal and interest” (SPPI).
Financial assets, including hybrid contracts, are classified as either amortized cost, fair value
through other comprehensive income (FVOCI), or the residual classification of fair value
through profit and loss (FVTPL).
Financial assets with cash flows that are SPPI and are held within a business model where the
objective is to hold the financial assets in order to collect contractual cash flows (“Hold to
collect” business model) are measured at amortized cost.
Financial assets with cash flows that are SPPI and are held within a business model where the
dual objective is to hold the financial assets in order to collect contractual cash flows and
selling financial assets (“Hold to collect and sell” business model) are measured at FVOCI.
Financial assets with cash flows that are SPPI but are not held within the “Hold to collect” or
“Hold to collect and sell” business models are measured at FVTPL.
Financial assets with cash flows that do not meet the SPPI conditions are measured at FVTPL.
Marketable securities held for trading are classified as FVTPL. For all other marketable
securities that are not held for trading, the Company, on initial recognition, may irrevocably
elect to present subsequent changes in the investment’s fair value in other comprehensive
income. This election is made on an investment-by-investment basis.
Financial liabilities are measured at amortized cost unless they must be measured at fair value
through profit or loss (such as instruments held for trading or derivatives) or if the Company
elects to measure them at fair value through profit or loss.
Financial assets and financial liabilities are recognized when the Company becomes a party to
the contractual provisions of the instrument. Financial assets are derecognized when the
rights to receive cash flows from the assets have expired or have been transferred and the
Company has transferred substantially all risks and rewards of ownership. Financial assets
and financial liabilities are recognized on the trade date, the date on which the Company
commits to purchase or sell the investment.
Financial assets and financial liabilities are offset and the net amount reported in the
consolidated statement of financial position when there is a legally enforceable and
unconditional right to offset the recognized amounts and when there is an intention to settle
on a net basis or realize the asset and settle the liability simultaneously.
40
| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
3
Significant accounting policies (continued)
c. Financial instruments (continued)
i)
Financial assets and financial liabilities held for trading
A financial asset or financial liability is classified as held for trading if it is acquired or
incurred principally for the purpose of selling or repurchasing in the near term or if on
initial recognition it is part of a portfolio of identifiable financial investments that are
managed together and for which there is evidence of a recent actual pattern of short-
term profit taking. Derivatives are also categorized as held for trading. The Company
does not classify any derivatives as hedges in a hedging relationship.
The Company makes short sales in which a borrowed security is sold in anticipation of
a decline in the market value of that security, or it may use short sales for various
arbitrage transactions.
From time to time, the Company enters into derivative financial instruments for
speculative purposes. These instruments are marked to market, and the corresponding
gains and losses for the year are recognized in the consolidated statement of operations.
The carrying value of these instruments is fair value, which approximates the amount
that would be received or paid if the derivative were to be transferred to a market
participant at the consolidated statement of financial position date. The fair value is
included in marketable securities if in an asset position or marketable securities sold
short if in a liability position.
As at December 31, 2022, the Company had a net fair market value of approximately
$5,159,131 of derivative financial liabilities that will expire with no value if out of the
money at expiration (Note 7).
ii)
Financial assets managed as fair value through profit or loss
Financial assets managed as fair value through profit or loss are financial instruments
that are not classified as held for trading but form part of a portfolio that is managed
and whose performance is evaluated on a fair value basis in accordance with the
Company’s documented investment strategy.
The Company’s marketable securities owned, unrealized gain on futures contract, and
marketable securities sold short are all classified as held for trading and carried at FVTPL.
Recognition, derecognition and measurement
Financial assets and financial liabilities at fair value through profit or loss are initially
recognized at fair value. Transaction costs are expensed as incurred in the consolidated
statement of operations. Subsequent to initial recognition, all financial assets and financial
liabilities at fair value through profit or loss are measured at fair value. Gains and losses
arising from changes in the fair value of financial assets or financial liabilities at fair value
through profit or loss are presented in the consolidated statement of operations in realized
and unrealized gain on short-term investments.
Financial assets at amortized cost
Classification
Financial assets at amortized cost are non-derivative financial assets with cash flows that are
“solely from the payment of principal and interest” (SPPI) and that are managed under a “held
to collect” business model.
The Company’s financial assets at amortized cost consist of cash, due from brokers, as well as
accounts receivable and long term receivable, which are included in other assets.
41
Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
3
Significant accounting policies (continued)
c. Financial instruments (continued)
Recognition and measurement
At initial recognition, the Company measures its financial assets at its fair value plus
transactions costs incurred. The amortized cost is the amount at which the financial asset is
measured at initial recognition minus the principal repayments, plus or minus the cumulative
amortisation using the effective interest method of any difference between that initial amount
and the maturity amount and adjusted for any loss allowance.
Interest income is calculated by applying the effective interest rate to the gross carrying
amount of financial assets.
Financial liabilities at amortized cost
Classification
The Company’s financial liabilities at amortized cost are non-derivative liabilities that
comprise trade payables and accrued liabilities, due to broker, and short-term and long term
CEBA loan.
Recognition and measurement
Trade payables and accrued liabilities are initially recognized at fair value. Subsequently, they
are measured at amortized cost using the effective interest method. Due to brokers and CEBA
loans are recognized initially at fair value, net of any transaction costs incurred, and
subsequently at amortized cost using the effective interest method.
Impairment
Substantially all of the Company’s financial assets at amortized cost are short-term assets and
from sources with low credit risk. The Company monitors its financial assets measured at
amortized cost and counterparty risk.
Fair Value of Financial Instruments
Fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. Financial
assets and liabilities recorded at fair value in the consolidated statement of financial position
are measured and classified in a hierarchy consisting of three levels for disclosure purposes.
The three levels are based on the priority of the inputs to the respective valuation technique.
The fair value hierarchy gives the highest priority to quoted prices in active markets for
identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
An asset or liability’s classification within the fair value hierarchy is based on the lowest level
of significant input to its valuation. The input levels are defined as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets or
liabilities
The Company defines active markets based on the frequency of valuation and any
restrictions or illiquidity on disposition of investments. The size of the bid/ask spread is
used as an indicator of market activity for fixed maturity securities. Fair value is based on
market price data for identical assets obtained from the investment custodian, investment
managers or dealer markets. The Company does not adjust the quoted price for such
instruments.
42
| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
3. Significant accounting policies (continued)
c. Financial instruments (continued)
Level 2: Quoted prices in markets that are not active or inputs that are
observable either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 2 inputs include observable market information, including quoted prices for assets
in markets that are considered less active. Fair value is based on or derived from market
price data for same or similar instruments obtained from the investment custodian,
investment managers or dealer markets.
Level 3: Unobservable inputs that are supported by little or no market activity
and are significant to the estimated fair value of the assets or liabilities
Level 3 assets and liabilities would include financial instruments whose values are
determined using internal pricing models, discounted cash flow methodologies, or similar
techniques that are not based on observable market data, as well as assets or liabilities for
which the determination of estimated fair value requires significant management
judgement or estimation.
The Company has determined the estimated fair values of its financial instruments based
upon appropriate valuation methodologies.
The levels of the fair value inputs used in determining estimated fair value of the
Company’s financial assets at fair value through profit or loss as at December 31, 2022
and 2021, is shown below.
Estimated fair values
December 31, 2022
Level 1
Level 2
Level 3
Marketable
securities
$49,237,506
$49,237,506
-
-
Unrealized gain on
futures contract
-
-
-
-
Marketable
securities sold short
($5,159,131)
($5,159,131)
-
-
$44,078,375
$44,078,375
-
-
Estimated fair values
December 31, 2021
Level 1
Level 2
Level 3
Marketable
securities
$37,802,853
$37,802,853
-
-
Unrealized gain on
futures contract
$311,437
$311,437
-
-
Marketable
Securities sold short
($2,652,329)
($2,652,329)
-
-
$35,461,960
$35,461,960
-
-
43
Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
3. Significant accounting policies (continued)
c. Financial instruments (continued)
At December 31, 2022 and 2021 there were no financial assets or liabilities measured and
recognized in the statement of financial position at fair value that would be categorized as
level 2 and 3 in the fair value hierarchy above.
d. Investment properties
Investment properties include properties held to earn rental revenue, for capital appreciation,
and/or for redevelopment. Investment properties are initially measured at fair value which is
most often the purchase price plus any directly attributable expenditures. Investment
properties are subsequently measured at fair value, which reflects market conditions at the
date of the consolidated statement of financial position. Gains or losses arising from changes
in the fair value of investment properties are recognized in the consolidated statement of
operations in the year they arise. A key characteristic of an investment property is that it
generates cash flows largely independently of the other assets held by an entity.
Subsequent expenditure is included in the asset’s carrying amount only when it is probable
that future economic benefits associated with the item will flow to the Company and the cost
of the item can be measured reliably. All other repairs and maintenance costs are charged to
the consolidated statement of operations during the financial period in which they occur.
Substantially all of the Company’s income generating properties and properties under
development are investment properties.
Properties under development are measured at cost.
Certain land leases held under an operating lease are classified as investment properties when
the definition of an investment property is met. At inception these leases are recognized at the
lower of the fair value of the property and the present value of the minimum lease payments.
Some properties may be partially occupied by the Company, with the remainder being held
for rental income or capital appreciation. If that part of the property occupied by the Company
can be sold separately, the Company accounts for the portions separately. The portion that is
owner-occupied is accounted for under IAS 16, and the portion that is held for rental income,
capital appreciation or both is treated as investment property under IAS 40. When the
portions cannot be sold separately, the whole property is treated as investment property only
if an insignificant portion is owner-occupied. The Company considers the owner-occupied
portion as insignificant when the property is more than 90% held to earn rental income or
capital appreciation. In order to determine the percentage of the portions, the Company uses
the size of the property measured in square metres.
The fair value of investment properties was based on the nature, location and condition of the
specific asset. The fair value is calculated at December 31 on the majority of investment
properties by an independent, professional, qualified appraisal firm, whose appraisers hold
recognized relevant, professional qualifications and who have recent experience in the
locations and categories of the investment properties valued. The remaining investment
properties’ fair value was calculated by management and was performed by qualified
individuals with recent experience in the locations and categories of the investment properties
valued.
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| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
3. Significant accounting policies (continued)
e. Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are categorized as
held for sale at the point in time when the asset or disposal group is available for immediate
sale. Management has committed to a plan to sell and is actively locating a buyer at a sales
price that is reasonable in relation to the current fair value of the asset, and the sale is probable
and expected to be completed within a one year period. Investment properties measured
under the fair value model and held for sale continue to be measured by the guidelines of IAS
40 – Investment Property. All other assets held for sale are stated at the lower of carrying
amounts and fair value less selling costs. An asset that is subsequently reclassified as held and
in use, with the exception of investment property measured under the fair value model, is
measured at the lower of its recoverable amount and the carrying value that would have been
recognized had the asset never been classified as held for sale.
f.
Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to
the Company and the revenue can be reliably measured. Revenue is measured at the fair value
of the consideration received or receivable. The Company’s specific revenue recognition
criteria are as follows:
i)
Rental revenue
The Company has not transferred substantially all of the benefits and risk of ownership
of its investment properties, and therefore, the Company accounts for leases with its
tenants as operating leases. Rental revenue includes all amounts earned from tenants
related to lease agreements including property tax and operating cost recoveries.
The Company reports rental revenue on a straight-line basis, whereby the total amount
of cash to be received under a lease is recognized into earnings in equal periodic
amounts over the term of the lease.
Contingent rents are recognized as revenue in the period in which they are earned.
Amounts payable by tenants to terminate their lease prior to their contractual expiry
date (lease cancellation fees) are included in rental revenue at the time of cancellation.
ii)
Interest income
Interest income is recorded as it accrues using the effective interest method.
iii) Subscription Revenue
Subscription revenue consists of subscriptions to its an investment data analytics
service. The subscription service provides customers the right to access its weekly data
publications. The Company’s subscription service represents a series of distinct
publications produced each week and are made available to the customer continuously
throughout the contractual period. However, the extent to which the customer uses the
services may vary at the customer’s discretion.
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Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
3. Significant accounting policies (continued)
f.
Revenue recognition (continued)
A performance obligation is a commitment in a contract with a customer to transfer
products or services that are distinct. Determining whether products and services are
distinct performance obligations that should be accounted for separately or combined
as one unit of accounting may require significant judgment. The Company’s data
analytics service is considered to have a single performance obligation where the
customer simultaneously receives and consumes the benefit, and as such revenue is
recognized ratably over the term of the contractual agreement.
For the Company’s data subscription product, the Company generally receives payment
for the full subscription contract up front.
iv) Unearned revenue
Payments received in advance of services being rendered are recorded as unearned
revenue and recognized ratably over the requisite service period.
g. Digital Assets
The Company's digital assets are primarily traded in active markets and are purchased with
the intent to re-sell in the near future, generating a profit from the fluctuations in prices or
margins. As a result digital assets are measured at fair value less cost to sell, with changes in
fair value recognized in the consolidated statements of operations.
h. Cash
Cash includes cash held at banks or on hand and demand deposits.
i.
Property and equipment
On initial recognition, property and equipment are valued at cost, being the purchase price
and directly attributable cost of acquisition or construction required to bring the asset to the
location and condition necessary to be capable of operating in a manner intended by the
Company, including appropriate borrowing costs and the estimated present value of any
future unavoidable costs of dismantling and removing items. Property and equipment is
subsequently measured at cost less accumulated depreciation, less any accumulated
impairment losses. All repairs and maintenance costs are charged to the consolidated
statement of operations during the period in which they occur.
Depreciation is recognized in the consolidated statement of operations and is provided on a
straight-line basis over the estimated useful life of the assets as follows:
Buildings
Straight-line over 40 years
Furniture and fixtures
Straight-line over 5 to 10 years
Equipment
Straight-line over 1 to 5 years
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| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
3. Significant accounting policies (continued)
i.
Property and equipment (continued)
Impairment reviews are performed when there are indicators that the net recoverable amount
of an asset may be less than the carrying value. The net recoverable amount is determined as
the higher of an asset’s fair value less cost to dispose and value in use. Impairment is
recognized in the consolidated statement of operations, when there is objective evidence that
a loss event has occurred which has impaired future cash flows of an asset. In the event that
the value of previously impaired assets recovers, the previously recognized impairment loss is
recovered in the consolidated statement of operations at that time.
An item of property and equipment is derecognized upon disposal or when no further
economic benefits are expected from its use. Any gain or loss arising on de-recognition of the
asset (calculated as the difference between the net disposal proceeds and the carrying amount
of the asset) is included in the consolidated statement of operations in the period the asset is
derecognized.
Depreciation methods, useful lives and residual values are reviewed at each financial year end
and adjusted if appropriate.
j.
Income taxes
Income taxes are comprised of both current and deferred taxes. Current tax and deferred tax
are recognized in the statement of operations except to the extent that it relates to items
recognized in Other Comprehensive Income (“OCI”) or directly in equity. In this case, the tax
is recognized in OCI or directly in equity respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the consolidated statement of financial position date in the countries
where the Company and its subsidiaries operate and generate taxable income and are
measured at the amount expected to be recovered from or paid to the taxation authorities for
the current and prior periods.
Deferred income tax assets and liabilities are recorded for the expected future income tax
consequences of events that have been included in the consolidated financial statements or
income tax returns. Deferred income taxes are recognized for all significant temporary
differences between the tax and financial statement bases for assets and liabilities and for
certain carry-forward items, such as losses and tax credits not utilized from prior years.
However, if the deferred income tax arises from initial recognition of an asset or a liability in
a transaction other than a business combination that at the time of the transaction affects
neither accounting nor taxable income, it is not accounted for.
Recognition of deferred tax assets for unused tax losses, tax credits and deductible temporary
differences is restricted to those instances where, in the opinion of management, it is probable
that future taxable profit will be available against which the deferred tax asset can be realized.
Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates, on the date the changes in tax laws and rates have been enacted or substantively
enacted.
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Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
3. Significant accounting policies (continued)
k. Foreign exchange transactions
Foreign currency transactions are translated at the rate of exchange in effect on the dates they
occur. Gains and losses arising as a result of foreign currency transactions are recognized in
the consolidated statement of operations. At reporting dates, monetary items are translated
at the closing rate of exchange in effect at the consolidated statement of financial position
date.
Translation of foreign operations
For the purpose of the consolidated financial statements, the results and financial position of
the Company’s operations are expressed in Canadian dollars, which is the functional currency
of the parent, and the presentation currency of the consolidated financial statements.
The Company translates the assets, liabilities, income and expenses of its subsidiaries which
have a functional currency other than the Canadian dollar, to Canadian dollars on the
following basis:
Assets and liabilities are translated at the closing rate of exchange in effect at the
consolidated statement of financial position date.
Income and expense items are translated using the average rate for the month in which
they occur, which is considered to be a reasonable approximation of actual rates.
Equity items are translated at their historical rates.
The translation adjustment from the use of different rates is included as a separate
component of equity, in accumulated other comprehensive income (loss).
k.
Comprehensive income
Comprehensive income consists of net income (loss) and OCI. OCI includes changes in
unrealized gains (losses) on the translation of subsidiaries with a functional currency other
than the Canadian dollar.
l.
Share capital and deferred share issuance costs
Ordinary shares issued by the Company are classified as equity. Costs directly identifiable
with the raising of capital will be charged against the related share issue, net of any tax effect.
Costs related to shares not yet issued are recorded as deferred financing costs. These costs will
be deferred until the issuance of the shares to which the costs relate, at which time the costs
will be charged against the related share issuance or charged to operations if the shares are
not issued.
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| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
3. Significant accounting policies (continued)
m. Earnings (loss) per share
For both continuing and discontinued operations, the Company presents basic and diluted
earnings (loss) per share (EPS) data for its common shares. Basic EPS is calculated by dividing
the results of operations attributable to ordinary shareholders of the Company by the
weighted average number of common shares outstanding during the period. Diluted EPS is
determined by adjusting the results of operations attributable to common shareholders and
the weighted average number of common shares outstanding for the effects of all dilutive
potential common shares, which comprise share options.
n. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided
to the chief operating decision maker. The chief operating decision maker, who is responsible
for allocating resources and assessing performance of operations, has been identified as the
Chief Executive Officer. The Company is now managed as three operating segments based on
how information is produced internally for the purpose of making operating decisions. The
segments are defined as investment property operations, subscription products and
corporate.
o. Leases
IFRS 16, Leases (“IFRS 16”) sets out the principles for the recognition, measurement,
presentation and disclosure of leases for both the lessee and the lessor.
From a lessee point of view, the Company has entered into Mongolian government land leases
on some of its investment properties. The Company, as a lessee, has determined, based on an
evaluation of the terms and conditions of the arrangements, that these land leases meet the
definition of an investment property and has classified them as such; therefore, the fair value
model is applied to those assets, and gains and losses on changes in fair value are recorded in
the consolidated statements of operations. The payments on these leases are nominal, and
are therefore exempt from recognition as low-value leases.
The Company has also entered into commercial and residential property leases on its
investment properties. The Company as a lessor, has determined, based on an evaluation of
the terms and conditions of the arrangements, that it retains the significant risks and rewards
of ownership of these properties and therefore accounts for these agreements as operating
leases.
For other leases of low-value assets or short-term leases that end within 12 months of the
commencement date and which have no renewal or purchase option, the Company has
elected to apply the recognition exemptions specified in IFRS 16, allowing the Company to
continue to expense the lease payments in the period in which they are incurred. The total of
such expenses was $4,620 for the 2022 fiscal year (2021 - $5,092).
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Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
3. Significant accounting policies (continued)
p. Provisions and contingent liabilities
Provisions are recognized when the Company has a present legal or constructive obligation as
a result of a past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation. When the Company expects some or all of the provision to be
reimbursed, the reimbursement is recognized as a separate asset but only when the
reimbursement is virtually certain. The expense of any provision is recognized in the
consolidated statement of operations net of any reimbursement. If the effect of the time value
of money is material, provisions are discounted using a current pre-tax rate that reflects,
where appropriate, the risks specific to the liability. Where discounting is used, the increase
in the provision due to the passage of time is recognized as a borrowing cost.
Contingent liabilities are disclosed if there is a possible future obligation as a result of a past
event, or if there is a present obligation as a result of a past event but either a payment is not
probable or the amount cannot be reasonably estimated.
q. Due from and to brokers
Amounts due from and to brokers represent negative cash balances or margin accounts, and
pending trades on the purchase or sale of securities. Where terms in the prime brokerage
agreements permit the prime broker to settle margin balances with cash accounts or
collateral, the due from brokers cash balances are offset against the due to brokers margin
balances at each prime broker.
r. Marketable Securities
The Company presents results from trading marketable securities on both a realized and
unrealized basis separately in the consolidatd statements of operations. A realized gain or
loss is recorded upon transfer of ownership of a marketable security, calculated as proceeds
(net of broker fees) less its cost which is measured on a first-in-first-out (“FIFO”) basis.
Unrealized gains and losses are the fair value adjustments to positions still held at reporting
dates.
s. Futures Contracts
The Company may invest in financial futures contracts (“futures contracts”) for the purpose
of hedging its existing portfolio securities or for speculative reasons.
Upon entering into a futures contract, the Company is required to pledge to the broker an
amount of cash and/or other assets equal to a certain percentage of the contract amount. This
payment is known as “initial margin.” Subsequent payments, known as “variation margin,”
are calculated each day, depending on the daily fluctuations in the fair value/market value of
the underlying assets. An unrealised gain or loss equal to the variation margin is recognised
on a daily basis and carried on the consolidated statements of financial position. When the
contract expires or is closed the gain (loss) is realised and is presented in the Statement of
Operations as a realised gain (loss) on short term investments. Futures contracts are valued
daily at their last quoted sale price on the exchange they are traded. A “sale” of a futures
contract means a contractual obligation to deliver the securities or foreign currency called for
by the contract at a fixed price at a specified time in the future. A “purchase” of a futures
contract means a contractual obligation to acquire the securities, commodities or foreign
currency at a fixed price at a specified time in the future.
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| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
3. Significant accounting policies (continued)
t.
Current Accounting Policy Changes
There were no accounting policy changes which impacted the Company in the December 31,
2022 fiscal year.
u. Future Accounting Policy Changes
IAS 1, Presentation of Financial Statements (“IAS 1”) The IASB issued ‘Classification of
Liabilities as Current or Non-Current (Amendments to IAS 1)’ in January 2020, affecting the
presentation of liabilities in the statement of financial position. In October 2022, the IASB
issued ‘Non-current Liabilities with Covenants (Amendments to IAS 1)’ affecting the required
disclosures for non-current liabilities with covenants. The narrow-scope amendments to IAS 1
clarify that liabilities are classified as either current or non-current, depending on the rights
that exist at the end of the reporting period. Classification is unaffected by the expectations of
the entity or events after the reporting date. The amendments also clarify what IAS 1 means
when it refers to the ‘settlement’ of a liability. The amendments must be applied
retrospectively in accordance with the normal requirements of IAS 8, Accounting Policies,
Changes in Accounting Estimates and Errors (“IAS 8”). The amendments are effective for
annual periods beginning on or after January 1, 2024, with earlier application permitted. The
amendments have not been early adopted by the Company. The Company is currently
assessing any potential impact of these amendments.
v. Comparative Figures
Certain comparative figures have been reclassified to conform with the basis of presentation
applied for the year ended December 31, 2022.
4
Significant accounting estimates and judgements
The preparation of financial statements in accordance with IFRS requires management to make
estimates and assumptions about the future that affect the reported amounts of assets and
liabilities. Estimates and judgements are continually evaluated based on historical experiences and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from these estimates and assumptions.
The effect of a change in an accounting estimate is recognized prospectively by including it in the
consolidated statements of operations in the period of the change, if the change affects that period
only, or in the period of the change and future periods, if the change affects both.Significant
estimates made in the preparation of these consolidated financial statements include the following
areas:
Fair value of investment properties – An external appraiser estimates the fair value of the
majority of investment properties by dollar value annually.
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Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
4
Significant accounting estimates and judgements (continued)
The remaining balance of investment properties was valued internally. The fair value of
investment properties is based on the nature, location and condition of the specific asset.
The fair value of investment properties represents an estimate of the price that would be
made in an arm’s length transaction between knowledgeable, willing parties. This fair
value assumes that the Company is in possession of the property’s land and property titles
where applicable. Management judges that the Company has the appropriate titles for
each of the properties classified as Investment Properties. Properties whereby
management judges that the Company’s titles are at risk, have been impaired to reflect the
level of risk estimated by management.
The Company operates in the emerging real estate market of Mongolia, which given its
current economic, political and industry conditions, gives rise to an increased inherent risk
given the lack of reliable and comparable market information. The significant estimates
underlying the fair value determination are disclosed in note 11. Changes in assumptions
about these factors could materially affect the carrying value of investment properties. In
addition, the significant global uncertainty resulting from the novel coronavirus (“COVID-
19”) pandemic has reduced the availability of reliable market metrics to inform opinions,
and therefore a higher degree of judgment must be applied. Consequently, fair values are
subject to significant change.
Valuation of marketable securities – The Company recognizes marketable securities at fair
value. Fair value is determined on the basis of market prices from independent sources, if
available. If there is no market price, then the fair value is determined by using valuation
models with inputs derived from observable market data where possible but where
observable data is not available, judgement is required to establish fair values.
Operating environment of the Company - Mongolia displays many characteristics of an
emerging market including relatively high inflation and interest rates. The tax and customs
legislation in Mongolia is subject to varying interpretations and frequent changes. The
future economic performance of Mongolia is tied to the continuing demand from China
and global prices for commodities as well as being dependent upon the effectiveness of
economic, financial and monetary measures undertaken by the Government of Mongolia
together with tax, legal, regulatory and political developments. Management is unable to
predict all developments that could have an impact on the Mongolian economy and
consequently what effect, if any, they could have on the future financial position of the
Company.
Significant judgements made in the preparation of these consolidated financial statements include
the following:
Judgement is required in determining whether an asset meets the criteria for classification
as assets held for sale and or as discontinued operations in the consolidated financial
statements. Criteria considered by management include the existence of and commitment
to a plan to dispose of the assets, the expected selling price of the assets, the probability of
the sale being completed within an expected time frame of one year and the period of time
any amounts have been classified within assets held for sale.
The Company reviews the criteria for assets held for sale each quarter and reclassifies such
assets to or from this financial position category as appropriate. On completion of the sale,
management exercises judgement as to whether the sale qualifies as a discontinued
operation.
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| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
4
Significant accounting estimates and judgements (continued)
As at December 31, 2022 and 2021, management has made the judgment that none of the
Company’s assets meet the criteria to be classified as held for sale. While this is due to a
number of factors, a primary reason is that due to the conditions of the Mongolian
economy and the lack of liquidity in the market, management was unable to conclude that
the sale of any significant size asset could be considered highly probable.
Judgement is required in determining whether the Company’s Investment property and
land use rights titles are at risk. As at December 31, 2020, management made the
judgment that Investment Properties whereby the land title has recently expired but is
expected to be renewed in the near future should continue to be classified as Investment
Properties. Properties whereby management judges that the Company’s titles are at risk,
have been impaired to reflect the level of risk estimated by management. As of December
31, 2022, all land titles of the Company’s Investment Properties were current.
5
Cash and cash equivalents
Cash at banks earns interest at floating rates based on daily bank deposit rates. The component of
cash accounts currently consists only of cash amounts held in banks or on hand.
The following table discloses the geographical location of cash:
2022
$
2021
$
Barbados
64,643
1,560,652
Canada
1,579,747
274,900
United States
213,209
313,036
Mongolia
193,646
247,723
Total cash
2,051,245
2,396,311
Cash is not collateralized. The carrying amount of cash approximates fair value.
The following table discloses the beakdown of cash and cash equivalents:
2022
$
2021
$
Cash
707,419
2,396,311
Cash equivalents*
1,343,826
-
Total cash and cash equivalents
2,051,245
2,396,311
*Cash equivalents are held in a GIC at a Canadian bank.
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Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
5
Cash and cash equivalents (continued)
The credit quality of cash balances may be summarized based on Standard and Poor’s ratings or
equivalents of Moody’s and/or Fitch ratings. The credit quality at December 31 was as follows:
2022
$
2021
$
Cash on hand
1,750
2,272
A or A+ rated
1,620,438
460,755
B- or B+ rated
269,152
368,234
BBB+ rated
63,361*
1,559,329
Unrated
96,544
5,721
Total cash
2,051,245
2,396,311
*Cash is held in a brokerage account, at which the Company also has a margin balance due and payable at December 31,
2022 (Note 6).
The unrated balance relates to one private bank in Barbados (2021 – one), one brokerage company
in Canada (2021 – one) and a cryptocurrency platform. The BBB+ rating relates to a brokerage
company in the United States.
6
Credit facilities and due from and due to brokers
a)
Credit facilities
During the year ended December 31, 2020, the Company qualified for a government-guaranteed
line of credit (Canada Emergency Business Account “CEBA”) of $40,000 which was interest-free
until December 31, 2020. On January 1, 2021, the line of credit converted to a 2-year, 0% interest
term loan to be repaid by December 31, 2022 at which time a 25% balance forgiveness ($10,000)
will apply if the loan is repaid by such date. On January 1, 2021 the Company qualified for an
additional $20,000 2-year, 0% interest term loan to be repaid by December 31, 2022. The
Company has the option to exercise a 3-year term extension on the loans by December 31, 2022, if
the loans are not repaid by then, at which time, the remaining unpaid balance of the loans will bear
interest at 5% interest per annum during the extension period and must be paid in full by December
31, 2025. In October 2022, the Government announced that the deadline for the partial loan
forgiveness and interest-free period has been extended to December 31, 2023.
Short and long term debt
2022
$
2021
$
Current
60,000
60,000
60,000
60,000
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| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
6
Credit facilities and due from and due to brokers (continued)
a)
Due from and due to brokers
The Company has margin facilities with its prime brokers. As at December 31, 2022 and 2021, the
Company’s amounts due to brokers have no specific repayment terms, and they are governed by
the margin terms set forth in the prime brokerage agreements. As at December 31, 2022, the
Company had net margin borrowings of $7,329,685 (2021 – net margin borrowings of $7,614,540).
The fair value of the collateral-listed equity securities is calculated daily and compared to the
Company’s margin limits. The prime brokers can at any time demand full or partial repayment of
the margin balances and any interest thereon or demand the delivery of additional assets as
collateral.
Due from and due to brokers balances are presented on a net basis by broker in the consolidated
statement of financial position. Under the prime broker agreements, the broker may upon events
of default offset, net and/or regroup any amounts owed by the Company to the broker by amounts
owed to the Company by the broker. The following tables set out the offsetting of the Company’s
various accounts with prime brokers.
Due from and due to brokers
2022
Gross
amounts due
from brokers
$
Gross
amounts due
to brokers
$
Net
amounts
$
Due from brokers
14,203
(14,203)
-
Due to brokers
-
(7,393,046)
(7,393,046)
2021
Gross
amounts due
from brokers
$
Gross
amounts due
to brokers
$
Net amounts
$
Due from brokers
6,872
(4,552)
2,320
Due to brokers
-
(9,173,869)
(9,173,869)
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Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
7
Equity investments and other holdings, securities sold short, derivatives
and futures
Equity Investments and other holdings
December 31,
December 31,
2022
$
2021
$
Assets
Equity securities
34,826,329
30,778,337
Options on futures
14,411,177
7,006,506
Calls
-
7,952
Puts
-
10,058
49,237,506
37,802,853
Securities sold short and derivative liabilities
December 31,
2022
$
December 31,
2021
$
Liabilities
Options on futures
5,127,327
2,598,477
Calls
-
47,835
Puts
31,804
6,017
5,159,131
2,652,329
Futures
December 31,
2022
$
December 31,
2021
$
Cost Basis
-
2,768,220
Unrealized gains on futures contract
-
311,437
Fair Market Value
-
3,079,657
A “purchase” of a futures contract means a contractual obligation to acquire the securities,
commodities or foreign currency at a fixed price at a specified time in the future and is not included
on the consolidated statements of financial position. An unrealised gain or loss equal to the change
in value of the contract is recognised on a daily basis and carried on the consolidated statements
of financial position as futures contracts.
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| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
8
Subscription Revenue
The Company’s revenue from contracts with customers is comprised of investment data analytics
subscriptions.
The Company has built a data analytics service, named KEDM, that tracks various event-driven
strategies. The Company initiated a paywall on July 1, 2021 to start monetizing this service.
Revenue earned during the period is classified as subscription revenue on the consolidated
statements of operations. Revenue collected that has not yet been earned, have been classified as
unearned revenue and will be classified according to the Company’s revenue policies described in
note 3.
Contract Liabilities:
As of December 31, 2022, the Company has unearned revenue of $1,547,154 to be fully recognized
by the end of July 2024, in accordance with contract terms (December 31, 2021 - $1,035,471).
December 31,
December 31,
2022
$
2021
$
Opening balance
1,035,471
-
Additions
3,685,713
1,979,882
Revenue earned
(3,174,031)
(944,411)
Closing balance
1,547,154
1,035,471
MGG has engaged an arm’s length company to compile and produce the KEDM report on an
ongoing basis, while MGG will act as the distributor and marketer of the product. As a part of this
engagement, MGG has agreed to pay certain direct and approved expenses related to producing
KEDM in addition to 20% of quarterly earned revenues above a threshold of $125,000 USD. The
Company paid $476,236 in revenue share during 2022 (December 31, 2021 - $111,541), classified
as subscription product expenses in note 22. Most of the expenses related to the unearned revenue
have not yet been incurred and are not reflected in the Company’s financial statements. MGG owns
all intellectual property related to KEDM and the arm’s length company disclaims any ownership
or rights to the intellectual property. The agreement can be discontinued by either party following
a reasonable transition period and MGG can engage a substitute party to continue the production
of KEDM. Beginning on January 1, 2023, MGG has engaged Praetorian PR LLC (PPR), a Puerto
Rican company owned by the MGG’s Chairman and CEO to produce KEDM. Refer to note 25 for
further details on the arrangement.
9
Digital assets
December 31,
December 31,
2022
$
2021
$
Balance - beginning of year
266,890
-
Net purchases
94,910
314,419
Unrealized loss
(98,700)
(42,606)
Foreign currency gain (loss)
21,153
(4,923)
Balance - end of year
284,253
266,890
The Company has a digital currency account at Kraken Custody which holds Monero (XMR)
cryptocurrency.
57
Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
10 Other assets
Short term other assets
December 31,
2022
$
December 31,
2021
$
Accounts receivable
15,172
29,888
Prepaid expenses
29,078
55,192
Allowance
-
(55,862)
44,250
29,218
Long term other assets
December 31,
2022
$
December 31,
2021
$
Long term receivable
98,364
111,722
Allowance for doubtful debt
(49,182)
-
49,182
111,722
The Company currently has a receivable of $98,364 from a property sold in 2019. The Company
has filed court proceedings against the debtor and has made an allowance for 50% of the amount.
This allowance was classified as short term in 2021 and long term in 2022.
11 Investment properties
2022
$
2021
$
Balance - beginning of year
11,885,907
14,542,236
Disposals
(1,066,165)
(2,163,008)
Fair value adjustment
622,186
(441,870)
Foreign exchange adjustments
(1,354,972)
(51,451)
Balance – end of year
10,086,956
11,885,907
During the year ended December 31, 2022, the Company sold five properties with a value of
$1,066,165 for cash proceeds of $919,621 resulting in a net loss of $146,544. During the year ended
December 31, 2021, the Company sold eight properties for net proceeds of $2,125,367 resulting in
a net loss of $37,641.
Investment properties by major category are as follows:
2022
$
2021
$
Office
931,736
925,127
Retail
5,508,385
7,119,588
Land and redevelopment sites
3,646,835
3,841,192
10,086,956
11,885,907
58
| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
11 Investment properties (continued)
Investment properties with an aggregate fair value of $10,020,823 (2021 - $10,187,412) in addition
to one property classified as PPE with a value of of $1,203,975, were valued by external
independent valuation professionals who are deemed to be qualified appraisers who hold a
recognized, relevant, professional qualification and who have recent experience in the locations
and categories of the investment properties valued. The remaining balance of investment
properties were valued internally.
The Company determined the fair value of investment properties using the income approach and
the sales comparison approach, which are generally accepted appraisal methodologies.
Under the income approach, the methodology used was the direct capitalization approach which
is based on rental income and yields. Rental incomes were based on current rent and reasonable
and supportable assumptions that represent what knowledgeable, willing parties would assume
about rental income from future rent in light of current conditions adjusted for non-recoverable
property costs. Yields were determined using data from real estate agencies, market reports and
property location among other things in determining the appropriate assumptions. Under this
method, year one income is stabilized and capped at a rate deemed appropriate for each investment
property.
The sales comparison approach analyzes all available information of sales of comparable
properties that have recently taken place or have recently been marketed and adjusts the price to
reflect differences in the property valued and sold.
The entire portfolio of investment properties has been valued using the income approach, the sales
comparison approach or a combination thereof.
Due to the COVID-19 pandemic and its ongoing impact on the economy, and specifically its
unknown future impact on the real estate market, there is heightened uncertainty surrounding the
valuation of the investment properties. Consequently, there is a need to apply a higher degree of
judgment as it pertains to the forward-looking assumptions that underlie the Company’s valuation
methodologies. In addition, less weight can be ascribed to previous market evidence, for
comparative purposes, to inform opinions of value. Given this impact on the availability of reliable
market metrics, fair values at December 31, 2022 may be subject to material change.
The Company currently has a standing agreement with the owner of a 42 sq. meter apartment
which has been included in one of the Company’s properties classified as land and redevelopment.
The agreement entitles the owner of the apartment to 84 sq. meters of space on the first floor of a
new building to be built on this land. In this agreement, the Company had an obligation to
complete the construction of a new building by the end of fiscal 2017 and the agreement was not
extended. A liability of $261,648 (2021 - $263,667) is currently included in the Company’s trade
payables and accrued liabilities (note 13) to reflect this liability. In addition, the Company has
recognized an unrealized fair value impairment of $887,732 included in investment properties
(2021 -$995,949) in excess of the fair value adjustment calculated using the valuation approaches
described. This adjustment is management’s estimate of the markets perception of the risk related
to this agreement, and is included within the unrealized gain (loss) on fair value adjustment on
Investment properties within profit and loss.
59
Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
11 Investment properties (continued)
Under the fair value hierarchy, the fair value of the Company's investment properties is considered
a level three, as defined in note 3.
The key valuation assumptions for commercial investment properties are as follows:
2022
Maximum
Minimum
Weighted- average
Capitalization rate
13.1%
12.6%
13.0%
2021
Maximum
Minimum
Weighted- average
Capitalization rate
13.1%
9.0%
11.8%
The following sensitivity table outlines the impact of a 0.25% change in the weighted average
capitalization rate on investment properties at 2022:
Change to fair value if
capitalization rate
increased 0.25%
Change to fair value if
capitalization rate
decreases 0.25%
Investment property
(16,984)
17,651
Additional valuation assumptions include the rental revenue per square meter, grade quality of the
property, and comparable market data.
Investment properties of $66,188 (2021 - $73,321) have no rental revenue associated with them at
December 31, 2022.
Investment properties include land use rights held under operating leases with an aggregate fair
value of $3,646,835 (2021 – $3,841,192) at December 31, 2022.
Certain investment properties held by the Company are leased out (the Company is the lessor)
under operating leases. The future minimum lease payments under non-cancellable leases are as
follows:
2022
$
2021
$
Less than 1 year
468,191
608,538
Between 1 and 5 years
226,289
265,126
Beyond 5 years
-
-
694,480
873,664
60
| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
11 Investment properties (continued)
Direct operating expenses arising from investment properties that generated rental income during
the year was $769,501 (2021 – $757,564). Direct operating expenses arising from investment
properties that did not generate rental income during the year was $1,352 (2021 - $1,536).
The Company’s operating leases, in which the Company is the lessor, are structured such that the
weighted average length of the leases as at December 31, 2022 was 12.6 months (10.6 months as at
December 2021), calculated as a percentage of monthly revenues.
12 Property and equipment
2022
Furniture and
fixtures
$
Equipment
$
Buildings
$
Total
$
Cost
At January 1
59,993
129,798
2,726,198
2,915,989
Additions
150,331
49,827
511,655
711,813
Disposals
(674)
(17,465)
-
(18,139)
Reversal of impairment
-
-
127,538
127,538
Foreign exchange
adjustment
(1,580)
(1,053)
(190,330)
(192,963)
At December 31
208,070
161,107
3,175,061
3,544,238
2022
Furniture and
fixtures
$
Equipment
$
Buildings
$
Total
$
Accumulated
depreciation
At January 1
48,719
122,182
524,881
695,782
Depreciation
17,574
12,325
73,763
103,662
Disposals
(674)
(17,465)
-
(18,139)
Foreign exchange
adjustment
(399)
(900)
(40,000)
(41,299)
At December 31
65,220
116,142
558,644
740,006
Net book value
at December 31
142,850
44,965
2,616,417
2,804,232
61
Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
12 Property and equipment (continued)
During the year ended December 31, 2022 the Company recognized a reversal of impairment on
its corporate office building of $127,538 (2021 – reversal of impairment of $53,630) which was
implied by the same valuation methodology described in note 11. During the year ended December
31, 2022, the Company completed renovations totaling $511,655 to its office building in Puerto
Rico (2021 – nil). This property will serve as an office in Puerto Rico and the remainder will be
rented out to affiliated and non affiliated parties.
2021
Furniture and
fixtures
$
Equipment
$
Buildings
$
Total
$
Cost
January 1
72,194
126,541
1,733,299
1,932,034
Additions
-
-
941,847
941,847
Disposals
(10,641)
(3,843)
-
(14,484)
Reversal of
impairment
-
-
53,630
53,630
Foreign exchange
adjustment
(1,560)
7,100
(2,578)
2,962
At December 31
59,993
129,798
2,726,198
2,915,989
2021
Furniture and
fixtures
$
Equipment
$
Buildings
$
Total
$
Accumulated
depreciation
At January 1
54,401
116,680
467,712
638,793
Depreciation
5,170
9,569
57,369
72,108
Disposals
(10,641)
(3,843)
-
(14,484)
Foreign exchange
adjustment
(211)
(224)
(200)
(635)
At December 31
48,719
122,182
524,881
695,782
Net book value
at December 31
11,274
7,616
2,201,317
2,220,207
62
| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
13 Trade payables and accrued liabilities
2022
$
2021
$
Trade and accrued payables
339,191
574,681
Property commitment
261,648
263,667
Security deposits
58,563
75,043
659,402
913,391
The carrying amounts above reasonably approximate the fair value at the consolidated statement
of financial position date. All trade and other payables are current.
14 Income taxes
a) Effective tax rate
The income tax expense reflects an effective tax rate that differs from the combined tax rate
for Canadian federal and provincial corporate taxes for the following:
2022
$
2021
$
Net income (loss) before income taxes
10,627,701
16,081,911
Combined statutory tax rate
26.5%
26.5%
Expected income tax (recovery)
2,816,000
4,262,000
Effect of:
Permanent differences
1,152,000
1,676,000
Change in statutory, foreign tax, foreign exchange
rates and other
(1,043,721)
(2,446,395)
Adjustment to prior years provision versus
statutory tax returns and expiry of non-capital
losses
(288,000)
(436,000)
Change in unrecognised deductible tax differences
53,000
(2,523,000)
Total income tax expense
2,689,279
532,605
Provision for income taxes
Current
727,001
1,197
Deferred
1,962,278
531,408
2,689,279
532,605
63
Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
14 Income taxes (continued)
b) Deferred income taxes
Differences between IFRS and statutory taxation regulations in Mongolia give rise to temporary
differences between the carrying amount of assets and liabilities for financial reporting purposes
and their tax bases. The Company did not recognize a deferred tax asset in these consolidated
financial statements as there is uncertainty with regard to the recoverability of the asset for both
the Canadian and Mongolian entities.
The significant components of the Company’s deferred tax assets and liabilities are as follows:
2022
$
2021
$
Deferred Tax Assets (liabilities)
Property and equipment
67,000
52,000
Investment properties
(354,000)
(434,244)
Marketable security
(2,695,522)
(1,637,000)
Digital assets
33,000
-
Non-capital losses available for future period
49,000
1,028,000
(2,900,522)
(991,244)
Unrecognized deferred tax assets
(72,000)
(19,000)
Net deferred tax liability
(2,972,522)
(1,010,244)
The significant components of the Company’s temporary differences, unused tax credits and
unused tax losses that have not been included on the consolidated statement of financial position
are as follows:
Temporary Differences
2022
Expiry Date
Range
2021
Expiry Date
Range
Property and equipment
62,000
No expiry date
11,000
No expiry date
Non-capital losses available
for future period
131,000
2031 to 2032
58,000
No expiry date
Tax attributes are subject to review, and potential adjustment by tax authorities.
64
| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
15 Share capital and contributed surplus
Common shares
The Company is authorized to issue an unlimited number of common and preferred shares.
The issued and outstanding common shares are as follows:
Number of
shares
Amount
$
Balance, December 31, 2020
31,281,499
53,165,247
Shares re-purchased
-
(2,161,125)
Treasury stock cancelled
(3,503,000)
-
Balance, December 31, 2021
27,778,499
51,004,122
Shares re-purchased
-
(456,992)
Treasury stock cancelled
(68,000)
-
Balance, December 31, 2022
27,710,499
50,547,130
As at December 31, 2022, the Company held 234,600 (2021-nil) shares in treasury.
Options
There were no options outstanding as of December 31, 2022 and the Company’s option plan lapsed
in 2021.
Restricted Stock Awards (RSA)
During the year, the Company renewed its Restricted Stock Award plan (“the RSA Plan”) whereby it
can grant RSAs to directors, officers, employees, and technical consultants of the Company. The
maximum number of RSAs that may be reserved for issuance under the RSA Plan is limited to
300,000 common shares. The Restricted Period in respect to the Restricted Shares shall end once
the Restricted Shares shall become vested. To date, no RSAs have been granted.
Earnings per share
The following table summarizes the shares used in calculating earnings (loss) per share:
2022
2021
Weighted average number of shares - basic
27,761,956
29,309,116
Effect of dilutive stock options
-
-
Weighted average number of shares - diluted
27,761,956
29,309,116
Basic earnings (loss) per share are derived by dividing net income (loss) for the year by the
weighted average number of common shares outstanding for the period.
65
Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
16 Management of capital structure
The Company’s objective when managing capital is to ensure the Company is capitalized in a
manner which provides a strong financial position for its shareholders.
The Company’s capital structure includes the components of equity. In managing its capital
structure, the Company considers future investment and acquisition opportunities, potential credit
available and potential issuances of new equity. The Company’s objective is to maintain a flexible
capital structure that will allow it to execute its stated business. There was no change in the
Company’s strategy or objective in managing capital since the prior year. There are no externally
imposed capital requirements at year end. Upon acquiring investment properties and operating
businesses, the Company will strive to balance its proportion of debt and equity within its capital
structure in accordance with the needs of the continuing business. The Company may, from time
to time, issue shares and adjust its spending to manage current and projected proportions as
deemed appropriate.
The method used by the Company to monitor its capital is based on an assessment of the
Company’s working capital position relative to its projected obligations.
17 Financial risk management
The Board of Directors ensures that management has put appropriate risk management processes
in place. Through the Audit Committee, the Board oversees such risk management procedures and
controls. Management provides updates to the Audit Committee on a quarterly basis with respect
to risk management.
Catastrophe risk
The Company has obtained insurance on buildings and all permanent fixtures totalling
approximately $6,600,000 effective May 8th 2022 ($8,300,000 - May 8th 2021). To date the
Company has not been able to obtain insurance on its Puerto Rican property with a value of
$1,412,442 at December 31, 2022.
Credit risk
Credit risk is the risk of an unexpected financial loss to the Company if a third party fails to fulfill
its performance obligations under the terms of a financial instrument. The Company’s credit risk
arises principally from the Company’s cash and receivables as well as its marketable securities
portfolio.
2022
$
2021
$
Current assets
51,617,254
40,809,029
Current liabilities
(15,461,570)
(13,839,334)
Working capital
36,155,684
26,969,695
66
| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
17 Financial risk management (continued)
The Company’s maximum exposure to credit risk comprises the carrying values of cash, accounts
receivable and marketable securities was $51,378,065 at December 31, 2022.
The Company’s exposure to credit risk is managed through risk management policies and
procedures with emphasis on the quality of the investment portfolio. The majority of the funds
invested are held in reputable Barbadian, American, Canadian or Mongolian banks (note 5).
The Company is exposed to credit risk as an owner of real estate in that tenants may become unable
to pay the contracted rents. The Company mitigates this risk by carrying out appropriate credit
checks and related due diligence on the significant tenants. The Company’s properties are
diversified across commercial classes.
Liquidity risk
Liquidity risk is the risk of having insufficient cash resources to meet financial obligations without
raising funds at unfavourable rates or selling assets on a forced basis. Liquidity risk arises from the
general business activities and in the course of managing the assets and liabilities. The purpose of
liquidity management is to ensure that there is sufficient cash to meet all financial commitments
and obligations as they fall due. The liquidity requirements of the Company’s business are met
primarily by funds generated from operations, liquid investments and income and other returns
received on investments. Cash provided from these sources is used primarily for investment
property operating expenses.
As at December 31, 2022, the Company does not believe the current maturity profile of the
Company lends itself to any material liquidity risk, taking into account the level of cash and
marketable securities as at December 31, 2022. All financial assets and liabilities have contractual
or expected maturities within 12 months, except for the CEBA loan which has repayment terms
described in Note 6. Due to the short term nature of the Company’s financial instruments, there
is no material impact due to discounting or the time value of money to disclose.
Equity price risk
Equity price risk is the risk that the fair value of equity investments and other holdings and equities
sold short and derivatives will vary as a result of changes in the market prices of the holdings. All
of the Company’s equity investments and other holdings and all of the equities sold short and
derivatives are based on quoted market prices as at the consolidated statement of financial position
date. Changes in the market price of quoted securities and derivatives may be related to a change
in the financial outlook of the investee entities or due to the market in general. Where non-
monetary financial instruments − for example, equity securities − are traded in currencies other
than the Canadian dollar, the price, initially expressed in a foreign currency and then converted
into Canadian dollars, will also fluctuate because of changes in foreign exchange rates.
Securities sold short represent obligations of the Company to make future delivery of specific
securities and create an obligation to purchase the security at market prices prevailing at the later
delivery date. This creates the risk that the Company’s ultimate obligation to satisfy the delivery
requirements will exceed the amount of the proceeds initially received or the liability recorded in
the consolidated financial statements. In addition, the Company has entered into derivative
financial instruments which have a notional value greater than their fair value which is recorded
in the consolidated financial statements. This information is disclosed in note 7 to these
consolidated financial statements.
67
Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
17 Financial risk management (continued)
This creates a risk that the Company could settle these instruments at a value greater or less than
the amount that they have been recorded in the consolidated financial statements. The Company’s
equity investments and other holdings have a downside risk limited to their carrying value, while
the risk of equities sold short and derivatives is open-ended. The Company is subject to commercial
margin requirements which act as a barrier to the open-ended risks of the equities sold short and
derivatives. The Company closely monitors both its equity investments and other holdings and its
equities sold short and derivatives.
Currency risk
Currency risk is the risk that the value of monetary financial assets and financial liabilities
denominated in foreign currencies will vary as a result of changes in underlying foreign exchange
rates. The Company is exposed to currency risk due to potential variations in currencies other than
the Canadian dollar.
As at December 31, 2022, the Company had material exposure to foreign currencies. The
approximate impact of a 10% fluctuation of the foreign currency against the Canadian dollar are as
follows:
Impact of 10% fluctuation in foreign currency
2022
$
2021
$
Mongolian Tögrög
1,080,510
1,304,329
US Dollar
447,292
2,777,545
Russian Ruble
-
182,754
Other price risk
Other price risk market fluctuation risk is where fluctuations in the value of equity securities affect
the level and timing of recognition of gains and losses on securities held, and cause changes in
realized and unrealized gains and losses. The Company’s marketable securities are exposed to
other price risk. The approximate impact of a fluctuation of 10% in the price of the marketable
securities would impact the value of the marketable securities by $4,923,751 (2021 - $3,780,285).
Economic risk
Mongolian tax, currency and customs legislation is subject to varying interpretations, and changes,
which can occur frequently. Management’s interpretation of such legislation as applied to the
transactions and activity of the Company may be challenged by tax authorities.
Mongolian tax authorities may be taking a more assertive position in their interpretation of the
legislation and assessments, and it is possible that transactions and activities that have not been
challenged in the past may be challenged by tax authorities. As a result, significant additional taxes,
penalties and interest may be assessed. Fiscal periods remain open to review by the authorities in
respect of taxes for five calendar years preceding the year of review. Under certain circumstances
reviews may cover longer periods.
68
| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
17 Financial risk management (continued)
Mongolian tax legislation does not provide definitive guidance in certain areas, specifically in areas
such as Value added tax (VAT), corporate income tax, personal income tax and other areas. From
time to time, the Company adopts interpretations of such uncertain areas that reduce the overall
tax rate of the Company. As noted above, such tax positions may come under heightened scrutiny
as a result of recent developments in administrative and court practices. The impact of any
challenge by the tax authorities cannot be reliably estimated; however, it may be significant to the
financial position and/or the overall operations of the entity.
The Company’s management believes that its interpretation of the relevant legislation is
appropriate and the Company’s tax positions will be sustained.
Management performs regular re-assessments of tax risk and its position may change in the future
as a result of the change in conditions that cannot be anticipated with sufficient certainty at
present.
18 Related party transactions
Parties are generally considered to be related if the parties are under common control or if one
party has the ability to control the other party or can exercise significant influence or joint control
over the other party in making financial and operational decisions. In considering each possible
related party relationship, attention is directed to the substance of the relationship, not merely the
legal form.
Key management personnel of the Company include all directors and executive management, and
persons directly related to directors and executive management. The summary of compensation
for key management personnel is as follows:
2022
$
2021
$
Salaries and other short-term employee benefits
590,924
597,668
Salaries to other related parties
78,040
63,664
Director fees
60,000
60,000
728,964
721,332
As at December 31, 2022, amounts due to related parties totaled approximately $16,446 (2021 -
$140,000) comprised of fees owed to management were included in trade payables and accrued
liabilities. During 2022, the Company agreed to reimburse a Company owned by an officer of the
Company, $6,814 for professional fees incurred from shared services (2021- $233,933). Salaries
to other related parties include the salary of an employee that is related to a director.
19 Commitments and contingencies
From time to time and in the normal course of business, claims against the Company may be
received. On the basis of management’s assessments and professional legal advice, management
is of the opinion that no material losses will be incurred and no provision or disclosure has been
made in these consolidated financial statements.
The Company has an obligation to provide an 84 meter apartment to an owner of an apartment
that has been included in one of the Companhy’s properties classified as land and redevelopment.
See note 11 for more information.
The Company indemnifies its directors and officers against any and all claims or losses reasonably
incurred in the performance of their service to the Company to the extent permitted by law.
69
Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
20 Supplementary cash flow information
2022
$
2021
$
Changes in non-working capital arising from
Unearned Revenue
511,683
1,035,470
Other assets
35,581
(37,073)
Net due to / (from) broker
(1,778,503)
9,172,922
Trade payables and accrued liabilities
(209,160)
348,849
Income tax payable
638,563
2,882
Changes in non-cash working capital from
operating activities
(801,836)
10,523,050
Income tax paid during the year was $84,164 (2021 - $2,416). Interest paid during the year was
$22 (2021 - $74).
21 Segment information
The Company’s operations are conducted in three reportable segments; Investment Property
Operations, Corporate, and Subscription Products. The Company reports information about its
operating segments based on the way management organizes and reports the segments within the
organization for making operating decisions and evaluating performance.
Investment Property Operations consist of commercial and residential investment property in
Mongolia held for the purposes of rental revenue, capital appreciation or redevelopment. These
properties are managed by Big Sky Capital LLC and its subsidiaries.
The Company evaluates performance based on net income (loss) before income taxes.
2022
Investment
Property
Corporate
Subscription
Products
Total
$
$
$
$
Rental income
798,826
-
-
798,826
Subscription revenue
-
-
3,174,031
3,174,031
Property operating expenses
(757,220)
(13,635)
-
(770,855)
Unrealized gain on investment properties
622,186
-
-
622,186
Reversal of impairment of PPE
127,538
-
-
127,538
Unrealized mark to market gain
-
1,031,997
-
1,031,997
Unrealized loss on digital assets
-
(98,700)
-
(98,700)
Other expenses
(257,305)
(1,842,357)
(927,330)
(3,026,992)
Subscription processing fees
-
-
(135,707)
(135,707)
Depreciation
(73,623)
(30,039)
-
(103,662)
Loss on disposal of investment property
(146,544)
-
-
(146,544)
Interest income
-
6,813
-
6,813
Other revenue
100,572
-
100,572
Realized gain on marketable securities
-
8,792,881
-
8,792,881
Foreign currency gain (loss)
51,820
203,497
-
255,317
Net income before income taxes
466,250
8,050,457
2,110,994 10,627,701
70
| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
21 Segment information (continued)
2021
Investment
Property Corporate
Subscription
Products
Total
$
$
$
$
Rental income
679,091
-
-
679,091
Subscription revenue
-
-
944,411
944,411
Property operating expenses
(759,100)
(1,683)
-
(760,783)
Unrealized loss on investment properties
(441,870)
-
-
(441,870)
Reversal of impairment of PPE
53,630
-
-
53,630
Unrealized mark to market gain
-
7,946,088
-
7,946,088
Unrealized loss on digital assets
-
(42,606)
-
(42,606)
Other expenses
(246,036)
(1,810,566)
(210,927)
(2,267,529)
Subscription processing fees
-
-
(69,157)
(69,157)
Depreciation
(61,086)
(11,022)
-
(72,108)
Loss on disposal of investment property
(37,641)
-
-
(37,641)
Other revenue
190,850
-
-
190,850
Realized gain on marketable securities
-
10,306,006
-
10,306,006
Reclassification of accumulated other
comprehensive income on disposal of
subsidiary
(33,006)
-
-
(33,006)
Foreign currency gain (loss)
1,201
(314,666)
-
(313,465)
Net income (loss) before income
taxes
(653,967) 16,071,551
664,327
16,081,911
71
Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
21 Segment information (continued)
Balance as of
December 31, 2022
Investment
Property
$
Subscription
products
$
Corporate
$
Total
$
Total assets
11,687,152
-
52,870,472
64,557,624
Property and equipment
1,350,730
-
1,453,502
2,804,232
Investment properties
10,086,956
-
-
10,086,956
Expenditures
Property and equipment
-
-
711,813
711,813
Investment properties
-
-
-
-
Total liabilities
355,394
1,547,154
16,531,544
18,434,092
Trade payables
and accrued
liabilities
Revenue
Property and
equipment
Investment
property
2022
$
2021
$
2022
$
2021
$
2022
$
2021
$
2022
$
2021
$
Canada
291,552
544,422
3,160,487
944,411
-
-
-
-
USA
12,456
162,195
13,544
-
1,453,502
941,847
-
-
Mongolia
355,394
206,774
752,854
832,300
1,350,730
1,278,360
10,086,956
11,885,907
659,402 913,391 3,926,885 1,776,711 2,804,232 2,220,207 10,086,956
11,885,907
Balance as of
December 31, 2021
Investment
Property
$
Subscription
products
$
Corporate
$
Total
$
Total assets
13,530,741
-
41,496,124
55,026,865
Property and equipment
1,278,360
-
941,847
2,220,207
Investment properties
11,885,907
-
-
11,885,907
Expenditures
Property and equipment
-
-
941,847
941,847
Investment properties
-
-
-
-
Total liabilities
913,319
1,035,471
12,900,788
14,849,578
72
| Mongolia Growth Group Ltd
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
22 Other expenses
2022
$
2021
$
Investor relations
30,981
22,480
Investment research expense
86,745
52,942
Repairs and maintenance
49,850
48,987
Office
168,002
98,651
Professional fees
743,198
1,176,824
Travel
123,680
30,999
Advertising
33,703
12,552
Land and property tax
51,510
94,507
Insurance
36,259
49,775
Utilities
121,968
53,807
Subscription processing fees
135,707
69,157
Subscription product expenses
927,330
210,927
Other
172,958
287,998
2,681,891
2,209,606
23 COVID-19
Beginning in February of 2020, the Government of Mongolia undertook extra-ordinary actions in
order to limit the spread of COVID-19 or other COVID-19 related impacts. These actions included
closing borders, closing schools, reducing gatherings and drastic limitations on business
operations. As long-term investors in Mongolia, the Corporation welcomes these actions that keep
the people of Mongolia safe from COVID-19. Since the initiation of these actions, the Company has
experienced a material reduction in rental revenues received. It is reasonable to expect there could
be a material negative impact on the fair values of investment properties and/or marketable
securities, however at this time the potential effect cannot be quantified. At this time, there is no
way to know the ultimate impact of these extra-ordinary actions upon the economy or the
Company.
24 Disposal of Subsidiary
On October 1, 2021, the Company disposed of its interest in its Orpheus LLC subsidiary as a result
of the sale of one of its land packages. The Company held 100% of the shares of Orpheus LLC where
the only assets and liabilities were related to the property. In connection with the sale, the
Company received cash considerations of $375,244 for assets with a fair market value of $478,936,
resulting in a loss of $103,692 classified as loss on disposal of investment property in the
consolidated statements of operations. Orpheus LLC had $33,006 other in comprehensive income
and it was reclassified to net income for the year.
73
Mongolia Growth Group Ltd |
Mongolia Growth Group Ltd.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian dollars)
25 Subsequent events
Beginning on January 1, 2023, MGG has engaged Praetorian PR LLC (PPR), a Puerto Rican
company owned by the MGG’s Chairman and CEO to produce KEDM. Under the terms of the
agreement, MGG will pay PPR a monthly fee of USD $50,000 along with 20% of any quarterly
revenue in excess of USD $125,000.
Since January 1, 2023, the Company has repurchased 168,100 of its shares at an average price of
$1.46/share and cancelled 402,700 shares.
74
| Mongolia Growth Group Ltd
Davidson & Company LLP
Vancouver, BC
Borden Ladner Gervais LLP
Calgary, AB
Farris, Vaughan, Wills & Murphy LLP
Vancouver, BC
Computershare Investor Services
100 University Ave., 8th Floor
Toronto, ON M5J 2Y1
Tel: 1 800 564 6253
www.investorcentre.com/service
Board of Directors
Harris Kupperman
CEO and Chairman of Mongolia Growth Group Ltd
Mr. Kupperman is a co‐founder of Mongolia Growth
Group and has been the Executive Chairman of the
Corporation since March 2014. Mr. Kupperman was the
President and CEO of the Corporation from February
2011 to March 2014 and returned as CEO in December
2014. Mr. Kupperman also publishes Kuppy’s Korner,
a blog dedicated to uncovering unique opportunities
around the world. He is currently the President and Chief
Investment Office of Praetorian PR LLC, the Rincon, PR-
based Registered Investment Advisor to the hedge fund,
Praetorian Capital Fund LLC. He graduated from Tulane
University College with a history degree. Mr. Kupperman
served as a Director at Aeroquest International Limited
(TSX:AQL) from 2010‐ 2011.
Brad Farquhar
Independent Director
Mr. Farquhar is Executive Vice-President and Chief Financial
Officer of SSC Security Services Corp. (TSXV: SECU). He
previously co-founded Input Capital Corp., the world’s first
agriculture streaming company, and Assiniboia Capital
Corp., which built Canada’s largest farmland fund before
selling it to the Canada Pension Plan Investment Board in
2014. Mr. Farquhar is a trained financial planner who spent
over 10 years as a senior advisor to senior political leaders
in Saskatchewan and Canada prior to going into business.
He received a MPA in Electoral Governance from Griffith
University in Australia, studied political science at Carleton
University, and completed a BA at Providence College. He
has also been Executive in Residence in Agribusiness at
the University of Regina. Mr. Farquhar is a Director of SSC
Security Services Corp., Cypress Hills Partners Inc., SIM
International, Prairie College, and on the advisory board of
AgFunder.com. Previously, he was a Director of Luxxfolio
Holdings Inc. (CSE: LUXX), Radicle Group Inc. (sold to
Bank of Montreal), and the Legacy Group of Companies.
Nick Cousyn
Independent Director
Mr. Cousyn is a Capital Markets’ professional with over 20
years of alternatives and traditional industry experience. Mr.
Cousyn was a licensed securities professional in the U.S.
with a background in equities, fixed income, derivatives
and distressed debt. While based in the US, some of the
firms he worked for included Deutsche Bank, Banque
Populaire, Wells Fargo and First Horizon National Bank.
During his 9 year tenure in Mongolia, Mr. Cousyn served as
Chief Communications Officer for Petro Matad and Chief
Operating Officer for BDSec (MO:BDS), Mongolia’s largest
broker and investment bank. He is currently employed by
Praetorian PR LLC, the Investment Advisor to the hedge
fund Praetorian Capital Fund LLC, where he is head of Client
Relations. Mr. Cousyn holds a BA in Economics from the
University of California at Riverside.
Jim Dwyer
Independent Director
Mr. Dwyer is a Partner and Board Member of Mongolian
Business Database in Ulaanbaatar. Jim was a New
York-based investment banker specializing in mergers
and acquisitions for 30 years and completed over 100
M&A transactions. In addition, he founded and managed
M&A departments for two major investment banking
firms: Shearson Loeb Rhoades and UBS-North America.
Mr. Dwyer first visited Mongolia in 2001 to represent the
Government of Mongolia as lead investment banker for
the privatization of its largest bank, Trade & Development
Bank. Thereafter, he served as lead investment banker for
the privatization of the largest Government-owned retail
bank, Khan Bank. He co-founded the Business Council
of Mongolia (BCM) and served as Executive Director from
its formation in 2007 to 2016. He is also an independent
director of other Mongolian-based entities including
Golomt Bank, Mandal Insurance and Sendly NBIF. Mr.
Dwyer received a BBA from the University of Notre Dame
and an MBA from Columbia Graduate School of Business
(Columbia University).
Robert Scott
Independent Director
Mr. Scott, CPA, CA, CFA brings more than 25 years of
professional experience in accounting, corporate finance,
and merchant and commercial banking. Mr. Scott earned
his CFA in 2001, his CA designation in 1998 and has a
B.Sc. from the University of British Columbia. He is a
Founder and President of Corex Management Inc., a
private company providing accounting, administration,
and corporate compliance services to privately held
and publicly traded companies, and has served on the
management teams and boards of numerous Canadian
publicly traded companies with a strong track record of
cost effectively running operations. Mr. Scott has also
listed several companies on the TSX Venture Exchange
gaining extensive IPO, RTO, regulatory and reporting
experience, and currently holds senior management and
board positions with a number of issuers on the TSX
Venture Exchange.
Auditors
Legal
Transfer Agent
Harris Kupperman
CEO and Chairman of the Board
Genevieve Walkden, MBA, CFP, CAIA
CFO and Corporate Secretary
Officers
76
| Mongolia Growth Group Ltd
info@mongoliagrowthgroup.com | www.mongoliagrowthgroup.com
First Canadian Place,100 King Street West,
56th Floor, Toronto, Ontario M5X 1C9, Canada
Tel: (877) 644-1186
Fax: (866) 468-9119
MONGOLIA GROWTH GROUP Ltd.
Canada: YAK
USA:
MNGGF
TSX - Venture